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The Wine Group LLC, A Delaware Limited Liability Company v. Levitation Management

October 5, 2011

THE WINE GROUP LLC, A DELAWARE LIMITED LIABILITY COMPANY, PLAINTIFF,
v.
LEVITATION MANAGEMENT, LLC, A NEVADA LIMITED LIABILITY COMPANY; AND
TIPTON SPIRITS, LLC, D/B/A DESIREE VODKA COMPANY, LLC, AN INDIANA LIMITED LIABILITY COMPANY, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTION TO DISMISS OR TO TRANSFER

Plaintiff The Wine Group LLC ("TWG") brought this trademark infringement action against defendants Levitation Management, LLC ("Levitation"),*fn1 and Tipton Spirits, LLC, d/b/a Desiree Vodka Company, LLC ("Tipton"). Defendants move to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) or, alternatively, to transfer to the Southern District of Indiana for improper venue pursuant to 28 U.S.C. § 1406(a).

I. Factual and Procedural Background

Plaintiff, a Delaware limited liability company with its principal place of business in Tracy, California, produces, imports, and markets wine, vodka, and other alcoholic beverages. (Compl. ¶¶ 3, 7.) Its products are advertised, distributed, and sold throughout the United States. (Id. ¶ 7.)

In 2007, plaintiff launched a brand of wine called "Cupcake." (Id. ¶ 8.) Plaintiff has registered "Cupcake" as a trademark. (Id. ¶ 15.) In 2010, plaintiff created a sub-brand of Cupcake wine called "Red Velvet." (Id. ¶ 12.)

After allegedly great nationwide success with the Cupcake wine, plaintiff decided to create a Cupcake brand of vodka in 2010 and launched the Cupcake vodka in April of 2011. (Id. ¶ 16.) Plaintiff has registered "Cupcake" as a trademark for spirits. (Id. ¶ 18.)

According to plaintiff, California is the largest market for vodka in the United States and plaintiff sells more Cupcake wine, Cupcake Red Velvet wine, and Cupcake vodka in California than any other state. (Lizar Decl. ¶¶ 3-7.)

In early 2010, defendants created a "Desiree" brand of vodka. (Compl. ¶ 19.) Levitation is a Nevada limited liability company, (id.), with its principal place of business in Brazil, Indiana. (Knight Decl. I ¶ 5.) "It is a marketing consulting agency that owns the DESIREE trademark, the other trademarks at issue [], and the domain name desireevodka.com." (Compl. ¶ 4.) Tipton, an Indiana limited liability company, "is responsible for the sales and marketing of the [Desiree vodka.]" (Id. ¶ 5.) Tipton's principal place of business is in Brazil, Indiana. (Knight Decl. I ¶ 8.)

Plaintiff takes issue with two of defendants' sub-brands of Desiree vodka: "On one vodka, Defendants use the trademark CUPCAKE and a large depiction of a cupcake, and on the other Defendants use the trademark RED VELVET and a large depiction of a slice of a layer cake." (Compl. ¶ 20.)

In February of 2011, before defendants had launched their vodka, plaintiff informed defendants by letter of its trademark registration and pending application and asked defendants to change their labels. Defendants were informed that plaintiff is located in California. The parties exchanged a series of communications in which defendants disputed that their use of "Cupcake" or "Red Velvet" was improper. In April of 2011, defendants launched their vodka and did not change their labels. (See Reidl Decl. ¶¶ 2-7; Compl. ¶¶ 23-27.)

The Complaint alleges the "[a]cts giving rise to the claims asserted herein have been expressly aimed at, have occurred in, and will continue to occur in California and this District," (Compl. ¶ 2), and that California and this district are the place of injury. (Id. ¶ 3.)

Plaintiff has not alleged that defendants sell their vodka in California. According to defendants, they currently sell their vodka in seven states. (Knight Decl. I ¶ 15.) Defendants' vodka cannot be purchased through their website.

(Id. ¶ 28, Ex. 1.)

Plaintiff alleges that defendants "are in the process of rolling out CUPCAKE and RED VELVET vodka and seeking distributors on a national basis, including in California. The Defendants' DESIREE vodka competes directly with TWG's CUPCAKE vodka." (Compl. ¶ 21.)

Defendants admit to engaging in one unsuccessful discussion with a California-based distributor, which resides in this district, that touched on defendants' vodka. (See Knight Decl. I ¶¶ 21-22.) Defendants' website states that their products will be "Coming soon" to every state. (Id. Ex. 1.)

In support of their allegation that defendants market and promote their vodka in California, (see Compl. ¶ 21), plaintiff relies heavily on defendants' Internet activity. Defendants maintain a website, www.desireevodka.com, at which visitors are invited to contact defendants to receive additional information. (Knight Decl. I Ex. 1.) The website includes "metatags" for "Cupcake Vodka" and "Red Velvet Vodka." (Lizar Decl. ¶ 8; Knight Decl. II ¶ 14.) Plaintiff alleges that the metatags "ensure that references to Defendants' vodka will appear whenever a consumer searches for TWG's wine or vodka." (Compl. ¶ 26.) However, according to defendants, a recent search on the search engine Google for "cupcake vodka" only yielded results related to plaintiff on the first two pages; the third page contained results related to defendants. (Knight Decl. II ¶ 14, Ex. A.) Defendants' website invites visitors to "follow" defendants on the website of Facebook, a California company, and provides a link to their Facebook page. (Knight Decl. I Ex. 1.)

Defendants have created a Facebook page that allows defendants to post information about their products. (Knight Decl. I ¶ 29.) The page also permits website users to post messages to defendants and defendants to respond to users messages. (Knight Decl. I, Ex. 2.) Defendants also use the Facebook page to solicit applications for "Brand Ambassadors" it hires to promote defendants' products. (Id.)

The parties dispute how Facebook functions and how defendants have used it. According to plaintiff, "each [Facebook "friend"] will receive all updates posted by the other person on their respective homes pages." (Lizar Decl. ¶ 14.)

Plaintiff claims that the owner of a Facebook page must first "accept" a "friend request" and can "delete" a "friend." (Id. ¶¶ 14, 16-17.) Plaintiff contends that only a "friend" can determine where another "friend" resides.*fn2 (Id. ¶ 15.)

Plaintiff's counsel, a resident of this district, "friended" defendants and has since "automatically receive[d] all communications posted to the Facebook page by Defendants," including an entry referring to "Cupcake Vodka" and "Red Velvet Vodka." (Reidl Decl. ¶¶ 12-13.) Plaintiff's counsel notes two entries on defendants' page by "friends" of defendants who indicate that they live in California. One entry from a "friend" in Bakersfield, California, simply said that defendants' vodka was not available in California, to which defendants did not respond. Another entry asked defendants when the vodka would be available in California, to which defendants responded that a distributor had not been appointed "yet" and asked for suggestions. (See Reidl Decl. ¶¶ 18-19; Knight Decl. I Ex. 2.)

According to defendants, as of August 2, 2011, five of the Facebook users who "like" defendants indicate that they live in California. Defendants have approximately 254 "fans." A search on Facebook's search bar for "cupcake vodka" does not result in any mention of defendants or their vodka. Such a search only results in a page for plaintiff's Cupcake vodka. (See Knight Decl. II ¶¶ 18-19, Ex. B.)

Facebook allows advertising, including advertising based on geography. (Id. ¶ 17.) According to defendants, they have not purchased targeted advertising on Facebook "for any country or state, let alone California or the cities that reside in the Eastern District of California." (Id.) Further, "at no time ha[ve] [defendants] engaged in paid advertising . . . anywhere outside of the markets where the Desiree vodka products are sold." (Id. ¶ 20.)

On June 24, 2011, plaintiff filed this action against defendants, asserting claims for trademark infringement under the Lanham Act, 15 U.S.C. §§ 1051-1127, and restitution based on unjust enrichment.

II. Discussion

The 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). Where the court does not hold an evidentiary hearing and the motion is based on written materials, as here, plaintiff need only establish a prima facie showing of jurisdiction. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). Once a defendant has contradicted allegations contained in the complaint, plaintiff may not rest on the pleadings, but must present admissible evidence which, if true, would support the exercise of personal jurisdiction. Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003). ...


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