BHH LLC et al v. Kenu, Inc.
Filing
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OPINION AND ORDER. Kenu's motion to transfer this action pursuant to 28 U.S.C. § 1404 (Dkt. No. 10) is granted. The Clerk is directed to transfer this case to the United States District Court for the Northern District of California. So ordered. re: 10 MOTION to Dismiss for Lack of Jurisdiction and Improper Venue, or in the Alternative, Motion to Transfer to the Northern District of California filed by Kenu, Inc. (Signed by Judge Louis L. Stanton on 2/27/2015) (rjm)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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BHH LLC and E. MISHAN & SONS, INC.,
Plaintiffs,
14 Civ. 7265 (LLS)
OPINION & ORDER
- against KENU,
INC.,
Defendant.
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Plaintiffs BHH LLC ("BHHn)
& E. Mishan & Sons, Inc.
("Mishann) sell "Clever Gripn phone mounts that attach to car
air vents and allow drivers to keep their smartphones in sight
while driving, which compete with mounts sold by defendant Kenu.
Kenu sent a cease-and-desist letter to a licensee of plaintiffs,
demanding that it and BHH stop selling BHH's product, claiming
it infringes Kenu's "AIRFRAMEn product's design patent and trade
dress.
Kenu also sent an email to non-party Amazon, stating
that the Clever Grip violates Kenu's design patent.
Plaintiffs bring this declaratory judgment action, alleging
that that the email and cease-and-desist letter harmed their
business and goodwill, and asserting claims for tortious
interference with advantageous business relations and unfair
competition.
Kenu moves for dismissal of the complaint for lack of
personal jurisdiction and improper venue, or transfer of the
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case to the United States District Court for the Northern
District of California for the convenience of the parties and
witnesses, pursuant to 28 U.S.C.
§
1404(a).
For the reasons that follow, Kenu's motion to transfer is
granted.
BACKGROUND
BHH owns the trademark "Bell +Howell," under which it
sells various products, including the Clever Grip.
9.
Compl.
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BHH is a New York limited liability company with its
principal place of business in New York, New York.
Mishan is a Clever Grip distributor.
Id.
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15.
Id.
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1.
It is a New
York corporation with its principal place of business in New
York, New York.
Id.
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2.
Kenu manufactures and sells the AIRFRAME.
Id.
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20.
Kenu
is a Delaware corporation with its only place of business in San
Francisco, California.
Id.
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3.
On August 28, 2014, Kenu's attorneys sent a letter to the
New York City office of non-party Elite Brands, Inc.
Elite
Brands is a licensee of BHH to sell certain Bell + Howell
branded products, but it is not licensed to sell the Clever
Grip.
The letter stated:
This letter is sent to inform you that we believe that the
offer for sale of the Bell + Howell Clever Grip Air Vent
Phone Mount, model 9434, is likely a violation of Kenu's
valuable patent and trade dress rights related to its
AIRFRAME~ product.
This letter constitutes Kenu's demand
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that Bell + Howell and Elite Brands, Inc. cease and desist
making, importing, selling or offering for sale of the
Clever Grip products in the United States.
* * * * *
Kenu is the legal owner of multiple design patents
globally, including United States Design Patent D690,707,
which we believe covers the items offered for sale by Bell
+ Howell and Elite Brands, Inc. under the name Clever Grip
Air Vent Phone Mount. A copy of Kenu's United States
design patent registration is included with this
correspondence.
Moreover, the trade dress associated with Kenu's AIRFRAME=
product is distinctive, non-functional, and is owned by
Kenu.
The trade dress associated with Kenu's AIRFRAME=
product signifies the source of the AIRFRAME= product to
its customers.
As a result of considerable efforts, Kenu's
customers, and the general public, have come to recognize
Kenu as an established and successful mobile phone
accessory business.
Id. Ex. 3, at 1-2.
The letter closed with:
Please indicate by return letter your receipt of this
correspondence and Bell+ Howell and Elite Brands, Inc.'s
compliance with the demands contained herein.
If you or
your attorneys have any questions, please feel free to
contact me.
Id. at 3.
On the same day, Kenu sent an e-mail to Amazon that stated:
We are the owners and brand manufacturers of the Kenu
Airframe (ASIN: BOOD901B4W) and (Design Patent Number:
690707).
We have registered our brand under the registry
KENU, INC.
The following products below violates our design patent and
are using our brand images to sell an imitation product.
We kindly request Amazon remove these listings from your
catalog.
Id. Ex. 4, at 1.
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The following day, on August 29, 2014, Amazon forwarded
Kenu's e-mail to Mishan.
Id.
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40.
Amazon requested that
Mishan "provide us written confirmation that, in the event
Amazon is required to participate, E. Mishan & Sons, Inc. will
defend and indemnify Amazon in this matter."
Id. Ex. 5, at 1.
The Complaints
Plaintiffs BHH and Mishan allege:
46.
On information and belief, Kenu's claims of trade
dress claim and brand images are couched in intentionally
vague and imprecise language and omit factual details in
order to mislead and intimidate licensees and customers of
BHH and Emson by obfuscating the lack of merit of Kenu's
claims.
47.
On information and belief, Kenu has disparaged the
Bell + Howard Clever Grip air vent holder as an imitation
product in order to impugn the quality of the product.
48.
The appearance of the Bell + Howell Clever Grip air
vent phone holder differs from the appearance of the Kenu
Airframe product.
49.
The surface ornamentation, overall shape, and shapes
of the individual elements of the Bell + Howell Clever Grip
air holder differ from the corresponding elements of Kenu
Airframe product and the design illustrated in the drawings
of Kenu's design patent 0690,707.
50.
On information and belief, the plainly dissimilar
appearance of the Bell + Howell Clever Grip air vent phone
mount and the patented design shown in the drawings of
Kenu's design patent 0690,707 are immediately apparent to
an ordinary observer.
51.
Kenu's design patent infringement claims are not made
in good faith.
52.
Kenu maliciously, or at least with gross recklessness,
has published false and misleading statements of fact by
sending them to Elite Brands, Inc. in New York City and
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Amazon with intent to harm the interests of BHH and Emson,
or [sic] which Kenu either recognized or should have
recognized are likely harm [sic] the interests of BHH and
Emson.
53.
Kenu's statements to Elite Brands, Inc. and Amazon are
couched in terms of "trade dressu and "brand imagesu
without specific identification of such to unfairly
intimate that the Bell + Howell Clever Grip air vent phone
holder violates its alleged trade dress.
54.
Kenu's conduct has caused and continues to cause
irreparable harm and damages to BHH and Emson, including
but not limited to the following:
a. Significant harm to their goodwill, business
reputations and the reputation of the Clever Grip
goods which they provide to customers and licensees.
b. Interference of their business with Amazon requiring
Emson, a business corporation, to undertake the
burdens and risks of defense obligations and
indemnification obligations which would not
otherwise be required in the ordinary course of
business, except for the actions of Kenu.
c. Disparagement of the Bell + Howell Clever Grip air
vent phone holder.
Id.
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46-47, 51-54.
Plaintiffs BHH and Mishan filed this action on September 9,
2014.
See Compl., Dkt. No. 1.
Approximately two weeks later, on September 25, 2014, Kenu
filed a complaint in the Northern District of California
alleging that BHH and Mishan had infringed the same patent and
trade dress rights it claimed in its cease-and-desist letter and
e-mail.
Kenu,
Inc. v. BHH LLC et al., Case No. 3:14-cv-04327.
On October 7, 2014, United States District Judge James Donato
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held that case was related to another action filed on September
10, 2014 in that Court by Kenu against eBay and counterfeiters
selling imitation products on eBay's website.
See Kenu's Motion
to Transfer at 14; Crockett Decl. Exs. A and B.
BHH and Mishan filed a motion to dismiss parts of Kenu's
California action on October 23, 2014.
Ex. A.
See Crockett Supp. Decl.
The Northern District of California has stayed Kenu's
action against BHH and Mishan there "in its entirety" pending
the outcome of the present motion Kenu filed in this Court on
October 28, 2014, seeking dismissal or transfer to California of
this case.
Minute Order of Hon. James Donato, January 21, 2015
in Civil Action C-14-04327-JD.
DISCUSSION
BHH and Mishan argue that their action in this Court should
not be transferred to California because it should have priority
under the "first-filed" rule.
Kenu contends that the first-filed rule does not control,
because this suit is a declaratory judgment action brought in
unseemly anticipation of the filing of Kenu's substantive
litigation in California, where it should be sent.
The First-Filed Rule and its Exceptions
"The first-filed rule states that, in determining the
proper venue, where there are two competing lawsuits, the first
suit should have priority."
N.Y. Marine & Gen. Ins. Co. v.
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Lafarge N. Am., Inc., 599 F.3d 102, 112 (2d Cir. 2010)
omitted).
(citation
But there are salient exceptions.
The Second Circuit has explained:
We have recognized only two exceptions to the first-filed
rule: (1) where the "balance of convenience" favors the
second-filed action, see, e.g., Motion Picture Lab.
Technicians Loc. 780, 804 F.2d at 19; Remington Prods.
Corp. v. Am. Aerovap, Inc., 192 F.2d 872, 873 (2d Cir.
1951), and (2) where "special circumstances" warrant giving
priority to the second suit, see, e.g., First City Nat'l
Bank, 878 F.2d at 79.
* * * * *
In applying the "balance of convenience" exception, we have
considered the ties between the litigation and the forum of
the first-filed action.
See Motion Picture Lab Technicians
Loc. 780, 804 F.2d at 19. We agree with several district
courts within our Circuit that the "factors relevant to the
balance of convenience analysis are essentially the same as
those considered in connection with motions to transfer
venue pursuant to 28 U.S.C. § 1404(a) ." Everest Capital
Ltd. v. Everest Funds Mgmt., L.L.C., 178 F. Supp. 2d 459,
465 (S.D.N.Y. 2002). Among these factors are:
(1) the plaintiff's choice of forum, (2) the
convenience of witnesses, (3) the location of relevant
documents and relative ease of access to sources of
proof, ( 4) the convenience of the parties, ( 5) the
locus of operative facts, (6) the availability of
process to compel the attendance of unwilling
witnesses, [and] (7) the relative means of the
parties.
D.H. Blair & Co. v. Gottdiener, 462 F.3d
Cir. 2006) (quoting Albert Fadem Trust v.
Corp., 214 F. Supp. 2d 341, 343 (S.D.N.Y.
(alterations in original). A balance of
identify the more appropriate forum.
95, 106-07 (2d
Duke Energy
2002))
these factors will
Given the centrality of the balance of convenience, the
"special circumstances" in which a district court may
dismiss the first-filed case without this analysis are
quite rare.
In fact, we have identified only a limited
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number of such circumstances.
One exists where the firstfiled lawsuit is an improper anticipatory declaratory
judgment action.
See Factors Etc., Inc., 579 F.2d at 219
(holding that the district court properly allowed laterfiled suit to proceed because first-filed declaratory
judgment suit was triggered by notice letter and was
therefore "in apparent anticipation of [the later-filed
suit]").
District courts in this Circuit have recognized
that, in order for a declaratory judgment to be
anticipatory, it must be filed in response to a direct
threat of litigation that gives specific warnings as to
deadlines and subsequent legal action.
See, e.g., Reliance
Ins. Co. v. Six Star, Inc., 155 F. Supp. 2d 49, 55
(S.D.N.Y. 2001); Fed. Ins. Co. v. May Dep't Stores Co., 808
F. Supp. 347, 350 (S.D.N.Y. 1992). Another special
circumstance is "where forum shopping alone motivated the
choice of the situs for the first suit." William Gluckin &
Co. v. Int'l Playtex Corp., 407 F.2d 177, 178 (2d Cir.
1969) (emphasis added).
This does not mean that any
evidence of forum shopping will suffice. Any lawyer who
files a case on behalf of a client must consider which of
the available fora might yield some advantage to his
client, and thus, to that degree, engages in "forum
shopping." Rather, the first-filing plaintiff must engage
in some manipulative or deceptive behavior, or the ties
between the litigation and the first forum must be so
tenuous or de minimis that a full "balance of convenience"
analysis would not be necessary to determine that the
second forum is more appropriate than the first.
Where
special circumstances are not present, a balancing of the
conveniences is necessary.
Employers Ins. of Wausau v. Fox Entertainment Group, Inc., 522
F.3d 271, 275-76 (2d Cir. 2008)
(footnotes omitted)
(brackets in
original).
Application to this Case
The considerations set forth above justify departure from
the first-filed rule and favor transfer of this case to
California.
Because this is a declaratory judgment action, this Court's
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jurisdiction is not mandatory but discretionary.
See Muller v.
Olin Mathieson Chern. Corp., 404 F.2d 501, 505 (2d Cir. 1968)
("Nevertheless, we point out that even when justiciability is
present the court is not required to proceed with the
declaratory judgment action, for it is well settled that a trial
court's decision to exercise declaratory jurisdiction is a
discretionary one.).
It is the Northern District of California
court which will have mandatory subject-matter jurisdiction over
these cases.
The section 1404(a) factors defining the balance of
convenience are in rough equilibrium.
What compel transfer to
California are a) that jurisdiction in New York over Kenu is not
beyond doubt, b) that this case is recognized by the California
court as related to litigation pending there in which BHH and
Mishan have already appeared, c) that transfer to California
will mean witnesses will testify in only one court
(California)
rather than two (California and New York) and d) it is apparent
that this action was stimulated by the cease-and-desist letter,
with its peremptory demand that Bell + Howell and Elite Brands,
Inc. indicate, by return mail, their "compliance with the
demands contained herein."
Accordingly, the motion to transfer is granted and this
action is transferred to the Northern District of California.
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CONCLUSION
Kenu's motion to transfer this action pursuant to 28 U.S.C.
§
1404 (Dkt. No. 10) is granted.
The Clerk is directed to transfer this case to the United
States District Court for the Northern District of California.
So ordered.
Dated:
New York, New York
February 27, 2015
{,.~
L.st-...44..
LOUIS L. STANTON
U.S.D.J.
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