United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS
F. DENNIS SAYLOR, District Judge.
This is an action for trademark infringement. Plaintiff Hilsinger Company has brought suit against defendants FBW Investments, LLC and Kleen Concepts, LLC. The complaint alleges that defendants' use of the mark "SHIELDME, " in connection with cleaning products has infringed Hilsinger's "SHIELD" brand by creating a likelihood of confusion as to whether "SHIELDME" products "originate with, or are sponsored, affiliated, or approved by, Hilsinger." The complaint asserts claims under the Lanham Act, 15 U.S.C. §§ 1114 and 1125, and for violation of common-law trademark rights.
On February 6, 2015, FBW filed a motion to dismiss the complaint for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2) and improper venue under Fed.R.Civ.P. 12(b)(3), or, in the alternative, to transfer the case to the Southern District of Texas under 28 U.S.C. § 1404(a). On April 14, 2015, Kleen Concepts filed a motion to dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2).
For the following reasons, FBW's motion to dismiss will be granted and Kleen's motion to dismiss will be denied.
A. Factual Background
The Hilsinger Company is a Delaware corporation with a principal place of business inPlainville, Massachusetts. (Second Am. Compl. ¶ 1). It designs and sells eye-care, eyewear, and lens-care products. ( Id. ¶ 7). In July 1985, Shield Lenscare Products, Inc. ("SLP") began marketing and selling optical lens cleaning products bearing the word mark, SHIELD. ( Id. ¶ 11). On April 25, 1989, SLP obtained a federal trademark registration for SHIELD in connection with "Optical lens cleaning preparation products." (Reg. No. 1, 536, 028, Second Am. Compl. Ex. A). On June 23, 1999, SLP assigned its interest in the SHIELD Brand to The Hilsinger Company L.P., which subsequently merged with Hilsinger. (Second Am. Compl. ¶ 13). The brand has been used in commerce continuously since approximately July 1985. ( Id. ¶ 14).
FBW Investments, LLC is a limited liability company based in Houston, Texas. (Second Am. Compl. ¶ 2). Kleen Concepts, LLC is a limited liability company based in Scottsdale, Arizona. ( Id. ¶ 3).
In January 2010, Kleen Concepts began producing and selling products under the SHIELDME mark. (Russell Decl. ¶ 5, Docket No. 46). In July 2010, it applied for trademark registration with the USPTO for the SHIELDME mark for a "Kit containing spray to eliminate bacteria and germs on surfaces, spray to provide antimicrobial protection on surfaces, and antimicrobial c[l]oth." (Second Am. Compl. ¶ 18). On September 20, 2011, Kleen Concepts obtained federal trademark registration 4, 027, 820 for the first SHIELDME mark. ( Id. ¶ 19; Second Am. Compl. Ex. B). On January 21, 2013, Kleen assigned its interest in the 820 trademark to FBW. (Second Am. Compl. ¶ 20). On January 22, 2013, FBW applied for trademark registration with the USPTO for the mark SHIELDME for "Canned pressurized air for dusting and cleaning purposes; Cleaning agents and preparations; Cleaning agents for cleaning surfaces; Cleaning preparations for electronic devices and screens; Hand cleaning preparations." ( Id. ¶ 21). On March 18, 2014, FBW obtained federal trademark registration 4, 497, 007 for the second SHIELDME mark. ( Id. ¶ 24; Second Am. Compl. Ex. C).
The complaint alleges that in late 2013 or early 2014, products bearing the SHIELDME marks began appearing in Walmart stores. (Second Am. Compl. ¶ 27). Those products allegedly appeared in close proximity to SHIELD Brand products that Hilsinger had been selling to Walmart for years. ( Id. ). Products bearing the SHIELDME marks are also available for purchase online, including at Amazon.com. (Scott Decl. Ex. 4, Docket No. 12-1). The website http://www.shieldmeproducts.com contains information about SHIELDME products, although it is not possible to buy products directly on the site. (Scott Decl. Ex. 5, Docket No. 12-1). The website allows users to tweet product information, "like" products on Facebook, e-mail product information to friends, comment directly on the website, and post comments about the product on the product Facebook page. (Scott Decl. ¶ 2, Ex. 1, Docket No. 26-1). In addition, a "contact" page provides website visitors with contact information for "ShieldMe Products" and allows visitors to send a message. (Scott Decl. Ex. 1, Docket No. 26-1). SHIELDME products are available for purchase (and in-store pick-up after on-line purchase) at Walmart, Sears, and Kmart stores throughout Massachusetts. (Scott Decl. ¶ 12, Ex. 7, Docket No. 12-1; see also Suh Decl., Docket No. 33-2). These products are also available for purchase at a Micro Center Computer and Electronics store in Cambridge, Massachusetts. (Stack Decl. ¶¶ 2-4, Exs. 1-2, Docket No. 47).
On July 30, 2014, Hilsinger sent FBW a cease-and-desist letter demanding that it stop using the SHIELDME marks. (Scott Decl. Ex. 2). On August 14, 2014, attorney Maria Speth responded to the cease-and-desist letter. (Scott Decl. Ex. 3). In her response, she stated the following:
Our firm represents FBW Investments, LLC, the owner of the federally registered trademark SHIELDME in connection with "kits containing sanitizing spray to eliminate the growth of bacteria and germs on surfaces, disinfecting spray to provide antimicrobial protection on surfaces, and cloth wipes impregnated with all purpose disinfecting preparations, all used for bacteria and germ prevention" and in connection with "canned pressurized air for dusting and cleaning purposes; cleaning agents and preparations; cleaning agents for cleaning surfaces; cleaning preparations for electronic devices and screens; hand cleaning preparations." (Registration numbers 4027820 and 4497007). Our client has used the SHIELDME trademark in connection with the products described above for over four years.
( Id. ).
In this proceeding, Speth filed an affidavit in which she stated that in responding to the cease and desist letter, she was acting "on behalf of and at the direction of Kleen Concepts." (Speth Decl. ¶ 7). She stated that "[i]n hindsight, I should have clarified in my August 14, 2014 letter that although FBW was the registrant, Kleen Concepts was the entity that manufactured and sold the SHIELDME product." ( Id. ¶ 8).
Ronnie Weinstein, a managing member of FBW, also submitted an affidavit, in which he stated that "FBW has no business operation of any kind. It does not manufacture or sell any product, and it does not provide any service. It only holds real estate assets located in Texas." (Weinstein Decl. ¶ 2, Docket No. 9-1). He further stated that "FBW does not use the SHIELDME trademark or make, sell or distribute any product identified by the mark SHIELDME. To FBW's knowledge, Kleen Concepts is the only entity that has used the SHIELDME mark and sold products under that name." ( Id. ¶ 7).
Grant Russell, the manager of Kleen Concepts, submitted an affidavit stating that "FBW does not use the SHIELDME trademark or make, sell or distribute any product identified by the mark SHIELDME." (Russell Decl. ¶ 11, Docket No. 9-2). He further stated that "FBW is not involved in Kleen Concepts' operations. FBW has no control over the sale of any SHIELDME products, including the states in which Kleen Concepts markets, distributes, or sells products. FBW does not receive any form of compensation arising from Kleen Concept's [sic] use of the SHIELDME trademark." ( Id. ¶ 12).
At the time that Hilsinger filed this action against FBW, FBW was the record owner of the two SHIELDME mark trademark registrations. ( See Weinstein Decl. ¶ 5, Docket No. 9-1). Although the marks were assigned to FBW, the assignment was done "with the understanding that Kleen Concepts would continue to use the trademark." ( Id. ). On February 12, 2015, after this action had commenced, FBW assigned both SHIELDME trademarks to Kleen Concepts. (Speth Decl. ¶ 9).
According to Russell, Kleen Concepts "is based entirely in Arizona and has no operations, offices, assets, or employees in Massachusetts." (Russell Decl. ¶ 4, Docket No. 46). It "has not shipped the SHIELDME products into Massachusetts and does not ship [them] into Massachusetts." ( Id. ¶ 6). Although Kleen Concepts sells to Walmart, Walmart "picks up SHIELDME products from Kleen Concepts' facility in Scottsdale, Arizona. From Scottsdale, Walmart trucks the products to its distribution centers, none of which are in Massachusetts." ( Id. ¶ 7). Kleen Concepts admits that Walmart "ships a small fraction of the SHIELDME products from its distribution center to its retail stores in Massachusetts." ( Id. ¶ 8). Kleen Concepts also sells to Sears Roebuck & Co., and ships SHIELDME products to Sears at distribution centers in Pennsylvania, Illinois, Texas, and California. ( Id. ¶¶ 9, 10). It does not ship those products directly to Sears or Kmart stores in Massachusetts. ( Id. ¶ 11). Likewise, Kleen Concepts admits that it sells its products on Amazon. ( Id. ¶ 12). It does not ship directly to customers who buy on Amazon. ( Id. ¶ 14). Rather, it ships SHIELDME products to Amazon's distribution centers in Kentucky, Pennsylvania, Arizona, and Indiana. ( Id. ¶ 13). In 2014, "Kleen Concepts sold a total of $11, 090 worth of SHIELDME lens cleaning products to third-party retailers who brought the products into Massachusetts." ( Id. ¶ 18). It sold a total of "$14, 900 in all SHIELDME products... to third-party retailers who brought the products into Massachusetts." ( Id. ¶ 19). According to Russell, "Kleen Concepts does not spend and has never spent any money on marketing targeted at Massachusetts residents." ( Id. ¶ 20).
B. Procedural Background
On December 23, 2014, Hilsinger filed the complaint in this case against FBW.
Hilsinger filed an amended complaint on January 23, 2015. On February 6, 2015, FBW filed a motion to dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2) and improper venue under Fed.R.Civ.P. 12(b)(3), or, in the alternative, to transfer the case to the Southern District of Texas under 28 U.S.C. § 1404(a). In its motion to dismiss, FBW contends that it has never made or sold any product that uses the SHIELDME mark.
On March 6, 2015, Hilsinger filed a motion to amend the complaint to "add additional grounds to cancel [FBW's] federal trademark registrations, to add a count for declaratory judgment as to forfeiture of trademark rights, and to add Kleen Concepts... as a party defendant." On April 2, 2015, the Court granted the motion to amend. The second amended complaint alleges (1) federal trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1114; (2) federal unfair competition and false designation of origin in violation of the Lanham Act, 15 U.S.C. § 1125(a); and (3) unfair competition in violation of common-law trademark rights. Hilsinger seeks (1) cancellation of the two SHIELDME trademark registrations (Reg. No. 4, 027, 820 and Reg. No. 4, 497, 007); (2) a declaratory judgment that FBW has failed to control Kleen Concepts' use of the accused mark and has thus lost any rights it may have had in them and that Kleen Concepts has no rights in the accused marks; (3) damages; (4) injunctive relief; and (5) attorneys' fees and costs.
On April 14, 2015, Kleen Concepts filed a motion to dismiss for lack of personal jurisdiction. On May 12, 2015, the Court held an evidentiary hearing on the two motions to dismiss.
II. Burden of Proof
The plaintiff bears the burden of showing that the court has personal jurisdiction over the defendant. Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002). A district court faced with a motion to dismiss under Rule 12(b)(2) may choose among several methods for determining whether the plaintiff has met its burden: the " prima facie " standard, the "preponderance-of-the-evidence" standard, or the "likelihood" standard. Daynard, 290 F.3d at 50-51, 51 n.5; Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145-47 (1st Cir. 1995); Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675-78 (1st Cir. 1992).
When a district court considers a motion to dismiss for lack of personal jurisdiction without first holding an evidentiary hearing, the prima facie standard governs its determination. United States v. Swiss Am. Bank, 274 F.3d 610, 618 (1st Cir. 2001). In conducting a prima facie analysis, the court is required to take specific facts affirmatively alleged by the plaintiff as true (whether or not disputed), construing them in the light most favorable to the plaintiff; the court, however, should not credit "conclusory allegations or draw farfetched inferences." Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994). The court can "add to the mix facts put forward by the defendants, to the extent that they are uncontradicted." Daynard, 290 F.3d at 51. Although the court will construe the facts in the light most favorable to the plaintiff in a motion to dismiss, the plaintiff still has the burden of demonstrating each jurisdictional requirement. See Swiss American, 274 F.3d at 618. Pursuant to Fed.R.Civ.P. 12, a defense of lack of jurisdiction "whether made in a pleading or by motion, ... must be heard and decided before trial unless the court orders deferral until trial." Fed.R.Civ.P. 12(i). "If a district court applies the prima facie standard and allows a motion to dismiss, it complies with the directive that the motion shall be heard and determined before trial'" Boit, 967 F.2d at 676. However, if it "applies the prima facie standard and denies the motion to dismiss, it is implicitly, if not explicitly, ordering that hearing and determination [of the motion to dismiss] be deferred until the trial.'" Id. (alterations in original). Although the prima facie standard is a "useful means of screening out cases in which personal jurisdiction is obviously lacking, and those in which the jurisdictional challenge is patently bogus[, ]... the approach offers little assistance in closer, harder-to-call cases, particularly those that feature conflicting versions of the facts." Foster-Miller, 46 F.3d at 145.
In cases that feature conflicting versions of the facts, courts may therefore choose to employ the "preponderance-of-the-evidence" standard or the "likelihood" standard to consider the question of personal jurisdiction. This is especially true when a court determines that "in the circumstances of a particular case it is unfair to force an out-of-state defendant to incur the expense and burden of a trial on the merits in the local forum without first requiring more of the plaintiff than a prima facie showing of facts essential to in personam jurisdiction." Boit, 967 F.2d at 676. When applying the "preponderance-of-the-evidence" standard, courts may hear and determine the motion to dismiss before trial. Id. The "preponderance-of-the-evidence" standard "necessitates a full-blown evidentiary hearing at which the court will adjudicate the jurisdictional issue definitively before the case reaches trial." Foster-Miller, 46 F.3d at 146. The court may consider "all relevant evidence proffered by the parties and mak[e] all factual findings essential to disposition of the motion." Boit, 967 F.2d at 676. "After the parties have proffered their evidence, the court may weigh evidence and make findings about whether plaintiff has made a showing as to each jurisdictional fact. In doing so, it may apply a preponderance-of-the-evidence standard." Id. Although the preponderance of the evidence standard allows the court to resolve the issue of personal jurisdiction definitively, "troubling issues may later be presented, in the same or another forum, as to whether doctrines of either issue preclusion' or law of the case' preclude a party from asserting at trial... contentions of fact contrary to what the district court found at the pretrial hearing." Id. at 677. Such issues may be especially concerning "when factual issues are common to both the jurisdictional question and the claim on the merits." Id.
Therefore, if the court determines that (1) resolving a motion "on the prima facie standard (thereby deferring the final jurisdictional determination until trial) imposes on a defendant a significant expense and burden of trial on the merits in the foreign forum that is unfair in the circumstances, " and (2) resolving a motion on the "preponderance-of-the-evidence" standard presents potential issues regarding issue preclusion and law of the case, it may employ a third option: the intermediary "likelihood" standard. Id. Under that standard, "even though allowing an evidentiary hearing and weighing evidence to make findings, the court may merely find whether the plaintiff has shown a likelihood of the existence of each fact necessary to support personal jurisdiction." Id. The "likelihood" standard "constitutes an assurance that the circumstances justify imposing on a foreign defendant the burdens of trial in a strange forum, but leaves to the time of trial a binding resolution of the factual disputes common to both the jurisdictional issue and the merits of the claim." Foster-Miller, 46 F.3d at 146. In evaluating a motion to dismiss on a "likelihood" standard, the court may "place reasonable constraints on the scope and length of the evidentiary hearing." Boit, 967 F.2d at 678. Although the court may "tak[e] into account evidence offered by the defendant[s] as well as that offered by the plaintiff, and consider the scope of the opportunity of each party to proffer evidence, " it "may dismiss after proceeding only far enough to find that plaintiffs have not shown a likelihood of the existence of each fact essential to jurisdiction." Id. Judges employing the "likelihood" standard "should proceed with great care." Foster-Miller, 46 F.3d at 148. Prior to using the "likelihood" standard, it is important "to ensure that parties are given satisfactory notice, reasonable access to discovery, and a meaningful opportunity to present evidence." Id. at 148-49.
Here, there is an apparent factual dispute as to whether FBW actually manufactures or sells products with the SHIELDME mark. Hilsinger has submitted a letter from attorney Maria Speth in which she purports to represent FBW. In that letter, she stated that her "client has used the SHIELDME trademark in connection with the products described above for over four years." (Scott Decl. Ex. 3, Docket No. 12-1). In response, FBW has submitted affidavits from Weinstein, Russell, and Speth in which they stated that Speth in fact represented Kleen Concepts, that FBW has never used the SHIELDME trademark, Kleen Concepts is the only entity that has used the SHIELDME mark, and that FBW has no control over Kleen Concepts. (Speth Decl; Weinstein Decl, Docket No. 9-1; Russell Decl., Docket No. 9-2). In light of that apparent dispute, the Court set the matter for an evidentiary hearing. Any factual issues as to whether FBW manufactures or sells products with the SHIELDME mark that may require resolution to determine the jurisdictional question may also overlap with the merits of this case. Accordingly, the Court will apply the "likelihood" standard to resolve defendants' motions to dismiss for lack of personal jurisdiction.
III. Findings of Fact
The Court finds that there is a likelihood that the following ...