CMT USA, Inc. v. Apex Tool Group LLC

Background

CMT USA, Inc. and CMT Utensili S.p.A. sued Apex Tool Group LLC and Apex Brands, Inc. over trademark infringement, trademark dilution, and unfair competition. CMT alleged that it sells woodworking tools, including circular saw blades using the color orange, and owns trademark registrations for that color as applied to woodworking saw blades and related accessories. CMT alleged that Apex sold circular saw blades using an orange color that was confusingly similar or identical to CMT’s marks or trade dress, causing CMT to lose sales.

Apex answered and asserted four federal counterclaims seeking cancellation of CMT’s marks based on functionality, fraud on the United States Patent and Trademark Office, genericness, and abandonment. Apex moved under 28 U.S.C. § 1404(a) to transfer the case from the Southern District of New York to the Western District of North Carolina, Charlotte Division. The parties did not dispute that the case could originally have been brought in North Carolina.

Transfer Analysis

The court evaluated the convenience of the parties and witnesses and the interests of justice. It gave CMT’s choice of the Southern District of New York some, but not significant, deference because CMT USA’s principal place of business was in North Carolina, CMT Utensili’s principal place of business was in Italy, and neither plaintiff resided in the Southern District of New York.

The convenience-of-witnesses factor favored transfer. Apex identified several North Carolina-based employees who were likely to have important information about the design, marketing, and sale of the allegedly infringing blades. Witnesses in Pennsylvania, Maryland, Italy, and Florida would have to travel under either venue. Although CMT identified a former trademark attorney in New York as a potential witness, the court found that this witness’s location did not outweigh the inconvenience to the North Carolina witnesses.

The convenience-of-parties factor also favored transfer because both sides had corporate offices in North Carolina, while neither party was incorporated in or had its principal place of business in New York. The location-of-evidence factor favored transfer, although the court considered it less significant because electronic document production reduced the importance of physical document location. Apex’s headquarters, industrial design center, and industrial design team were in North Carolina.

The locus-of-operative-facts factor favored transfer. In trademark and trade-dress cases, the court considers where infringing labels are applied and where consumer confusion is likely to occur. Although Apex sold the products in New York, the products were sold throughout the United States, so New York was not a unique location of operative facts. The court also found that consumers were just as likely to be confused in North Carolina and that some design and labeling decisions likely occurred there.

The availability-of-process factor was neutral. CMT did not claim that its former attorney, the only identified third-party witness, would be unwilling to travel to North Carolina. The parties’ relative means were also neutral because they agreed there was no disparity between the corporate parties. The court found no significant efficiency benefit from keeping the case in New York because the case remained in its early stages. It also found that New York’s familiarity with state law did not weigh heavily against transfer because the case included nine federal-law claims and the North Carolina court was capable of handling the state-law claims.

Disposition

Judge Ani L. ROCHON concluded that the balance of factors favored transferring the action for the convenience of the parties and witnesses and in the interests of justice. The court granted Defendants’ motion to transfer and directed the clerk to transfer the action to the United States District Court for the Western District of North Carolina, Charlotte Division.