District Court Finds Lack of Personal Jurisdiction Over Defendant in TTAB Appeal, Transfers Case Rather Than Dismissing It

In February 2020, the TTAB ordered cancellation of two registration for certain trash bag trade dress, one registration owned by each party to the proceeding, on the grounds of genericness and functionality [TTABlogged here]. Poly-America then brought a civil action in the U.S. District Court for the Eastern District of Texas for review of the Board's decision, under 15 USC Section 1071(b). Defendant API moved to dismiss for lack of personal jurisdiction. The court agreed that personal jurisdiction was lacking, but because Poly-America's time for appeal from the Board decision had expired, the court declined to dismiss the case and instead transferred it to the Southern District of New York. Poly-America, L.P. v. API Industries, Inc., Civil No. 4:20-CV-837-SDJ (September 30, 2021).

The court first concluded that it did not have "general jurisdiction" over API, a Delaware corporation headquartered in New York. A court has general jurisdiction when the defendant's "affiliations with the state are so continuous and systematic as to render them essentially at home in the forum State." Both parties recognized that it is an exceptional case when a corporation's operations in a forum other than its place of incorporation or the location of its principal place of business will satisfy the general jurisdiction standard. 

The court found that API's manufacturing facility and seventy employees in Texas, comprising "only fifteen percent of its workforce," were not enough to make API "essentially at home" in Texas.

Turning to the question of "specific jurisdiction," the court found that API "purposely directed its activities" toward Texas. However, the TTAB proceeding did not arise out of those activities. Rather, "the underlying controversy is the TTAB cancelling [Poly-America's] registration," which has "nothing to do with" API's manufacturing of plastic trash bags in Texas.

And so the court concluded that it did not have personal jurisdiction over API.

Poly-America asked, as an alternative to dismissal, that the court transfer the case under 28 U.S.C. 1361 to the US District Court for the Southern District of New York. It pointed out that if the case were dismissed outright, it would lose its right to appeal under Section 1071, which imposes a sixty-day time limit for appeal. API agreed that the court has the discretion to transfer the case. Section 1361 provides that if a court finds a “want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court . . . in which the action or appeal could have been brought at the time it was filed or noticed.”

The court concluded that the interests of justice supported transfer of the case.

API requested reimbursement for its attorney fees in connection with the motion to dismiss, but the board tossed out that request: "Section 1631 makes no mention whatsoever of attorney’s fees. Thus, the 'American Rule' governs, and Poly-America and API each pay their own attorney’s fees."

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TTABlogger comment: Sooner or later, we'll have the definitive answer to the nagging question of whether the color orange is de jure functional for trash bag draw strings.

Text Copyright John L. Welch 2021.

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