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MorphoTrust USA, LLC v. IDentrix, LLC

United States District Court, D. Massachusetts

June 21, 2016

MORPHOTRUST USA, LLC, Plaintiff,
v.
IDENTRIX, LLC, INFOZEN, INC., and INFOZEN LLC, Defendants.

          MEMORANDUM AND ORDER

          DENISE J. CASPER, UNITED STATES DISTRICT JUDGE

         I. Introduction

         Plaintiff MorphoTrust USA, LLC (“MorphoTrust”) has brought this action against Defendants IDentrix, LLC (“IDentrix”), InfoZen, LLC and InfoZen, Inc. (collectively, “Defendants”), alleging federal trademark infringement under 15 U.S.C. § 1114(a) (Count I), false designation of origin under 15 U.S.C. § 1125(a) (Count II), injury to reputation and dilution under Mass. Gen. L. c. 110H, § 13 (Count IV), common law trademark infringement (Count V), and unfair trade practices under Mass. Gen. L. c. 93A, § 11 (Count VI).[1] D. 1 ¶¶ 49-87. MorphoTrust specifically alleges that, in 2013, Defendants began using an identity-based software, IDENTRIX, that competes directly with and infringes upon MorphoTrust’s thirty-year old trademark, IDENTIX. D. 1 ¶¶ 23-28.

         Defendants move to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). D. 8. Defendants also move to dismiss the action for improper venue pursuant to Fed.R.Civ.P. 12(b)(3) or, alternatively, to transfer the action to the United States District Court for the District of Maryland pursuant to 28 U.S.C. § 1404(a). Id. MorphoTrust opposes the motion to dismiss, D. 15, and, alternatively, seeks jurisdictional discovery to the extent necessary to support its contention that this Court has personal jurisdiction over Defendants. D. 15 at 21-22. For the reasons stated below, the Court DENIES Defendants’ motion and DENIES MorphoTrust’s request for jurisdictional discovery.

         II. Standard of Review

         On a motion to dismiss for lack of personal jurisdiction, the burden to establish personal jurisdiction belongs to the plaintiff. See Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass’n, 142 F.3d 26, 34 (1st Cir. 1998). If a defendant asserts that plaintiff has failed to make a prima facie showing to support jurisdiction, the Court must determine “whether the plaintiff has proffered evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction.” Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir. 1995) (internal quotation marks omitted) (quoting Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992)). The Court accepts “specific facts affirmatively alleged by the plaintiff as true (whether or not disputed) and construes them in the light most congenial to the plaintiff’s jurisdictional claim” and then adds “facts put forward by the defendants, to the extent that they are uncontradicted.” Mass. Sch. of Law, 142 F.3d at 34. The Court, however, will not “credit conclusory allegations or draw farfetched inferences.” Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994). In conducting this analysis, the Court considers the alleged facts and the parties’ supplemental filings, including affidavits. See Sawtelle v. Farrell, 70 F.3d 1381, 1385 (1st Cir. 1995); Ticketmaster, 26 F.3d at 203.

         On a motion to dismiss for improper venue, the Court is “not required to determine the best venue, merely a proper venue.” Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 12 (1st Cir. 2009). The plaintiff bears the burden to establish that the venue he has selected is proper. See, e.g., Sindi v. El-Moslimany, No. 13-cv-10798-IT, 2014 WL 6893537, at *11 (D. Mass. Dec. 5, 2014) (quoting TransAmerica Corp. v. Trans-Am Leasing Corp., 670 F.Supp. 1089, 1090 (D. Mass. 1987)); Cordis Corp. v. Cardiac Pacemakers, 599 F.2d 1085, 1086 (1st Cir. 1979). In assessing the plaintiff’s showing, the Court may accept all well-pleaded allegations as true, unless they are contradicted by the defendant’s affidavits. See Universal Trading & Inv. Co. v. Bureau for Representing Ukrainian Interests in Int’l & Foreign Courts, 898 F.Supp.2d 301, 317 (D. Mass. 2012) (quoting Turnley v. Banc of Am. Inv. Services, Inc., 576 F.Supp.2d 204, 211 (D. Mass. 2008)).

         III. Factual Background

         The following relevant facts are alleged in MorphoTrust’s complaint or the parties’ supplementary filings. MorphoTrust is a Delaware limited liability company with its principal place of business in Massachusetts. D. 1 ¶ 3. MorphoTrust is headquartered in Billerica, Massachusetts. Id. MorphoTrust offers personal identity authentication products and services. Id. ¶ 11.

         InfoZen, Inc. was a former Maryland limited liability company with a principle place of business in Bethesda, Maryland. D. 1 ¶ 4; D. 10 ¶ 4. InfoZen, Inc. was in the business of information technology services. D. 10 ¶ 5. On October 5, 2015, InfoZen, Inc. filed an Article of Conversion in Maryland converting InfoZen, Inc. into InfoZen, LLC. D. 1 ¶ 5; D. 10 ¶ 4. Prior to the conversion, InfoZen, Inc.’s clients consisted solely of federal government agencies. D. 10 ¶ 6. InfoZen, Inc. had no Massachusetts customers. Id. ¶ 6. InfoZen, Inc. had no employees in Massachusetts. Id. ¶ 7. No InfoZen, Inc. employees traveled to Massachusetts in connection with any services or goods offered by InfoZen, Inc. Id. ¶ 8. InfoZen, Inc. did not own property in Massachusetts, did not have an office in Massachusetts and did not have a bank account in Massachusetts. Id. ¶ 9. InfoZen, Inc. was not registered to do business in Massachusetts. Id. ¶ 10. The InfoZen, Inc. website made no mention of Massachusetts. Id. ¶ 12. The InfoZen, Inc. website did not allow customers to transact business. Id. ¶ 13. The InfoZen, Inc. website did not specifically advertise for or solicit Massachusetts business. Id. ¶ 14.

         InfoZen, LLC is a Maryland corporation with a principal place of business in Bethesda, Maryland. D. 10 ¶ 16. InfoZen, LLC is in the business of information technology services. Id. ¶ 17. InfoZen, LLC’s clients consist solely of federal government agencies. Id. ¶ 18. InfoZen, LLC contracts with its federal agency clients in Maryland, Washington D.C. and Virginia. Id. ¶ 19. The InfoZen, LLC website is available at <www.infozen.com>. Id. ¶ 21. InfoZen, LLC’s website describes its business and provides a Maryland phone number, a Maryland fax number, a Maryland mailing address and multiple e-mail addresses. Id. ¶ 22. The website does not mention Massachusetts or allow customers to transact business. Id. ¶¶ 23-24. InfoZen, LLC has no employees in Massachusetts and no employees have traveled to Massachusetts in connection with services or goods offered by InfoZen, LLC. Id. ¶¶ 25-26. InfoZen, LLC does not own any property in Massachusetts, have a bank account in Massachusetts, possess registration to do business in Massachusetts or have any Massachusetts customers. Id. ¶¶ 27-30.

         IDentrix is a Delaware limited liability company with a principal place of business in Bethesda, Maryland. D. 10 ¶ 32. On or about May 1, 2015, InfoZen, Inc. transferred certain assets, including the IDENTRIX mark, to IDentrix. Id. ¶ 34. IDentrix is in the business of providing a subscription service to its cloud-based product (IDentrix) which monitors risk alerts (e.g., criminal records, licenses and bankruptcies) of employees on behalf of private companies. Id. ¶ 36. On its website, IDentrix describes its services and provides a Maryland phone number, a Maryland mailing address, and an e-mail address. Id. ¶ 37. The website does not mention Massachusetts. Id. ¶ 38. IDentrix has no employees in Massachusetts. Id. ¶ 40. No IDentrix employee has traveled to Massachusetts in connection with any services or goods offered by IDentrix. Id. ¶ 41. IDentrix does not own any property in Massachusetts, have a bank account in Massachusetts or have any customers in Massachusetts. Id. ¶¶ 42-46.

         For over thirty years, MorphoTrust has been using the term IDENTIX, which it adopted as a trade name, trademark and house mark in 1982. D. 1 ¶ 12. MorphoTrust owns two federal trademark registrations for the IDENTIX trademark: 1) federal trademark Registration No. 2, 425, 102 for the word mark IDENTIX in connection with “computer hardware and software used for biometric identification, verification and security” in International Class 9, which registered on January 30, 2001 and 2) federal trademark Registration No. 2, 513, 388 for a stylized version of the IDENTIX mark in connection with “computer hardware and computer software for use in checking or identifying persons in a biometric verification, identification and security system and electronic finger print readers” in International Class 9, which registered on November 27, 2001. Id. ¶ 21.

         MorphoTrust uses the trademark IDENTIX in interstate commerce in connection with its computer software and related services. Id. ¶ 13. MorphoTrust’s products use identity- based characteristics such as biometrics, authentication of documents and verification of other identity-based data to establish and verify personal identification. Id. With MorphoTrust’s IDENTIX identity-based products, MorphoTrust’s clients can confirm when an individual is making up an identity, attempting to obtain multiple identities, stealing someone else’s identity or wanted for a crime. Id. ¶ 15. Such identity-based verification is needed for, inter alia, employment, program enrollment, establishing online accounts, accessing applications or benefits and investigating potential fraud. Id. ¶ 18. For three decades, MorphoTrust has advertised and marketed its services under the IDENTIX name and mark to the public, targeting commercial and government entities. Id. ¶¶ 14, 22. As a result, the IDENTIX trademark is well-known to the public as identifying MorphoTrust as the source of all such IDENTIX products and services. Id. ¶ 22.

         On October 21, 2013, InfoZen, Inc. filed a federal trademark application on an intent-to-use basis (Ser. No. 86/096, 536) to register the word mark IDENTRIX for “computer software for providing rapid visibility of previously undetected identity-based security and fraud risks, ” and for “software development in the field of providing rapid visibility of previously undetected identity based security and fraud risk.” Id. ¶ 26. The application matured to registration on June 30, 2015, was issued Registration No. 4, 765, 207 and alleges October 10, 2013 as the date upon which InfoZen, Inc. first used IDENTRIX in interstate commerce. Id. InfoZen, Inc. began use of IDENTRIX in October 2013 with identity-based software and development services for identity-based software. Id. ¶ 27. In or around May 1, 2015, InfoZen, Inc. assigned the IDENTRIX mark to IDentrix and recorded the assignment with the United States Patent and Trademark Office on August 11, 2015. D. 10 ¶ 15. On May 4, 2015, InfoZen, Inc. and InfoZen, LLC[2] announced the public launch of IDENTRIX, which was described as a “patented software that continuously evaluates personnel data and proactively alerts organizations to potential risks such as insider threats.” D. 1 ¶ 32. Those products and services compete directly with the identity-based software and related products and services sold by MorphoTrust under the IDENTIX mark. Id. ¶ 27.

         Defendants operate two websites through which Defendants use and display the IDENTRIX mark in connection with identity-based software and related services. Id. ¶ 33. Defendants’ websites, <www.identrix.com> and <www.infozen.com>, may be viewed from anywhere in the United States and allow users, including residents in Massachusetts, to send communications to Defendants. Id. ¶ 34. Both websites include a “Contact Us” link encouraging users to contact Defendants via email, telephone, Twitter, and/or Linked In to inquire about the services rendered by Defendants, including the identity-based software and related services sold under the IDENTRIX mark. Id. ¶ 34. The websites invite users to request “a free live 30 minute demo” of the IDENTRIX software. Id. ¶ 35. To sign up for the demonstration, Defendants ask users to submit their name, email address and phone number. Id.

         Prior to filing the trademark application for IDENTRIX, InfoZen, Inc. and InfoZen, LLC had actual knowledge of MorphoTrust and its trademark. Id. ¶ 28. InfoZen, Inc. and InfoZen, LLC discussed with MorphoTrust the possibility of partnering on at least one project. Id. During that time, InfoZen, Inc. and InfoZen, LLC engaged in negotiations with MorphoTrust regarding a non-disclosure disagreement; the agreement provided that the parties litigate all disputes in Massachusetts, agree to exclusive jurisdiction of such courts and waive all defenses of lack of personal jurisdiction. Id. In addition, InfoZen, Inc. and InfoZen, LLC sent a PowerPoint presentation to MorphoTrust employees, marketing its products and services. Id.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After learning of the IDENTRIX trademark application and InfoZen, Inc. and InfoZen, LLC&rsquo;s use of IDENTRIX, MorphoTrust, through its counsel, sent InfoZen, Inc. and InfoZen, LLC a letter on June 4, 2015 alleging trademark infringement and demanding that InfoZen, Inc. and InfoZen, LLC cease use of IDENTRIX. D. 1 &para; 37. On July 15, 2015, after receipt of the letter, InfoZen, Inc. and InfoZen, LLC formed the separate company, IDentrix. Id. It was after this letter was sent that InfoZen, Inc. and InfoZen, LLC assigned the IDENTRIX trademark registration from InfoZen, LLC to IDentrix. Id. MorphoTrust alleges that Defendants’ registration, use and marketing of IDENTRIX, given the similarities with MorphoTrust’s IDENTIX, are likely to cause customer confusion as ...


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