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Haas Outdoors, Inc. v. Dryshod International, LLC

United States District Court, N.D. Mississippi, Aberdeen Division

November 13, 2018

HAAS OUTDOORS, INC. PLAINTIFF
v.
DRYSHOD INTERNATIONAL, LLC and JAMES K. DONOHUE DEFENDANTS

          MEMORANDUM OPINION

         The Court today considers multiple motions to dismiss and transfer [10, 12, 16] filed by Defendants James Donohue and Dryshod, LLC. In this copyright and trademark infringement action, Haas alleges that Defendants James Donohue, on behalf of Dryshod began negotiations to license Haas' popular Mossy Oak Break-Up camouflage pattern for apparel produced by Dryshod. Donohue abruptly ended the negotiations and created his own pattern and trademark. Haas asserts this pattern too closely resembles Break-Up, and that the mark, MOBU, is intended to confuse customers into believing they are buying Mossy Oak products. Haas alleges that Defendants produced apparel bearing the infringing pattern and mark and sold it in the United States.

         Haas initially filed suit in the United States District Court for the Western District of Texas for copyright and trademark violations. After filing suit, Haas found some of the Dryshod apparel in this district, where Haas' headquarters lie. Haas purchased some of this apparel, dismissed the Texas suit, and refiled here.

         Defendants claim that they initially inquired about licensing Mossy Oak camouflage for use on boots designed by Donohue and Dryshod. At some point, Defendants decided to create their own pattern rather than licensing those owned by Haas. Defendants assert that they do not actually produce or sell any of the allegedly infringing products. Rather, they claim that they act as a "sourcing agent" for unaffiliated distributors by designing apparel and then finding manufacturers to produce the apparel, which is sold directly from the manufacturer to the distributor. It was one of these separate, unaffiliated distributors, Defendants claim, who put the products into Mississippi. Donohue and Dryshod filed motions to dismiss for lack of personal jurisdiction, to dismiss for improper venue, and to transfer venue back to the Western District of Texas.[1]

         Haas' claims the relationship between the Defendants and the distributors was a bit more involved. It claims Defendants and the distributors were involved in a joint business venture that warrants imputing any contacts in Mississippi to Donohue and Dryshod. The Court allowed limited discovery on the jurisdictional issues to proceed, and the parties have filed further briefs in support of their positions. The motions are now ready for review. For the reasons set forth below, the Court finds that Haas has failed to make a prima facie showing that personal jurisdiction over Defendants exists and that the case should be transferred.

         Analysis

         "When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident." Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994) (quoting Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985)). When the district court rules on the motion without an evidentiary hearing, the plaintiff may bear his burden by presenting a. prima facie case that personal jurisdiction is proper." Id. (citing Thompson v. Chrysler Motor Corp., 755 F.2d 1162, 1165 (5th Cir. 1985)). The Court takes the allegations of the complaint as true, unless they are controverted by opposing affidavits. Gardemal v. Westin Hotel Co., 186 F.3d 588, 592 (5th Cir. 1999) (citing Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990)). The Court may consider "affidavits, interrogatories, depositions, oral testimony, or any combination of recognized discovery methods." Zyfo?//v. DM Records, Inc., No. CIV.A.3:02-CV-1408-G, 2004 WL 1243153, at *5 (N.D. Tex. June 4, 2004) (citing Alfred v. Moore & Peterson, 117 F.3d 278, 281 (5th Cir. 1997)).

         "A federal district court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution." Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999).

         The Court first considers whether Mississippi's long-arm statute confers personal jurisdiction of Defendants. The long-arm statute confers jurisdiction over "[a]ny nonresident person, firm, general or limited partnership, or any foreign or other corporation not qualified under the Constitution and laws of this state as to doing business herein," in one of three ways. Miss. Code Ann. § 13-3-57. First, under the "contract prong", personal jurisdiction attaches to anyone who contracts with a resident of Mississippi where any part of the contract is performed in the state. Id. Second, under the "tort prong", personal jurisdiction may be had over anyone who commits "a tort in whole or in part in this state ..." Id. Finally, under the "doing business prong" a non-resident is subject to jurisdiction if it "performs any character of work or service" in Mississippi. Id.

         Haas contends that jurisdiction is proper over Defendants under the both the "doing business" and "tort" prongs. According, to Haas, Defendants are amenable to personal jurisdiction under the "doing business" prong because Defendants attempted to secure a trademark and copyright license from Haas in Mississippi, and because the "Dryshod Joint Venture" sold infringing products in Mississippi.

         Haas also argues that Defendants are amendable to jurisdiction under the "tort prong" because infringing products were sold here and so Haas suffered injury here. Alfred v. Moore & Peterson, 117 F.3d 278, 282 (5th Cir. 1997) ("Under the tort prong of the Mississippi long-arm statute, personal jurisdiction is proper if any element of the tort (or any part of any element) takes place in Mississippi.") Haas also contends that because it is a Mississippi corporation, any infringement injury occurred in Mississippi.

         The Court finds that there is no action taken by the Defendant's themselves that would implicate any of the three avenues of personal jurisdiction under Mississippi's long arm statute.

         There are no facts that suggest Defendants themselves "do business" in Mississippi. Defendants do not sell, advertise, or otherwise transact any sort of business within the state. Haas asserts that Defendants license negotiations with Haas constitute doing business in Mississippi. These discussions with Haas took place through emails and phone calls over a four-month period, before Defendants ended licensing efforts. See PL's Resp. in Opposition, Ex. 2-3, 5-9 [73-2, 73-3, and 73-5 through 73-9] (draft license agreements and emails between Defendants and Haas); Pi's Resp., Ex. 4 James Donohue Dep. at 31-34 [73-4]. The Defendants unconsummated negotiations to secure a license, however, do not constitute "doing business" is in the state. Cypress Pharm., Inc. v. Tiber Labs., LLC, 504 F.Supp.2d 129, 135-56 (S.D.Miss. 2007); Peterson v. Test Int'l, EC, 904 F.Supp. 574, 579 (S.D.Miss. 1995) ("Moreover, mere negotiations or solicitation ... by a nonresident defendant from an out-of-state locus is not "doing business" in Mississippi.").

         Nor is there any action by the Defendant's themselves which could be considered committing any element or part of an element within Mississippi. That Haas resides in Mississippi does not necessarily mean the injury occurred in Mississippi, because the actual injury must be distinguished from "its resultant consequences". Alfred, 117 F.3d at 281. Thus, in the trademark context, courts have held that the tort occurs where infringing sales are made, not simply where the mark owner resides. See McRae's, Inc. v. Hussain, 105 F.Supp.2d 594, 597 (S.D.Miss. 2000) (collecting cases). The evidence provided bears out that it was Team J, one of Dryshod's distributors, who distributed the infringing products to the stores in Mississippi. PL's Resp., Ex. 16, Team J Sales to Mississippi [73-15].

         Beyond the fact that there is no allegation that Dryshod themselves sold infringing products in Mississippi, Haas has shown no evidence that a trademark injury occurred in Mississippi at all. The only retail purchase of the offending goods was made by Haas' employees. February 8, 2018 Receipt [25-3]. But "trademark claims are founded on notions of customer confusion." 721 Bourbon, Inc. v. House of Auth, LLC,140 F.Supp.3d 586, 596 (E.D. La. 2015) (holding there was no personal jurisdiction in trademark case where the only evidence of a sale in forum state was a purchase made by plaintiff). It cannot be said that Haas was "confused as to the source of the products in question." Id. It clearly ...


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