Trane International Inc. v. Calentadores de America, S.A. de C.V.

Background

Trane International Inc. and Trane U.S., Inc. sued Calentadores de America, S.A. de C.V. and Ariston Thermo Mexico S.A. de C.V. The claims concerned trademark infringement under the Lanham Act and breach of a trademark license agreement.

The 2000 license gave Calentadores and its affiliates an exclusive license to use Trane’s “American Standard” trademark for specified water-heater activities. The license prohibited assignment or transfer of rights without Trane’s written consent and prohibited use of the mark close to or in association with other marks not licensed under the agreement. The license selected New York law and provided for non-exclusive jurisdiction in the Southern District of New York.

On April 30, 2019, Ariston Thermo Mexico purchased all but two shares of Calentadores. Trane alleged that this acquisition transferred Calentadores’s license rights to Ariston Thermo Mexico in violation of the license. Trane also alleged that defendants used the American Standard mark on the Ariston Group website and on the @_ASWH Twitter account. After Trane amended its complaint, defendants renewed their motion to dismiss for lack of personal jurisdiction and failure to state a claim.

Personal Jurisdiction over Ariston Thermo Mexico

The court dismissed the claims against Ariston Thermo Mexico for lack of personal jurisdiction. Ariston Thermo Mexico did not sign the license and therefore was not ordinarily subject to its forum-selection clause. The court rejected Trane’s argument that Ariston Thermo Mexico was bound by the clause because it was closely related to Calentadores. A non-signatory may be subject to a forum-selection clause in circumstances such as succession to a signatory, but the court found that Ariston Thermo Mexico was not Calentadores’s successor and that Calentadores remained the licensee.

The court also found that Trane’s allegations did not establish jurisdiction under New York’s long-arm statute. The alleged intellectual-property infringement was insufficient on these allegations because neither the plaintiffs nor the defendants were located in New York. The court denied Trane’s request for jurisdictional discovery, stating that Trane had already amended its pleading and had not plausibly alleged that Ariston Thermo Mexico was bound by the forum-selection clause or offered another jurisdictional theory.

Breach of Contract

The court dismissed Trane’s breach-of-contract claim. Trane argued that Ariston Thermo Mexico became an “Affiliate” of Calentadores when it acquired Calentadores and thereby obtained license rights, triggering the license’s non-assignment provision.

Applying New York law, the court held that the complaint did not plausibly allege that the license transferred rights to Ariston Thermo Mexico. Without explicit language providing otherwise, a license covering a party and its affiliates applies to affiliates existing when the contract was made. The license defined affiliates using present-tense language and did not clearly extend the grant to future affiliates. The court also rejected Trane’s interpretation because it would make the license simultaneously create and prohibit an automatic transfer of rights whenever control changed. The court stated that Calentadores remained bound by the license and available for suit if it breached the agreement.

Trademark Infringement

The court dismissed Trane’s Lanham Act trademark-infringement claim for failure to plausibly allege a likelihood of consumer confusion. The complaint plausibly alleged that the mark was valid, used in commerce, and used in connection with advertising. The court nevertheless found that Trane had not plausibly alleged the required confusion about the affiliation, connection, sponsorship, or approval of the parties’ goods or services.

The court treated the alleged uses as nominative use—use of another party’s mark to identify that party’s products. It found that several traditional factors for evaluating confusion did not fit this dispute, that Trane alleged no actual consumer confusion, and that the allegations did not show the mark was used too prominently or too often. Most importantly, the court found that the alleged uses accurately reflected the relationship between the parties: Calentadores was licensed to market and distribute American Standard water heaters, and the complaint identified Ariston Thermo Mexico and Ariston Group as Calentadores’s parent companies. The court rejected Trane’s argument that lack of permission under the license itself established confusion.

Leave to Amend and Disposition

The court denied Trane’s request for leave to amend. It held that Trane’s theory of personal jurisdiction was legally incorrect and could not be cured by additional factual allegations. The court also noted that Trane had already received an opportunity to amend, had been warned that it likely would have no further opportunity, and had not proposed an amendment or explained how amendment would cure the deficiencies.

The defendants’ April 1, 2022 motion to dismiss was granted. The court directed the Clerk of Court to enter judgment for the defendants and close the case.