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Automated Solutions, Inc., An Idaho Corporation; and v. Fadal Machining Centers

June 6, 2011

AUTOMATED SOLUTIONS, INC., AN IDAHO CORPORATION; AND
CNCPROS.NET, INC., AN IDAHO CORPORATION FORMERLY KNOWN AS FADALCNC.COM, INC.
PLAINTIFFS,
v.
FADAL MACHINING CENTERS, LLC, A WISCONSIN LLC; AND
MAG INDUSTRIAL AUTOMATION SYSTEMS, LLC, A DELAWARE LLC, DEFENDANTS.



The opinion of the court was delivered by: Honorable Mikel H. Williams United States Magistrate Judge

MEMORANDUM DECISION AND ORDER

Currently pending is Defendants Fadal Machining Centers, LLC ("Fadal") and MAG Industrial Automation Systems, LLC ("MAG") (collectively, "Defendants") Motion to Dismiss or Transfer Venue Fed. R. Civ. P. 12(b)(2) or (3) and 28 U.S.C. § 1404 and § 1406.

BACKGROUND

Defendant Fadal is a Wisconsin limited liability company ("LLC") with its principal place of business in Chatsworth, California. Defendant MAG is a Delaware LLC with its principal place of business in Sterling Heights, Michigan. Both do business is Wisconsin. Fadal is wholly-owned by G & L USA, LLC, a Wisconsin LLC, which is in turn wholly-owned by MAG Industrial Automation Systems, LLC. Plaintiffs Automated Solutions, Inc. ("ASI") and CNCPros.net, Inc. ("CNC") are both Idaho corporations with their principal places of business in Ada County, Idaho.

Defendants engage in the manufacture and sale of vertical machining centers for drilling, taping, thread milling, and the like. They also use computer controls for the operation of their machines. These machines are sometimes called computer numeric controlled machines ("machines"). In connection with its business, Fadal owns the Fadal trademark. Similarly, Defendant MAG is owner of the MAG trademark and design mark. Defendants have also secured several copyrights for software used to operate the machines as well as copyrights for manuals.

Plaintiffs are distributors of replacement parts for these types of machines. Plaintiff ASI is in the business of providing maintenance services to end-users of these machines manufactured by Defendants and others.

On October 20, 2006, ASI entered into a distributor agreement (the Agreement) with Fadal by which ASI could distribute certain products in a defined distributor territory. (Sisterly Aff., Ex. F, Dkt. 10-11). In the Agreement, ASI acknowledged that Fadal was the exclusive owner of certain trade designations. ASI was granted a non-exclusive, non-assignable privilege to use Defendants' trade designations while the Agreement was in effect. Neither CNC nor MAG were named parties to the Agreement.

The Agreement provides, in part:

15. Severability, Governing Law and Forum Selection.

(d) Any action, claim, suit or proceeding between the parties, including but not limited to, those [in] connection with or arising out of or related to this Agreement or which in any way involves the relationship between the parties, whether in contract, tort or statute shall be initiated and prosecuted as to all parties and their successors and assigns solely and exclusively in the United States District Court, Eastern District, State of Wisconsin and each party waives, freely and completely, any right to dismiss and/or transfer any action pursuant to 28 U.S.C. § 1404 or § 1406 and any successor statutes. In the event the District of Wisconsin does not have subject matter jurisdiction then such matters shall be solely and exclusively determined under the jurisdiction of the appropriate state court of competent jurisdiction located in Fond du Lac County, Wisconsin. The parties consent to in personam jurisdiction of the courts described therein. (Sisterly Aff., Ex. F at p. 8.)

The Agreement also states:

11. Company Trade Designations and Intangible Property

(a) Distributor acknowledges Company's exclusive ownership, license rights and/or other rights in the various trademarks, trade names, service marks, trade dress and other trade designations and intangible property (collectively "trade designations") and intangible property relating to Company's business or the Products. Company hereby grants Distributor a nonexclusive, non-assignable, non-licensable privilege to use Company trade designations only in a lawful manner and in connection with the distribution, advertising, display and sale of the Products. This privilege to use such trade designations shall expire upon termination of this Agreement. Such trade designations and intangible property shall be used only in manner, form and context specified or approved in writing by Company and upon Company's request Distributor shall discontinue the way in which Distributor uses any Company trade designations and intangible property.

(b) Distributor agrees to remove all Company trade designations affixed in any fashion to property owned or controlled by Distributor (including equipment and office supplies) before leasing, selling or otherwise transferring such property or control thereof to another person or before putting ...


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