Opinion
No. 04 Civ. 5002 (JSR).
February 14, 2005
MEMORANDUM ORDER
Plaintiffs, both New York companies, allege that defendants have infringed their copyright by manufacturing and selling a wall covering design known as "Painted Desert." Defendants have moved to dismiss for lack of personal jurisdiction over both the corporate defendant, U.S. Vinyl Manufacturing Corp. ("U.S. Vinyl"), and the individual defendant, U.S. Vinyl President Steven W. McCloud. For the reasons stated below, the motion is denied.
The pertinent facts are as follows. U.S. Vinyl is incorporated in Texas and based in Georgia. Declaration of Steven W. McCloud, 10/6/04, ¶ 8. U.S. Vinyl manufacturers vinyl wall coverings and sells them primarily to large commercial customers such as hotel chains. Id. ¶ 8. The Painted Desert wall coverings at issue in this case were designed and manufactured in Georgia and have not been sold in New York. Id. ¶¶ 15-17. However, it is undisputed that the chains to which defendants sell their goods generally have numerous properties in New York. Moreover, in response to what purported to be an ordinary purchasing inquiry made by an investigator working for plaintiffs, a U.S. Vinyl employee sent a sample book that included the allegedly infringing pattern to a New York City address. Declaration of William B. Belmont, 8/17/04, ¶ 4. Defendants argue that this action should not be attributed to the company because it was carried out by a low-level employee who had not received an instruction not to mail out the sample book in question. In the absence of any evidence that the employee was actually disobeying a company directive, there is no case law supporting this proposition. Also rejected is defendants' argument that this evidence should be excluded because plaintiffs' actions violated ethical rules. It is not "an end-run around the attorney/client privilege" if investigators merely "recorded the normal business routine" rather than interviewing employees or tricking them "into making statements they otherwise would not have made." Gidatex v. Campaniello Imports, Ltd., 82 F. Supp. 2d 119, 122 (S.D.N.Y. 1999).
On a motion to dismiss for lack of jurisdiction, the Court may consider affidavits and other materials outside the pleadings, while still resolving all doubts and factual disputes in favor of the plaintiff. See Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir. 2001).
In a federal question case involving a statute such as the Copyright Act that does not have its own jurisdictional rules, a federal court applies the personal jurisdiction rules of the forum state, here, New York. PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997). Under New York law, personal jurisdiction does not require that a tort be committed within the state. It is sufficient that the defendant's tortious act causes "injury to person or property within the state," the defendant "expects or should reasonably expect the act to have consequences in the state," and the defendant "derives substantial revenue from interstate or international commerce." N.Y.C.P.L.R. § 302(a)3, 302(a)3(ii). Here, because the plaintiffs (and their intellectual property) are based in New York, the injury is felt within the state no matter where the infringement takes place. See, e.g., Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 204 (1978) (finding financial injury to be felt in New York where defendant's out-of-state acts of unfair competition and misappropriation of trade secrets threatened loss of New York sales). U.S. Vinyl conducts business with large commercial customers, and therefore it derives substantial revenues from interstate and/or international commerce.
Moreover, as noted above, defendants sell their patterns to major hotel chains with numerous properties in New York and therefore must reasonably expect that sales of infringing products to those chains will have consequences in New York. Furthermore, as shown by the investigator's inquiry, defendants have made samples of the infringing patterns available in New York, even if they have not actually consummated a sale in the state. Cf. Citigroup Inc. v. City Holding Co., 97 F. Supp. 2d 549, 568 (S.D.N.Y. 2000) (finding it reasonably foreseeable that publication of Websites with offending marks would have consequences in New York); Pilates, Inc. v. Pilates Inst., Inc., 891 F. Supp. 175, 180 (S.D.N.Y. 1995) (finding personal jurisdiction where defendant mailed advertising for infringing product into state). Further still, the instant parties have been involved for years in other trademark infringement litigation, putting defendants on full notice that a New York company is affected by their actions.
Finally, as president of U.S. Vinyl, McCloud is subject to personal jurisdiction along with his company, so long as he can be held personally liable for his company's acts of infringement as alleged in the complaint. See, e.g., Editorial Musical Latino Ams., S.A. v. MAR Int'l Records, 829 F. Supp. 62, 64 (S.D.N.Y. 1993).
Accordingly, defendants' motion to dismiss for lack of personal jurisdiction is denied.
SO ORDERED.