enjoined Hyman from the "sale or distribution or attempted sale
or distribution of its Bank product or any version thereof. .
. ." Its Bank was called "the Magic Bank." Soon thereafter,
Hyman apparently made certain shipments of its Magic Bank and
Maruzen moved by Order to Show Cause to hold Hyman in contempt
of court. After a hearing conducted on January 25, 1991, I
ordered that Hyman be fined $100,000.00 for its contempt in
shipping the Magic Bank after Hyman had previously been
A Patent ("953 Patent") was obtained for the Art Bank on
November 6, 1990 in Tenyo's name. Shigeru Sugawara, a Tenyo
employee, designed and created the first version of the Art
Bank. Maruzen then moved to amend its complaint, adding a
patent infringement claim.*fn2 On February 14, 1991, I granted
Maruzen's motion for leave to amend, but denied any motion for
a preliminary injunction as against Fascinations and held in
abeyance its cross-motion to dismiss. Hyman cross-moves
pursuant to Fed.R.Civ.P. 12(b)(5) and 12(b)(2) to dismiss the
complaint for insufficiency of service of process and lack of
personal jurisdiction. In addition, Hyman moves for
reconsideration of the contempt order, seeking a stay of
execution pending reconsideration or appeal of the contempt
order. Fascinations withdraws its original motion to dismiss
and by a substituted motion, Fascinations and Kay-Bee now
jointly move pursuant to Fed.R.Civ.P. 12(b)(7) and 19 for an
order dismissing the amended complaint because of failure to
join an indispensable party.
STATEMENTS OF FACT
Maruzen is the United States subsidiary of Maruzen Co, Ltd.
("Maruzen Japan") a Japanese publisher and retailer of
stationary products and gift items. As part of its retail
activities, Maruzen Japan searches for novel stationary and
gift products. In October 1989, it entered into an agreement
with Tenyo, which had designed the Art Bank, and was prepared
to manufacture the Art Bank for distribution by Maruzen in the
United States. Mizutani Declaration ("Decl.") ¶ 4. Maruzen
Japan thereupon sublicensed its United States rights in the Art
Bank to its subsidiary Maruzen to sell and protect the product
in the United States.
Since entering the United States market with the Art Bank,
Maruzen has undertaken to register its intellectual property
rights in all of its versions of and improvements in the Art
Bank. All of Tenyo's rights in the copyright and trademark in
the United States market were assigned exclusively to Maruzen.
Even though Tenyo had already applied for patent and trademark
protection, Maruzen independently applied for registration for
the illustrations and sculptures in the interior of the Art
Bank ("the designs").
In February 1990, Maruzen discovered that defendant Hyman was
soliciting orders for a coin box similar to the Art Bank, which
was called the "Magic Bank." Apparently, Hyman was attending
various gift conventions in the United States and soliciting
orders for its Magic Bank. Using the Art Bank as a sample,
Hyman has sold its Magic Bank claiming origination of the Art
Bank. On March 6, 1990, Maruzen obtained a copyright
registration VA 388421. Maruzen has since registered other
copyrights and trademarks for the Art Bank. Sometime later,
Maruzen discovered that Fascinations created a toy bank known
as the "Mystery Bank." The Mystery Bank was modelled after
Hyman's Magic Bank, resembling Maruzen's Art Bank design.
Fascinations and Kay-Bee jointly assert that Maruzen lacks
standing to sue
on behalf of the `953 Patent because of its failure to show
that it is Tenyo's assignee of rights in the United States.
Specifically, they claim that Maruzen's First Amended Complaint
fails to contain any allegation that Maruzen had acquired all
of the asserted intellectual property rights from Maruzen Japan
which in turn acquired those same rights from Tenyo.
Specifically, Fascinations and Kay-Bee assert that the amended
complaint does not include certain documents which purport a
transfer of rights on October 1, 1989. Thus, Fascinations and
Kay-Bee contend that Maruzen is not the sole owner of these
rights but merely the exclusive distributor of the Art Bank
product for Tenyo, the alleged creator and manufacturer of that
product. Amended Complaint ¶ 5.
Status as an assignee or patentee is a crucial prerequisite
to bringing suit on infringement grounds. "In order to sue for
infringement under 35 U.S.C. § 281, the plaintiff must be the
owner of the patents, i.e., the patentee or assignee of the
patent." Afros S.p.A. v. Krauss-Maffei Corp., 671 F. Supp. 1402,
1444 (D.Del. 1987), aff'd without opinion, 848 F.2d 1244 (Fed.
Cir. 1988). Annexed to Maruzen's reply papers, are certain
letters apparently originating from Tenyo and Maruzen Japan and
purporting to transfer rights in the Art Bank to Maruzen.
Maruzen's Reply Declarations and Exhibits in Support of
Maruzen's Motion for a Preliminary Injunction and to Amend the
Complaint ("Maruzen's Reply"), Exh. B. Specifically, the Tenyo
Tenyo Co., Ltd. is the owner worldwide of all of
the interectual (sic) property rights, including
copyrights associated with the Art Bank product,
which was first made on April 1, 1989. In return
for valuable consideration, receipt of which is
hereby acknowledged, Tenyo Co., Ltd. hereby
assigns and transfers to Maruzen Co., Ltd.
[Maruzen Japan], all of Tenyo Co., Ltd.'s
intellectual property interests for the Art Bank
product in the United States of America, including
any patent, trademark. . . . This assignment is
effective as of October 1, 1989.
In Addition, Maruzen Japan, by letter substantially tracking
the above letter's language, assigned all of its rights in the
Art Bank to Maruzen with regard to the United States
"Agreements transferring patent rights must be either
assignments or licenses. Whether an agreement be one or the
other is governed by its substance, not its label." CMS
Industries, Inc. v. L.P.S. International, Ltd., 643 F.2d 289,
294 (5th Cir. 1981) (citing Waterman v. Mackenzie,
138 U.S. 252, 255, 11 S.Ct. 334, 335, 34 L.Ed. 923 (1891)). "Where an
agreement effectively transfers the entire bundle of rights
residing in a patent, that agreement is an assignment." CMS
Industries, Inc. v. L.P.S. International, Ltd., 643 F.2d at 294
(citing Etherington v. Hardee, 290 F.2d 28, 29 (5th Cir.
1961)). Even Fascinations and Kay-Bee admit that an assignee of
a patent is considered to be a successor in title to ownership
of the patent, and may sue independently without being required
to join his assignor as an indispensable party under
Maruzen is the exclusive licensee of the Tenyo novelty bank
product. Although Tenyo is the originator, creator, developer,
and manufacturer of the Art Bank, it has assigned to Maruzen
all United States intellectual property rights in the Art Bank.
Amended Complaint ¶ 6. The letters annexed to Maruzen's reply
papers are indicative of an effective assignment of patent,
trademark, and copyrights in the Art Bank which were ultimately
assigned from Tenyo to Maruzen Japan, and then from Maruzen
Japan to its domestic subsidiary Maruzen for the United States
market. See Koyanagi Decl.; Maruzen's Reply, Exh. B. Because
the United States market is the only market relevant to this
action, there is no need to join Tenyo or Maruzen Japan.
Neither party appears necessary to the action
at bar*fn4 and Maruzen has adduced sufficient information to
withstand motions to dismiss on the basis of its purported
failure to join Tenyo and Maruzen Japan as necessary
Next, Hyman requests that I dismiss this case, claiming that
service of process, pursuant to Fed.R.Civ.P. 4(d)(3), was
deficient, thus constituting a violation of due process. While
due process underlies the mechanism set up by Fed.R.Civ.P. 4,
requiring that sufficient notice be given "in such a manner
that there can be little doubt that the party has actual notice
of the claims in order to appear and defend," Rule 4 is to be
construed liberally with regard to service of process.
Durant and Isaacs v. Traditional Investments, Ltd., No.
88-9048, 1990 WL 33611 (S.D.N.Y. March 22, 1990) (LEXIS, Genfed
library, Courts file) (citing S.E.C. v. Tome, 833 F.2d 1086,
1092 (2d Cir. 1987)). Thus, when a defendant receives actual
notice of a lawsuit brought against him, technical
imperfections with service will rarely invalidate the service.
Durant and Isaacs v. Traditional Investments, Ltd., No.
88-9048. 1990 WL 33611 (S.D.N.Y. March 22, 1990) (LEXIS, Genfed
library, Courts file) (citing Wright & Miller, Federal Practice
and Procedure, at 1088, at 3132, n. 2.).
Fed R.Civ.P. 4(d)(3) allows service of process on
corporations through their "managing or general agents." This
requirement has been loosely interpreted, requiring merely that
service constitute some assurance that the corporation is
apprised of its status as a named defendant in a law suit.
Manchester Modes, Inc. v. Lilli Ann Corp., 306 F. Supp. 622, 626
Maruzen served Hyman by delivering the summons and a copy of
the complaint to Terrence P. Long, Hyman's National Sales
Manager. According to Hyman, Long is neither a managing agent
nor someone vested with powers to bind the corporation and thus
the corporation, having been improperly served, never received
sufficient notice of the suit against it, regardless that Long
accepted service without objection.
Long's responsibilities include attending national and local
trade shows. Long Affid. ¶ 3.; Daugherty Affid. ¶ 4. In
addition, as National Sales Manager, Long is responsible for
communication with and training of independent sales
representatives with respect to all of Hyman's products. Long
Affid. ¶¶ 2, 3. Certainly, Long's position as National Sales
Manager was reasonably considered by Maruzen to be a
responsible enough one, impliedly assuring that Long as an
officer of the corporation would provide the corporation with
proper notice of the pending suit, notwithstanding the fact
that Long could not "bind the corporation" in contract or
otherwise. See Durant and Isaacs v. Traditional Investments,
Ltd., No. 88-9048, 1990 WL 33611 (S.D.N.Y. March 22, 1990)
(LEXIS, Genfed library, Courts file) (generally, service is
sufficient when made upon an individual who stands in such a
position as to render it fair, reasonable, and just to imply
the authority on his part to receive service) (citing Montclair
Electronics, Inc. v. Electra/Midland Corp., 326 F. Supp. 839,
842 (S.D.N.Y. 1971)).
Rule 4 does not require that service be made solely
on a restricted class of formally titled officials,
but rather permits it to be made upon a
representative so integrated with the organization
that he will know what to do with the papers.
Generally, service is sufficient when made upon an
individual who stands in such a position as to
render it fair, reasonable and just to imply the
authority on his part to receive service.
Top Form Mills Inc. v. Sociedad Nationale Industria
Applicazioni Viscosa, 428 F. Supp. 1237 (S.D.N.Y. 1977)
(emphasis added). Relying on Long's status as a National Sales
Manager, Maruzen reasonably assumed that Long had the implied
authority to receive service. Moreover, Long reports directly
to the Vice President for Sales. His direct and consistent
contact with his superior bolsters the theory that the
corporation was properly served for Long surely did or should
have understood the import of his reporting the service of the
summons to his superior, clearly the kind and type of officer
of which Rule 4 speaks. Hyman concedes that Long understood
that he should report to his superior with respect to his
receipt of these obviously important documents. Accordingly,
service upon Long sufficed to place Hyman on notice of the
pending law suit here.
Hyman next contests the validity of personal jurisdiction
over it because of its lack of contacts with New York, the
forum state. Due process requires "minimum contacts" between a
defendant and a forum State as a predicate for a court's valid
assertion of jurisdiction over a non-domiciliary.
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100
S.Ct. 559, 564, 62 L.Ed.2d 490 (1980). New York's long-arm
statute provides for jurisdiction over non-domiciliaries which
transact business in New York, contract to supply goods or
services in New York, or commit a tortious act within the
state. N.Y.Civ.Prac.L. & R. § 302(a)(1) (McKinney 1990).
Specifically, "a court may exercise personal jurisdiction over
any non-domiciliary who in person or through an agent: (1)
transacts any business within the state or contracts anywhere
to supply goods or services in the state."
Hyman maintained a booth and entered its toys and novelty
products in a toy fair held in New York's Javits Center,
apparently soliciting sales and conducting business such that
its products would potentially enter New York's stream of
commerce. Notwithstanding, even mere attendance, solicitation,
and receipt of sales orders at a toys and gifts fair in New
York demonstrates an expectation of sales to consumers and
entrance into the stream of commerce in New York. Thus, it is
fair to glean from Hyman's knowing placement of goods in New
York's stream of commerce, that its "presence" in New York
abundantly meets due process expectations and provides me a
fair predicate to exercise personal jurisdiction over Hyman in
this district. See World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297-98, 100 S.Ct. 559, 567-68, 62 L.Ed.2d 490 (1980)
("forum State does not exceed its powers under the Due Process
Clause if it asserts personal jurisdiction over a corporation
that delivers its products into the stream of commerce with the
expectation that they will be purchased by consumers in the
For the foregoing reasons, Hyman's cross-motion, pursuant to
Fed.R.Civ.P. 12(b)(5) and 12(b)(2) to dismiss the complaint for
insufficiency of service of process and lack of personal
jurisdiction, is denied. Hyman's motion for reconsideration of
the contempt order is granted to the extent that the fine shall
be reduced to an amount constituting Hyman's gross receipts for
post-injunction sales of the Magic Bank. Fascinations withdrew
its original motion to dismiss which is thus denied as moot. As
for Fascinations' substituted motion to dismiss, submitted in
conjunction with Kay-Bee and brought pursuant to Fed.R.Civ.P.
12(b)(7) and 19, that motion is denied as well. Maruzen is
hereby ordered to submit, for the court's signature, an
appropriate judgment against Hyman in accordance with the above
reduction. In order to do so, Hyman must make available to
plaintiff, its relevant books and records within ten days of
the date of this order. Any failure by Hyman to do so will
vitiate the reduction provided herein.