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Universal Beauty Products, Inc. v. Morning Glory Products

October 18, 2012

UNIVERSAL BEAUTY PRODUCTS, INC. PLAINTIFF,
v.
MORNING GLORY PRODUCTS, INC., DEFENDANT.



The opinion of the court was delivered by: John F. Grady, United States District Judge

10-3212.121-RSK Oct. 18, 2012

MEMORANDUM OPINION

Before the court is the defendant's motion to transfer venue. For the reasons explained below, we deny the defendant's motion.

BACKGROUND

Universal Beauty Products, Inc. ("Universal") is an Illinois corporation in the business of manufacturing hair-care products. (Am. Compl. ¶ 1.) Defendant Morning Glory Products, Inc. ("Morning Glory") - a North Carolina corporation based in Greenville, North Carolina - is a competitor of Universal. (Id. at ¶ 2.) Universal accuses Morning Glory of marketing and advertising its "Gro-Protect Solutions" hair-care product as patented, when in fact it is not. (See id. at ¶¶ 10-11 (alleging that Morning Glory's patent application is pending).) It has sued Morning Glory under the Patent Act for false marking, a claim that requires it to prove that: (1) Morning Glory falsely claimed that its product was patented "for the purpose of deceiving the public;" and (2) Universal "suffered a competitive injury" as a result. See 35 U.S.C. § 292(a) and (b). In support of its claim for damages, Universal alleges that it spent substantial time and money attempting to develop products that would not infringe Morning Glory's purported patent. (Am. Compl. ¶¶ 13-15, 19.)

DISCUSSION

Morning Glory has moved to transfer this case to the Eastern District of North Carolina, where its office is located. "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). We may transfer this action if (1) venue is proper in both this court and in the Eastern District of North Carolina; (2) the Eastern District of North Carolina is more convenient for the parties and witnesses; and (3) transfer would serve the interests of justice. See Abbott Labs. v. Selfcare, Inc., No. 98 C 7102, 1999 WL 162805, at *1 (N.D. Ill. Mar. 15, 1999) (Grady, J.). "The movant . . . has the burden of establishing, by reference to particular circumstances, that the transferee forum is clearly more convenient." Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219--20 (7th Cir. 1986); see also In re National Presto Industries, Inc., 347 F.3d 662, 664 (7th Cir. 2003) ("[U]nless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.") (citation and internal quotation marks omitted).

The parties do not dispute that venue is proper both here and in the Eastern District of North Carolina, so we will confine our discussion to the second and third factors.

A. Convenience Factors

To evaluate the convenience of one forum over another, we consider five factors: (1) the plaintiff's choice of forum; (2) the situs of material events; (3) the relative ease of access to sources of proof; (4) the convenience of witnesses; and (5) the convenience of the parties. Abbott Labs., 1999 WL 162805, at *3.

1. The Plaintiff's Choice of Forum.

The general rule is that the plaintiff's choice of forum is given "substantial weight, particularly when it is the plaintiff's home forum." Amorose v. C.H. Robinson Worldwide, Inc., 521 F.Supp.2d 731, 735 (N.D. Ill. 2007). Prior to a recent amendment to the false-marking statute, courts in this district consistently held that the general rule did not apply to plaintiffs in false marking cases. See, e.g., Simonian v. Maybelline, LLC, No. 10 C 1615, 2011 WL 814988, *6 (N.D. Ill. Mar. 1, 2011); Zojo Solutions, Inc. v. Leviton Manufacturing Co., Inc., No. 10 C 881, 2010 WL 4257546, *1 (N.D. Ill. Oct. 20, 2010) (Grady, J.); Simonian v. Monster Cable Prods., Inc., 821 F.Supp.2d 996, 998 (N.D. Ill. 2010). The statute in effect when these cases were decided authorized plaintiffs to file qui tam actions to recover a civil penalty that they were entitled to share with the federal government. See 35 U.S.C. § 292 (b) ("Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.") (effective to September 15, 2011). Courts considering § 1404(a) motions in such cases - including this court in Zojo - reasoned that the plaintiff's forum choice was entitled to less deference because the federal government was the real party in interest, not the plaintiff. See Monster Cable, 821 F.Supp.2d at 998 ("[T]he plaintiff in a qui tam action is actually the federal government, not Simonian. Therefore, contrary to Simonian's suggestion otherwise, his choice of venue is not entitled to substantial deference."); see also Zojo, 2010 WL 4257546, *1 ("In a qui tam action, the plaintiff/relator's choice of forum is entitled to little weight."). Congress has since abolished qui tam suits in false-marking cases. See U.S. ex rel. Heathcote Holdings Corp., Inc. v. Suncast Corp., No. 11 C 1010, 2012 WL 3042898, *1 (N.D. Ill. July 25, 2012) ("Among other things, the [Leahy--Smith America Invents Act] fundamentally altered the § 292 enforcement regime by eliminating qui tam actions. ); see also 35 U.S.C. § 292(a) ("Only the United States may sue for the penalty authorized by this subsection."). Universal alleges that it has suffered a "competitive injury as a result" of Morning Glory's false-marking and it is suing on its own behalf to recover damages for that injury. See 35 U.S.C. § 292(b). Accordingly, it "is entitled to the same deference to [its] choice of forum as would be afforded to any civil plaintiff." West v. Quality Gold, Inc., No. 5:11--cv--02531--EJD, 2012 WL 1067558, *3 (N.D. Cal. Mar. 28, 2012).

Morning Glory implicitly acknowledges the amendment's impact by emphasizing that in many qui tam suits the courts also ruled that the plaintiff's choice was entitled to less deference because the claims had little connection to the chosen forum. See, e.g., Hunter Fan, 2010 WL 3975564, *2 ("If the forum does not have a significant relationship to the material events leading to the litigation, courts afford the plaintiff's choice less deference."). Instead, these courts concluded that the lawsuits were centered in the location where the defendant made the decision to market its product as "patented," typically the defendant's home forum. See id. (holding that liability "hinge[d]" where the defendant made the decision to mark its product as patented with the alleged intent to deceive the public); see also Maybelline, 2011 WL 814988, *7; Monster Cable, 821 F.Supp.2d at 998; Zojo, 2010 WL 4257546, *2. In this case, Universal does not contest Morning Glory's assertion that it made the relevant decisions in Greenville, North Carolina, where its office is located. However, we do not believe that this concession weighs as heavily in the balance as it would have before Congress amended the false-marking statute. The plaintiffs in the qui tam suits were not required to prove that they were injured to recover a share of the penalty that the statute imposed. See Zojo, 2010 WL 4257546, *2. Consequently, the cases had little connection to the plaintiff's home forum. By contrast, in this case this district has a "significant relationship to the material events leading to the litigation . . . ." Hunter Fan, 2010 WL 3975564, *2. Universal is claiming substantial damages stemming from its alleged research and development in Illinois in response to Morning Glory's false claim that its "Gro-Protect" product was patented. We fully expect that Universal's actions in Illinois will be a ...


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