Sturm, Ruger v. Armscor, et al.

2016 DNH 141

• Court: District Court, D. New Hampshire
• Decided: August 17, 2016
• Docket: 14-cv-194-SM
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Sturm, Ruger & Co., Inc.

v. Civil No. 14-cv-194-SM Opinion No. 2016 DNH 141 Armscor Precision International, Inc. et al.

O R D E R

Sturm, Ruger & Co., Inc. (“Ruger”) brought suit against

Armscor Precision International, Inc. (“API”), Rock Island

Armory Exports, Inc. (“RIA”) (collectively “domestic

defendants”), and Arms Corporation of the Philippines (“ACP” or

“Filipino defendant”) asserting claims arising out of the

defendants’ alleged copying of a rifle manufactured by Ruger.

Ruger moves to compel the defendants to respond to certain

discovery requests. Doc. no. 42. The defendants object. Doc.

no. 45. For the reasons that follow, the court grants Ruger’s

motion in part and denies in part.

Standard of Review

“Parties may obtain discovery regarding any nonprivileged

matter that is relevant to any party's claim or defense and

proportional to the needs of the case . . . .” Fed. R. Civ. P.

26(b)(1). “Information within this scope of discovery need not

be admissible in evidence to be discoverable.” Id. If a party

fails to respond to requests for production or interrogatories, the party seeking discovery may move to compel production of the

requested documents or answers to the interrogatories. Fed. R.

Civ. P. 37(a)(3)(B)(iii), (iv).

The party seeking an order compelling discovery responses

over an opponent's objection bears the initial burden of showing

that the discovery requested is relevant. Caouette v.

OfficeMax, Inc., 352 F. Supp. 2d 134, 136 (D.N.H. 2005). “This

burden, however, should not be overstated. As the court of

appeals has instructed, ‘district courts are to interpret

liberally the discovery provisions of the Federal Rules [of]

Civil Procedure to encourage the free flow of information among

litigants.’” West v. Bell Helicopter Textron, Inc., No. 10-cv-

214-JL, 2011 WL 6371791, at *2 (D.N.H. Dec. 20, 2011) (quoting

Heidelberg Ams., Inc. v. Tokyo Kikai Seisakusho, Ltd., 333 F.3d

38, 41 (1st Cir. 2003)).

Background 1

Ruger is a manufacturer of firearms, which is incorporated

in Delaware and has its main corporate office located in

Connecticut. Am. Compl. ¶ 2. Ruger has a facility in Newport,

New Hampshire, where it manufactures its signature rifle, the

“10/22® carbine autoloading rifle (the ‘10/22’)”. Id. ¶¶ 2, 12.

1 The factual background is drawn from Ruger’s amended complaint and memoranda related to its motion to compel. 2 Ruger has sold and marketed its 10/22 rifle around the world.

Id. ¶¶ 12, 29.

The domestic defendants API and RIA are both located in

Nevada. Id. ¶ 3-4. The Filipino defendant is a foreign

corporation with its main office in the Philippines. Id. ¶ 5.

In this case, Ruger alleges that the defendants have designed

and manufactured a .22 caliber semi-automatic rifle (the “RIA

22”) that impermissibly copies the 10/22. Id. ¶¶ 37-262. Ruger

claims that the defendants have sold and marketed the RIA 22

around the world. Id. ¶¶ 263-345.

Based on the defendants’ alleged conduct, Ruger brought

this suit asserting claims for trade dress infringement, 15

U.S.C. § 1125(a), trade dress dilution, § 1125(c), contributory

trade dress infringement § 1125(a), and violation of the New

Hampshire Consumer Protection Act, RSA 358-A. Id. ¶¶ 346-70.

Ruger alleges this court has jurisdiction over the case because

the defendants’ actions violate the Lanham Act, 15 U.S.C. §

1125. Id. ¶¶ 9, 348, 353, 367.

In early 2016, Ruger served the defendants with

interrogatories and requests for the production of documents

concerning, among other things, information regarding the sales,

marketing, and advertising of the RIA 22. See Pl.’s Exs. A, D,

E, F, G, H. The defendants objected to Ruger’s requests, in

part, contending that the requested information is irrelevant

3 and improperly seeks discovery of sales, marketing, and

advertising information occurring outside the United States.

Id. The defendants stated in their discovery responses that

they would only produce discovery “concerning marketing or

advertising [or sales] in the United States that [is] not

otherwise privileged or protected . . . .” Pl.’s Ex. A at 3-4;

Ex. D at 3-4; Ex. E at 3-4 (emphasis added).

The parties soon after met and conferred to address Ruger’s

discovery requests and the defendants’ responses. The parties

were unable to reach an agreement, and Ruger filed its motion to

compel.

Discussion

A. Discovery of the Defendants’ Foreign Sales and Marketing Activities

Ruger contends the disputed discovery requests are

“directly relevant to the claims and allegations raised in its

complaint.” Doc. no. 42 at 8. Specifically, Ruger alleges that

the defendants sell and market the RIA 22 around the world;

therefore, discovery concerning the defendants’ sales and

marketing of the RIA 22 is relevant to determining damages and

establishing subject-matter jurisdiction under the Lanham Act.

In response, the defendants argue that “information relat[ed] to

[their] activities occurring outside the United States” is

4 irrelevant because it is beyond the scope of Ruger’s Lanham Act

claims. Doc. no. 45-1 at 4. 2

The “core purposes of the Lanham Act” are “to protect the

ability of American consumers to avoid confusion and to help

assure a trademark's owner that it will reap the financial and

reputational rewards associated with having a desirable name or

product.” McBee v. Delica Co., 417 F.3d 107, 121 (1st Cir.

2005) (citing Dastar Corp. v. Twentieth Century Fox Film Corp.,

539 U.S. 23, 33–34). 3 In enforcing the Act, “[t]he Supreme Court

has . . . made it clear that the Lanham Act could sometimes be

used to reach extraterritorial conduct . . . but it has never

laid down a precise test for when such reach would be

appropriate.” Id. at 117.

The First Circuit has held “that the Lanham Act grants

subject matter jurisdiction over extraterritorial conduct by

foreign defendants only where the conduct has a substantial

2 At the motion hearing, the defendants stated that they did not intend to file a motion challenging whether Ruger’s Lanham Act claims should be dismissed for lack of subject-matter jurisdiction. Nevertheless, the defendants did note that the lack of jurisdiction was an affirmative defense. 3 Under the Lanham Act, in addition to trademark infringement, a plaintiff may file a civil action for trade dress infringement. 15 U.S.C. § 1125(a)(3). It follows that the Lanham Act works to assure a trade dress owner “reap the financial and reputational rewards associated with having a desirable name or product” just as it would for the owner of a trademark. McBee, 417 F.3d at 121. 5 effect on United States commerce.” Id. at 120 (emphasis added).

In instances “when an American citizen is the defendant[,]” the

First Circuit points to Steele v. Bulova Watch Co., 344 U.S. 280

(1952), for guidance and notes that “[i]n such cases, the

domestic effect of the international activities may be of lesser

importance and a lesser showing of domestic effects may be all

that is needed.” McBee, 417 F.3d at 118.

1. The Filipino Defendant

The defendants argue that Ruger’s discovery requests for

the sales, marketing, and advertising activities of the RIA 22

by the Filipino defendant are irrelevant because “sales and

marketing activity occurring outside the United States has no

substantial effect on commerce in the United States.” Doc. no.

45-1 at 5-6. This position, however, is contrary to the

substantial effects test in this circuit.

As stated previously, the First Circuit in McBee noted that

the “core purposes” of the Lanham Act were two-fold: to protect

American consumers and to assure the owner of a protected

product “reap the financial and reputational rewards associated

with having” that product. 417 F.3d at 121. The defendants’

argument focuses on the former purpose and forgets the latter.

If the only purpose of the Lanham Act were to protect American

consumers from product confusion, then the defendants’ argument

would be persuasive and the discovery of foreign activities by

6 foreign defendants would be irrelevant. In this circuit,

though, the substantial effects test may be satisfied by “a

variety of harms . . . arising from wholly foreign activities by

foreign defendants[,]” including “harm caused by false

endorsements, passing off, or product disparagement, or

confusion over sponsorship affecting American commerce and

causing loss of American sales.” Id. at 119. Therefore,

although the Filipino defendant’s conduct may be exclusively

foreign, it is not necessarily immune from producing discovery

in this case.

Here, Ruger has demonstrated that the sales, marketing, and

advertising information it seeks from the Filipino defendant is

relevant to its claims. Ruger explained during the motion

hearing that its 10/22 and the defendants’ RIA 22 are sold in

the same international markets, and Ruger believes that the

international sales and marketing information of the RIA 22 is

relevant to determining damages (due to loss of foreign sales)

and whether product disparagement or confusion has occurred.

These articulated inquiries are relevant in establishing a

Lanham Act claim. See id.; Rodgers v. Wright, 544 F. Supp. 2d

302, 313 (S.D.N.Y. 2008) (“Financial harm to an American

trademark owner whether from the loss of foreign sales or the

damage to the trademark owner's reputation abroad is at the very

7 least, relevant to determining whether foreign infringement has

a substantial effect on U.S. commerce.”).

2. The Domestic Defendants

The defendants additionally argue that Ruger’s discovery

requests for the sales, marketing, and advertising activities of

the RIA 22 by the domestic defendants are irrelevant because

Ruger has failed to show how the sale of rifles internationally

has had “a substantial effect on United States commerce.” Doc.

no. 45-1 at 6. In this circuit, however, the substantial

effects test as it applies to foreign defendants does not apply

to American-citizen defendants. McBee, 417 F.3d at 118-19.

Indeed, to satisfy subject-matter jurisdiction against American-

citizen defendants under the Lanham Act, “the domestic effect of

the international activities may be of lesser importance and a

lesser showing of domestic effects may be all that is needed.”

Id. at 118.

Here, Ruger has explained that, although the domestic

defendants are based in Nevada, they have admitted to selling

the RIA 22 internationally and “import[ing] the [RIA 22] to the

United States and export[ing] the [RIA 22] to Canada.” Doc. no.

42 at 10-11. Further, Ruger stated during the motion hearing

that it believes an executive for the domestic defendants is

directly affiliated with the Pilipino defendant, and the RIA 22

– although not sold domestically – has made its way between all

8 three defendants. These allegations by Ruger are at least

sufficient to show that the discovery of sales and marketing of

the RIA 22 by the domestic defendants is relevant to its Lanham

Act claims. See Reebok Int'l Ltd. v. Sebelen, 930 F. Supp. 720,

723 (D.P.R. 1996) (finding “[w]here the defendants deal in

counterfeit footwear between Asian and other countries, even

though no counterfeit shoes are distributed in the United

States, United States courts have jurisdiction over the

defendants under the Lanham Act by reason of their United States

banking activities and use of United States commerce.”)

B. Discovery of the Receiver or Barreled Action of the RIA 22

The defendants additionally object to the discovery of the

“sales of the receiver or barreled action for the RIA 22.” Doc.

no. 45-1 at 7. In addition to the general objections noted

above, the defendants argue that the discovery of these specific

components of the RIA 22 is irrelevant because Ruger’s trade

dress claims are based on the “overall configuration and

external appearance” of the 10/22 rifle. Id.

“The party seeking information in discovery over an

adversary's objection has the burden of showing its relevance.”

Caouette, 352 F. Supp. 2d at 136. Here, Ruger did not respond

to this objection in its briefs and spent little time discussing

the issue during the motion hearing. Therefore, the court

denies this aspect of Ruger’s motion to compel without prejudice

9 to the extent it seeks information specific to the receiver or

barreled action of the RIA 22. If the parties are unable to

resolve this aspect of Ruger’s discovery requests, Ruger may

renew its motion to compel as to this issue, and the parties may

submit additional briefs.

Conclusion

For the foregoing reasons, Ruger’s motion to compel, doc.

no. 42, is granted in part. Importantly, the court makes no

determination as to whether Ruger has established a Lanham Act

claim or subject-matter jurisdiction. Those issues are for

another day. At this point, Ruger has simply articulated enough

to satisfy that the majority of its contested discovery requests

are relevant to its claims.

Nevertheless, under the recently revised Federal Rules of

Civil Procedure, parties may only obtain discovery that is

relevant to its claims and “proportional to the needs of the

case . . . .” Fed. R. Civ. P. 26(b)(1). During the motion

hearing, the parties represented that they would further confer

as to the scope of Ruger’s discovery requests if the court found

the requests to be relevant. Should additional discovery

disputes arise, prior to filing a motion to compel, the parties

may request an informal conference with the court. To the

extent the aforementioned informal process does not resolve the

discovery dispute, the parties may thereafter seek to resolve

10 the dispute through a customary motion to compel discovery or

other appropriate motion.

The parties’ assented-to motion to extend deadlines is

granted in part. Doc. no. 50. The disclosure of rebuttal

experts and experts’ written reports shall be extended to April

3, 2017. The deadline for witness and exhibits lists, pretrial

statements, objections to pretrial statements, JERS statements,

and the date of the pretrial conference will be set by the

clerk’s office. All other deadlines are extended as proposed by

the parties. If the parties’ proposed dates are no longer

feasible in light of the court’s order on the motion to compel,

the parties may file an appropriate motion.

SO ORDERED.

______________________________ Andrea K. Johnstone United States Magistrate Judge

August 17, 2016

cc: James F. Laboe, Esq. Dustun H. Holmes, Esq. R. Matthew Cairns, Esq.