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FOOT LOCKER RETAIL, INC. v. SBH

January 18, 2005.

FOOT LOCKER RETAIL, INC., Plaintiff,
v.
SBH, INC., Defendant.



The opinion of the court was delivered by: DEBORAH BATTS, District Judge

MEMORANDUM & ORDER

Plaintiff Foot Locker Retail, Inc. ("Foot Locker") commenced this action against Defendant SBH, Inc. ("SBH") alleging that SBH has violated federal and state trademark and unfair competition laws by interfering with Foot Locker's registration and use of the KINNEY family of trademarks, of which Foot Locker claims to be the rightful owner. SBH now moves to dismiss the Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b) (2), or, in the alternative, to transfer this case to the Eastern District of Missouri pursuant to 28 U.S.C. § 1404(a). For the following reasons, SBH's motion to dismiss or transfer venue is DENIED. I. BACKGROUND*fn1

Foot Locker is a corporation organized under the laws of New York and having a place of business at 112 West 34th Street, New York, New York. (Complaint ["Compl."] ¶ 4). A wholly-owned subsidiary of Foot Locker, Inc., Foot Locker is one of the world's leading footwear retailers, offering a wide variety of footwear products for sale in thousands of retail stores throughout the United States and the world. (Id. ¶ 6; Declaration of Gary Bahler ["Bahler Decl."] ¶ 1). Since 1894, Foot Locker and its predecessors in interest have used the marks "KINNEY," "KINNEY KIDS," and other marks containing the term "KINNEY" (collectively, the "KINNEY family of marks"), for footwear and retail services. (Compl. ¶ 7). Foot Locker is also the current owner of all statutory and common law rights in and to the KINNEY family of marks, and owns four United States trademark registrations containing the term KINNEY. (Id. ¶ 8).

  SBH is a corporation organized under the laws of Missouri, with its sole place of business at 677 North Ballas Road, St. Louis, Missouri, and it has only two employees, Steven Schuver, SBH's president, and his brother David Schuver, who is vice president. (Bahler Decl. ¶ 4; Declaration of Steven S. Schuver ["Schuver Decl."] ¶¶ 2-4). SBH is a trademark and patent holding company that gathers intellectual property, by purchase or aggression, and holds it with the goal of eventually licensing or selling the property to third parties. (Compl. ¶ 15). SBH has engaged in extensive activity in the footwear industry, regularly attending two large footwear shows held annually in Las Vegas and meeting with representatives from several major shoe companies. (Declaration of Michelle Mancino Marsh ["Marsh Decl."], Ex. A at 51). Through these outreach efforts, SBH has established business relationships with Nike, LA Gear, Payless Shoe Source, SG Footwear, Walmart and other shoe manufacturers and retailers around the country. (Id.)

  SBH has never maintained any bank accounts, security interests, real or personal property, or other assets in New York State, nor has it ever had any employees, agents, agents for service of process, shareholders or other representatives there. (Schuver Decl. ¶¶ 5, 8, 11). In addition, SBH has not made or entered into any contract in New York, nor does it derive any revenue from the State of New York or from residents of the State of New York (Id. ¶¶ 12-13). SBH does maintain a passive Internet website, accessible at the web address www.sbhgroup.com, which describes SBH's principal business services and other information relating to SBH but does not solicit customers from New York or any other locale and does not contain the word or mark KINNEY. (Id. ¶ 16). Visitors to the website cannot form contracts or transact any business with SBH via the website, but the website does contain email addresses by which website visitors may contact SBH to discuss its services. (Id.).

  In the fall of 2001, Steven Schuver placed a telephone call to Foot Locker's office in New York to ask whether it was in fact using the KINNEY registered trademarks and whether it would be interested in selling the trademarks to SBH. (Supplemental Declaration of Steven S. Schuver ["Schuver Supp. Decl."] ¶ 2; Marsh Decl., Ex. A at 27). Schuver received no response to the use question and was initially told that the trademarks were not for sale. (Marsh Decl., Ex. A at 27-28, Ex. B at 29). A series of phone calls between the two sides ensued at the conclusion of which Gary Bahler, Foot Locker, Inc.'s vice president and general counsel, informed Schuver that the price tag for the KINNEY trademarks was $50 million. (Marsh Decl., Ex. A. at 28, Ex. B at 30).

  Thereafter, in January 2002, SBH filed a Petition to Cancel Foot Locker's KINNEY trademark registrations with the United States Patent and Trademark Office's (PTO) Trademark Trial and Appeal Board ("the Cancellation Proceeding") and also filed three intent-to-use applications to register the KINNEY designation with the PTO. (Compl. ¶¶ 16-17; Bahler Decl. ¶ 3). Subsequently, in March 2003, in an effort to settle the Cancellation Proceeding, both Steven and David Schuver traveled to New York City for one day to meet with executives from Foot Locker, at which time "a possible business venture concerning the KINNEY marks" was discussed. (Bahler Decl. ¶ 4; Schuver Decl. ¶ 15).

  In June 2003, SBH discovered that Footstar, Inc., a New York-based competitor of Foot Locker's in the footwear and athletic apparel industry, had filed its own intent-to-use application in an attempt to register the KINNEY trademark. (Schuver Supp. Decl. ¶ 3; Marsh Decl., Ex. B at 14; Bahler Decl. ¶ 4). Steven Schuver then made a telephone call to Footstar from SBH's offices in Missouri to discuss SBH's licensing of its three intent-to-use applications for the KINNEY trademarks to Footstar; however, no agreement was made between the two companies. (Marsh Decl. ¶¶ 15-16; Schuver Supp. Decl. ¶ 3). In response to SBH's contact with Footstar and other alleged efforts by SBH "to collaborate with others to use and license KINNEY marks . . . and [to] represent? falsely that SBH is the owner of the marks," Foot Locker commenced the present action, alleging (1) false designation of origin and misrepresentation in commerce under 15 U.S.C. § 1125(a), (2) deceptive trade practices under N.Y. Gen. Bus. L. § 349, (3) common law unfair competition, misappropriation, and deceptive trade practices, and seeking a declaratory judgment as to Plaintiff's rights to the "KINNEY family of marks." (Compl. ¶¶ 19, 23, 31, 40, 45).

  SBH now moves to dismiss the present action under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, arguing that it does not have the requisite contacts with the State of New York to satisfy either the New York long-arm statute or constitutional due process. (Memorandum in Support of Defendant SBH, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction ["Def. Mem."] at 1). In the alternative, SBH requests that the Court transfer venue to the District of Missouri, Eastern Division pursuant to 28 U.S.C. § 1404(a) because such transfer is warranted by the convenience of the parties and witnesses and the interests of justice. (Id.) II. DISCUSSION

  A. Personal Jurisdiction

  In the face of a challenge to personal jurisdiction under Rule 12(b)(2), the plaintiff has the burden of establishing in personam jurisdiction. See Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994). "Eventually personal jurisdiction must be established by a preponderance of the evidence, either at an evidentiary hearing or at trial. But where the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor." A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79 (2d Cir. 1993).

  To determine whether personal jurisdiction is proper over a nonresident defendant in a diversity case, "the court must look first to the long-arm statute of the forum state. If the exercise of jurisdiction is appropriate under that statute, the court then must decide whether such exercise comports with the requisites of due process." Bensusan Restaurant Corp. v. King, 126 F.3d 25 (2d Cir. 1997) (citing PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997)); Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir.), cert. denied, 519 U.S. 1006 (1996); Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 127 (2d Cir. 2002). 1. New York Long-Arm Statute

  New York's long-arm statute confers personal jurisdiction over any non-domiciliary who:
(1) transacts any business within the state or contracts anywhere to supply goods or services in the state; or
(2) commits a tortious act within the state . . ., or
(3) commits a tortious act without the state causing injury to person or property within the state . . . if he
(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.
N.Y. CPLR § 302(a) (1) — (3).

  Plaintiff contends that the Court can exercise long-arm jurisdiction over Defendant under § 302(a)(3)(ii). (Plaintiff Footlocker's Memorandum in Opposition to Defendant's Motion to Dismiss ["Pl. Mem."] at 10).*fn2 Conferral of jurisdiction under this provision requires the satisfaction of five elements: (1) that defendant committed a tortious act outside of New York state, (2) that plaintiff's cause of action arises from that act, (3) that the act caused injury to a person or property within New York State, (4) that defendant expected or should reasonably have expected the act to have consequences in New York State, and (5) Defendant derived substantial revenue from interstate commerce. LaMarca v. Pak-Mor Manufacturing Co., 95 N.Y.2d 210, 215, 713 N.Y.S.2d 304, 307 (2000).

  a. Commission of Tortious Act Outside of New York Giving Rise to Present Causes of Action

  In the present case, Defendant allegedly contacted Footstar, Inc., a New-York based competitor of Plaintiff, by telephone from its offices in Missouri in June 2003 in an attempt to license to Footstar its three intent-to-use applications for the KINNEY trademarks that actually belonged to Plaintiff. (Marsh Decl., Ex. B at 14-16; Schuver Supp. Decl. ¶ 3). Such a communication on the part of Defendant, originating from outside New York State, contained false representations regarding Plaintiff's trademark rights and, together with other allegedly similar conduct by Defendant, forms the basis for Plaintiffs causes of action for federal, state and common law unfair ...


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