Bel Canto Design, Ltd. v. MSS HiFi, Inc. et al
ORDER granting 3 Motion for TRO (Written Opinion). Signed by Senior Judge David S. Doty on 8/25/2011. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 11-2126(DSD/FLN)
Bel Canto Design, Ltd., a
MSS HiFi, a New York corporation,
and John Boey a/k/a Johnny Boey,
Benjamin J. Court, Esq., John Harper III, Esq. and
Messerli & Kramer, P.A., 1400 Fifth Street Towers, 100
South Fifth Street, Minneapolis, MN 55402 and Mark A.
Larsen, Esq. and Larsen, Christensen & Rico, PLLC, 50
West Broadway, Suite 400, Salt Lake City, UT 84101,
counsel for plaintiff.
Troy J. Hutchinson, Esq., Benjamin E. Gurstelle, Esq. and
Briggs & Morgan, PA, 80 South Eighth Street, Suite 2200,
Minneapolis, MN 55402, counsel for defendants.
This matter came before the court on August 12, 2011, upon the
motion for a temporary restraining order (TRO) by plaintiff Bel
Canto Design, Ltd. (Bel Canto). Bel Canto and defendants MSS HiFi,
Inc. (MSS HiFi) and John Boey all appeared through counsel.
on a review of the file, record and proceedings herein, and for the
following reasons, the court grants the TRO.
Bel Canto is a Minnesota corporation that manufactures highend audio equipment.
Bel Canto distributes its products through a
network of authorized dealers.
MSS HiFi is a New York corporation
that sells audio equipment over the internet and from two stores in
MSS HiFi purchased Bel Canto products for two years as
an authorized dealer.
Boey Decl. ¶ 6, ECF No. 22.
time, MSS HiFi purchased and sold over $50,000 in Bel Canto
In November 2009, Bel Canto ended its authorized-
dealer agreement with MSS HiFi.
Id. ¶ 3.
Thereafter, MSS HiFi
continued to sell Bel Canto products.
In March 2011, Bel Canto learned that MSS HiFi had sold a Bel
Canto product under the serial number C5i-076.
Supplemental Decl. ¶¶ 4–5.
The serial number was counterfeit. Id.
¶¶ 16–19 (external serial number C5i-0761 attached to product
identified by internal serial numbers as C5i-106).
occurred six weeks earlier.
See id. Ex. 1.
Bel Canto began to
originally purchased C5i-106 from Bel Canto suddenly began placing
orders ten times as large as had been its practice.
Id. ¶ 20.
Canto also discovered that MSS HiFi uses its website to solicit
“high-end audio dealers” to purchase products for MSS HiFi:
Need to place a $50k or $100k order with a
manufacturer in order to get the proper
JB Audio can be your secret
investor. We are very discreet [sic], and we
already have arrangements with a number of
The real C5i-076 is in Finland, where it was reviewed in the
current issue of a Finnish HiFi magazine.
Supplemental Decl. Ex. 20.
dealers to keep the big brothers guessing. We
will do everything in our power to protect
McCormick Decl. Ex. 4.
Bel Canto terminated its relationship with
the authorized dealer that originally purchased C5i-106.
Based on images of serial numbers posted on the MSS HiFi
website, Bel Canto determined that MSS HiFi was selling several
products with counterfeit serial numbers.
For example, MSS HiFi
advertised a product with serial number LNS-149.
Id. Ex. 23.
serial number was false: the real LNS-149 remains in inventory at
an authorized Bel Canto dealer in England.
Decl. ¶ 24; id. Exs. 14–18.
At some point thereafter, and until late in the day on August
11, 2011, the MSS HiFi website proclaimed:
MSS HiFi is the exclusive online headquarter
for all Bel Canto Design products.
Announcing a special ceremony at our NYC store
on August 3rd, 2011 at 5pm. The entire lineup
of Bel Canto products will be on display and
sold at special discounts. Industry first: we
will show you the retail price sheet and
dealer cost sheet to help you make informed
buying decision [sic] just like the most
transparent new car dealers. Special guest PJ
[sic] Zornosa with MSS bikini models will be
at our store to kick off our first annual
Samosa Eating Contest to win a free Bel Canto
USB LightLink ($349 MSRP)!
Warning: you cannot win if you eat more than 7
RSVP required — email or call Amanda to
reserve. Free drinks and samosas. Audiophile
delights Bel Canto reference system to be
personal [sic] set up and demonstrated by the
Audio Robin Hood himself.
Do not miss out on this opportunity to win a
free Bel Canto USB LightLink at a whopping
$349 retail price
$210 regular dealer’s cost
$178.50 with quantity discount
$157.50 demo cost
$8 is the actual cost according to Bel Canto
requisition, that’s $7 for the unit plus $1
This is why you cannot win if you eat more
than 7 samosas because these gourmet fresh
made samosas cost us $1 each.
Zornosa Decl. Exs. 1–2.
MSS HiFi is not an authorized dealer of Bel Canto products.
It is not the exclusive online dealer of Bel Canto products.
Bel Canto sales manager P.J Zornosa was not invited to the
On July 22, 2011, defendants also posted statements falsely
attributed to Bel Canto’s attorneys, Mark A. Larsen and Lisa C.
Larson [sic] and Ricko [sic] posted on Friday,
July 22, 2011 10:38:15 AM GMT+5
We confirm that PJ Zormosa [sic] will be there
to officially endorse MSS HiFi as the Online
Headquarter [sic] for all BCD products. We
feel that John Boey, as the President of the
Leaders of the Free World, is best suited to
present our products to a boundary-less
worldwide audience. We certify that BCD
products converted to foreign AC voltage by
the master technician at MSS HiFi perform 100%
up to specs, and is [sic] no different than
any 220-240V products that we ship overseas.
Mark A. Larson [sic] and Lisa C. Ricko [sic]
Attorneys for BCD.
Zornosa Decl. Ex. 2.
Also on July 22, 2011, Boey sent an email to
Bel Canto that stated:
That’s it? Only false claims of infringements
to eBay? You should also consider suing me in
court. I’ve been dying to go to court as the
President of the Leaders of The Free World.
No big deal.
We’ll just have to put more
effort into promoting Bel Canto products on
our own website, our NYC store, and other
audio classified sites.
Thanks for your
endorsement that you posted for us on
www.msshifi.com. It is much appreciated.
Rico Decl. Ex. 2.
On July 28, 2011, Bel Canto began this action against MSS
HiFi, claiming counterfeiting, trademark infringement and false
designation of origin and affiliation in violation of sections 32
and 43 of the Lanham Act, 15 U.S.C §§ 1114 and 1125; deceptive
trade practices in violation of the New York Unfair Trade Practices
Act, N.Y. Gen. Bus. Law § 349, and the Minnesota Uniform Deceptive
Trade Practices Act, Minn. Stat. §§ 325D.43–.48; unlawful trade
practices in violation of the Minnesota Unlawful Trade Practices
Act, Minn. Stat. § 325D.12–15; violation of the Minnesota False
Statements in Advertising Act, Minn. Stat. § 325F.67; and commonlaw
On August 2, 2011, Bel Canto moved for a TRO, and the court
scheduled a hearing for August 12.
At the end of the hearing, the
court invited the parties to submit additional briefing by August
The court now considers the motion for a TRO.
As an initial matter, defendants argue that a TRO is not
warranted because they are not subject to personal jurisdiction in
nonresident defendant only to the extent permitted by the long-arm
statute of the forum state and by the Due Process Clause.”
USA, Inc. v. Rich, 384 F.3d 979, 984 (8th Cir. 2004) (citation
The Minnesota long-arm statute “confers jurisdiction to
the fullest extent permitted by the Due Process Clause.”
Coen, 509 F.3d 900, 905 (8th Cir. 2007) (citation omitted); see
jurisdiction to any person who “commits any act outside Minnesota
causing injury or property damage in Minnesota.”
A defendant need only make a prima facie showing of
jurisdiction at the TRO stage.
See Cohen, 509 F.3d at 904.
To satisfy due process, a defendant must have “sufficient
minimum contacts” with the forum state such that maintaining the
contacts exist when the defendant’s conduct and connection with the
forum state are such that [it] should reasonably anticipate being
haled into court there.” Coen, 509 F.3d at 905 (citation omitted).
The court considers five factors to measure minimum contacts: “(1)
the nature and quality of a defendant’s contacts with the forum
state; (2) the quantity of such contacts; (3) the relation of the
cause of action to the contacts; (4) the interest of the forum
convenience of the parties.”
Dever v. Hentzen Coatings, Inc., 380
F.3d 1070, 1073-74 (8th Cir. 2004).
receive significant weight.
The first three factors
See id. at 1074. The court “must look
at all of the factors in the aggregate and examine the totality of
the circumstances in making a personal-jurisdiction determination.”
Johnson v. Arden, 614 F.3d 785, 794 (8th Cir. 2010).
contacts must exist either at the time the cause of action arose,
the time the suit is filed, or within a reasonable period of time
immediately prior to the filing of the lawsuit.”
Pecoraro v. Sky
Ranch for Boys, Inc., 340 F.3d 558, 562 (8th Cir. 2003).
Bel Canto only argues that the court has specific personal
jurisdiction over defendants.
Specific jurisdiction exists when
St. Jude Med., Inc. v. Lifecare Int’l,
Inc., 250 F.3d 587, 591 (8th Cir. 2001) (citation omitted).
Intentional actions outside of the forum that have consequences
felt within the forum may support personal jurisdiction over
See Cohen, 509 F.3d at 906.
authorized dealer of Bel Canto products as recently as November
Such substantial contact supports a finding that MSS
HiFi purposefully availed itself of Minnesota, and such contacts
were reasonably close in time to the sale of counterfeit Csi-076
just over a year later.
Moreover, as in Calder, the damaging
effects of defendants’ sale of Bel Canto products with counterfeit
serial numbers, misrepresentation to consumers about the voltage
configuration of Bel Canto products, false statements that it is
Products,” and statement that a Bel Canto product is worth seven
samosas all inflict harm on Bel Canto in Minnesota.
Missouri Long-Arm Statute at issue in Johnson, Minnesota extends
jurisdiction to acts committed beyond the state when their effects
are felt within Minnesota.
See Johnson, 614 F.3d at 797 (“The
Missouri long-arm statute confers jurisdiction to Missouri courts
for torts committed within Missouri.”).
John Boey, as an officer of MSS HiFi, is not shielded from
his own intentional torts.
See Calder v. Jones, 465 U.S. 783,
789–90 (1984). Here, Bel Canto has presented evidence that Boey,
as “President of the Leaders of the Free World” posted infringing
comments to the MSS HiFi website.
Further, Bel Canto has provided evidence that MSS HiFi acted
through a Bel Canto authorized dealer as a proxy to transact
business with Bel Canto in Minnesota. As to the secondary factors,
Minnesota has a strong interest in protecting trademarks, and it
appears that witnesses and evidence may be located in several
states and countries.
See Minn. Mining & Mfg. Co. v. Rauh Rubber,
Inc., 943 F. Supp. 1117, 1124 (D. Minn. 1996).
For all of these
reasons, the court finds that defendants have sufficient minimum
jurisdiction comports with due process.
A TRO is an extraordinary equitable remedy, and the movant
bears the burden of establishing its propriety.
v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003).
See Watkins Inc.
The court considers
four factors in determining whether a TRO should issue: (1) the
threat of irreparable harm to the movant in the absence of relief,
(2) the balance between that harm and the harm that the relief may
cause the non-moving party, (3) the likelihood of the movant’s
ultimate success on the merits and (4) the public interest.
Dataphase Sys., Inc. v. C.L. Sys., Inc., 640 F.2d 109, 114 (8th
Cir. 1981) (en banc).
Bel Canto argues that defendants’ sale of Bel Canto products
with counterfeit serial numbers, false claims about being an
exclusive online distributor and claims about the value of Bel
Bel Canto, however, has presented evidence that MSS
HiFi has sold and offered for sale products with counterfeit serial
Moreover, defendants do not deny making the false
representations about Bel Canto on the MSS HiFi website.
To show irreparable harm, “a party must show that the harm is
certain and great and of such imminence that there is a clear and
present need for equitable relief.” Iowa Utils. Bd. v. F.C.C., 109
F.3d 418, 425 (8th Cir. 1996).
qualifies as irreparable harm.”
“[P]otential loss of goodwill
Id. at 426.
Based on defendants’
false representations and false claims, the court finds that Bel
Canto has demonstrated that it is likely to suffer irreparable harm
to its goodwill without equitable relief. Moreover, where as here,
the misrepresentations have a tendency to deceive, harm is presumed
in the context of violation of § 43 of the Lanham Act.
Hills Jewelry Mfg. Co. v. Gold Rush, Inc., 633 F.2d 746, 753 (8th
Cir. 1980). Therefore, this factor weighs strongly in favor of Bel
The first sales doctrine does not apply to altered products.
See Beltronics USA, Inc. v. Midwest Inventory Distrib., LLC, 562
F.3d 1067, 1073–74 (10th Cir. 2009); see also Champion Spark Plug
Co. v. Reich, 121 F.769, 773 (8th Cir. 1941).
Balance of Harms
The court has already determined that Bel Canto’s reputation
and goodwill are harmed by defendants’ claims and sale of altered
Bel Canto products.
On the eve of the TRO hearing, defendants
removed the false statements from their website.
claim that they do not sell Bel Canto products with altered serial
Although the evidence suggests otherwise, if true,
injunctive relief will cause little if any harm to defendants.
Therefore, this factor weighs in favor of Bel Canto.
Likelihood of Success on the Merits
The court next considers the “most significant” Dataphase
factor: likelihood that the movant will prevail on the merits.
S & M Constructors, Inc. v. Foley Co., 959 F.2d 97, 98 (8th Cir.
The Lanham Act makes unlawful the unauthorized:
use in commerce [of] any reproduction,
counterfeit, copy, or colorable imitation of a
registered mark in connection with the sale,
advertising of any goods or services on or in
connection with which such use is likely to
cause confusion, or to cause mistake, or to
15 U.S.C. § 1114.
The Lanham Act further imposes civil liability
when a person uses:
any word, term, name, symbol, or device, or
designation of origin, false or misleading
description of fact, or false or misleading
representation of fact, which ... is likely to
cause confusion, or to cause mistake, or to
deceive as to the affiliation, connection, or
association of such person with another
person, or as to the origin, sponsorship, or
approval of his or her goods, services, or
commercial activities by another person, or
... in commercial advertising or promotion,
misrepresents the nature, characteristics,
qualities, or geographic origin of his or her
or another person’s goods, services, or
Id. § 1125(a).
In this case the evidence of false statements and altered
serial numbers offered by plaintiffs suggests that they are very
likely to prevail on the merits of their Lanham Act and deceptive
Therefore, this factor weighs heavily in favor of
The public interest favors protection of trademarks and trade
names and protection of consumers from purchasing misrepresented
competition. Here, however, it appears that defendants are engaged
interest factor favors Bel Canto.
Accordingly, based upon a
balancing of the four Dataphase factors, a TRO is warranted.
By listing these claims, the court offers no opinion on the
merits of the other claims, but merely notes that plaintiffs are
likely to succeed on several claims. Cf. United Healthcare Ins.
Co. v. AdvancePCS, 316 F.3d 737, 742–43 (8th Cir. 2002).
Based on the above, IT IS HEREBY ORDERED that:
The motion for a temporary restraining order [Doc. No. 3]
servants, employees, and attorneys, and all other persons who are
in active concert or participation with them, are hereby restrained
Selling any Bel Canto products with false, altered
or counterfeit serial numbers, including but not limited
to the following Bel Canto products:
DAC 3.5VB Serial No. D35-135
VBS-1 Serial No. VBS-118
DAC 3.5VB Serial No. D35-135
VBS-1 Serial No. VBS-118
DAC 3.5VB Serial No. D35-139
R5M-262 & R5M-263
C5i Serial No. C51-112
LNS1 Serial No. LNS-149
VBS-1 Serial No. VBS-152
DAC 1.5 Serial No. D15-220
DAC 2.5 Serial No. D25-156
REF1000m, Serial Nos. R1M-127 & R1M-128;
Claiming any affiliation with Bel Canto, including
Zornosa, will be attending any MSS HiFi sponsored events;
respect to Bel Canto or its trademarks in the sale of
goods or services in commerce in any way;
Within fourteen days of the date of this order, John Boey
and MSS HiFi shall file with this court and serve on Bel Canto a
report in writing under oath setting forth in detail the manner and
form in which they have complied with this order;
Bel Canto shall provide security to defendants in the
form of a bond or deposit of cash with the Clerk of Court in the
amount of $5,000;
This order shall remain in effect for fourteen days.
August 25, 2011
s/David S. Doty
David S. Doty, Judge
United States District Court