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ORB FACTORY v. DESIGN SCI. TOYS

May 19, 1998

THE ORB FACTORY, LTD., a Canadian corporation, Plaintiff, against DESIGN SCIENCE TOYS, LTD., a New York corporation; and DOES 1-20, inclusive, Defendants. - against - NOVA DESIGN GROUP, LTD., a New York corporation; REGIS McCANN, an individual; and DOES 1-20, inclusive, Counterclaim Defendants.


The opinion of the court was delivered by: SWEET

OPINION

 Sweet, D.J.

 Defendant Design Science Toys, Ltd. ("DST") has moved to transfer this action to the United States District Court for the Northern District of New York ("Northern District") pursuant to 28 U.S.C. § 1406(a) on the grounds that venue is improperly laid in the United States District Court for the Southern District of New York ("Southern District"), or, alternatively, pursuant to 28 U.S.C. § 1404(a) on the grounds that the transfer is required for the convenience of the parties and in the interests of justice.

 For the reasons set forth below, the motion is denied.

 The Parties

 The Orb Factory, Ltd. ("Orb") is a Canadian corporation that engages in the business of designing, producing, marketing, and selling toys, jewelry, and other products fashioned from manipulable metal wire, such as stainless steel. Orb's principal place of business is in Halifax, Nova Scotia.

 DST is a New York corporation that manufactures toys. Its postal address is Tivoli, New York, which is in the Southern District, but, according to DST, its place of business is physically located in Columbia County, New York, which is in the Northern District.

 Relevant Third Parties

 Counterclaim defendant Nova Design Group, Ltd. ("Nova") is a subsidiary of Orb. It is located in Ulster County, New York.

 Counterclaim defendant Regis A. McCann ("McCann"), a natural person, is a key employee of Nova and lives in the Northern District. McCann previously worked for DST. McCann is the plaintiff in the civil action Regis A. McCann v. Design Science Toys, Ltd. et al, Civ. A. No. 96 CV 1224, in the Northern District.

 Prior Proceedings

 Orb filed its initial complaint in the Southern District on December 17, 1996. Its First Amended Complaint ("Complaint") was filed on February 2, 1997. DST filed an Answer on February 5, 1997, and two Amended Answers, one on February 26, 1997, and the other on June 30, 1997.

 DST filed its notice of motion to transfer this action to the Northern District on February 20, 1998. The motion was heard and deemed fully submitted on April 1, 1998.

 The Facts

 Orb's Complaint filed in the Southern District of New York contains the following claims against DST: trademark infringement, unfair competition and false designation of origin, common law unfair competition, dilution in violation of CLS Gen. Bus. Law § 368-d, breach of fiduciary duty, and account stated.

 Two of the toys/jewelry that Orb designs, markets, and sells are the Celestial Orb and the Celeste Pendant. Orb is the owner of the trademarks Celestial Orb and Celeste Pendant and has used the trademarks in interstate commerce at least as early as 1992.

 The crux of Orb's Complaint alleges that DST began using the mark Heaven's Orb, in the Southern District and in interstate commerce, in connection with the design, production, marketing, and sale of a product identical or substantially similar to Orb's product that bears the trademark Celestial Orb. Likewise, Orb states that DST's use of the mark Heaven's Pendant is in connection with a product identical or substantially similar to Orb's product bearing the trademark Celeste Pendant. Orb contends that such use was without the consent or authorization of Orb.

 DST's counterclaims include breach of contract, unjust enrichment and quantum meruit damages, breach of fiduciary duty, unfair competition, trade dress infringement, defamation, dilution in violation of Gen. Bus. Law § 368-d, and conversion.

 This is not the only litigation with which DST is currently involved. On or about May 15, 1996, DST commenced an action in New York State Supreme Court, Dutchess County, against McCann, alleging unfair competition, theft and use of DST's confidential information and trade secrets, interference with business relations and contracts, wrongful disclosure of proprietary trade secrets and information, conversion of royalties, breach of contract, violation of fiduciary duty, conspiracy to unfairly compete, and conversion. McCann's attempt to remove the state action to federal court was denied on the grounds that no exclusively federal cause of action existed. The state action was stayed pending the Northern District case discussed below. Ultimately, after DST's motion to dismiss in the Northern District case was denied, the state action was dismissed without prejudice.

 Before the instant action was filed, while the state action was pending, McCann commenced a civil action against DST in the Northern District alleging patent infringement, inducement to infringe, interference with prospective employment, interference with business relationships, breach of fiduciary duty, and request for declaratory judgment that McCann did not violate the rights of DST as alleged in DST's state court complaint. DST's counterclaims are similar to those it made in the action at issue. McCann makes no claim regarding Orb or Nova.

 Discussion

 I. Motion to Transfer Venue Under § 1406(a) Is Denied

 Where a suit is filed in federal court in a district in which venue is improper, and a timely and sufficient objection to the defect is raised, a change of venue may be ...


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