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IP Co. LLC v. General Communication

October 31, 2007


The opinion of the court was delivered by: Brieant, J.

Memorandum and Order

Before the Court in this action for declaratory judgment, is a motion for an order of dismissal, pursuant to Fed. R. Civ. Pro. § 12(b)(2), for lack of personal jurisdiction. The motion was filed on September 5, 2007 (Doc. No. 12). Opposition papers were filed on September 19, 2007 (Doc. No. 21). Reply papers were filed on September 28, 2007 (Doc. No. 22). Oral argument by both parties was heard on October 5, 2007.

The following facts are presumed true for the purposes of this motion only. James Gee, Jr., a resident of Tennessee, is the principal of IP Co. LLC (the "Plaintiff"), having its principal office in Ossining, New York in this district. Plaintiff is a shell entity that owns and manages a portfolio of intellectual properties owned by Mr. Gee. Plaintiff owns two federally registered trademarks which are used in connection with Mr. Gee's company, Global Cable Inc. ("Global Cable"). The trademarks are "GCI" and "GCI GLOBAL CABLE INC.". It is alleged that Global Cable has continually employed these two marks since 1995. Global Cable is a Georgia corporation that manufactures and repairs cable equipment and converters for consumers. Global Cable also refurbishes and repairs cable boxes on a large scale for cable television providers.

General Communications, Inc, is a publicly traded company based in Anchorage, Alaska. GCI Communications Corp. ("GCI") is a wholly owned subsidiary of General Communications, Inc. (collectively the "Defendants") that was founded in 1979. Both companies are incorporated in Alaska. GCI provides local wireless and long distance telephone, cable television, Internet and data communications services throughout Alaska. GCI owns four U.S. trademark registrations for its "GCI" mark, (U.S. Registration Nos.: 2281319; 2287633; 2287632; and 1304141), the earliest of which was issued in 1984 for "voice and data telecommunications services". The others cover a wide spectrum of telecommunication services. GCI claims to have invested over $750 million in its integrated communications assets and its annual advertising budget exceeds $1 million. Defendants assert that the GCI mark is highly recognized and the reputation and goodwill associated with its mark are valuable assets.

In 2006, GCI learned that Global Cable had applied for its two trademarks, which were issued by the United States Patent and Trademark Office ("USPTO"). The marks were registered on January 17, 2006 and March 14, 2006, respectively. On February 1, 2007, Defendants sent a cease and desist letter to Plaintiff's lawyer, located at Plaintiff's New York address. The letter asked Plaintiff to stop using the "GCI" trademark, surrender the two trademarks and abandon the domain name "". After receiving the letter, Plaintiff's counsel telephoned GCI's counsel. After multiple phone and e-mail conversations attempting to resolve the issue, Plaintiff filed this action for a declaratory judgment, holding that it does not infringe on Defendants' trademarks. The parties continued to exchange information for approximately three months, when Plaintiff then served the Summons and Complaint on Defendants in Anchorage.

Defendants contend that GCI has never been licensed to do business in New York nor has it ever conducted business here. GCI does not have an office or employ any employees in New York, own or rent any property in the state, or advertise or solicit business here. Overall, Defendants claim that they have no contacts with the State of New York sufficient to support personal jurisdiction.

Plaintiffs, however, allege various contacts between the Defendants and New York. First, the Plaintiffs claim that in 2001-2002, Global Cable contracted with Adelphia Communications Corporation to purchase thousands of cable boxes, which Global Cable then arranged to refurbish and resell to GCI. (See Plain. Memo Ex. D). Adelphia later breached its contract with Global Cable, at which time GCI recommended that Global Cable contact Contec, a cable brokerage firm in Schenectady, New York, that GCI "regularly purchase[d] cable equipment from". Global Cable did so and completed the transaction with GCI. During this transaction, it is contended that GCI did not object to Plaintiff's marks.

Plaintiff contends that the operations of a cable television provider require GCI to engage in contacts with numerous cable networks located in New York, such as paying subscription fees and special authorization from the networks to decode encrypted signals. Plaintiff maintains that television channel signals are changed on a regular basis. Defendants, however, claim that most of the network representatives that GCI deals with are based on the West Coast and that GCI "rarely interacts directly with network providers in New York".

Further, Plaintiff asserts that, although GCI does not provide service in New York, Defendant receives subscription fees from customers in New York through its website, which allows for the maintenance of accounts from anywhere around the world. Additionally, Plaintiff asserts that GCI was involved in the WorldCom, Inc. bankruptcy proceedings in the Southern District of New York in 2002, as a major creditor of WorldCom, and thus, the Defendants availed themselves of the benefits of this forum.

In addition to GCI's stock being traded on NASDAQ, Defendants officers travel to New York two or three times per quarter for meetings related to raising capital and other financial matters. Additionally, in 2003, Defendants obtained $50 million in financing from Credit Lyonnais in New York for assistance in building a fiber optic cable.

Plaintiff also maintains, and Defendants admit, that GCI purchases refurbished cable equipment from Contec, a company located in Schenectady, New York, since 2000. However, Defendants claim that the total value of such purchases from Contec during 2001 through 2007 amounts to approximately $13.5 million, only 0.37% of GCI's total purchases during that period.

In addition, in June 2007, Defendants awarded a $20.7 million contract to Globecomm System located in Hauppauge, New York to provide new software systems and platforms to assist in supporting and extending GCI's communication network throughout rural villages in Alaska.

Rule § 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction

In a Rule 12(b)(2) motion, the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant. "A plaintiff may carry this burden 'by pleading in good faith...legally sufficient allegations of jurisdiction, i.e., by making a 'prima facie showing' of jurisdiction." Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). "Where the issue is addressed on affidavits, all allegations are construed in the light most favorable ...

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