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AVECMEDIA, INC. v. GOTTSCHALK

July 13, 2004.

AVECMEDIA, INC., Plaintiff,
v.
EMILY GOTTSCHALK; THE GARR GROUP, LLC; TGG PACKAGING SOLUTIONS, LLC; PACKAGING SOLUTIONS, LLC; and ACQUIRE, INC., Defendants.



The opinion of the court was delivered by: BARBARA JONES, District Judge

Opinion

Plaintiff, Avecmedia brought this diversity action against defendants, Emily Gottschalk; The Garr Group, LLC; TGG Packaging Solutions, LLC; Packaging Solutions, LLC; and Acquire, Corp. for patent infringement and tortious interference with contract. Defendants The Garr Group, TGG Packaging Solutions, Packaging Solutions, and Emily Gottschalk ("The TGG Defendants") filed a crossclaim against Acquire for defense costs and fees and indemnification based on an Indemnification and Hold Harmless Agreement between the TGG Defendants and Acquire. Defendant Acquire has moved pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure to dismiss the complaint and the first amended crossclaim for lack of personal jurisdiction. The Plaintiff bears the burden of establishing that the Court has personal jurisdiction over the Defendant. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). In the absence of an evidentiary hearing and prior to discovery, the Plaintiff need only establish a prima facie showing of personal jurisdiction. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986). The following facts are drawn from the complaint, affidavits, and documents submitted by the parties, and have been construed in the light most favorable to the Plaintiff, and all doubts have been resolved in its favor. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).

FACTS

  Avecmedia is a Connecticut corporation headquartered in Norwalk, Connecticut. Avecmedia is the owner of several patented packaging systems which enable CDs, CD-ROMs, DVDs and other game discs to be packaged easily on high-volume consumer products, such as drink lids, candy boxes, and mailing devices. (Compl. ¶ 11). TGG is a multimedia (CD/DVD) promotion company located in Voorhees, New Jersey. Acquire, an advertising agency, is a California corporation with its principal place of business and sole office located in California. (McInnis Decl. ¶ 2).

  On November 11, 2001, Avecmedia personnel, Defendant Gottschalk and other personnel and/or agents of Defendants Garr Group, TGG, and Packaging Solutions had a meeting in New York City, the purpose of which was to explore a possible business relationship between the companies. (Compl. ¶ 15). Following the meeting, Gottschalk executed on behalf of the Garr Group a Confidentiality/Non-Circumvention Agreement with Avecmedia "whereby the parties agreed that they would engage in discussions regarding Avecmedia's proprietary products and/or product ideas." Each party agreed "not to use, sell, exploit, copy or further develop or disclose to anyone else the other's Confidential Information or to make such Confidential Information public or common knowledge." (Compl. ¶ 16). Avecmedia claims that the TGG Defendants misappropriated Avecmedia's confidential information and used it to manufacture, distribute and sell their own line of products using Avecmedia's technology. Specifically, they claim the products TGG sold to Acquire as part of an advertising campaign are a misappropriation of Avecmedia's patented technology.

  In May 2003, Acquire designed an advertising campaign on behalf of Electronic Arts, Disney, MGM, Virgin Records, Zingy, and Capitol Records. The purpose of the campaign, titled "Fun in the Sun" ("FITS"), was to publicize various recordings by providing free samples of client's work to the movie-going public on a CD-ROM ("FITS CD") that was placed inside a see-through drink cup lid ("FITS lids"). The FITS lids were to be distributed to the public by a movie theater operator. Acquire's tasks included creating the master CD-ROM, obtaining the necessary copyright and trademark rights for the CD-ROM content, contracting a lid vendor, and arranging with a theater chain to distribute the drink lids. (McInnis Decl. ¶ 13). Acquire avers that the lids were never meant to be sold either to the theater chain or the end users; they were to be given to the theaters for further free distribution to theater customers. (McInnis Decl. ¶ 13).

  In furtherance of the FITS advertising campaign, Acquire entered into an agreement with Defendants TGG, a lid vendor. TGG was to replicate the FITS CD-ROM, package the CD-ROMs into TGG's CD lid, and ship the lid/CD-ROM combination to movie theaters. (McInnis Decl. ¶ 14). The only sale of the allegedly infringing lids took place between TGG and Acquire. Emily Gottschalk negotiated the agreement on behalf of TGG. The negotiations were conducted via telephone between TGG in New Jersey and Acquire in California. (McInnis Decl. ¶ 16). As part of the overall agreement, the parties entered into a written confidentiality agreement and an Indemnification and Hold Harmless Agreement requiring Acquire to indemnify The Garr Group. Acquire alleges that it relied on statements by TGG in "concluding that TGG, as the developer and seller of the lids, had the patent rights that it needed to carry out its obligations under the contract concerning the FITS campaign." (McInnis Decl. ¶ 15).

  The FITS CD lids were to be distributed by Cinemark USA, Inc., the operator of a movie theater chain. Cinemark's home office is in Plano, Texas but Cinemark is registered to do business in New York, and operates two movie theaters in New York. (Warshavasky Decl. Ex. J). The theater agreed to distribute the FITS CD-ROM's free to consumers with the purchase of a 44 oz. fountain drink. On or about July 7, 2003 Cinemark began distribution of the FITS lids to its theaters, but Acquire claims that no lids were shipped to New York. (McInnis Decl. ¶ 18). On or about July 11, 2003, the Convex Group, who is not a party to this action, sent a cease and desist letter to Cinemark claiming that TGG's lids infringed four of its US patents*fn1 and demanded that Cinemark immediately cease and desist the distribution of TGG's promotional lids. Cinemark immediately refused to distribute the TGG lids; distribution was stopped before a single lid was given to a theater patron. (McInnis Decl. ¶ 21).

  Acquire's Contacts with New York

  Acquire does not have any offices, employees, or agents within the State of New York; it does not have a telephone number, assets, bank accounts, or real property within the State of New York; nor does it have subsidiaries within the State of New York. (McInnis Decl. ¶¶ 7-9). Acquire is not licensed to do business within the State of New York nor does it direct advertisements or solicitations within the State of New York. (McInnis Decl. ¶¶ 6, 10). Acquire has sent employees to New York only twice during its six year existence. In March 2002, Ronald McInnis, the President of Acquire, and Tom Taylor were in New York for two days meeting with potential sponsors of a CD-ROM advertising campaign that did not involve the use of a soft drink lid. On June 18, 2003, Ronald McInnis and Rebecca Japsen traveled to New York for three days on behalf of Acquire and had courtesy meetings with the companies that had already agreed to sponsor the FITS advertising campaign. They also met with William Plumb and Alexandra Gordon of Avecmedia to discuss the possibility of doing business. At the meeting, the parties discussed "the possibility of Avecmedia supplying the AvecPAK CD Drink Lid to Acquire for a promotion that Acquire was planning for later that summer in which they were to distribute lids of fountain beverage cups at motion picture theaters." (Gordon Decl. ¶ 3). Following the June meeting Rebecca Japsen continued to be in telephone and email contract with Avecmedia concerning the advertising campaign. There is a disagreement between Avecmedia and Acquire as to whether the advertising campaign discussed on June 20, 2003 was part of the FITS advertising campaign, which is the source of this lawsuit. Avecmedia avers that the meeting concerned the FITS campaign. Acquire's President, Ronald McInnis, counters that the June meeting and subsequent communications with Avecmedia were in connection with a future advertising campaign — a promotion contemplated to take place in August/September 2003 entitled "Back to School." (McInnis Reply Decl. ¶ 2). McInnis claims that, by the time of the meeting with Avecmedia on June 20, 2003, Acquire had already reached an agreement with TGG to provide the soda lids for the FITS promotion. (McInnis Reply Decl. ¶ 2). McInnis presented an invoice Acquire received from Defendant TGG for the FITS soft drink lids as evidence that the FITS campaign was completed by June 20, 2003. The invoice, dated June 2, 2003, calls for partial availability of the lids by June 18, 2003, before the meeting with Avecmedia took place; the invoice also references payments made on May 29, 2003 and June 3, 2003. Furthermore, McInnis states in his declaration that distribution of the FITS lids began on July 7, 2003 and was halted due to the cease and desist letter that Cinemark received from the Convex Group on June 11, 2003. (McInnis Decl. ¶¶ 17-19, Ex. C). All of these events took place prior to the June 20 meeting in New York. In addition, electronic mail communication between Acquire and Avecmedia also states that the time frame for the promotion was the end of August or the beginning of September 2003.

  Throughout the telephone and email communication between Acquire and Avecmedia, Avecmedia alleges that its employees, Alexandra Gordon and William Plumb, were working from their home offices in New York state. McInnis and Japsen assert that they did not know Avecmedia's employees were working from their home offices in New York and that they believed the employees were in Connecticut, as Avecmedia is a Connecticut corporation and is headquartered in Connecticut.

  DISCUSSION

  Personal jurisdiction over a defendant in a diversity action is determined by reference to the law of the state where the court sits. Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990). Personal jurisdictional analysis involves a two-part inquiry. First, a court must determine whether jurisdiction is proper under the forum state's law — in this case New York's long-arm statue, CPLR § 302(a).*fn2 Second, if the forum state's law supports jurisdiction, then a court must determine whether jurisdiction comports with constitutional due process requirements and does not violate traditional notions of "fair play and substantial justice."*fn3 Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999).

  Avecmedia asserts that personal jurisdiction over Acquire is proper pursuant to CPLR sections 302(a)(1) and 302(a)(3). The TGG defendants argue for personal jurisdiction only under 302(a)(1). A plaintiff must secure personal jurisdiction over a defendant with respect to each claim [he or she] asserts." First Capital Asset Mgmt., Inc. v. Brickellbush, Inc., 218 F. Supp.2d 369, 397 (S.D.N.Y. 2002). As stated above, Avecmedia's claims against Acquire are for patent infringement and tortious interference with contract and TGG's crossclaim is a claim for ...


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