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Hershey Co. v. Pagosa Candy Co.

April 10, 2008


The opinion of the court was delivered by: Sylvia H. Rambo United States District Judge


Before the court is a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2) or improper venue pursuant to Fed. R. Civ. P. 12(b)(3) filed by Defendant Pagosa Candy Company ("Pagosa"). Pagosa argues that Plaintiff's claims of trademark infringement, unfair competition and trademark dilution should be dismissed because this court lacks personal jurisdiction. In the alternative, Pagosa argues that change of venue is appropriate pursuant to 28 U.S.C. § 1404. For the reasons that follow, this court finds that personal jurisdiction over Pagosa in this judicial district is not proper. Rather than dismissing the case altogether, Pagosa's request for change of venue will be granted, and the action will be transferred to the District Court of Colorado pursuant to 28 U.S.C. § 1406(a).

I. Background

In deciding a motion to dismiss, the court is required to accept as true all of the factual allegations in the complaint, Erickson v. Pardus, - U.S. -, 127 S.Ct. 2197, 2200 (2007), and all reasonable inferences permitted by the factual allegations, Watson v. Abington Twp., 478 F.3d 144, 150 (3d Cir. 2007), viewing them in the light most favorable to the plaintiff, Kanter v. Barella, 489 F.3d 170, 177 (3d Cir. 2007). Accord Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) . "To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint and matters of public record." Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993) (citations omitted); see also Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2007). The court may consider "undisputedly authentic document[s] that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the [attached] document[s]." Id. For the purposes of this motion to dismiss, the court sets forth the facts stated in Plaintiffs' complaint and accepts them as true.

The Plaintiffs in this case (collectively, "Hershey") are The Hershey Company, Hershey Chocolate and Confectionary Corporation ("Hershey Chocolate") and Hershey Entertainment and Resorts Company ("Hershey Entertainment"). Hershey Chocolate owns certain trademarks that it licenses to The Hershey Company and Hershey Entertainment. Those trademarks include "Hershey The Sweetest Place on Earth," "The Sweetest Place on Earth," and other phrases containing the words "The Sweetest Place" or "The Sweetest" followed by references to locations associated with Hershey Chocolate and the town of Hershey, Pennsylvania. Hershey Chocolate and its licensees have been using these marks in this manner for almost twenty years. Hershey's substantial use and promotion of the marks make them well known and distinctive of its products, services and business and have created an excellent reputation among actual and potential purchasers of its products. (Doc. 18 ¶ 17.) By virtue of the extended use and widespread recognition of these marks, they are distinctive and famous within the meaning of Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c). (Id. ¶ 18.)

Hershey acts with diligence in monitoring the unauthorized use and misuse its marks. After Hershey began using its "Sweetest Place" marks, it discovered that Pagosa Candy Company was using the slogan "The Sweetest Place in the Rockies" on its internet web site in connection with its candy business. Pagosa Candy Company is the trade name of The Chocolate Robin Corporation, a closely-owned S-type Colorado corporation, with a principal place of business located in Pagosa Springs, Colorado. Hershey considered Pagosa's use of "The Sweetest Place in the Rockies" an infringement of its trademarks. Hershey contacted Pagosa in a letter dated March 29, 2007 complaining about the slogan and demanding Pagosa cease using it. Hershey received no reply to this demand letter and an additional demand letter sent on April 23, 2007. (Id. ¶¶ 21-22.) However, Pagosa did respond to Hershey's third demand letter of May 24, 2007. Pagosa's response included a denial that the slogan was an infringement of Hershey's marks. (Id. ¶ 23.)

Accordingly, Hershey filed a complaint against Pagosa on July 26, 2007, alleging various trademark violations seeking damages and injunctive relief.*fn1 (Doc. 1.) Pagosa was granted two extensions and then filed a motion to dismiss or transfer venue for lack of jurisdiction on October 29, 2007. (Doc. 13.) Hershey filed an amended complaint reiterating its earlier allegations on November 20, 2007. (Doc. 18.) Hershey asserts that this court has personal jurisdiction over Pagosa because Pagosa is using its infringing slogan in advertising directed to Pennsylvania, Pagosa distributes products offered and sold in connection with the infringing slogan in Pennsylvania, and Pagosa does business in the Commonwealth through its website and through "agents" in Pennsylvania. (Id. ¶ 12.) Pagosa filed a motion to dismiss for lack of jurisdiction or transfer venue presently before the court on December 5, 2007. (Doc. 19.) The issues have been fully briefed and are now ripe for disposition.

II. Legal Standard 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction

"Once [a court's jurisdiction] is challenged, the burden rests upon the plaintiff to establish personal jurisdiction." Gen. Elec. Co. v. Deutz Ag, 270 F.3d 144, 150 (3d Cir. 2001) (citing Mellon Bank (East) PSFS, Nat'l. Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)). A plaintiff may meet this burden by "establishing with reasonable particularity sufficient contacts between the defendant and the forum state." Mellon Bank, 960 F.2d at 1223 (quoting Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Assoc., 819 F.2d 434, 437 (3d. Cir. 1987)). "A court must take 'specific analytical steps' when determining whether it can assert personal jurisdiction over a non-resident defendant." Accuweather, Inc., v. Total Weather, Inc., 223 F. Supp. 2d 612, 613 (M.D. Pa. 2002) (quoting Pennzoil Prod. Co. v. Colelli & Assocs., Inc., 149 F.3d 197, 200 (3d Cir. 1998)).

The analysis becomes more complex when internet contacts are offered as a basis for a court's exercise of personal jurisdiction over a non-resident defendant. The internet allows businesses and customers to communicate with each other from anywhere in the world. Customers can also place orders from anywhere in the world. Because the internet has no boundaries, a court must consider whether the electronic contacts between the remote party and the party in the forum state are sufficient to satisfy the "minimum contacts" element of the personal jurisdiction analysis. See G. Peter Albert, Jr., et al., Intellectual Property Law in Cyberspace 2006 Cumulative Supplement 14-5 (2006). Courts in this circuit have addressed this specific issue, but the starting point in every analysis is the traditional personal jurisdiction framework.

A. Personal Jurisdiction

A federal district court sitting in Pennsylvania has jurisdiction over non-resident parties to the extent provided by Pennsylvania law. See Fed. R. Civ. P. 4(e); see also Mellon Bank, 960 F.2d at 1221. Pennsylvania's long-arm statute allows a court to exercise jurisdiction over a non-resident defendant "to the fullest extent allowed under the Constitution of the United States and may be based upon the most minimum contact with this Commonwealth allowed under the Constitution of the United States." See 42 Pa. Cons. Stat. § 5322(b); see also Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 63 (3d Cir. 1984). Accordingly, the reach of Pennsylvania's long-arm statute is "coextensive with the due process clause of the United States Constitution." Time Share, 735 F.2d at 63. The due process clause of the United States Constitution requires a non-resident defendant to have certain minimum contacts with the forum state in order for a court in that forum to properly exercise personal jurisdiction. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). General jurisdiction may be exercised over a non-resident defendant when the defendant has "continuous and systematic" contacts with the forum state. Int'l Shoe, 326 U.S. at 318.

If the defendant does not have continuous and systematic contacts with the forum state, the defendant may be subject to specific jurisdiction in the forum state. Deutz Ag, 270 F.3d at 150 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984)). Three elements must be established in order to warrant specific jurisdiction. Zippo Mfg. Co. v. Zippo Dot Com, 952 F. Supp. 1119, 1122-23 (W.D. Pa. 1997). First, the cause of action must "arise[] out of the defendant's contacts with the forum." Helicopteros Nacionales, 466 U.S. at 414 n.8. Second, the defendant must have "purposefully established 'minimum contacts' with the forum." Burger King v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting Int'l Shoe, 326 U.S. at 316). Finally, the exercise of personal jurisdiction must be reasonable, and must not offend "traditional notions of fair play and substantial justice." World-Wide Volkswagen, 444 U.S. at 292 (quoting Int'l Shoe, 326 U.S. at 316).

To establish the minimum contacts necessary to assert specific jurisdiction the defendant must have "purposefully availed itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 109 (1987) (quoting Burger King, 471 U.S. at 475). "Defendants who 'reach out beyond one state' and create continuing relationships and obligations with the citizens of another state are subject to regulation and sanctions in the other state for the consequences of their actions." Zippo, 952 F. Supp. at 1123 (quoting Burger King, 471 U.S. at 473). Specific jurisdiction is established when "the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen, ...

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