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Telebrands Corp. v. Martfive, LLC

United States District Court, Third Circuit

August 30, 2013

TELEBRANDS CORP., Plaintiff,
v.
MARTFIVE, LLC and CHARLES M. HENGEL, Defendants.

OPINION

MICHAEL A. HAMMER, Magistrate Judge.

I. INTRODUCTION

This matter comes before the Court on the motion of defendants martFIVE, LLC ("martFIVE") and Charles M. Hengel ("Hengel") to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2), to transfer the proceedings to the United States District Court for the District of Minnesota pursuant to 28 U.S.C. § 1404(a), or stay the proceedings pending the outcome of a case filed in the United States District Court for the District of Minnesota.

For the reasons herein, Defendants' motion to transfer is granted. Because transferring this action renders Defendants' other requests moot, the Court need not reach Defendants' motions to dismiss or to stay the litigation.

II. Background

A. Factual Background

Plaintiff Telebrands Corp. ("Telebrands") is a direct marketing company that markets and sells a range of consumer products through direct response advertising, catalogue sales, mail orders, internet sales, and national retail stores. Compl., ECF No. 1 ¶ 15. Telebrands is currently test-marketing two products through direct response advertising that are relevant to this dispute: (1) a plush toy marketed under the trademark "POCKET PALS"; and (2) a collapsible cane marketed under the trademark "TRUSTY CANE." Id . ¶¶ 17-18.

Defendant martFIVE is a Minnesota-based limited liability company. Id . ¶ 4. Defendant Hengel, a Minnesota resident, is the CEO and 100% owner of martFIVE. Id . ¶ 5; Affidavit of Charles M. Hengel ("Hengel Aff."), ECF No. 13-7 ¶¶ 1, 4. This litigation relates to two products developed, manufactured, and sold by Defendants: (1) a plush toy sold under the trademark"Stuffies®"; and (2) a collapsible cane sold under the trademark "HURRYCANE®". Compl., ECF No. 1 ¶¶ 22, 23. Stuffies®'s design is patented at U.S. Design Patent No. D681, 744 and two trademarks relating to that product are registered at U.S. Trademark Registration Nos. 4, 286, 271 and 4, 286, 272. Id . ¶¶ 19-25. Three trademarks relating to the HURRYCANE® are registered at U.S. Trademark Registration Nos. 4, 243, 464, 4, 286, 043, and 4, 191, 792. Id . ¶¶ 26-28. These products may also be subject to copyright and/or trade dress protections. Id . ¶¶ 29-31.

In March or April of this year, Defendants became aware of Plaintiff's production of TRUSTY CANE and POCKET PALS. See Declaration of Charles M. Hengel in Opposition to Defendant Telebrands Corp.'s Motion to Dismiss or Transfer ("Hengel Minn. Decl."), [1] attached as Ex. 9 to the Declaration of Robert T. Maldonado in Opposition to Defendants' Motion to Dismiss, Stay or Transfer ("Maldonado Decl."), ECF No. 21-1 ¶ 3.

On May 16, 2013, Hengel sent an e-mail, through LinkedIn, to Lynn Hamlin, Telebrand's Vice President of Infomercials. See May 16, 2013 e-mail, attached as Ex. 1 to the Declaration of Lynn Hamlin in Support of Plaintiff Telebrands Corp.'s Memorandum of Law in Opposition to Defendants' Motion to Dismiss, Transfer, or Stay ("Hamlin Decl."), ECF No. 21-3. In this correspondence, Hengel claims Telebrands is "in violation of a number IP elements of both HurryCane and Stuffies." Id.

Hengel also directed martFIVE's legal counsel, Russell M. Spence, Jr., Esq., to draft and send a cease and desist letter to Telebrands. Hengel Minn. Decl., attached as Ex. 9 to Maldonado Decl., ECF No. 21-1 ¶ 5. On May 20, 2013, Spence sent a cease and desist letter to the attention of Khubani and Plaintiff's legal department, claiming TRUSTY CANE and POCKET PALS infringed martFIVE's protected intellectual property and demanding Plaintiff cease and desist from its production and sale of these goods. See Letter from Spence to Telebrands, attached as Ex. G to Compl., ECF No. 1-7 at 2-3. The letter continued: "Unless we receive your written reply and confirmation that you will abide by these reasonable requests by May 29, 2013, we will presume that you do not intend to voluntarily take the necessary actions outlined above. We will then have no alternative but to commence immediate legal action against your company[.]" Id.

On May 24, 2013, Hengel and Khubani were participants to a telephone call in which these allegations were discussed. See Hengel Aff., ECF No. 13-7 ¶ 7.

On May 29, 2013, Plaintiff, through its counsel, Robert T. Maldonado, Esq., sent an e-mail to Defendants' counsel, stating Plaintiff required "additional information" before it could "respond substantively" to Defendants' infringement claims. See Letter from Maldonado to Spence, attached as Ex. 2 to Maldonado Decl., ECF No. 21-1. Specifically, Plaintiff requested: (1) that the Defendants identify which of its products infringed upon Defendants' patent or trademarks; and (2) additional details about the copyrights and trade dress referenced in the May 20, 2013 letter. Id.

B. Procedural History

On May, 29, 2013, the same day that Plaintiff's counsel sent its e-mail response, Plaintiff filed this action. See Compl., ECF No. 1. The Complaint names both martFIVE and Hengel as defendants and seeks declaratory judgments of invalidity or non-infringement relating to martFIVE's patent, trademarks, copyrights, and trade dress. Id.

On June 4, 2013, Defendant martFIVE filed a separate action against Plaintiff in the U.S. District Court for the District of Minnesota (the "Minnesota litigation"). See Affidavit of Russell M. Spence, Jr., Esq. ("Spence Aff."), ECF No. 13-2 ¶ 3. On June 21, 2013, martFIVE moved in the Minnesota litigation for a temporary restraining order, expedited discovery, and a preliminary injunction. Id . Oral argument on this motion was heard on July 10, 2013 before the Hon. Patrick J. Schiltz. See Transcript of Oral Argument, attached as Ex. 8 to Maldonado Decl., ECF No. 21-1. On July 18, 2013, Judge Schiltz denied martFIVE's motion for a preliminary injunction. See Order, attached as Ex. 1 to Maldonado Decl., ECF No. 21-1.

Defendants filed a motion to dismiss, transfer, or stay these proceedings on June 26, 2013 and submitted a brief in support of the motion. See Specially-Appearing Defendants' Brief in Support of Motion to Dismiss, Transfer or Stay ("Defs. Br."), ECF No. 13-1. Plaintiff filed a brief in opposition to the motion on July 23, 2013. See Plaintiff Telebrands Corp.'s Memorandum of Law in Opposition to Defendants' Motion to Dismiss, Transfer or Stay ("Pl. Opp'n Br."), ECF No. 22. On July 29, 2013, Defendants filed their reply. See Specially-Appearing Defendants' Reply Brief in Support of Motion to Dismiss, Transfer, or Stay ("Def. Reply Br."), ECF No. 26.

The Honorable Jose L. Linares, United States District Judge, referred the motions to the Undersigned for a Report and Recommendation.

III. Discussion

Section 1404(a) of Title 28 of the United States Code permits a district court "[f]or the convenience of parties and witnesses, [and] in the interest of justice" to transfer an action to another district "where it might have been brought." Abrams v. Gen. Nutrition Cos., Inc. , 2006 WL 2739642, at *8 (D.N.J. Sept. 26, 2006) (citing 28 U.S.C. § 1404(a)).[2] "An action might have been brought in another district if: (1) venue is proper in the [other] district, and (2) the [other] district can exercise [personal] jurisdiction over all the parties." Id . (citing Shutte v. Armco Steel Corp. , 431 F.2d 22, 24 (3d Cir. 1970)). Thus, "[t]he first step in a court's analysis of a transfer motion is to determine whether [personal jurisdiction and] venue would be proper in the transferee district." Marino v. Kent Line Int'l, 2002 WL ...


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