United States District Court, M.D. North Carolina
TURN AND BANK HOLDINGS, LLC and PRECISION AIRMOTIVE, LLC, Plaintiffs,
AVCO CORPORATION and AVSTAR FUEL SYSTEMS, INC., Defendants.
MEMORANDUM OPINION AND ORDER
CATHERINE C. EAGLES, DISTRICT JUDGE.
and Bank Holdings, LLC and Precision Airmotive, LLC have sued
Avco Corporation and AVStar Fuel Systems, Inc. for trademark
infringement arising out of sales of fuel injection servos,
an airplane engine part. The defendants move to dismiss for
lack of personal jurisdiction, contending they do not have
minimum contacts with North Carolina. The defendants have
purposefully availed themselves of jurisdiction here because
Avco has made purposeful and deliberate contacts with North
Carolina to sell these servos in its engines, AVStar has
purposefully sold its servos through Avco's distribution
channels here, and this alleged infringement is the latest
step in a longstanding effort by the defendants to replace
the plaintiffs and their predecessors in the servo market.
Since the exercise of jurisdiction is also constitutionally
reasonable, the motion to dismiss will be denied.
parties to this lawsuit and related entities have a long
litigation history over intellectual property rights,
including in this district. See, e.g., Avco
Corp. v. Turn & Bank Holdings, LLC, No.
4:12-CV-01313, 2018 WL 1706359 (M.D. Pa. Apr. 9, 2018);
Memorandum & Order, Avco Corp. v. Marvel-Schebler
Aircraft Carburetors, LLC, No. 4:10-cv-02026-JEJ, Doc.
35 (M.D. Pa. Feb. 7, 2011) (transferring carburetor-related
trademark litigation to the Middle District of North
Carolina). This case began in May 2019, when
Precision filed its complaint asserting that Avco
and AVStar are infringing on its registered trademark rights
in violation of federal statutory and North Carolina common
law trademark protections, have committed unfair competition
in violation of the Lanham Act, and have violated North
Carolina's prohibition on unfair and deceptive trade
practices. See Doc. 1 at ¶¶ 46-77.
Precision also alleges that Avco and AVStar conspired to
reverse-engineer Precision's products and to
intentionally infringe on its trademarks to benefit from the
goodwill associated with Precision's marks and to replace
the Precision servos in the servo market. Id. at
7-12. The defendants move to dismiss for lack of personal
jurisdiction. Doc. 14 at ¶ 1.
Supreme Court recognizes two types of personal jurisdiction:
general (or “all-purpose”) jurisdiction and
specific (or “case-linked”) jurisdiction.
Bristol-Myers Squibb Co. v. Super. Ct. of Cal., 137
S.Ct. 1773, 1779-80 (2017). The parties agree that neither
defendant is subject to general jurisdiction in North
Carolina. Accordingly, the Court will only consider
whether the defendants are subject to specific jurisdiction.
defendants are subject to specific personal jurisdiction in a
federal court only if both the forum state's long-arm
statute and due process are satisfied. See Universal
Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 558 (4th
Cir. 2014). In North Carolina, these considerations are
co-extensive. Christian Sci. Bd. of Dirs. of First Church
of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th
satisfy due process requirements, a defendant must have
sufficient “minimum contacts” with the forum
state such that “the maintenance of the suit does not
offend traditional notions of fair play and substantial
justice.” Int'l Shoe Co. v. Wash., 326
U.S. 310, 316 (1945). This requires that a defendant have
“purposefully directed his activities at the residents
of the forum” and that the cause of action
“arise[s] out of or relate[s] to” those
activities. Burger King Corp. v. Rudzewicz, 471 U.S.
462, 472-73 (1985). “[T[he Supreme Court has rejected
the exercise of jurisdiction where a defendant has merely
placed a product into the stream of commerce foreseeing that
it might ultimately reach the forum state, ” but
sufficient contacts exist where a defendant has
“targeted the forum with its goods.” ESAB
Grp., Inc. v. Zurich Ins. PLC, 685 F.3d 376, 392 (4th
Fourth Circuit has “synthesized the due process
requirements for asserting specific personal jurisdiction in
a three part test” in which courts consider “(1)
the extent to which the defendant purposefully availed itself
of the privilege of conducting activities in the State; (2)
whether the plaintiffs' claims arise out of those
activities directed at the State; and (3) whether the
exercise of personal jurisdiction would be constitutionally
reasonable.” Consulting Eng'rs Corp. v.
Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009).
“Where, as here, the district court addresses the
question of personal jurisdiction on the basis of motion
papers, supporting legal memoranda, and the allegations in
the complaint, the plaintiff bears the burden [of] making a
prima facie showing of a sufficient jurisdictional basis to
survive the jurisdictional challenge.” Id. at
Background and Jurisdictional Facts
decide whether Precision made the requisite prima facie
showing, the Court “must construe all relevant pleading
allegations in the light most favorable to the plaintiff,
assume credibility, and draw the most favorable inferences
for the existence of jurisdiction.” Mylan Labs.,
Inc. v. Akzo, N.V., 2 F.3d 56, 62 (4th Cir. 1993)
(original emphasis omitted). The defendants have not denied
many of Precision's allegations and have not refuted much
of Precision's evidence, nor have they submitted evidence
to address several of the factors relevant to jurisdiction.
The Court has therefore taken these unrefuted allegations and
declarations as true for the purposes of this motion and has
drawn reasonable inferences in favor of Precision from these
facts and as to facts on which the defendants have chosen to
remain silent. See id.; accord Carefirst of Md.,
Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390,
396 (4th Cir. 2003).
Court finds the following facts for the purpose of this
and Bank is a North Carolina limited liability company that
holds several trademarks used on fuel injection servos, which
control the delivery of a combustible fuel-air mixture to
aircraft engines. Doc. 1 at ¶¶ 2, 13, 17. The
Bendix Corporation developed these servos in the 1960s and
affixed marks to identify its servos consisting of the prefix
“RSA” followed by a series of numbers and
letters, e.g., “RSA-5AD1, ” “RSA-10AD1,
” and “RSA-10ED1.” Id. at
2012, Turn and Bank bought the servo product line and
licensed its intellectual property rights to Precision, a
North Carolina limited liability company, for servo
production. Id. at ¶¶ 3, 17; Doc. 32-2 at
¶ 6. All servo producers, from Bendix up to Precision,
have continuously manufactured and sold servos with these RSA
marks. Doc. 1 at ¶ 18. As a result, buyers for decades
have used these marks to identify this line of servos.
Id. at ¶ 20; Avco Corp., 2018 WL
1706359, at *8 (holding at summary judgment that the RSA
marks have acquired secondary meaning). At present, Precision
and Turn and Bank's operations are in Gibsonville and
Burlington, North Carolina. Doc. 1 at ¶¶ 2- 3; Doc.
32-2 at ¶¶ 7-8.
a Delaware corporation that for decades purchased servos from
Precision's predecessors. Doc. 1 at ¶ 24. Around
2002, Avco began pressuring Precision's predecessor to
reduce its servo prices. Id. When that company
refused, Avco contracted with AVStar, a Florida corporation,
to reverse-engineer the Precision line of servos and to then
sell the servos to Avco as part of an overall plan by Avco
for AVStar to replace Precision servos in the servo market.
Id. at ¶¶ 24-26, 28; see also Avco
Corp., 2018 WL 1706359, at *2 (summarizing the
“series of agreements” between AVStar and the
Lycoming Engines division of Avco to use RSA servos). AVStar
successfully reverse-engineered the servos, which the Federal
Aviation Administration then approved. Doc. 1 at ¶ 30.
In or around August 2012, Avco began selling AVStar servos
with the same RSA marks used by Precision; AVStar affixed the
RSA marks to its servos under its agreement with Avco, which
indemnified AVStar for doing so. Doc. 1 at ¶¶
28-30; see also Avco Corp., 2018 WL 1706359, at *2
(finding at summary judgment that the defendants'
agreements included “an obligation on the part of
AVStar to use the same RSA-based model numbers used by
Precision”). AVStar receives 98% of its servo revenue
from Avco, it's “primary customer.” Doc. 29-3
at ¶ 19; Doc. 15 at 15. Avco's “sister”
company, Cessna, also sells aircraft in North Carolina with
AVStar's servos and Avco's engines. Doc. 32-2 at
April 2018, the United States District Court for the Middle
District of Pennsylvania held on summary judgment that
AVStar's use of the RSA marks violated Precision's
trademark and that Avco induced this infringement. See
Avco Corp., 2018 WL 1706359, at *11. Within months of
this decision, Avco and AVStar began selling servos and
engines with servos bearing new marks that replaced the
“RSA” prefix with “LFC” but that
retained the same model numbers, including “LFC-5AD1,
” “LFC-10AD1, ” and
“LFC-10ED1.” See Doc. 1 at ¶ 33;
Doc. 7-7 at 10-11; Doc. 15 at 8-9; Doc. 29-3 at ¶ 17.
Precision's claims for trademark infringement in this
case are based upon these new LFC marks, which Precision
contends are confusingly similar to its valid RSA marks. Doc.
1 at ¶ 34.
record does not contain direct evidence that AVStar affixes
the LFC marks to servos under an agreement with or at the
direction of Avco. See Doc. 7-7 at 10-11; Doc. 7-8.
However, this is a reasonable inference given that
Precision's allegations to this effect remain undisputed,
see, e.g., Doc. 1 at ¶ 53; AVStar adopted the
original RSA marks at Avco's direction and with
Avco's indemnification, as noted above; and switching
marks would have a “significant detrimental impact on
AVStar's ability to provide products” to Avco. Doc.
29-3 at ¶ 19. AVStar also sells servos to others without
the LFC or RSA mark, see Doc. 1 at ¶ 41, which
further indicates that AVStar uses the LFC marks on the
servos it sells to Avco at Avco's direction. Taking all
inferences in favor of Precision, the Court will so find.
has two distributors in North Carolina and has sold engines
with AVStar servos in North Carolina for years through these
distributors. Doc. 32-2 at ¶ 12. These servos also enter
North Carolina via sales of airplanes containing Avco
engines. Id. at ¶ 13. Until recently, these
servos contained the infringing RSA mark. Id. at
¶ 12; see generally Avco Corp., 2018 WL
1706359, at *2. Avco advertises these two distributors on its
website, which allows customers to search for distributors by
geographic region to “find an authorized . . .
distributor near you.” See Doc. 32-2 at ¶
14 & p. 7. It is reasonable to infer that Avco maintains
ongoing relationships with North Carolina distributors and
has an online search feature to solicit sales through these
distributors from in and around North Carolina.
says it “has no record” of directly shipping any
LFC products to North Carolina. Doc. 34-2 at ¶ 17.
However, Avco has shipped at least one engine equipped with
an AVStar LFC servo into North Carolina, see Doc.
15-4 at ¶ 19, which an end-user bought from Avco's
distributor in Burlington, North Carolina. See Doc.
34-1 at ¶ 4. There is no evidence that Avco intends to
retreat from the North Carolina market, where it has
regularly sold engines with AVStar's servos for years,
see Doc. 32-2 at ¶ 12, and where its sister
company Cessna regularly sells airplanes with Avco servos in
the engines. Id. at ¶ 13. AVStar has also for
years sold the RSA servos directly to consumers in North
Carolina, see Id. at ¶ 12, and similarly has
presented no evidence its channels for selling servos have
changed since it switched to the new LFC mark. See
Doc. 34-2. As ...