People Express Airlines, Inc. v. 200 Kelsey Assocs., LLC

922 F.Supp.2d 536

PEOPLE EXPRESS AIRLINES, INC., A Delaware Corporation, Plaintiffs,

v.200 KELSEY ASSOCIATES, LLC, A New Jersey Limited Liability Company, Defendant.

Civil Action No. 4:12cv61.

United States District Court,

E.D. Virginia,

Newport News Division.

Feb. 5, 2013.

Duncan Glover Byers, Jeffrey Dennis Wilson, Byers Law Group, Norfolk, VA, for Plaintiff.

Paul David Anders, Richmond, VA, for Defendant.

OPINION AND ORDER

MARK S. DAVIS, District Judge.

This matter is before the Court on Defendant 200 Kelsey Associates, LLC's (“200 Kelsey”) motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) or, in the alternative, to dismiss in part pursuant to Federal Rule of Civil Procedure 12(b)(6) and to strike impertinent matter pursuant to Federal Rule of Civil Procedure 12(f). After examining the Complaint, 200 Kelsey's motion to dismiss and the associated memoranda, the Court finds that the facts and legal contentions are adequately presented and oral argument would not aid in the decisional process. Fed.R.Civ.P. 78(b); E.D. Va. Loc. Civ. R. 7(J). The matter is therefore ripe for decision. For the reasons set forth below, the Court GRANTS 200 Kelsey's motion to dismiss pursuant to Rule 12(b)(2). Because the Court finds it lacks personal jurisdiction, it does not reach 200 Kelsey's alternative ground for dismissal pursuant to Rule 12(b)(6) nor its motion to strike pursuant to Rule 12(f).

I. FACTUAL HISTORY¹

Plaintiff People Express Airlines, Inc. d/b/a PEOPLExpress Airlines or PEOPLExpress (“PEOPLExpress”) is a Delaware Corporation with a principle place of business in Newport News, Virginia. Defendant Kelsey is a limited liability company organized under the laws of the State of New Jersey with its principal place of business in New York. The suit seeks a declaration of the parties' rights in certain trademarks and judgment against 200 Kelsey for cybersquatting and unfair trade practices.

PEOPLExpress is a corporation that formed in the summer of 2011 with the intent to begin providing airline passenger service in Virginia under the “famous” brand and marks related to “PEOPLE EXPRESS,” including the word mark “PEOPLEXPRESS,” the combination mark “PEOPLExpress,” and a design mark depicting the profiles of two faces. The “PEOPLE EXPRESS” brand (“Brand”) and related marks (“Marks”) were previously used for passenger flight service by another company, also operating under the name PEOPLExpress, from 1981 until 1987, when that company ceased service after becoming part of another airline. Plaintiff PEOPLExpress claims no connection to the former PEOPLExpress. Plaintiff PEOPLExpress claims only that it intends to make use of the Brand and associated Marks made “famous” by the prior airline.

Plaintiff PEOPLExpress asserts that it intended to commence passenger service in the summer of 2012 and that in the summer of 2011 it began taking several actions in preparation for such service, including performing marketing and accounting studies of the Brand. PEOPLExpress claims that it has invested significant time and money in extensive preparations to use the Brand in commerce. Additionally, on September 22, 2011, PEOPLExpress filed an intent-to-use application with the U.S. Trademark Office. This application and the circumstances surrounding it give rise to the instant litigation.

Specifically, on January 18, 2012, the U.S. Trademark Office informed PEOPLExpress that it could not approve PEOPLExpress's intent-to-use application, because 200 Kelsey already held a prior-pending intent-to-use application for the mark “PEOPLE EXPRESS,” filed on September 16, 2009. PEOPLExpress claims that 200 Kelsey's pending intent-to-use application is the second such application that 200 Kelsey has filed with respect to the “PEOPLE EXPRESS” mark, and that 200 Kelsey filed this second application five days before the first application was to become abandoned due to 200 Kelsey's failure to file a statement of use. Thus, 200 Kelsey has allegedly kept the “PEOPLE EXPRESS” mark unavailable for registration since September 21, 2005, the date it filed its first intent-to-use application.

With respect to 200 Kelsey's second intent-to-use application, the U.S. Trademark office issued a Notice of Allowance on May 17, 2011. 200 Kelsey then filed for a six-month extension of time to file its statement of use on November 17, 2011, which extension was granted on November 19, 2011. PEOPLExpress claims that further extensions of time might be granted, effectively suspending any further action on 200 Kelsey's intent-to-use application until May 17, 2014, at the latest.

PEOPLExpress alleges that 200 Kelsey has a practice of registering trademark applications without having the intent to use the marks in commerce, and that 200 Kelsey continually extends its registrations so it may demand licenses from those, such as PEOPLExpress, who do intend to use the marks in commerce. PEOPLExpress claims that 200 Kelsey aims “to extort money” for marks it has never used and in which it has no legitimate rights. PEOPLExpress further alleges that, in addition to filing fraudulent trademark applications, 200 Kelsey registers domain names for marks in which it has no ownership or interest, and does not intend to use in any way, in an effort to “hold” the domain name. PEOPLExpress complains that, in accordance with this practice, 200 Kelsey registered the domain name www. people express airline. com on July 26, 2005 and the domain name www. people expressair. com on November 23, 2009.

Sometime after learning of 200 Kelsey's pending intent-to-use application, PEOPLExpress contacted 200 Kelsey regarding the mark. PEOPLExpress claims that 200 Kelsey refused to consider any agreement involving its application other than a “license” of the mark to PEOPLExpress pending the resolution of such application. PEOPLExpress complains that such a license agreement is improper because it would create in 200 Kelsey controlling rights to the mark where none currently exist.

II. PROCEDURAL HISTORY

PEOPLExpress initiated the instant action on April 26, 2010, when it filed a three-count Complaint against 200 Kelsey seeking a declaratory judgment (Count I) and alleging that 200 Kelsey cyber squatted in violation of the Lanham Act (Count II) and engaged in unfair trade practices (Count III).

PEOPLExpress specifically requests that the court (1) declare that PEOPLExpress's use of the “PEOPLE EXPRESS” mark does not infringe on the rights of 200 Kelsey; (2) declare that 200 Kelsey has no right, title, or interest in the marks or domain names involving the words PEOPLE and EXPRESS; (3) issue preliminary and permanent injunctions restraining 200 Kelsey from pursuing any existing or future trademark involving the names or logos associated with PEOPLExpress; (4) order 200 Kelsey to assign to PEOPLExpress all rights to any and all websites or domain names; and (5) order 200 Kelsey to abandon any and all trademark applications for any mark including the words “PEOPLE” and “EXPRESS” and any other mark associated with PEOPLExpress. PEOPLExpress also seeks actual and punitive damages, costs, and attorneys' fees.

On May 18, 2012, 200 Kelsey filed its motion to dismiss and a brief supporting such motion. ECF Nos. 5–6. PEOPLExpress filed its opposition brief on June 5, 2012. ECF No. 9. 200 Kelsey filed its reply brief on June 11, 2012. ECF No. 10. Therefore, 200 Kelsey's motion to dismiss is fully briefed and ripe for this Court's consideration.

III. DISCUSSION

If the Court lacks personal jurisdiction over 200 Kelsey, dismissal of all claims is appropriate.² Therefore, the Court begins by considering 200 Kelsey's Motion to Dismiss Pursuant to Rule 12(b)(2). Because the Court finds it lacks personal jurisdiction over 200 Kelsey, it does not reach 200 Kelsey's alternative ground for dismissal nor its motion to strike.

A. Standard of Review

Rule 12(b)(2) permits a party to request that a court dismiss an action on the ground that the court lacks personal jurisdiction over that party. Fed.R.Civ.P. 12(b)(2). When a defendant challenges the court's personal jurisdiction over him, the plaintiff bears the burden of proving that the court possesses personal jurisdiction by a preponderance of the evidence. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 59–60 (4th Cir.1993); Combs v. Bakker, 886 F.2d 673, 676 (4th Cir.1989). In cases where “the defendant provides evidence which denies facts essential for jurisdiction, ‘the plaintiff must, under threat of dismissal, present sufficient evidence to create a factual dispute on each jurisdictional element which has been denied by the defendant and on which the defendant has presented evidence.’ ” Colt Def., L.L.C. v. Heckler & Koch Def., Inc., No. 2:04cv258, 2004 U.S. Dist. LEXIS 28690, at *29–30 (E.D.Va. Oct. 22, 2004) (quoting Indus. Carbon Corp. v. Equity Auto & Equip. Leasing Corp., 737 F.Supp. 925, 926 (W.D.Va.1990)).

When deciding the question of its jurisdiction over a party, the Court may rule “on the basis only of motion papers, supporting legal memoranda and the relevant allegations of a complaint.” Combs, 886 F.2d at 676. In that context, “the burden on the plaintiff is simply to make a prima facie showing of a sufficient jurisdictional basis to survive the jurisdictional challenge.” Id. In evaluating a plaintiff's prima facie showing, “a district court may look to both plaintiff and defendant's proffered proof.” PBM Prods. v. Mead Johnson Nutrition Co., No. 3:09cv269, 2009 WL 3175665, at *2, 2009 U.S. Dist. LEXIS 93312, at *4 (E.D.Va. Sept. 29, 2009) (citing Mylan Labs., 2 F.3d at 62). However, “the court must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction.” Combs, 886 F.2d at 676. In any motion pursuant to Rule 12(b)(2), the ultimate question is whether the plaintiff has proven that the Court has...