Foreign Candy Co. v. Promotion in Motion, Inc., 953 F. Supp. 2d 934

Plaintiff Foreign Candy Co., an Iowa corporation, developed a sour watermelon candy called Upnext Gummies (UNG) and invested resources to market it beginning in Sept. 2012.
Defendant Promotion In Motion, Inc., a New Jersey candy manufacturer, sells a preexisting sour watermelon candy called Sour Jacks (SJC) and has sold product in Iowa (≈1% of its business) and maintains an Iowa-based employee.
On Nov. 12, 2012, Defendant sent a cease-and-desist letter to Plaintiff in Iowa threatening litigation if Plaintiff did not cease development/distribution of UNG by Nov. 28, 2012.
Plaintiff filed a declaratory-judgment action in the Northern District of Iowa on Nov. 28, 2012 seeking a declaration of non-infringement and related relief.
Defendant moved to dismiss for lack of personal jurisdiction (no specific or general jurisdiction) and alternatively argued the suit should be dismissed under the first-filed rule as an anticipatory preemptive declaratory action.
The court concluded Defendant’s contacts with Iowa (sales, an Iowa employee, and the cease-and-desist letter directed to Iowa) related sufficiently to the dispute to permit exercise of personal jurisdiction, and declined to depart from the first-filed rule.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Personal jurisdiction (specific and general)	Defendant has sufficient contacts with Iowa (sales proportional to population, Iowa employee, and letter sent into Iowa) that relate to the trademark dispute	Defendant lacks minimum contacts: less than 1% of sales in Iowa; dispute did not arise in Iowa	Court found a significant relationship between Defendant’s Iowa contacts and the dispute; specific jurisdiction exists and court concluded jurisdiction is proper under due process (also characterized contacts as supporting general jurisdiction)
First-filed rule / anticipatory declaratory judgment	Filing a declaratory action after receiving a threatening cease-and-desist was a reasonable, protective use of declaratory relief to avoid wasting investment in product development	Plaintiff raced to the courthouse to deprive Defendant of its home forum; declaratory action and notice of imminent suit are red flags justifying dismissal	Court held no compelling circumstances to override the first-filed rule: declaratory relief was used appropriately and the threat of imminent litigation was not sufficiently certain to require dismissal

International Shoe Co. v. Washington, 326 U.S. 310 (established minimum contacts/due process framework)
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (foreseeability and reasonableness in personal jurisdiction analysis)
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (purposeful direction/contacts test for specific jurisdiction)
Calder v. Jones, 465 U.S. 783 (intentional conduct calculated to cause injury in the forum relevant to jurisdiction)
Dakota Indus. v. Dakota Sportswear, 946 F.2d 1384 (Eighth Circuit five-factor due process test for jurisdiction)
Orthmann v. Apple River Campground, 765 F.2d 119 (first-filed rule priority among concurrent jurisdictions)
Northwest Airlines, Inc. v. American Airlines, Inc., 989 F.2d 1002 (exceptions/red flags to the first-filed rule)