Jem Accessories, Inc. v. JVCKENWOOD USA Corporation

Background

Jem Accessories, Inc., doing business as Xtreme Cables, sued JVCKENWOOD USA Corporation and Harman International Industries, Inc. for trademark infringement under the federal Lanham Act and unfair competition under the Lanham Act and New York law. Jem alleged that JVCKENWOOD sold earbuds and headphones using the marks “XX XTREME XPLOSIVES” and “XTREME XPLOSIVES,” while Harman sold Bluetooth speakers using the “XTREME” mark.

Harman argued that it had been improperly joined as a defendant because its alleged conduct was separate from JVCKENWOOD’s conduct. Harman asked the court either to drop it from the case or to sever the claims against it and transfer them to the U.S. District Court for the Central District of California. Jem opposed the motion.

Rule 20 Joinder

Federal Rule of Civil Procedure 20 permits multiple defendants to be sued in one action when two requirements are met: the claims arise from the same transaction, occurrence, or series of transactions or occurrences, and the claims involve a common question of law or fact.

The court concluded that Jem satisfied the common-question requirement because the claims could involve overlapping issues, such as the strength of Jem’s marks. But the court held that Jem did not satisfy the transaction-or-occurrence requirement. Jem did not allege that JVCKENWOOD and Harman were jointly, separately, or alternatively liable, acted together, or shared ownership. The complaint instead described independent sales by separate companies involving different products and marks.

The court explained that alleging that separate defendants infringed the same trademark, or used similar methods, does not by itself establish that their conduct arose from the same transaction or occurrence. The court therefore found that the defendants were not properly joined under Rule 20.

Rule 21 Remedy

Under Federal Rule of Civil Procedure 21, a court may drop a misjoined party. The court considered whether dropping Harman would promote judicial efficiency, avoid prejudice, and prevent the need for overlapping but separate discovery and evidence.

The court found that keeping the claims together would provide little efficiency because the claims would require different legal strategies, witnesses, and evidence. Harman’s alleged manufacture, advertising, importation, and sale of Bluetooth speakers would involve different evidence from JVCKENWOOD’s alleged manufacture, advertising, importation, and sale of earbuds and headphones. The court also found that keeping unrelated claims together could cause confusion and prejudice.

Disposition

The court granted Harman’s motion. Harman was dropped from the case, and Jem’s claims against Harman were dismissed without prejudice. Jem’s claims against JVCKENWOOD were allowed to proceed under the existing case number.

Because Harman was dropped from the case, the court did not decide whether the claims against Harman should be transferred to the Central District of California. It also did not take a position on the parties’ arguments concerning alternative forums, the first-to-file rule, or forum non conveniens.