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Michael Miller Fabrics, LLC v. Studio Imports Ltd.

June 7, 2012

MICHAEL MILLER FABRICS, LLC, PLAINTIFF,
v.
STUDIO IMPORTS LTD., INC.,
DEFENDANT.



The opinion of the court was delivered by: Kimba M. Wood, U.S.D.J.:

OPINION AND ORDER

Plaintiff, Michael Miller Fabrics LLC ("Michael Miller Fabrics"), moves for an injunction restraining Defendant, Studio Imports Ltd., Inc. ("Studio Imports"), from further prosecuting the declaratory judgment action filed by Studio Imports against Michael Miller Fabrics in the United States District Court for the Southern District of Florida (the "Florida Action"), Studio Imports Ltd., Inc. v. Michael Miller Fabrics, LLC, 12 CV 60884 (S.D. Fla.).

BACKGROUND

Michael Miller Fabrics is a limited liability company incorporated in New York, with its principal place of business in New York City. Michael Miller Fabrics develops and designs collections of printed textiles for sale to manufacturers and retailers of clothing, accessories, home furnishings, bedding, and other consumer goods. To develop its collections, Michael Miller Fabrics hires artists to design its fabrics and also purchases and licenses exclusive rights in original patterns from independent designers.

Studio Imports is a limited liability company incorporated in Florida, with offices in Florida and in New York. Studio Imports designs, manufactures, and distributes handbags, wallets, and other women's accessories.

Michael Miller Fabrics alleges that Studio Imports has manufactured and sold throughout the United States handbags and accessories bearing designs which infringe copyrights owned by Michael Miller Fabrics. Upon discovering the alleged infringement, Michael Miller Fabrics sent Studio Imports a cease-and-desist letter on March 30, 2012. The parties then engaged in settlement negotiations, and Michael Miller Fabrics sought documents from Studio Imports regarding the extent of the alleged infringement.

Studio Imports provided only some of the information requested, and when the remainder was not forthcoming, Michael Miller Fabrics threatened to initiate litigation. An exchange of emails ensued, in which counsel for Studio Imports repeatedly delayed fulfillment of the document requests. Counsel for Michael Miller Fabrics ultimately wrote to counsel for Studio Imports on Thursday, May 10, 2012, saying that "if we do not receive all of the information set forth in our cease and desist by tomorrow May 11, 2012, we are prepared to proceed to litigation." Approximately two hours later, Studio Imports filed a two and one-half page complaint initiating the Florida Action.

Michael Miller Fabrics proceeded to file its complaint in the Southern District of New York two business days later, on May 15, 2012, alleging unfair competition, in violation of state common law, and copyright infringement, in violation of 17 U.S.C. §§ 101 et. seq. Michael Miller Fabrics also requested an Order to Show Cause as to why an order should not be entered enjoining Studio Imports from further prosecuting the Florida Action, which this Court granted. (Dkt. No. 4.) After reviewing briefing from the parties and hearing oral argument, the Court now considers whether an injunction restraining Studio Imports from prosecuting the Florida Action should issue.

DISCUSSION

I.Establishing Priority Among Multiple Suits

In Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215 (2d Cir. 1978), the Second Circuit explained the settled rule that the first-filed suit should have priority, "absent the showing of [a] balance of convenience in favor of the second action . . . or unless there are special circumstances which justify giving priority to the second." Id. at 218 (internal quotations omitted); accord City of New York v. Exxon Corp., 932 F.2d 1020, 1025 (2d Cir. 1991).

The presumption in favor of the first-filed suit, however, "is not to be applied in a 'rigid' or 'mechanical' way." Dornoch Ltd. v. PBM Holdings, Inc., 666 F. Supp. 2d 366, 369 (S.D.N.Y. 2009) (Rakoff, J.) (quoting Columbia Pictures Indus., Inc. v. Schneider, 435 F. Supp. 742, 747 (S.D.N.Y. 1977) (Lasker, J)). Indeed, "[t]he complex problems that can arise from multiple federal filings do not lend themselves to a rigid test, but require instead that the district court consider the equities of the situation when exercising its discretion." Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2d Cir. 2006).

A. "Special Circumstances"

The "special circumstances" in which a district court may dismiss the first-filed case without conducting an analysis of the "balance of convenience" are rare. Emp'rs Ins. of Wausau v. Fox Entm't. Grp., Inc., 522 F.3d 271, 275 (2d Cir. 2008). One such special circumstance "exists where the first-filed lawsuit is an improper anticipatory declaratory judgment action." Id. Another special circumstance exists "where forum shopping alone motivated the ...


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