My Pillow, Inc. v. LMP Worldwide, Inc.

Citation: 331 F. Supp. 3d 920Docket: Case No. 18-cv-0196 (WMW/SER)

Court: District Court, D. Maine; September 6, 2018; Federal District Court

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Wilhelmina M. Wright, United States District Judge, is overseeing a trademark-infringement lawsuit initiated by My Pillow, Inc. against LMP Worldwide, Inc. Currently, the court is addressing LMP's motion to transfer the case to the United States District Court for the Eastern District of Michigan and a motion to dismiss My Pillow's complaint for failure to state a claim. The court denies the transfer motion but grants in part and denies in part the motion to dismiss.

My Pillow, based in Minnesota, has used the trademark "MYPILLOW" since 2009, while LMP has used its own mark since 2007. A previous lawsuit between the parties in 2012 ended with a settlement agreement governed by Michigan law, which allowed LMP to use its mark and stated that LMP's mark would not cause confusion with My Pillow's mark. The agreement specifically prohibits LMP from using the My Pillow mark in connection with pillows and restricts LMP from purchasing certain ad words related to My Pillow unless additional words are included.

My Pillow claims that LMP violated this agreement by purchasing prohibited ad words, misrepresenting My Pillow in communications with a wholesale customer, and producing misleading radio advertisements in Minnesota. After notifying LMP of these breaches and terminating the agreement in January 2018, My Pillow filed this lawsuit, asserting multiple claims including breach of contract, trademark infringement under the Lanham Act, unfair competition, and trademark cancellation.

The court will consider the convenience of the parties and witnesses, as well as the interests of justice, in deciding on the transfer motion, as stipulated in 28 U.S.C. § 1404(a).

The court assesses the specific circumstances of the case and evaluates all relevant factors concerning transfer motions, which are not to be granted lightly. The moving party carries the burden of proving that a transfer is justified and that the relevant factors strongly favor such a motion. LMP seeks to transfer the lawsuit on the grounds of convenience for parties and witnesses and the interests of justice. Both parties agree that My Pillow could have initiated the lawsuit in the Eastern District of Michigan.

The first factor examined is the convenience for the parties under Section 1404(a). This includes evaluating travel expenses and potential productivity loss incurred from litigating out-of-state. If both parties prefer their home venues and the moving party does not convincingly demonstrate financial incapacity to litigate in the original jurisdiction, this factor is deemed neutral. LMP argues that litigation in Minnesota would impose significant financial hardship on them due to their operations being based in Michigan. They claim that the need for employees to travel would adversely affect their business. Conversely, My Pillow, based in Minnesota, contends that transferring the case would merely shift the inconvenience to them, which is not sufficient for a transfer.

Regarding convenience to witnesses, LMP argues that key non-party witnesses reside in Michigan, favoring transfer. My Pillow counters that LMP’s witnesses are not essential and highlights the presence of non-party witnesses in Minnesota. The court typically views the convenience of non-party witnesses as the most critical factor, focusing on their potential inconvenience rather than that of party-controlled witnesses. The court concludes that the inconvenience LMP would face in Minnesota is only marginally greater than the inconvenience My Pillow would face in Michigan, leading to a slight favor for transfer on this factor.

In the case of Nelson v. Master Lease Corp., the court addresses the criteria for transferring venue, emphasizing that the party requesting the transfer must specify essential witnesses and their expected testimony. Both parties have non-party witnesses they plan to call, yet neither clarifies the significance of their testimonies, which undermines their arguments for transfer. LMP claims that the travel burden on witnesses from Michigan supports transfer, while My Pillow indicates it will call local radio-station employees in Minnesota. However, the court notes that the relevance of the non-party witnesses' testimonies is not sufficiently established by either side, leading to a neutral weighing of this factor in the venue decision.

Regarding the interests of justice, LMP argues for transfer based on the application of Michigan law and potential judicial economy. My Pillow counters that its choice of forum should be respected and that the Minnesota court can apply Michigan law effectively. LMP contends that local courts are better suited for local law issues, particularly if they are novel; however, it fails to demonstrate that the legal questions are complex or novel, thus reducing the weight of this argument. LMP also mentions judicial economy, citing the case loads of the respective courts, but the court finds that minor differences in case loads do not significantly impact case timelines. LMP's assertion that My Pillow frequently litigates in Michigan is supported only by a single instance from 2012, which the court does not find compelling.

LMP contends that if this lawsuit is moved to Michigan, it would likely be classified as a companion to a prior 2012 lawsuit due to similar parties and evidence. However, the current case involves breach of contract and trademark infringement claims that were not present in the 2012 case, indicating the cases do not arise from the same transaction. Judicial economy is only slightly in favor of transfer since the 2012 lawsuit had minimal documentation at the time of settlement. LMP argues that My Pillow's choice of forum should be given weight, but the court notes this is just one factor, and the plaintiff's choice is less significant when the connection to the forum state is merely residency. While My Pillow's choice holds some importance, it is not decisive. Overall, the factors regarding convenience and judicial economy neither strongly favor nor oppose transfer, leading to the conclusion that LMP has not met the burden to justify transferring the case; thus, the motion to transfer is denied.

LMP also moved to dismiss My Pillow's complaint for failure to state a claim. Under the relevant legal standard, a complaint must contain sufficient factual allegations that, if true, present a plausible claim for relief. Courts accept factual allegations as true and infer in favor of the plaintiff, but legal conclusions presented as facts may be disregarded. The complaint must raise a right to relief above mere speculation.

My Pillow claims that LMP breached two sections of their agreement: Section 2.1(a), regarding the use of the My Pillow mark, and Section 2.1(c), concerning the purchase of ad words for online advertising. LMP seeks to dismiss the breach-of-contract claim, arguing that My Pillow's allegations do not adequately support the claim of breach. Under Michigan law, a breach-of-contract claim requires the existence of a contract, proof of breach, and evidence of damages. LMP challenges the breach element, specifically asserting that My Pillow has not provided sufficient facts regarding the ad words purchase. Section 2.1(c) prohibits LMP from purchasing ad words for "my" and "pillow" unless accompanied by other words. My Pillow alleges that LMP purchased the terms "My," "Pillow," and "mypillow" without any accompanying words, which constitutes a breach. LMP contends that My Pillow's allegations are mere legal conclusions not entitled to truth. However, the court finds that My Pillow's specific factual allegation regarding the purchase of ad words is sufficient to support its breach-of-contract claim, leading to the denial of LMP's motion to dismiss.

Regarding trademark infringement, LMP argues that My Pillow has not stated a claim because the agreement allowed LMP's use of the LMP mark without causing confusion. To succeed in a trademark infringement claim, My Pillow must prove ownership of a registered trademark, unauthorized use by LMP, and the likelihood of confusion. My Pillow asserts that LMP's use of its mark infringed upon its trademark rights, claiming LMP used the LMP mark in a manner not authorized by their agreement. LMP counters that the agreement permits its use of the LMP mark. My Pillow maintains that LMP's continued use of the mark violates the terms of their agreement.

The complaint lacks specific factual allegations regarding LMP's use of the LMP mark, relying solely on a screenshot from LMP's website that aligns with permitted uses under an agreement. My Pillow does not substantiate its claim that LMP's use of the mark was unauthorized, as the allegation is deemed too conclusory to warrant a presumption of truth, leading to the conclusion that My Pillow has not established a trademark infringement claim. Consequently, LMP's motion to dismiss is granted for Count 2 (trademark infringement under the Lanham Act) and Count 4 (common-law trademark infringement). 

Regarding the cancellation of the LMP mark, My Pillow's claim is also dismissed. Although My Pillow argues for cancellation due to potential confusion with its own mark, Section 1119 does not serve as an independent cause of action but rather as a remedy linked to a violation of trademark laws. Since My Pillow failed to state a claim for trademark infringement, it cannot establish grounds for cancellation.

Lastly, My Pillow alleges unfair competition and false advertising under both Minnesota's Deceptive Trade Practices Act and the Lanham Act, citing misleading use of the My Pillow mark through LMP's advertisements and communications. However, LMP seeks dismissal of these claims for failure to adequately state a claim for relief.

My Pillow's unfair-competition claim against LMP hinges on LMP's radio advertisements and keyword advertising. Under the Lanham Act, a claim for unfair competition requires My Pillow to demonstrate that LMP's actions created a likelihood of confusion among consumers regarding the origin of goods. LMP contends that its advertisements do not cause confusion, but My Pillow argues that the determination of confusion is fact-sensitive and typically not resolved at the motion to dismiss stage. My Pillow alleges that LMP's use of its mark was intended to confuse consumers about the source of LMP's products, which is sufficient to support a claim under Section 1125(a)(1)(A).

In addition, My Pillow alleges false advertising based on an email from LMP to a wholesale customer. LMP argues for dismissal, claiming the email does not qualify as a commercial advertisement. To succeed in a false-advertising claim, My Pillow must show that LMP made a false statement in a commercial advertisement that deceived a significant portion of the audience, influenced purchasing decisions, and caused My Pillow injury. The email, being a private communication not sufficiently disseminated to the public, does not meet the criteria for commercial advertisement or promotion. Consequently, My Pillow's false-advertising claims are dismissed, leading to LMP's motion to dismiss being granted for those counts.

Defendant LMP Worldwide, Inc.'s motion to transfer is denied. The motion to dismiss is partially granted and partially denied as follows: Counts 2 and 6 are dismissed without prejudice; Count 4 is dismissed without prejudice regarding the common-law trademark-infringement claim but denied for other claims; Counts 3 and 5 are dismissed without prejudice for their false-advertising claims but denied for other claims. An "ad word" purchase is defined, and both parties present arguments regarding employee-witnesses, which are addressed in Part I.A. No arguments are made regarding judgment enforcement, fair trial obstacles, or conflict-of-law issues. The agreement between the parties is governed by Michigan law, and thus the court does not address My Pillow's alternate breach-of-contract claim related to Section 2.1(a). Trademark-infringement claims are analyzed similarly under federal law and common law, with the court noting My Pillow's argument about terminating the agreement does not impact the application of the agreement's terms to previous conduct. The court declines to consider the likelihood of confusion regarding Count 4's claims. LMP does not contest the common-law unfair-competition claim, so it is not addressed. False-advertising claims are governed by both the Lanham Act and Minnesota law, requiring similar analysis. The complaint's allegations are ambiguous, but My Pillow's reliance on LMP's email to a wholesale customer limits the consideration of other claims related to false advertising.