UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA
December 21, 2010
CYTOSPORT, INC., A CALIFORNIA CORPORATION, PLAINTIFF,
CYTOGENIX SPORTS LABORATORIES, SRL, A BARBADOS CORPORATION, DEFENDANT.
MEMORANDUM AND ORDER RE:
MOTIONS TO DISMISS AND TO AMEND
Plaintiff CytoSport, Inc. ("CytoSport"), brought this action against defendant Cytogenix Sports Laboratories, SRL ("Cytogenix Sports Laboratories"), alleging trademark infringement and other claims. Defendant now moves to dismiss for lack of personal jurisdiction and insufficient service of process. Plaintiff also moves for leave to amend its First Amended Complaint ("FAC").
I. Factual and Procedural Background Plaintiff is a California corporation headquartered in Benecia, California, and is in the business of manufacturing and marketing various dietary supplement products using a family of trademarks that employ the prefix "Cyto," including "CytoSport," "Cyto Gainer," and "CytoMax." (FAC ¶¶ 1, 8, 10-13.) Defendant is a "Barbados society."*fn1 (Id. ¶ 2.) Plaintiff alleges that defendant is marketing and promoting products called "Cytonox," "Cytocell," and "Cytogenix," which directly compete with plaintiff's "Cyto" products. (Id. ¶¶ 18-20, 24-26, 30-32.) Defendant admits that it is the "owner" of trademarks for Cytonox and Cytocell, which it licenses to Iovate Health Sciences International, Inc. ("Iovate International"), a Canadian corporation, but claims that it is only a "repository of trademark rights." (Skinner Decl. in Supp. of Def.'s Mot. to Dismiss ("Skinner Decl.") ¶¶ 5-6 (Docket No. 24).)
Plaintiff brought this action against defendant on March 23, 2010 (Docket No. 2), and filed the FAC on October 27, 2010. (Docket No. 12.) The FAC alleges claims for trademark infringement, unfair competition, and trademark cancellation. (Id.) On November 8, 2010, Iovate International filed a declaratory judgment action against CytoSport in the Western District of New York, seeking a judgment that its use of Cytogenix Sports Laboratories' trademarks does not infringe on CytoSport's rights. (Def.'s Mem. in Supp. of Mot. to Dismiss ("Def.'s Mem.") at 2:19-24 (Docket No. 21).)
The names of all the potentially interested parties require clarification. Currently involved in the suit are CytoSport as plaintiff and Cytogenix Sports Laboratories as defendant. The parties mention Cytogenix Laboratories, SRL ("Cytogenix Laboratories"), as an entity that might actually own some of the trademarks at issue. Cytogenix Laboratories, like Cytogenix Sports Laboratories, is a Barbados corporation, now dissolved, with the same address and the same business model of acting as a "repository of trademark rights." (See Def.'s Reply Mem. in Supp. of Mot. to Dismiss ("Def.'s Reply") at 1:15-2:5 (Docket No. 48).) There are also multiple Iovate-related corporations, including Iovate International, Iovate Health Sciences U.S.A. Inc., and Iovate Health Sciences Inc. (See id. at 2:6-19.)
Soon after plaintiff filed the initial Complaint, it entered into settlement discussions with counsel for defendant. (Pl.'s Mem. in Opp'n to Def.'s Mot. to Dismiss ("Pl.'s Opp'n") at 3:17-18 (Docket No. 42).) Counsel for defendant entered an appearance in the case on October 13, 2010. (Docket No. 9.) During the settlement negotiations, plaintiff proposed a settlement that included defendant and "Iovate Health Sciences" as defendants. (Pl.'s Opp'n at 4:1-2.) In response, defendant's counsel deleted both defendants as parties to the agreement, and added "Iomedix Trademark Ltd." as defendant, listing its place of business as 381 North Service Road West, Oakville, Ontario L6M 0H4. (Id. at 4:2-9.) In a later version, Iomedix was removed by defendant, and "Cytogenix Trademark Ltd." was listed as defendant, with the same address in Ontario. (Id. at 4:10-13.)
When settlement discussions broke down, plaintiff served the Complaint on defendant at the address in Ontario. (Id. at 4:22-24.) Records on file with the Canadian Intellectual Property Office relating to the trademarks at issue specify that the Ontario address was also the address of defendant's designated representative regarding trademark applications or registrations in Canada, Jo-Ann Heikkila. (Id. at 4:25-28; Def.'s Reply at 13:26-14:16.) The FAC was similarly served. (Def.'s Mem. at 9:1-6.) Defendant's actual address is in Barbados. (Def.'s Mem. at 8:10-12.)
Defendant now moves to dismiss the FAC pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and Rule 12(b)(5) for insufficient service of process. Plaintiff moves for leave to amend its FAC to include Iovate Health Sciences International, Inc., and Iovate Health Sciences U.S.A. Inc. as defendants and to add one more cause of action.
A. Motion to Dismiss
1. Service of Process
Federal courts cannot exercise personal jurisdiction over a defendant without proper service of process. Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987). Insufficient service can result in dismissal under Federal Rule of Civil Procedure 12(b)(5). To determine whether service of process was proper, courts look to the requirements of Federal Rule of Civil Procedure 4. See Fed. R. Civ. P. 4. Rule 4(h) governs service over domestic and foreign corporations.
Rule 4(h)(2) provides that a foreign corporation may be served in "a place not within any judicial district of the United States, in any manner prescribed by Rule 4(f) for serving an individual, except personal delivery . . . ." Fed. R. Civ. P. 4(h)(2). Rule 4(f) governs service of an individual in a foreign country and states that service abroad is to be effected "by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extra-judicial Documents." Fed. R. Civ. P. 4(f)(1).
The Convention on Service Abroad of Judicial and Extra-judicial Documents in Civil and Commercial Matters, Nov. 15, 1965 (Hague Service Convention), (1969) 20 U.S.T. 361, T.I.A.S. No. 6638, referenced in Rule 4(f)(1), is a multi-national treaty that governs service of summons on persons in signatory foreign countries. Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 698 (1988). Each member state must establish a "central authority" for receiving and processing requests for service upon defendants residing within the state. Id. at 698-99. Once a central authority receives a request in the proper form, it must serve the documents by a method prescribed by the internal law of the receiving state or by a method designated by the requester and compatible with that law. Id. at 699. A signatory to the Convention may also consent to other methods of service within its boundaries. See 20 U.S.T. 361, T.I.A.S. No. 6638, Arts. 8, 10. Barbados is a signatory to the Convention. See Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court for the Southern District of Iowa, 482 U.S. 522, 524 n.1 (1987). Even if plaintiff's method of service would have been proper under the Hague Convention, the address to which service was effected was not defendant's proper address.
However, even if service was not accomplished in conformance with Rule 4, "[s]o long as a party receives sufficient notice of the complaint, Rule 4 is to be 'liberally construed' to uphold service." Travelers Cas. & Sur. Co. of Am. v. Brenneke, 551 F.3d 1132, 1135 (9th Cir. 2009) (quoting Chan v. Soc'y Expeditions, Inc., 39 F.3d 1398, 1404 (9th Cir. 1994)). The Ninth Circuit applies a flexible approach to determine whether to permit the defective service to stand. In Borzeka v. Heckler, 739 F.2d 444, 447 (9th Cir. 1984), the Ninth Circuit adopted a rule permitting courts to overlook a non-compliant service of process provided that (1) the party to be served received actual notice, (2) the defendant would not be prejudiced by the defect in service, (3) there was a justifiable excuse for the failure to properly serve, and (4) the plaintiff would be severely prejudiced if the complaint were dismissed. Id.
Defendant does not argue that it did not have actual notice or that it would be prejudiced by maintaining the action (see Def.'s Reply at 15:11-12, n. 12), and the court finds that the first two prongs are therefore met. Defendant, which had been in settlement discussions with plaintiff for several months after the complaint was filed, was certainly on notice of the suit and cannot have been prejudiced by the non-compliant service. Furthermore, defendant did not inform plaintiff that service of the initial Complaint was insufficient, and thus plaintiff proceeded to serve the FAC in the same fashion.
As to whether plaintiff had a justifiable excuse for failure to properly serve, it has sufficiently demonstrated that the confusion surrounding each of the relevant parties and their addresses constituted a justifiable excuse. CytoSport attempted service of the Complaint and the FAC on Cytogenix Sports Laboratories at the address given to it by defendant's counsel multiple times during settlement discussions. (See Pl.'s Opp'n at 4:2-13.) That address was also the address on file with the Canadian Intellectual Property Office for Cytogenix Sports Laboratories. (Id. at 4:25-28.) While Cytogenix Sports Laboratories also had an address in Barbados, the court can understand plaintiff's confusion. In light of the fact that defendant does not contest actual notice, and thus no harm occurred as a result of the improper service, the court finds that plaintiff had a justifiable excuse for the attempted service in Canada.
Finally, plaintiff has shown that it would be prejudiced if the non-compliant service resulted in dismissal of the suit. If the suit were dismissed for non-compliance with the rules of service, plaintiff could properly serve defendant and start the suit over again. While there is no evidence that plaintiff would be barred from refiling the case in the Eastern District of California, the parties seem to agree that the first-to-file rule would then potentially result in transfer of the newly re-filed case to the Western District of New York, where Iovate International's declaratory judgment case would have become the first-filed action upon dismissal of the instant action. (See Pl.'s Opp'n at 20:13-27; Def.'s Reply at 16:1-9.)
The prejudice described is thus essentially that of being denied plaintiff's choice of forum. Dismissal and subsequent re-filing solely to perfect service of process would also unnecessarily burden the resources of the parties and the court. Denying plaintiff its choice of forum may not be especially prejudicial. However, given the complete lack of prejudice to defendant, the fact that actual notice was clearly accomplished, and the confusion, if not purposeful obfuscation on the part of defendant, leading to the technical defect in service, the court finds that plaintiff substantially complied with Rule 4. Accordingly, the court will not dismiss the FAC for failure to properly serve defendant. See Borzeka, 739 F.2d at 447.
2. Personal Jurisdiction
A plaintiff has the burden of establishing that the court has personal jurisdiction over a defendant. Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (citing Cubbage v. Merchent, 744 F.2d 665, 667 (9th Cir. 1984)). On a motion to dismiss, a plaintiff "need make only a prima facie showing of jurisdictional facts . . . . That is, the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant." Id. (quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). When not directly controverted, a plaintiff's version of the facts must be taken as true, and conflicts between the facts contained in the parties' affidavits should be resolved in favor of the plaintiff. Id. Once a defendant has contradicted the allegations contained in the complaint, however, a plaintiff may not rest on the pleadings, but must present evidence which, if true, would support the exercise of personal jurisdiction. Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1284-85 (9th Cir. 1977).
Pursuant to Federal Rule of Civil Procedure 4(k)(2), known as the federal long-arm statute, a plaintiff can establish jurisdiction over a defendant based on the aggregate contacts of the defendant with the United States as a whole. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006). To do so, the plaintiff must prove three factors. "First, the claim against the defendant must arise under federal law. Second, the defendant must not be subject to the personal jurisdiction of any state court of general jurisdiction. Third, the federal court's exercise of personal jurisdiction must comport with due process." Id. at 1159 (internal citations omitted).
Here, the first factor is met because plaintiff brings claims for trademark infringement under the Lanham Act, 15 U.S.C. §§ 1051-1127. The second factor is met if a defendant does not identify another state court in which the suit could proceed. Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 461 (9th Cir. 2007). If "defendant contends that he cannot be sued in the forum state and refuses to identify any other where suit is possible, then the federal court is entitled to use Rule 4(k)(2). This procedure makes it unnecessary to traipse through the 50 states . . . ." Id. (quoting ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 552 (7th Cir. 2001)). Defendant in this case has not identified any other jurisdiction where suit is possible, so the second factor is satisfied.*fn2
For the third factor, due process, the court asks whether the defendant "has certain minimum contacts with the relevant forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006) (en banc) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)) (internal quotation marks omitted). Sufficient "minimum contacts" can give rise to "general jurisdiction" or "specific jurisdiction." Unocal Corp., 248 F.3d at 923. General jurisdiction applies if the defendant's activities in the forum "are substantial, continuous and systematic," whereas specific jurisdiction applies if a defendant's "less substantial contacts with the forum give rise to the cause of action before the court." Id. Because plaintiff has not presented any argument in support of general jurisdiction over defendant in this action, the court will limit its analysis to determining whether specific jurisdiction exists.
The Ninth Circuit analyzes specific jurisdiction according to a three-prong test:
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.
Yahoo! Inc., 433 F.3d at 1205-06 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)). The plaintiff bears the burden of satisfying the first two prongs of the test. Menken v. Emm, 503 F.3d 1050, 1057 (9th Cir. 2007). If the plaintiff succeeds in satisfying both of the first two prongs, "the burden then shifts to the defendant to present a compelling case that the exercise of jurisdiction would not be reasonable." Id. (quoting Schwarzenegger, 374 F.3d at 802) (internal quotation marks omitted).
At its base, due process seeks to ensure that a defendant is not haled into court for contacts that are random, fortuitous, or attenuated. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). It places responsibility on a defendant's own actions that create a connection with the forum. Id. The Ninth Circuit's flexible approach allows a lesser showing of contacts if considerations of reasonableness are met. Ochoa v.
J.B. Martin & Sons Farms, Inc., 287 F.3d 1182, 1188 n.2 (9th Cir. 2002) ("Jurisdiction may be established with a lesser showing of minimum contacts 'if considerations of reasonableness dictate.'"
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(quoting Haisten v. Grass Valley Med. Reimbursement Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986))).
a. Purposeful Availment
A showing that a defendant purposefully availed himself of the privilege of doing business in a forum state typically consists of evidence of the defendant's actions in the forum, such as executing or performing a contract there. Schwarzenegger, 374 F.3d at 802. In this way, the defendant purposely avails himself of "the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958). In exchange for the forum state's benefits and protections, the defendant must submit to the burden of litigation in the forum state. Burger King, 471 U.S. at 476. Here, the "forum state" is the United States as a whole under the federal long-arm statute. Pebble Beach, 453 F.3d at 1159.
By submitting trademark applications for the "Cyto" products to the United States Patent and Trademark Office ("USPTO"), defendant purposefully availed itself of the privilege of doing business in the United States. See Monster Cable Prods., Inc. v. Euroflex S.R.L., 642 F. Supp. 2d 1001, 1009 (N.D. Cal. 2009) (application for trademark registration constitutes substantial contact); cf. Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1353 (Fed. Cir. 2002) (obtaining a patent constitutes purposeful availment); Nat'l Patent Dev. Corp. v. T.J. Smith & Nephew Ltd., 877 F.2d 1003, 1010 (D.C. Cir. 1989) (en banc) ("By registering a patent in the United States Patent Office, a party residing abroad
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purposefully avails itself of the benefits and protections patent registration in this country affords.").
Furthermore, while the exact contours of the relationships within and between the Cytogenix companies and the Iovate companies are unclear at this point, it is clear that someone is currently using the marks in commerce in the United States. (See Bettilyon Decl. in Supp. of Opp'n to Def.'s Mot. to Dismiss ("Bettilyon Decl.") Ex. 5 (Docket No. 42 Ex. 1) (picture of packaging of Cytocell product)); see 15 U.S.C. § 1051(a)(3)(C) (requiring applicant for trademark registration to state that "the mark is in use in commerce"). Even if defendant merely licenses the marks to Iovate International, the ability to license trademarks registered with the USPTO for use in the United States allows the parties to take advantage of the rights and privileges of United States law. Cf. Deprenyl, 297 F.3d at 1353 ("Licensing the practice of the invention claimed in a United States patent constitutes additional purposeful availment of the benefits of United States patent law. . . . [T]he act of contracting for consideration in exchange for licensing the practice of an invention claimed in a United States patent constitutes purposeful availment of the benefits of United States patent law."). Thus, defendant has clearly purposefully availed itself of the rights and privileges of the United States.
b. Claims Arise from Forum-Related Activities The second prong in establishing whether defendant has sufficient minimum contacts to constitute specific personal jurisdiction requires plaintiff to show that its claims arise out of or relate to defendant's forum-related activities. Yahoo!
Inc., 433 F.3d at 1206 (quoting Schwarzenegger, 374 F.3d at 802). "This step explores the relationship between the cause of plaintiff's harm and the defendant's acts identified as creating purposeful contacts with the forum state." Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987). Courts evaluate this relationship along a continuum. On one end, where a defendant has multiple and significant contacts to support general jurisdiction, no relationship is needed between the contacts and the cause of action. On the other end, where there is only one contact with the forum state, "the cause of action must arise out of that particular purposeful contact of the defendant with the forum state." Id.
As explained above, plaintiff has alleged that defendant purposely availed itself of the benefits of the United States both by applying for trademark registrations and by using and licensing those marks in the United States. The FAC alleges that defendant "manufactures, markets and sells a powdered nutritional supplement product using the mark Cytonox." (FAC ¶ 18.) The FAC makes similar allegations regarding "Cytocell" and "Cytogenix." (Id. ¶¶ 24, 30.) Defendant does not dispute the fact that it applied for trademark applications, and admits that it licenses the trademarks to Iovate International.
Defendant has, however, contradicted the allegations regarding use of the products by submitting a declaration stating that defendant only acts as a repository of trademark rights, which it exclusively licenses to Iovate International, and that it did not manufacture, advertise, promote, or sell any product whatsoever. (Skinner Decl. ¶¶ 5-6, 8.) In response, plaintiff has submitted evidence that "Cytogenix Laboratories" is selling the products. (Bettilyon Decl. Exs. 3, 5.) For example, plaintiff submits a picture of the Cytocell product, which prominently displays the words "Cytogenix Laboratories" above the name of the product, and includes the following language on the back of the product: "Distributed by Iovate Health Sciences U.S.A. Inc. . . . Made in the U.S.A. . . . The CytoCELLTM trademark is owned by Cytogenix Sports Laboratories." (Id. Ex. 5.) Defendant responds by stating in a declaration that "Cytogenix Laboratories has always been a separate legal entity from Cytogenix Sports Laboratories, SRL ("CSL"). For example, the two companies have had separate bank accounts and neither acted as an agent or on behalf of the other." (Dohaney Decl. in Supp. of Def.'s Reply Mem. in Supp. of Mot. to Dismiss ¶ 4 (Docket No. 50).) Defendant also contends that Cytogenix Laboratories, like Cytogenix Sports Laboratories, is merely a repository of trademark rights licensed to Iovate International, and the use of its name, itself a trademark, on a product does not indicate otherwise. (Id. ¶¶ 6-7.)
Even if defendant has not itself sold the products in the United States, which the court cannot determine at this time, plaintiff's claims arise from defendant's forum-related activities. The Ninth Circuit applies a "but for" test to determine whether a claim arises from forum-related activities. Terracom v. Valley Nat'l Bank, 49 F.3d 555, 561 (9th Cir. 1995). This test asks whether, but for a defendant's contacts with the forum state, the plaintiff's claims against defendant would have arisen. Id. The answer here is clearly no. But for defendant's trademark applications and licensing agreement giving Iovate International the exclusive right to sell the "Cyto" products in the United States, plaintiff would not have claims for trademark infringement and unfair competition regarding its "Cyto" products. Cf. Deprenyl, 297 F.3d at 1355 (patent infringement litigation arose out of the contacts of "obtaining a United States patent and negotiating an ongoing license of the claimed invention"). In light of the trademark registration applications and the licensing of the marks for use in the United States, the court finds that plaintiff's claims arise from defendant's forum-related activities.
c. Fair Play and Substantial Justice Because plaintiff has satisfied the first two prongs of the test for specific jurisdiction, the burden shifts to defendant "to 'present a compelling case' that the exercise of jurisdiction would not be reasonable." Menken, 503 F.3d at 1057 (quoting Schwarzenegger, 374 F.3d at 802). To determine the reasonableness of exercising jurisdiction over a defendant, the court considers the following factors:
(1) the extent of the defendant['s] purposeful interjection into the forum state's affairs; (2) the burden on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of the defendant's state; (4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum.
Id. at 1058 (quoting CE Distrib., LLC v. New Sensor Corp., 380 F.3d 1107, 1112 (9th Cir. 2004)).
As to the first factor, some cases in the Ninth Circuit
"have suggested that once the minimum contacts threshold is met the degree of intrusion into the forum becomes irrelevant." Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1488 (9th Cir. 1993) (citing Corporate Inv. Bus. Brokers v. Melcher, 824 F.2d 786, 787 (9th Cir. 1987)); see Menken, 503 F.3d at 1062 (Bybee, J., concurring). Nonetheless, other cases provide that "[e]ven if there is sufficient 'interjection' into the state to satisfy the [purposeful availment prong], the degree of interjection is a factor to be weighed in assessing the overall reasonableness." Core-Vent Corp., 11 F.3d at 1488 (quoting Ins. Co. of N. Am. v. Marina Salina Cruz, 649 F.2d 1266, 1271 (9th Cir. 1981)) (alterations in original).
Although defendant's contacts are sufficient to satisfy the first two prongs of the test for personal jurisdiction, the amount of interjection is not overwhelming. For example, the parties have not presented information regarding the extent of defendant's activities in the United States, such as sales figures for the "Cyto" products. Thus, this factor weighs slightly against the reasonableness of exercising personal jurisdiction over defendant. Nonetheless, this factor does not "weigh heavily" in defendant's favor since defendant's contacts "were sufficient to meet the purposeful availment prong." Id.
Regarding the second factor, the court acknowledges that defendant, a Barbados corporation, would be burdened by litigating this case in California. However, "with the advances in transportation and telecommunications and the increasing interstate practice of law, any burden is substantially less than in days past." Menken, 503 F.3d at 1060 (quoting CE Distrib., 380 F.3d at 1112). Indeed, the Ninth Circuit provides that even where a defendant must travel from a foreign country, "this factor is not dispositive" as to the reasonableness of exercising personal jurisdiction. Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1115 (9th Cir. 2002) (citing Sinatra v. Nat'l Enquirer, Inc., 854 F.2d 1191, 1199 (9th Cir. 1988)); see, e.g., Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1132-33 (9th Cir. 2003); Core-Vent Corp., 11 F.3d at 1488-89. Therefore, although this factor weighs in defendant's favor, the court does not find it wholly persuasive.
The third factor concerns the extent to which the district court's exercise of jurisdiction would conflict with the sovereignty of Barbados, defendant's state of residence. "[F]oreign nations present a higher sovereignty barrier than that between two states within our union." Marina Salina Cruz, 649 F.2d at 1272. However, since the dispute arises out of United States trademark law and concerns products sold in the United States, and defendant does not argue that Barbados has any interest in the suit, the court finds no compelling sovereignty concern.
As to the fourth factor, the United States has a strong interest in providing redress for violations of its trademark laws. See Life Alert Emergency Response, Inc. v. Lifealert Security, Inc., No. CV 08-3226, 2008 WL 5412431, at *7 (C.D. Cal. Dec. 29, 2008) ("[T]he United States has a strong interest in applying its own trademark law . . . ."); Ind. Plumbing Supply, Inc. v. Standard of Lynn, Inc., 880 F. Supp. 743, 749 (C.D. Cal. 1995) ("trademark infringement . . . has as a principal purpose the protection of the public from confusion"). Therefore, this factor weighs strongly in favor of exercising personal jurisdiction over defendant.
The fifth factor concerns the efficiency of the forum. In evaluating this factor, courts look primarily at where the witnesses and the evidence are likely to be located. Sinatra, 854 F.2d at 1200. This factor "is no longer weighed heavily given the modern advances in communication and transportation." Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1323 (9th Cir. 1998). Plaintiff is located in California, defendant has its address in Barbados, and the defendants plaintiff seeks leave to include are located in Ontario, Canada, and the Western District of New York. The Eastern District of California is as efficient a forum as any other. This factor is therefore neutral.
The convenience and effectiveness of relief for plaintiff obviously weigh in favor of its choice of forum. However, courts have given little weight to a plaintiff's inconvenience in litigating in another forum. See Ziegler v. Indian River Cnty., 64 F.3d 470, 476 (9th Cir. 1995). This factor weighs slightly in favor of exercising personal jurisdiction over defendant.
Finally, as explained above, defendant has not consented to the exercise of personal jurisdiction in any other statutorily proper forum for this dispute. This factor weighs strongly in favor of exercising personal jurisdiction.
Ultimately, although some of the foregoing factors favor defendant, the court concludes that defendant has not presented a "compelling case" that the exercise of personal jurisdiction over it would be unreasonable. See Panavision, 141 F.3d at 1324 ("[W]e conclude that although some factors weigh in [defendant's] favor, he failed to present a compelling case that the district court's exercise of jurisdiction . . . would be unreasonable."). Indeed, "[t]he only case in which the Supreme Court has held that these factors determined the question of personal jurisdiction was in a suit between two foreign corporations in which the Court divided evenly over whether the minimum contacts were sufficient." Menken, 503 F.3d at 1063 n.1 (Bybee, J., concurring) (citing Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102, 107 (1987)).
The court finds that it has personal jurisdiction over defendant. It is reasonable and does not offend "traditional notions of fair play and substantial justice," Int'l Shoe, 326 U.S. at 316, to require defendant to submit to the burden of litigation. Accordingly, defendant's motion to dismiss for lack of personal jurisdiction will be denied.
B. Motion to Amend
Plaintiff has moved for leave to amend the FAC to include Iovate Health Sciences International, Inc., and Iovate Health Sciences U.S.A. Inc. as defendants and to add one more cause of action. Federal Rule of Civil Procedure 15 empowers the parties to agree to amendments and alternatively directs the court to freely grant leave to amend "when justice so requires." Fed. R. Civ. P. 15(a)(2). "[T]his policy is to be applied with extreme liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990); see Breier v. N. Cal. Bowling Proprietors' Ass'n, 316 F.2d 787, 790 (9th Cir. 1963)
("[L]eave to amend should be allowed unless the complaint 'cannot under any conceivable state of facts be amended to state a claim.'" (quoting Alexander v. P. Mar. Ass'n, 314 F.2d 690, 694 (9th Cir. 1963))).
Courts commonly consider four factors when deciding whether to grant a motion for leave to amend a complaint: (1) bad faith on the part of the movant; (2) undue delay in filing the motion; (3) prejudice to the opposing party; and (4) the futility of the proposed amendment. Roth v. Garcia Marquez, 942 F.2d 617, 628 (9th Cir. 1991).
Given the fact that these proceedings are still in the initial stages, defendant cannot seriously accuse plaintiff of undue delay or bad faith. Plaintiff was justifiably confused, as has been the court, about the relevant parties that should be sued, and brought this motion to amend within nine days of learning that Iovate International brought a declaratory judgment action against it in New York. (See Mem. of P. & A. in Supp. of Pl.'s Mot. for Leave ("Pl.'s Mem.") at 1:27-2:4, 2:14-15.) Defendant characterizes plaintiff's suit against only Cytogenix Sports Laboratories as "strategic" behavior (Def.'s Opp'n to Pl.'s Mot. for Leave at 2:17); the court is inclined to view it as mere confusion. Whatever the reason, it does not rise to the level of bad faith.
"Prejudice" exists where amendment will significantly hinder a defendant's ability to defend against the plaintiff's claims, as in cases where discovery has already been completed or when the amendment will require relitigation of significant issues. See Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1161 (9th Cir. 1989); Georgiou Studio, Inc. v. Boulevard Invest, LLC, 663 F. Supp. 2d 973, 978 (D. Nev. 2009). The court has not yet issued a scheduling order in this matter. No discovery has occurred and no trial date has been set. There is no indication that anyone would be prejudiced by the amendment.
Finally, amendment would not be futile. In fact, the amendment would add relevant parties to the suit, allowing an eventual judgment to be binding as to both the owner and the exclusive licensee of the trademarks at issue. (See Pl.'s Mem. at 4:17-19.) Defendant argues that the suit could be adequately heard in the Western District of New York. However, the possibility of suit against Iovate International in another forum does not make this action futile. Indeed, if the two cases are as related as the parties make them out to be, this court would presumably be the proper forum under the "first-to-file" analysis. See Wright v. RBC Capital Mkts. Corp., No. Civ. S-09-3601 FCD GGH, 2010 WL 2599010, at *5 (E.D. Cal. June 24, 2010) ("Where duplicative actions are filed in courts of concurrent jurisdiction, the court which first acquired jurisdiction generally should proceed with the litigation."). Because defendant has not shown bad faith, undue delay, prejudice, or futility, and because the court freely gives leave to amend, the court will grant plaintiff's motion to amend the FAC.
IT IS THEREFORE ORDERED that defendant's motion to dismiss plaintiff's First Amended Complaint be, and the same hereby is, DENIED.
IT IS FURTHER ORDERED that plaintiff's motion to amend the First Amended Complaint be, and the same hereby is, GRANTED.
Plaintiff has twenty days from the date of this Order to file an amended complaint consistent with this Order.