Manhattan Hosiery Company, Inc. v. Metro Goldwyn Mayer Studios Inc.

Background

Manhattan Hosiery brought a declaratory-judgment action against Metro-Goldwyn-Mayer Studios Inc. (“MGM”). It sought a court declaration that it had not infringed MGM’s trademarks and had not unfairly competed with MGM.

Manhattan Hosiery sells clothing throughout the United States and uses the trademark ROCKY. It had used the mark since 1984, and the mark had been registered since 2014. After Manhattan Hosiery failed to file a required statement of continued use, the U.S. Patent and Trademark Office declared the registration abandoned on July 23, 2021. Manhattan Hosiery re-filed to register the mark two days later.

MGM owns rights in the Rocky films featuring Rocky Balboa. On September 17, 2021, MGM sent Manhattan Hosiery a letter asserting infringement of six MGM trademarks containing the word “Rocky.” MGM sent a similar letter on November 3. The parties began settlement discussions on November 4, and Manhattan Hosiery filed this action on January 25, 2022.

MGM moved to dismiss the complaint under the Declaratory Judgment Act, arguing that the case was an improper anticipatory declaratory-judgment action or was motivated by improper forum shopping. Alternatively, MGM moved under 28 U.S.C. § 1404(a) to transfer the case to the Central District of California.

Motion to dismiss

The court denied MGM’s motion to dismiss. It ruled that Manhattan Hosiery had not filed the action in response to a direct threat of impending litigation. MGM’s letters referred to seeking “all available remedies,” but the court held that this was not a specific warning of litigation with a deadline and subsequent legal action.

The court also held that MGM had not shown improper forum shopping. Manhattan Hosiery was located in New York, so choosing a nearby forum was not unusual or, on the record presented, improper. The court assumed for purposes of the motion that Manhattan Hosiery knew MGM would file its own lawsuit in the Central District of California, but found that MGM still had not identified a letter or notice that constituted a direct threat when Manhattan Hosiery filed this case.

Motion to transfer venue

The court also denied MGM’s motion to transfer venue. Section 1404(a) permits transfer for the convenience of the parties and witnesses and in the interest of justice when the proposed district is one where the case could have been brought. The party seeking transfer must establish by clear and convincing evidence that transfer is warranted.

The court concluded that the Central District of California was a permissible alternative venue, but Manhattan Hosiery’s choice of New York was entitled to substantial weight. The court found that the remaining private- and public-interest factors did not favor transfer. MGM identified witnesses and trademark-related documents in California, while Manhattan Hosiery identified likely documents and witnesses in or around New York City. The court found that the possible presence of some evidence and witnesses in California was insufficient to show that those factors favored transfer.

The court also found neutral MGM’s argument that the California court would be more familiar with the governing law. The only claims then in the case arose under federal trademark law, with which both courts were familiar. Any possible future California-law counterclaims did not change that conclusion. Finally, the court found court congestion and trial efficiency to be neutral, noting that there was no reason to believe the case would be delayed in the Southern District of New York.

Disposition

Judge Denise Cote denied MGM’s June 27 motion to dismiss and denied MGM’s motion to transfer venue. The opinion addressed the forum and venue issues and did not decide whether Manhattan Hosiery actually infringed MGM’s trademarks or unfairly competed with MGM.