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LLC v. Advantus Corp.

United States District Court, W.D. North Carolina, Charlotte Division

August 21, 2014

T2 PRODUCTS, LLC, Plaintiff,
v.
ADVANTUS CORP., Defendant.

ORDER

GRAHAM C. MULLEN, District Judge.

I. INTRODUCTION

This matter is before the Court upon Defendant's Motion to Dismiss or to Transfer for Improper Venue, or in the Alternative, Motion to Decline to Exercise Jurisdiction. (Doc. No. 3). This Motion has been fully briefed and is now ripe for disposition.

II. FACTUAL BACKGROUND

Plaintiff T2 Products, LLC ("T2") is in the business of selling pool floats, including the "Maggie Blue" pool floats at issue in this lawsuit. Defendant Advantus Corp. ("Advantus") is a Florida corporation and is the exclusive licensee of a patent for a certain type of buoyant cushion (the "Buoyant Cushion Patent") and has marketed and sold pool floats embodying the Buoyant Cushion Patent throughout the United States.

In early 2013, Advantus became aware that T2 was selling products that infringed the Buoyant Cushion Patent. After the parties failed to resolve the matter without litigation, Advantus filed suit against T2 in the Middle District of Florida alleging patent infringement (the "2013 Florida Suit"). The parties ultimately settled; however, in conjunction with the settlement, the district court entered a permanent injunction against T2 and "all of its agents, successors, assigns, and persons in active concert or participation with any of them, " enjoining them from "manufacturing, distributing, selling, offering for sale, and/or advertising" the "Spuncrylic & Mesh" and "Sunbrella & Mesh" versions of the Maggie Blue pool floats. (Ex. 2 at 5-6, Doc. No. 3-2.)[1]

As part of the settlement of the 2013 Florida Suit, the parties entered into a sublicense agreement ("Sublicense"), which permitted T2 to sell certain Buoyant Cushion Products in limited circumstances. (Advantus' Mot. Dismiss or Transfer at 3, Doc. No. 3.) Under the Sublicense, T2 agreed to not, directly or indirectly:

(i) Import, use, make, have made, sell or offer to sell any Sublicense Products in any way or manner whatsoever except in strict compliance with this Agreement.
(ii) Import, use, make, have made, sell or offer to sell any Buoyant Cushion Products within the United States, except to the extent that the sale of such products is explicitly authorized under Schedules A, B, or C.

(Ex. 3 at 6, Doc. No. 3-3.) Under Schedule C of the Sublicense, Advantus authorized T2 to sell to Costco the Maggie Blue Buoyant Cushion Products that are 70" by 32" in size and sold at a minimum retail price of $89. ( Id. at 15.) The Sublicense contains a mandatory, exclusive venue provision requiring any litigation arising out of the agreement to take place in the Middle District of Florida.

Advantus recently discovered that T2 had sold Costco an item which depicts the approved Maggie Blue product on the box, but the actual product inside the box is a different product that does not conform to Schedule C of the Sublicense. As a result, on April 11, 2014, Advantus sent a letter to Todd Youngblood, President of T2, notifying him that the sales of the Maggie Blue floats were in violation of the Federal Lanham Act, 15 U.S.C. ยง 1125(a). (Ex. 5, Doc. No. 3-5.) Particularly, the letter informed Mr. Youngblood that T2 was engaging in false advertising by selling Costco an item which depicted the approved Maggie Blue product on the box, while the actual item inside the box was a different, inferior product that did not conform to Schedule C of the Sublicense. ( Id. ) The letter explicitly threatened litigation if T2 failed to propose an acceptable plan of reconciliation within seven days. ( Id. ) On April 14, 2014, in response to the demand letter, Mr. Youngblood emailed Advantus' President, Kevin Carpenter, requesting that they discuss the issue directly. (Ex. 6 at 11, Doc. No. 3-6.) Mr. Carpenter responded on the same day, requesting a written proposal and reiterating an intent to litigate absent a resolution. ( Id. ) On April 20, T2 filed the present declaratory judgment action, seeking a declaration from this Court that it has not engaged in false advertising under the Lanham Act. T2 did not, however, serve the Complaint, but instead continued to make settlement overtures to Advantus.

On April 24, 2014, Advantus filed suit against T2 in the Middle District of Florida alleging breaches of the Sublicense as well as federal and state law causes of action for unfair competition, false advertising, and deceptive trade practices. The Complaint was served on T2 the day after it was filed. The case is now pending as Advantus, Corp. v. T2 International, LLC, and T2 Products, LLC, Case No. 3:14-CV-00484-BJD-PDB. (the "Advantus 2014 Florida Suit").[2]

Also on April 24, Mr. Youngblood emailed Mr. Carpenter stating that he was out of the country but would present a settlement by April 29. (Ex. 6 at 10, Doc. No. 3-6.) The email did not mention the Complaint T2 had filed, but not served. The following day Mr. Youngblood emailed Mr. Carpenter a copy of the Complaint T2 had filed on April 20, but stated that he did not intend to serve the Complaint:

"We wish to avoid further litigation on this matter and come to a reasonable settlement quickly. However we have taken steps to protect our rights to sell our products that our customers around the world purchase from us. Attached is a copy of the complaint we filed in Charlotte on Sunday. We do not intent ...

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