Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-07966/USCOURTS-cand-4_06-cv-07966-6/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 28:1338 Copyright Infringement

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SILVERLIT TOYS MANUFACTORY, LTD., a

Hong Kong company; and SPIN MASTER

LTD., a Canadian corporation,

Plaintiffs,

v.

ABSOLUTE TOY MARKETING, INC., a Utah

corporation, dba HOBBYTRON.COM; TIM

GIBSON; and JIM ROYER,

Defendants.

 /

No. C 06-7966 CW

ORDER GRANTING IN

PART PLAINTIFFS'

MOTION FOR A

PRELIMINARY

INJUNCTION AND

DENYING DEFENDANTS'

MOTION TO TRANSFER

AND MOTION TO

DISMISS

Plaintiffs Silverlit Toys Manufactory, Ltd. (Silverlit) and

Spin Master Ltd. (Spin Master) move for a preliminary injunction. 

Defendants Absolute Toy Marketing, Inc., d.b.a. HobbyTron.com, Tim

Gibson and Jim Royer oppose the motion and move to transfer this

case to the District of Utah or in the alternative to dismiss the

claims against Gibson and Royer for lack of personal jurisdiction. 

Defendants oppose Plaintiffs' motion. The matters were heard on

February 9, 2007. Having considered all of the papers filed by the

parties, the evidence cited therein and oral argument on the

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motions, the Court grants in part Plaintiffs' motion for a

preliminary injunction and denies Defendants' motion to transfer or

dismiss.

BACKGROUND

Plaintiff Silverlit designs, manufactures, develops and

markets toys, including remote control toy helicopters. Silverlit

has been the registered owner of the trademark "Silverlit" since

1992. Among its products is a miniature remote control helicopter

called the Picoo Z, which Silverlit began distributing in 2006. 

The helicopter was originally marketed both as the "Picoo Z" and

the "Hummingbird," but by the time it was marketed in the United

States, it was marketed as only the "Picoo Z." 

On January 23, 2006, Silverlit obtained the copyright

registration for the design of the Picoo Z helicopter and on

December 20, 2006, Silverlit obtained the copyright registration

for the Picoo Z instruction manual and packaging. On June 27,

2006, Silverlit applied to the Patent and Trademark Office for

registration of the word mark "Picoo Z." That application is still

pending. 

Defendant Absolute Toy Marketing is a Utah corporation that

operates a retail and wholesale website, HobbyTron.com, which sells

toys, including remote control toys. Defendant Royer is the

president and owner of Absolute Toy Marketing and registrant of the

domain name HobbyTron.com. The parties dispute Defendant Gibson's

role at Absolute Toy Marketing. Plaintiffs allege that Gibson is

the founder and CEO of HobbyTron, citing various news and trade

documents that identify him as CEO. Defendants counter that Gibson

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was the founder and CEO of Gibson Tech Ed, Inc. (Gibson Tech), a

company that also did business as HobbyTron, but that Defendants

allege went out of business in February, 2006. Defendants

acknowledge that Absolute Toy Marketing purchased a portion of

Gibson Tech's assets at a public auction, but do not explain when

or how Absolute Toy Marketing came to do business as HobbyTron or

when it took control of the HobbyTron website. Defendants identify

Gibson as "an employee" of Absolute Toy Marketing but do not state

what his role is at the company.

During 2006, Silverlit promoted the Picoo Z Helicopter at

trade shows and in various trade magazine and newspaper

advertisements. The Picoo Z was recognized by the Guinness Book of

World Records as the world's smallest commercial remote control

helicopter. Plaintiffs describe the Picoo Z as "a highly desired

toy by consumers and retailers alike." Plaintiffs' Motion for

Preliminary Injunction at 4. Silverlit states that it has sold

nearly 600,000 units of the Picoo Z helicopter, of which 81,916

units were shipped to the United States through November, 2006. 

Silverlit recently entered into a license agreement with Plaintiff

Spin Master, granting Spin Master a trademark and copyright license

to distribute the Picoo Z helicopter in Canada, Mexico and the

United States.

Among the Picoo Z helicopters Plaintiffs shipped to the United

States were approximately 10,750 units, sold to Defendant Absolute

Toy Marketing. Pursuant to Absolute Toy Marketing's instructions,

the helicopters were shipped to a company called World Trading,

located in North Hollywood, California. 

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Plaintiffs allege that in early December, 2006, they

discovered that Defendants were marketing and distributing to

customers around the United States, including California, remote

control toy helicopters called the "Pico Z" and "Picco Z" in

packaging similar to Silverlit's Picoo Z packaging. Plaintiffs

conducted an investigation, ordering the products from the

HobbyTron website and comparing them to the Picoo Z products. 

Plaintiffs have also received complaints from consumers who bought

the allegedly infringing products from the HobbyTron website and

were disappointed with the product.

Plaintiffs further allege that "Defendants have gone to great

lengths to fool consumers into falsely believing that the

Infringing Products that HobbyTron is selling are genuine Silverlit

Picoo Z Helicopters." Plaintiffs' Motion for Preliminary

Injunction at 6. They allege that the helicopter, packaging and

instruction manual "are exact copies of, or confusingly similar to,

the Silverlit Picoo Z" and that HobbyTron displays images of the

Silverlit Picoo Z, not of the allegedly infringing products, on its

website. Plaintiffs also cite a December, 2006 press release that

states that "one month before Christmas, HobbyTron.com is the only

major source of the Picco Z Mini RC Helicopter in the United

States." Kim Declaration in Support of Plaintiffs' Motion for

Preliminary Injunction, Ex. W. The press release goes on to quote

Defendant Royer as stating, "Once you've played with the Picco Z RC

helicopter, you immediately understand why they're flying out of

Internet retailers and off store shelves the way they are--they're

incredibly fun. . . . We're happy to report that although the Picco

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Z is sold out at Radio Shack, Toys 'R' Us and others, we still have

tens of thousands available for holiday shoppers." Id. Plaintiffs

allege that the Defendants intended to mislead consumers into

believing that Picoo Z's were being offered for sale, when it was

Defendants' allegedly inferior product that was actually offered.

On December 19, 2006, Plaintiffs' counsel sent a cease and

desist letter to HobbyTron regarding the sale of these products. 

Defendants have not responded to the letter.

On December 29, 2006, Plaintiffs filed this lawsuit, alleging

claims for (1) copyright infringement; (2) contributory copyright

infringement; (3) vicarious copyright infringement; (4) trademark

infringement; (5) unfair competition and false designation of

origin; (6) common law trademark and trade name infringement; (7)

unfair competition under California Business and Professions Code

§§ 1720, et seq.; and (8) common law passing off and disparagement.

On January 5, 2007, Plaintiffs moved for a preliminary

injunction. On January 19, 2007, Defendants moved to transfer the

case to the District of Utah or in the alternative to dismiss the

claims against Defendants Gibson and Royer based on a lack of

personal jurisdiction. Defendants also seek to stay Plaintiffs'

motion for preliminary injunction pending the resolution of the

motion to transfer. The Court considers both parties' motions

simultaneously. 

LEGAL STANDARDS

I. Preliminary Injunction

To obtain a preliminary injunction, the moving party must

establish either: (1) a combination of probable success on the

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merits and the possibility of irreparable harm, or (2) that serious

questions regarding the merits exist and the balance of hardships

tips sharply in the moving party's favor. Rodeo Collection, Ltd.

v. West Seventh, 812 F.2d 1215, 1217 (9th Cir. 1987). 

The test is a "continuum in which the required showing of harm

varies inversely with the required showing of meritoriousness." 

Id. (quoting San Diego Comm. Against Registration & the Draft v.

Governing Bd. of Grossmont Union High Sch. Dist., 790 F.2d 1471,

1473 n.3 (9th Cir. 1986)). The moving party ordinarily must show

"a significant threat of irreparable injury," although there is "a

sliding scale in which the required degree of irreparable harm

increases as the probability of success decreases," United States

v. Odessa Union Warehouse Co-op, 833 F.2d 172, 174, 175 (9th Cir.

1987), and vice versa. To overcome a weak showing of merit, a

plaintiff seeking a preliminary injunction must make a very strong

showing that the balance of hardships is in its favor. Rodeo

Collection, 812 F.2d at 1217. 

II. Motion to Dismiss

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a

defendant may move to dismiss for lack of personal jurisdiction. 

The plaintiff then bears the burden of demonstrating that

jurisdiction exists. Schwarzenegger v. Fred Martin Motor Co., 374

F.3d 797, 800 (9th Cir. 2004). The plaintiff "need only

demonstrate facts that if true would support jurisdiction over the

defendant." Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995);

Fields v. Sedgwick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir.

1986). Uncontroverted allegations in the complaint must be taken

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as true. AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588

(9th Cir. 1996). However, the court may not assume the truth of

such allegations if they are contradicted by affidavit. Data Disc,

Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1284

(9th Cir. 1977). Conflicts in the evidence must be resolved in the

plaintiff's favor. AT&T, 94 F.3d at 588.

If material facts are controverted or if the evidence is

inadequate, a court may permit discovery to aid in determining

whether personal jurisdiction exists. Data Disc, Inc., 557 F.2d at

1285 n.1. If the submitted materials raise issues of credibility

or disputed questions of fact, the district court has the

discretion to hold an evidentiary hearing in order to resolve the

contested issues. Id.

There are two independent limitations on a court's power to

exercise personal jurisdiction over a non-resident defendant: the

applicable State personal jurisdiction rule and constitutional

principles of due process. Sher v. Johnson, 911 F.2d 1357, 1361

(9th Cir. 1990); Data Disc, Inc, 557 F.2d at 1286. California's

jurisdictional statute is co-extensive with federal due process

requirements; therefore, jurisdictional inquiries under State law

and federal due process standards merge into one analysis. Rano v.

Sipa Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993).

The exercise of jurisdiction over a non-resident defendant

violates the protections created by the due process clause unless

the defendant has "minimum contacts" with the forum State so that

the exercise of jurisdiction "does not offend traditional notions

of fair play and substantial justice." International Shoe Co. v.

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Washington, 326 U.S. 310, 316 (1945). Personal jurisdiction may be

either general or specific. Plaintiffs allege that the Court has

specific jurisdiction over Defendants Gibson and Royer.

Specific jurisdiction exists where the cause of action arises

out of or relates to the defendant's activities within the forum. 

Data Disc, Inc, 557 F.2d at 1286. Specific jurisdiction is

analyzed using a three-prong test: (1) the non-resident defendant

must purposefully direct its activities or consummate some

transaction with the forum or a resident thereof; or perform some

act by which it purposefully avails itself 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 results from the defendant's forum-related activities;

and (3) the exercise of jurisdiction must be reasonable. Lake v.

Lake, 817 F.2d 1416, 1421 (9th Cir. 1987). Each of these

conditions is required for asserting jurisdiction. Insurance Co.

of N. Am. v. Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir.

1981). 

A showing that a defendant "purposefully availed" itself 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. The requirement of purposeful availment ensures that the

defendant should reasonably anticipate being haled into the forum

state court based on its contacts. World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 297 (1980). The purposeful availment test

is met where "the defendant has taken deliberate action within the

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forum state or if he has created continuing obligations to forum

residents." Ballard, 65 F.3d at 1498. 

 A showing that a defendant "purposefully directed" its conduct

toward a forum state "usually consists of evidence of the

defendant's actions outside the forum state that are directed at

the forum, such as the distribution in the forum state of goods

originating elsewhere." Schwarzenegger, 374 F.3d at 803. 

Purposeful direction may be established under the "effects test"

where the defendant (1) committed an intentional act, (2) expressly

aimed at the forum state, (3) causing harm that the defendant knows

is likely to be suffered in the forum state. Dole Food Co. v.

Watts, 303 F.3d 1104, 1111 (9th Cir. 2002).

The second factor requires that the claim arise out of or

result from the defendant's forum-related activities. A claim

arises out of a defendant's conduct if the claim would not have

arisen "but for" the defendant's forum-related contacts. 

Panavision Int'l v. L.P.v. Toeppa, 141 F.3d 1316, 1322 (9th Cir.

1998).

Once the plaintiff has satisfied the first two factors, the

defendant bears the burden of overcoming a presumption that

jurisdiction is reasonable by presenting a compelling case that

specific jurisdiction would be unreasonable. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472-73 (1985); Haisten v. Grass Valley

Medical Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986). Seven

factors are considered in assessing whether the exercise of

jurisdiction over a non-resident defendant is reasonable: (1) the

extent of the defendant's purposeful interjection into the forum

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State's affairs, (2) the burden on the defendant, (3) conflicts of

law between the forum State and the defendant's home jurisdiction,

(4) the forum State's interest in adjudicating the dispute, (5) the

most efficient judicial resolution of the dispute, (6) the

plaintiff's interest in convenient and effective relief, and

(7) the existence of an alternative forum. Caruth v. International

Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995); Roth v.

Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991).

III. Motion to Transfer

Title 28 U.S.C. § 1404(a) provides as follows: "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." Plaintiffs do not

dispute that this case could have been brought in the District of

Utah. Thus, the Court need only consider the convenience of the

parties and witnesses and the interest of justice.

The statute identifies three basic factors for district courts

to consider in determining whether a case should be transferred: 

(1) convenience of the parties; (2) convenience of the witnesses;

and (3) the interests of justice. 28 U.S.C. § 1404(a). The Ninth

Circuit provides other factors the court may consider: ease of

access to the evidence; familiarity of each forum with the

applicable law; feasability of consolidation of other claims; any

local interest in the controversy; relative court congestion and

time of trial in each forum; location where the relevant agreements

were negotiated and executed; the parties' contacts with forum;

difference in the costs of litigation in the two forums; and

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availability of compulsory process to compel attendance of

unwilling non-party witnesses. Decker Coal Co. v. Commonwealth

Edison Co., 805 F.2d 834, 843 (9th Cir. 1986); Jones v. GNC

Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). Another

factor the Ninth Circuit has identified is the plaintiff's choice

of forum. See Securities Investor Protection Corp. v. Vigman, 764

F.2d 1309, 1317 (9th Cir. 1985). The Securities Investor court

held that, unless the balance of the § 1404(a) factors "is strongly

in favor of the defendants, the plaintiff's choice of forum should

rarely be disturbed." Id.; see also Decker Coal, 805 F.2d at 843

("defendant must make a strong showing . . . to warrant upsetting

the plaintiff's choice of forum"). 

The burden is on the defendant to show that the convenience of 

parties and witnesses and the interest of justice require transfer

to another district. See Commodity Futures Trading Comm'n v.

Savage, 611 F.2d 270, 279 (9th Cir. 1979). 

DISCUSSION

I. Preliminary Injunction

In copyright infringement, trademark infringement and unfair

competition cases, a reasonable showing of likelihood of success on

the merits raises a presumption of irreparable harm. LGS

Architects, Inc. v. Concordia Homes, 434 F.3d 1150, 1155-56 (9th

Cir. 2006); Vision Sports, Inc. v. Melville Corp., 888 F.2d 609,

612 n.3 (9th Cir. 1989). Plaintiffs argue that they are likely to

succeed on the merits of their copyright infringement claims,

Lanham Act claims and common law claims of unfair competition and

that preliminary injunctive relief should therefore be granted. 

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1

The Court notes that the copyright for the helicopter itself

is entitled "X-Rotor Hummingbird" rather than Picoo Z. Plaintiff

states that it marketed the Picoo Z as the Hummingbird outside of

the United States before introducing the Picoo Z in the United

States. The copyright certificates for the instructions and

packaging are entitled "Picoo Z."

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Without disputing Plaintiffs' primary assertion that

Defendants are marketing and selling a product remarkably similar

to Plaintiffs' Picoo Z, Defendants attempt to argue that an

injunction is improper because Plaintiffs are unlikely to succeed

on the merits of their claims. 

A. Copyright Claims

To establish a claim of copyright infringement a plaintiff

must demonstrate (1) ownership of the copyrights, and (2) copying

of an expression protected by those copyrights. Triad Systems

Corp. v. Southeastern Express Co., 64 F.3d 1330, 1335 (9th Cir.

1995). 

Plaintiffs have produced certificates of registration for the

design, instruction manual and packaging of the Picoo Z helicopter. 

See Kim Declaration in Support of Motion for Preliminary

Injunction, Exhibits K, L, and M.1 Under 17 U.S.C. § 410(c), "the

certificate of a registration made before or within five years

after first publication of the work shall constitute prima facie

evidence of the validity of the copyright and of the facts stated

in the certificate." 

In order to prove copying of the expression protected by the

copyrights, Plaintiffs must demonstrate (1) that Defendants had

access to the Picoo Z helicopter, manual and packaging and (2) that

the works are substantially similar. Funky Films, Inc. v. Time

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Warner Entm't Co., L.P., 462 F.3d 1072, 1076 (9th Cir. 2006). It

cannot be disputed that Defendants had access to the helicopter,

manual and packaging, because both parties agree that Plaintiffs

shipped approximately 10,000 units to Defendants in 2006. To

establish that the works are substantially similar, Plaintiffs must

meet a two part test, establishing that the products are both

extrinsically and intrinsically similar. Id. "The 'extrinsic

test' is an objective comparison of specific expressive elements"

while the "'intrinsic test' is a subjective comparison that focuses

on 'whether the ordinary, reasonable audience' would find the works

substantially similar in the 'total concept and feel of the

works.'" Cavalier v. Random House, Inc., 297 F.3d 815, 822 (9th

Cir. 2002). The Court finds that Plaintiffs have met both elements

of this test. The products are objectively almost identical. The

helicopters are the same shape and bear many of the same designs. 

The instruction manuals are virtually identical to one another,

including typographical errors. The only differences between the

two manuals are that Defendants' manual does not include the

Silverlit name and contact information and calls the helicopter the

"Pico Z" or "Rider" instead of the "Picoo Z." Finally, the

packaging is identical in shape and size and both bear the same

stylized letter "z" in the name of the helicopter. Further, the

text on Defendants' packaging is virtually identical to the text on

Plaintiffs' packaging.

Defendants do not dispute Plaintiffs' allegations that their

packaging infringes Silverlit's copyright. Further, Defendants do

not dispute that their product is virtually identical to

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Plaintiffs'. Instead, Defendants argue that the helicopter is a

"useful article" that can be denied copyright protection and

therefore that Plaintiffs' helicopter and instruction manual

copyrights are invalid. See 17 U.S.C. § 101. Plaintiffs counter

by citing cases finding that "toys are not useful articles;

therefore toys may be copyrighted." Kikker 5150 v. Kikker 5150

USA, LLC, 2004 U.S. Dist. LEXIS 16859, *18 (N.D. Cal. 2004). 

Defendants respond that the helicopter is not merely a toy but has

"an 'intrinsic utilitarian function' which is flying in a stable

manner, flying in a controlled manner, flying for 'over 6 minutes,'

flying indoors, actively simulating a larger helicopter and

providing user with a realistic experience of flying an actual

helicopter." Defendants' Opposition to Motion for Preliminary

Injunction at 14. An Illinois court rejected a similar argument,

finding that a flying saucer toy was not a useful article simply

because it could fly. Spinmaster Ltd. v. Overbreak LLC, 404 F.

Supp. 2d 1097, 1103-04 (N.D. Ill. 2005). The Illinois court found

that the defendant "incorrectly tries to equate the purpose of [the

toy] with an aspect of its design. Its method of flight is

certainly part of the draw of the toy, and one of the qualities

that makes playing with it unique, but it is quite clear that the

[toy] is designed to portray a flying saucer. The flight is only

one part of that portrayal." Id. 

Similarly, the Court finds that the Picoo Z is a toy that is

meant to portray a helicopter and that it is not a "useful

article." See 17 U.S.C. § 101 (defining useful article as "an

article having an intrinsic utilitarian function that is not merely

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to portray the appearance of the article"). The Court finds that

Plaintiffs have made a reasonable showing that they will be

successful on the merits of their copyright infringement claims.

B. Trademark Claims

Plaintiffs also allege trademark claims under the Lanham Act

and the common law for unfair competition. "The 'ultimate test'

for unfair competition is exactly the same as for trademark

infringement: 'whether the public is likely to be deceived or

confused by the similarity of the marks.'" Century 21 Real Estate

Corp. v. Sandlin, 846 F.2d 1175, 1178 (9th Cir. 1988) (quoting New

West Corp. v. NYM Co. of California, 595 F.2d 1194, 1201 (9th Cir.

1979)). 

The Ninth Circuit has identified eight factors that are

relevant to whether consumers are likely to confuse related goods:

(1) strength of the mark, (2) proximity of the goods, 

(3) similarity of the marks, (4) evidence of actual confusion, 

(5) marketing channels used, (6) degree of care likely to be

exercised by the purchaser, (7) evidence of bad faith intent in

selecting the mark, and (8) likelihood of expansion and overlap of

the products. AMF, Inc. v. Sleekcraft, 599 F.2d 341, 348-49 (9th

Cir. 1979). Because each of these factors is not necessarily

relevant in every case, the list of factors functions as a guide

and is neither exhaustive nor conclusive. Metro Pub., Ltd. v. San

Jose Mercury News, 987 F.2d 637, 640 (9th Cir. 1993). In fact, the

Ninth Circuit has warned against "excessive rigidity" in applying

the factors and noted that "it is often possible to reach a

conclusion with respect to likelihood of confusion after

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considering only a subset of the factors." Brookfield

Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d

1036, 1054 (9th Cir. 1999); see also Eclipse Associates Limited v.

Data General Corp., 894 F.2d 1114, 1118 (9th Cir. 1990) (Sleekcraft

factors "were not meant to be requirements or hoops that a district

court need jump through to make a determination"); Murray v. Cable

National Broadcasting Co., 86 F.3d 858 (9th Cir. 1996) (finding no

likelihood of confusion after abbreviated Sleekcraft analysis). 

The Court finds that Plaintiff has demonstrated a likelihood

of confusion based on these factors. As discussed above, the

products being sold are remarkably similar. Further, Defendants'

choice of name for its product, "Pico Z," is similar to Plaintiffs'

Picoo Z name. Both products are sold over the internet, and

Plaintiffs have provided evidence that Defendants are intentionally

confusing customers. For example, as discussed above, Defendants

issued a press release that likely would lead a consumer to believe

that Defendants' Pico Z was in fact Plaintiffs' Picoo Z. Further,

Plaintiffs provide evidence of multiple consumers who bought

Defendants' product believing it was Plaintiffs'. 

Defendants do not dispute that there is a likelihood of

confusion between the Pico Z name and the Picoo Z name. Instead,

they argue that Plaintiffs' decision to market the helicopter as

the "Havoc Heli" in the United States eliminates any possibility of

confusion. However, Defendants argument fails for two reasons. 

First, Defendants fail to acknowledge that Plaintiff only changed

the name of its product as a result of infringing activity by

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2Defendants suggest that Plaintiffs changed the name of the

toy because of another company's prior use of a similar name for a

toy helicopter. However, as Plaintiffs point out, Defendants do

not provide any evidentiary support for this contention. 

17

others, including Defendants.2 Further, Defendants do not

acknowledge that Plaintiffs continue to market the helicopter as

the Picoo Z outside of the United States, that Plaintiffs continue

to offer the Picoo Z for sale on their website or that there is a

significant aftermarket for the Picoo Z on auction websites such as

eBay. 

The Court finds that Plaintiffs have made a reasonable showing

that they will be successful on the merits of their trademark

claims.

C. Scope of the Injunctive Relief

Plaintiffs seek an order enjoining Defendants from continuing

to market and sell the allegedly infringing products and from

utilizing Plaintiffs' copyrighted materials. The Court finds that

the scope of the proposed relief is appropriate. However,

Plaintiffs also seek the impoundment and destruction of all

allegedly infringing helicopters, instruction manuals, packaging,

promotional materials and the tools used to produce them. The

Court finds that destruction of the allegedly infringing materials

is inappropriate pending the outcome of the litigation. 

D. Bond

Plaintiffs request that the Court not require them to post a

bond, arguing that there is no likelihood that Defendants will be

harmed by being enjoined from their unlawful conduct. Defendants

counter that "the bond should be no less than $1,000,000," arguing

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that Plaintiffs have not shown that their conduct is unlawful. 

Defendants' Opposition to Motion to Dismiss at 22. The Court will

require Plaintiffs to post a $1,000 bond.

II. Motion to Dismiss

Defendants concede that Absolute Toy Marketing's sale of the

allegedly infringing products in California subjects it to specific

jurisdiction in the State but argue that the Court lacks personal

jurisdiction over Gibson and Royer because they do not have the

constitutionally required minimum contacts with the State. 

Plaintiffs counter that both of the individual Defendants have

sufficient power within Absolute Toy Marketing to be held

personally liable for the actions of the company, and that they

should therefore be subject to personal jurisdiction. Defendants

do not dispute that an individual who "is the moving, active

conscious force behind the infringing activity" would be subject to

jurisdiction in this case. Babbit Electronics, Inc. v. Dynascan

Corp., 828 F. Supp. 944 (S.D. Fla. 1993), aff'd 38 F.3d 1161 (11th

Cir. 1994). Instead, Defendants argue that the individual

Defendants did not actually exercise sufficient control over

Absolute Toy Marketing's decisions with respect to the allegedly

infringing products to subject them to the Court's jurisdiction. 

A. Defendant Tim Gibson

As mentioned above, Defendants state that Gibson is an

"employee" of Absolute Toy Marketing, but do not elaborate on his

role at the company. However, Plaintiffs have provided evidence

that Gibson is a manager in the company, capable of exercising

sufficient control to subject him to jurisdiction. For example,

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Plaintiffs note that Gibson is listed second, below Defendant

Royer, the company's president, on the list of "Company Management"

included on the "HobbyTron.com Company Fact Sheet" published in

November, 2006. Kim Declaration in Support of Plaintiffs'

Opposition to Motion to Transfer, Ex. J. 

Instead of providing affirmative evidence of Gibson's role at

Absolute Toy Marketing that demonstrates that he did not take part

in the decision to market and sell the allegedly infringing

products, Defendants attempt to point out technical problems with

Plaintiffs' evidence. For example, Defendants point out that most

of the articles that state that Gibson was the founder or CEO of

HobbyTron pre-dated Absolute Toy Marketing. While this eliminates

those articles as evidence of Gibson's role at Absolute Toy

Marketing, it does not negate the evidence that he was part of the

"Company Management" as of November, 2006. Further, Defendants do

not provide any evidence related to the transfer of the HobbyTron

website from Gibson Tech, the company that Gibson did create, to

Absolute Toy Marketing. 

Because Defendants have not provided any evidence or

affidavits to contradict the evidence produced by Plaintiffs and

the allegations in the complaint, and because the Court resolves

conflicts in the evidence in Plaintiffs' favor, it denies

Defendants' motion to dismiss the claims against Gibson for lack of

personal jurisdiction. AT&T, 94 F.3d at 588. 

B. Defendant Jim Royer

Defendants admit that Defendant Royer is the president and

owner of Absolute Toy Marketing but deny that there is sufficient

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evidence to establish that he was involved in decisions related to

the infringing products. Plaintiffs allege that, in addition to

Royer's title and ownership interest in the company, the misleading

statements Royer made regarding the sale of Absolute Toy

Marketing's "Picco Z" helicopter in a press release demonstrate his

involvement in the marketing and sale of the infringing products. 

Further, Royer is the owner of the HobbyTron.com website, through

which the allegedly infringing products were sold. Again,

Defendants do not provide affirmative evidence that Royer was not

involved in the marketing and sale of the allegedly infringing

product but seek to undermine the evidence that Plaintiffs present. 

Defendants argue that knowledge of the company's sale of the

allegedly infringing product is insufficient to establish a claim

against Royer and therefore is insufficient to establish specific

jurisdiction. However, Plaintiffs' evidence shows more than

knowledge of the sale of the allegedly infringing product. Here,

Royer's knowingly misleading statements are enough to establish

that he was a moving active force behind the alleged infringement

even if he was unaware that his actions were improper. See, e.g.,

Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899,

913-14 (E.D.N.Y. 1988) (holding liable a corporate officer who was

unaware his acts would result in trademark infringement); Playboy

Enterprises, Inc. v. Starware Publishing Corp., 900 F. Supp. 438,

441-42 (S.D. Fla. 1995) (same for copyright infringement). 

II. Motion to Transfer 

Defendants move to transfer this case to the District of Utah

on several grounds. First Defendants note that neither of the

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Plaintiffs resides in this district. Second, Defendants argue that

most of the witnesses and evidence is located in Utah. Next,

Defendants argue that the convenience of the parties weighs in

favor of transfer. Finally, Defendants argue that Utah has a

particular interest in the resolution of this case. Plaintiffs

disagree that Defendants have met their burden of showing that the

convenience of parties and witnesses and the interest of justice

require transfer.

A. Plaintiffs' Choice of Forum

Although courts typically give a plaintiff's choice of forum

great deference unless the defendant can show that other factors of

convenience clearly outweigh the plaintiff's choice, there are

factors that diminish the deference typically afforded. Decker

Coal, 805 F.2d at 843; Securities Investor, 764 F.2d at 1317. For

example, "in contrast to the strong presumption in favor of a

domestic plaintiff's forum choice, 'a foreign plaintiff's choice

deserves less deference.'" Ravelo Monegro v. Rosa, 211 F.3d 509,

513 (9th Cir. 2000) (quoting Piper Aircraft v. Reyno, 454 U.S. 235,

256 (1981)). "[T]he degree to which courts defer to the

plaintiff's chosen venue is substantially reduced where the

plaintiff does not reside in the venue or where the forum lacks a

significant connection to the activities alleged in the complaint." 

Williams v. Bowman, 157 F. Supp. 2d 1103, 1106 (N.D. Cal. 2001). 

Here Plaintiffs do not reside in the district. While the

Court gives some weight to Plaintiffs' choice of forum, the

ordinary deference afforded is diminished. This factor weighs

slightly against transfer. 

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B. Convenience of the Witnesses and Access to Evidence

Defendants identify over fifteen witnesses who reside in Utah:

eleven Absolute Toy Marketing employees and several third party

witnesses, including an unidentified group of FedEx and UPS

employees who "have knowledge of the shipment of the alleged

infringing mini-helicopters." Defendants' Motion to Transfer at 9. 

The Court discounts the inconvenience to Defendants' employees,

whom Defendants can compel to testify. STX, Inc. v. Trik Stik,

Inc., 708 F. Supp. 1551, 1556 (N.D. Cal. 1988). Further, it is not

clear that the witnesses Defendants identify would be called upon

to testify in this case. As Plaintiffs point out, their claims do

not involve "a low-level employee's physical act of packing a toy

in a cardboard box, or a UPS employee's act of delivering that box

to a consumer." Plaintiffs' Opposition to Motion to Transfer at

16.

Plaintiffs do not identify any witnesses that they intend to

call, stating only that they "may be required to involve foreign

witnesses to establish their claims" and that if they do so, San

Francisco is more convenient for those traveling from Asia. 

Defendants counter that there are direct flights from Asia to the

Salt Lake City Airport, and that the relative increase in expense

is minimal for Plaintiffs if the case is transferred to Utah while

the potential savings for Defendants are great. 

The Ninth Circuit has held that "the location of the evidence

and witnesses . . . 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). The Court

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finds this factor to weigh slightly in favor of transfer.

C. Convenience to Parties

Defendants argue that it will be very inconvenient for them to

litigate this matter in this district, but that transfer to Utah

will not increase any inconvenience to Plaintiffs. First, they

argue that Absolute Toy Marketing is a small company with only

twenty-five employees and that its yearly sales of $8 million are

very small, relative to Plaintiff Silverlit's yearly sales of $80

million and Plaintiff Spin Master's yearly sales of $300 million. 

Therefore, Defendants argue that the burden of traveling to

California to litigate would be much higher for them than for

Plaintiffs to travel to Utah. Defendants note that a larger

percentage of their staff would be absent from their home offices

during litigation and that their travel expenses would be

disproportionately high. 

In contrast, Defendants point out that Plaintiffs' witnesses

will already be traveling to the United States from Hong Kong or

Canada whether the litigation is in California or Utah. Defendants

also point out that the Salt Lake City airport has direct flights 

to both Ontario, Canada and Hong Kong. Therefore any additional

inconvenience or cost associated with litigating in Utah rather

than California would be minimal for Plaintiffs. The Court finds

that the additional inconvenience to Plaintiffs if transfer is

granted will be less than the inconvenience to Defendants of

litigating in California. This factor weighs in favor of transfer.

D. Utah's Interest in the Resolution of the Case

Another consideration in deciding a motion to transfer is the

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interest in having localized controversies decided in the district

where they occur. See Gulf Oil Co. v. Gilbert, 330 U.S. 501, 508

(1947). Defendants argue that the District of Utah has a greater

local interest in deciding this case because Defendants are

incorporated under the laws of that State and are located there. 

Plaintiffs counter that California has a strong interest in

adjudicating the dispute because of "Defendants' improper sales and

advertising activities directed at California customers." 

Plaintiffs' Opposition to Motion to Transfer at 15. Therefore,

Plaintiffs note that "California maintains a strong interest in

'protecting its citizens from the willful acts of nonresident

defendants.'" Io Group v. Pivotal, Inc., 2004 U.S. Dist. LEXIS

6673, *15 (N.D. Cal. 2004) (quoting Figi Graphics, Inc. v. Dollar

General Corp., 33 F. Supp. 2d. 1263, 1268 (S.D. Cal. 1998)). 

However, the cases Plaintiffs cite discuss California courts'

exercise of jurisdiction over foreign defendants in cases brought

by California residents. 

As with many cases involving the internet, no jurisdiction has

a particularly strong connection to this case. The marketing and

sale of goods over the internet occurred on a national scale. 

Therefore, the alleged injury occurred wherever a consumer bought a

product. 

Defendants also argue that the contract for the sale of the

original 10,000 helicopters from Silverlit to HobbyTron was made

pursuant to Utah law. However, it is not clear how the terms of

the sales agreement is relevant to Plaintiffs' claims. 

Finally, Plaintiffs argue that a Utah court will be less

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efficient in deciding the California statutory and common law

claims that they allege along with their federal copyright and

trademark infringement claims. 

Because internet cases affect all jurisdictions, Utah law is

not applicable in this case and California law is relevant to

Plaintiffs' claims, this factor weighs slightly against transfer.

E. Interests of Justice

The interests of justice and judicial efficiency weigh against

transfer because Defendants' blatant copying has required this

Court to familiarize itself early with the case on a motion for

preliminary injunction. It would be inefficient to require a judge

in Utah to duplicate this effort.

F. Balancing of Factors

On balance, the factors weigh against transfer. The Court

denies Defendants' motion because they fail to meet their burden of

establishing that the convenience of the parties and witness and

the interest of justice require transfer to Utah. 

CONCLUSION

The Court GRANTS in part Plaintiffs' motion for a preliminary

injunction (Docket No. 4). The injunction has entered as a

separate order. The Court DENIES Defendants' motion to transfer or

dismiss (Docket No. 34).

IT IS SO ORDERED.

2/15/07

Dated: CLAUDIA WILKEN

UNITED STATES DISTRICT JUDGE

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