A federal court in Texas has determined that a trademark and patent infringement lawsuit involving Frito-Lay North America’s corn chip products can be maintained in the Eastern District of Texas because it has jurisdiction over the defendants and the defendants failed to show that it was “clearly more convenient” to litigate the matter in Arkansas. Frito-Lay N. Am., Inc. v. Medallion Foods, Inc., No. 4:12-CV-74 (U.S. Dist. Ct., E.D. Tex., Sherman Div., order entered March 30, 2012). Details about the case are included in Issue 427 of this Update.
According to the court, after Frito-Lay notified the defendants that their BOWLZ product infringed its patent and trade dress rights, the defendants filed a complaint for declaratory relief in the Eastern District of Arkansas. Frito-Lay filed its suit the same day in the Eastern District of Texas. The Arkansas court stayed that action pending the Texas court’s ruling on jurisdiction and venue, noting that “[i]f the Eastern District of Texas decides that it has personal jurisdiction and denies the motion to transfer, the [Arkansas] action will be dismissed.”
Under a stream-of-commerce theory of personal jurisdiction, the court found jurisdiction proper as to defendant Medallion because it manufactures the allegedly infringing tortilla chips and “has fulfilled and continues to fulfill repeated purchase orders for the allegedly infringing tortilla chips for . . . a ‘major customer’ of Defendants. Medallion knows that these allegedly infringing tortilla chips are then sold in Texas, and Medallion continues to reap the benefit of the sales of the tortilla chips in Texas.” The court also found jurisdiction over defendant Ralcorp proper taking the plaintiff’s allegations as true, i.e., that Ralcorp and Medallion identify themselves interchangeably on Ralcorp’s Web site, the two companies share some corporate officers, “an employment opportunity at a Medallion plant is considered employment with Ralcorp,” and “the companies sued Plaintiff together in the Eastern District of Arkansas, jointly seeking a declaration of their rights to the allegedly infringing tortilla chip product.”
Analyzing a number of private and public interest factors as to the convenience of the forum, the court found that six were neutral and two weighed slightly against transfer. Thus, the matter will proceed before the Texas federal court.