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Hallmark Industries, Inc. v. Hallmark Licensing, LLC

United States District Court, D. New Jersey

February 15, 2018

HALLMARK INDUSTRIES, INC., Plaintiffs,
v.
HALLMARK LICENSING, LLC, Defendant.

          REPORT AND RECOMMENDATION

          Leda Dunn Wcttre United States Magistrate Judge.

         This matter comes before the Court on defendant's motion to dismiss for lack of personal jurisdiction and improper venue. ECF No. 7, Plaintiff opposes the motion. ECF No. 9. The Honorable Susan Davis Wigenton, U.S.D.J., referred this motion to the undersigned for a Report and Recommendation. Having considered the parties' written submissions and oral argument before the Court, and for good cause shown, the Court recommends that defendant's motion to dismiss for lack of personal jurisdiction and improper venue be GRANTED.

         I. BACKGROUND

         Plaintiff Hallmark Industries, Inc. is a New Jersey corporation engaged in the manufacture, marketing, sale, and wholesale distribution of jewelry. Complaint ("Compl."), ECF No. 1 ¶¶ 4, 10. Defendant Hallmark Licensing, LLC is a Kansas limited liability company with a principal place of business in Kansas City, Missouri. ECF No. 7-1 ¶ 2. It is a wholly owned subsidiary of Hallmark Cards, Inc., and owns and licenses various marks that include the HALLMARK mark and Crown logo Id. ¶ 10.

         This action is primarily an appeal from a final decision of the Trademark Trial and Appeal Board ("TTAB") that denied plaintiff registration of Application Nos. 77457422 and 77666333 to use the words HALLMARK and HALLMARK925 on jewelry products, on the basis that the applications were likely to be confused with two of defendant's registered marks, HALLMARK RINGS and HALLMARK DIAMONDS. See Compl. ¶¶ 2, 28-29; Hallmark Licensing, LLC v. Hallmark Industries, Inc., Opposition No. 91211392 (T.T.A.B. May 3, 2017). In addition to seeking reversal of the TTAB's decision, plaintiff seeks a declaratory judgment that it, not the defendant, is the owner of the HALLMARK RINGS and HALLMARK DIAMONDS marks. Plaintiff further asserts claims against defendant for trademark infringement, false designation of origin, counterfeiting, common law and statutory unfair competition, deceptive acts and practices, and tortious interference with economic advantage.

         The underlying dispute turns largely on whether plaintiff or defendant owns the HALLMARK DIAMONDS and HALLMARK RINGS marks. Plaintiff alleges that its predecessor in interest, Diastar, Inc., owned these marks and that it acquired the registrations from Diastar prior to the latter's filing for bankruptcy in 2008. Compl. ¶¶ 31, 34, 35. Plaintiff charges that defendant wrongfully sought to acquire the registrations for these marks from an entity known as Rosenthal & Rosenthal ("R&R"). Id. ¶¶ 31-38. Plaintiff contends that defendant "knew or should have known that R&R did not own [plaintiffs] Marks at the time it purported to purchase these marks from R&R" and that defendant "sought to 'purchase' [plaintiffs] Marks from R&R solely in order to manipulate the TTAB proceeding and give the false impression to the TTAB" that it owned the registered marks. Id. ¶¶ 38-39.

         In July 2013, plaintiff filed its applications for HALLMARK and HALLMARK925. Id. ¶¶ 27-29. Defendant opposed the applications, alleging likelihood of confusion with the HALLMARK DIAMONDS and HALLMARK RINGS marks it claims to have acquired from R&R. Id. ¶ 31. In May 2017, the TTAB granted summary judgment to defendant, finding plaintiffs applications were likely to cause confusion with defendant's marks. See Hallmark Licensing, LLC v. Hallmark Industries, Inc., Opposition No. 91211392, (T.T.A.B. May 3, 2017).

         Plaintiff subsequently filed this action in July 2017, and defendant filed the instant motion to dismiss in September 2017. ECF No. 7. This Court heard oral argument of the motion on January 11, 2018, and reserved decision.

         II. DISCUSSION

         Defendant moves to dismiss on the grounds that this Court lacks personal jurisdiction over it and based on improper venue. For the reasons set forth below, the undersigned recommends the District Court find that plaintiff has not met its burden to show personal jurisdiction exists over defendant and that venue is improper.

         A. Personal Jurisdiction

         1. Legal Standard

         When a defendant challenges a Court's exercise of personal jurisdiction, the plaintiff bears the burden to prove that jurisdiction is proper. Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330-31 (3d Cir. 2009). Where the district court does not hold an evidentiary hearing, plaintiff must establish only & prima facie case of personal jurisdiction. Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004). Under a prima facie standard, "the plaintiffs allegations are presumed true and all factual disputes are resolved in the plaintiffs favor." LaSala v. Marfin Popular Bank Pub. Co., 410 Fed.Appx. 474, 476 (3d Cir. 2011). A plaintiff meets this burden by "establishing with reasonable particularity sufficient contacts between the defendant and the forum state." Display Works, LLC v. Bartley, 182 F.Supp.3d 166, 172 (D.N.J. 2016) (quoting Mellon Bank PSFS, Nat'l Ass 'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)). Once the motion is made, however, and plaintiffs allegations are challenged by affidavits or other evidence, "plaintiff must respond with actual proofs, not mere allegations." Patterson by Patterson v. FBI, 893 F.2d 595, 604 (3d Cir. 1990) (citation omitted); see also Metcalfe, 566 F.3d at 330 ('"[O]nce a defendant has raised a jurisdictional defense, ' the plaintiff must 'prov[e] by affidavits or other competent evidence that jurisdiction is proper."') (quoting Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996)). Plaintiff must ultimately prove the existence of jurisdiction by a preponderance of the evidence, although such a showing is unnecessary at the preliminary stages of litigation. LaSala, 410 Fed.Appx. at 476; Mellon Bank (E) PSFS, Nat'l Ass 'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992); Display Works, LLC v. Bartley, 182 F.Supp.3d 166, 172 (D.N.J. 2016)

         This Court exercises jurisdiction to the extent permitted by New Jersey law. See Miller Yacht Sales, 384 F.3d at 96 (citing Fed.R.Civ.P. 4(e)). New Jersey's long-arm statute permits the exercise of jurisdiction over non-residents "to the uttermost limits permitted by the United States Constitution." Charles Gendler Co. v. Telecom Equity Corp.,102 N.J. 460, 469 (1986) (quoting Avdel Corp. v. Mecure,58 N.J. 264, 268 (1971)). Therefore, "we ask whether, under the Due Process Clause, the defendant has certain minimum contacts with [New Jersey] such that the maintenance of the suit does not offend traditional notions ...


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