Domain Name Seller Pushes the Envelope Too Far

Domain name purchase negotiations went seriously awry here.  SelectHealth, Inc., is a Utah corporation and health insurance provider.  James E. Risinger is a Texas resident.  Risinger owned the domain name www.selecthealth.com.  SelectHealth contacted Risinger about purchasing the domain name and entered into negotiations with Risinger.  Risinger copied SelectHealth’s website, www.selecthealth.org, and pasted it into the www.selecthealth.com website.  Risinger then added a registration survey and email capability to the www.selecthealth.com website.  Over 1,200 emails and 637 registrations were collected by Risinger, who then turned this information over to SelectHealth, apparently in an effort to drive up the domain name’s purchase price. 

SelectHealth sued Risinger in federal district court in Utah, alleging that Risinger caused confusion by misappropriating Select Health’s copyrighted material, trade names, trade dress and trademarks and that SelectHealth suffered damages.  The district court denied Risinger’s motion to dismiss for lack of personal jurisdiction.  SelectHealth’s copyright infringement claim provided enough allegation of injury to SelectHealth to prevent Risinger’s motion to dismiss from being granted.

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Trade Secrets Claim Results from Copyright Infringement Investigation

nexTUNE, a Washington corporation, provides digital music services to businesses and individuals.  Over a period of more than six years, nexTUNE developed music delivery technologies that it considered trade secrets.  EMI Music is a major music company.  EMI sent nexTUNE a cease and desist letter, which accused nexTUNE of copyright infringement.  EMI then requested information about nexTUNE’s music services in connection with its investigation of nexTUNE’s claim that a statutory license covered nexTUNE’s use of EMI’s copyrighted sound recordings.  nexTUNE agreed to provide the information requested, on the condition that it be kept confidential.  nexTUNE’s president met with EMI’s outside counsel, Buck McKinney and Christopher Harrison, in Austin, Texas, and provided the requested information.  In a phone conversation before the meeting, McKinney agreed to keep the information confidential.  At the meeting, nexTUNE’s president recognized Harrison as someone who was working for a nexTUNE direct competitor and had previously worked for other nexTUNE’s direct competitors.

nexTUNE sued EMI, McKinney and Harrison in the Western District of Washington, alleging non-infringement of EMI’s copyrights (a federal law claim) and misappropriation of trade secrets (a state law claim).  Harrison moved to dismiss the trade secret misappropriation claim against him for lack of personal jurisdiction (FRCP 12(b)(2)) and failure to state a claim upon which relief can be granted (FRCP 12(b)(6)).  McKinney moved to dismiss the trade secret claim against him for lack of subject matter jurisdiction (FRCP 12(b)(1)) and lack of personal jurisdiction.  EMI moved to dismiss the trade secret claim against it for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted.  The district court granted Harrison’s motion to dismiss for lack of personal jurisdiction, but denied McKinney’s motion.  The district court granted McKinney’s and EMI’s motions to dismiss for lack of subject matter jurisdiction without prejudice and with leave to amend the complaint.  EMI’s motion to dismiss for failure to state a claim was granted and the claim dismissed without prejudice.

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Personal Jurisdiction Over Foreigner Who Accessed Server in Forum State

The Second Circuit Court of Appeals recently held that a Canadian defendant’s remote use of a computer located in Connecticut satisfied the jurisdictional requirements of both the Connecticut long-arm statute and due process.  MacDermid, Inc., a specialty chemical company, maintains its principal place of business in Waterbury, Connecticut.  Defendant Jackie Deiter lives near Toronto, Ontario, Canada and is a former employee of MacDermid’s Canadian subsidiary, MacDermid Chemical, Inc.  MacDermid alleged that prior to her termination, Deiter forwarded confidential and proprietary MacDermid files from her corporate email account to her personal email account, thereby misappropriating MacDermid’s trade secrets and obtaining unauthorized access to and misusing MacDermid’s computer system.  Deiter obtained and emailed the files by remotely accessing MacDermid’s Waterbury, Connecticut servers.

MacDermid sued Deiter in federal district court in Connecticut for state law violations, basing jurisdiction on diversity of citizenship and the Connecticut long-arm statute.  The district court judge granted Deiter’s Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, ruling that Deiter did not use a Connecticut computer when she sent email from the MacDermid computer at her home to her personal home computer.  The Second Circuit reversed the district court’s decision. 

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Willful Copyright Infringement is Enough Contact for Personal Jurisdiction

Washington Shoe is a Washington State corporation that manufactures footwear for men, women and children.  Through one of its sales representatives, Washington Shoe had an ongoing relationship with A-Z Sporting Goods, a single retail store located in Alma, Arkansas.  A-Z is an Arkansas corporation.  A-Z does not sell products over the Internet.  Washington Shoe’s sales representative discovered that A-Z was selling infringing copies of two of Washington Shoe’s copyrighted children’s rain boot designs.  Washington Shoe’s attorney sent A-Z two cease and desist letters.  After receiving the second letter, A-Z moved the boots out of its store, but sold its remaining supply of the boots to a thrift store.

Washington Shoe sued A-Z for copyright infringement in the Western District of Washington.  The district court granted A-Z’s motion to dismiss for lack of personal jurisdiction, but denied A-Z’s request for attorneys’ fees.  Washington Shoe appealed the dismissal of its case.  A-Z cross-appealed the denial of its motion for attorneys’ fees.  The Ninth Circuit Court of Appeals reversed the order dismissing the case.  The Ninth Circuit ruled that A-Z, whose only relevant contact with Washington State was its alleged willful copyright infringement, was subject to personal jurisdiction in Washington State.

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Personal Jurisdiction for Internet Copyright Infringement Clarified

May the federal district court in Washington State exercise personal jurisdiction over an accused copyright infringer who lives in New York state for infringing content posted on the accused infringer’s website?  No, according to Judge Robert S. Lasnik of the Western District of Washington in Seattle.

Larry G. Johnson is an attorney in Washington State and the sole copyright owner of The Deposition Guide, A Practical Handbook for Witnesses.  Catharine M. Venzon is an attorney in New York state.  Venzon’s law firm posted scanned pages from Johnson’s book on its website.  Johnson sued Venzon and her law firm for copyright infringement in federal court in Washington State.  Venzon brought a motion to dismiss for lack of personal jurisdiction.  The district court granted the motion, focusing on whether Venzon’s conduct was expressly aimed at Washington State.

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Copyright, Lanham Act and Some State Law Claims Survive Motion to Dismiss in Floral Art Case

Plaintiff Susan Tierney Cockburn filed suit (pdf) in the Western District of Washington against five out of state defendants – one manufacturing defendant and four retail defendants.  The defendants filed motions to dismiss the complaint for lack of personal jurisdiction and to dismiss plaintiff’s Lanham Act (federal trademark) and state law claims for failure to state a claim upon which relief can be granted under Fed. R. Civ.P. 12(b)(6).  The defendants also questioned whether plaintiff’s works were copyrighted, although that does not appear to have been part of the formal motion.  Judge Robert S. Lasnik granted the motion to dismiss in part and denied it in part.

Facts.  Plaintiff is a professional author and artist in Redmond, Washington.  She creates floral art with paper and three dimensional paper flowers for use in crafts and hobbies.  She “developed a unique line of paper punches to enhance her paper floral art and three dimensional paper flowers.”  (Order pdf page 2).  Plaintiff registered copyrights for two books:  Paper Bouquet and The Paper Garden – Summer Blooms.

Defendant SWS Industries, Inc. is an Illinois corporation that manufactures punches used in office products, industrial supply/hardware and crafts.  An SWS representative contacted plaintiff in 2009, asking whether plaintiff would work with it on augmenting its existing paper punches.  SWS later presented plaintiff with a contract to purchase and manufacture her floral designs, but the parties failed to come to an agreement.  Plaintiff alleges that SWS created infringing works which it sold to Internet and retail customers all over the United States.  Plaintiff alleges that the retail defendants sold SWS’s infringing products either online or through retail stores.  The retail defendants are Archiver’s, a Minnesota corporation, Notions, a Michigan corporation, Moore, a Florida corporation, and CreateForLess, LLC, an Oregon limited liability company.  The defendants are not licensed to do business in Washington state and do not have employees or a physical presence in Washington.

Plaintiff claimed copyright infringement, violation of the Lanham Act, 15 USC §1125(a), violation of Washington’s Consumer Protection Act, and violation of Washington trade dress and trade name protection.  She sought a constructive trust and an accounting, both of which are state law claims.

Personal Jurisdiction.  The court undertook the same analysis described in my June 1, 2011, post Personal Jurisdiction Found Lacking in Copyright Infringement Action.  Washington State’s long arm statute extends to the limit of the Due Process Clause. 

For a forum state to have personal jurisdiction over an out-of-state defendant, that defendant must have certain minimum contacts with the forum state, such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.

(Order pdf page 5).

The court set out the three-part test used in the Ninth Circuit to analyze specific jurisdiction:

  1. The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
  2. the claim must be one which arises out of or relates to the defendant’s forum-related activities; and
  3. the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

(Order pdf page 5).

The court indicated that “[i]n tort cases, courts typically inquire whether a defendant purposefully directs his activities at the forum state, applying an ‘effects’ test that focuses on the forum in which the defendant’s actions were felt, whether or not the actions themselves occurred within the forum.”  (Order pdf page 6).  Tort claims include a claim for willful copyright infringement. 

The first part of the above three-part test, purposeful availment, has its own three part test:  “the defendant allegedly must have (1) committed an intentional act, which was (2) expressly aimed at the forum state, and (3) caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.”  (Order pdf page 6). 

The Ninth Circuit has approved a sliding scale analysis in addition to the effects test:  “[T]he likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet.”  (Order pdf page 6). 

The court ruled that the defendant retailers conduct with Washington involved the sale of a small number of non-infringing products and was “insufficient to show that they directed their activity towards Washington in a substantial way.”  (Order pdf page 7).  The retail defendants’ conduct was also found not to have been expressly aimed at the forum, as the retail defendants did not previously know of plaintiff’s existence, her dispute with SWS or her residence in Washington state.  The court granted the retail defendants’ motion to dismiss for lack of personal jurisdiction.

SWS argued that exercising personal jurisdiction over it would be unreasonable.  “Defendant must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.”  (Order pdf page 8).  The seven factors for determining reasonableness are:

  1. the extent of the defendants’ purposeful contacts;
  2. the burden on defendant of having to defend in Washington;
  3. the extent to which jurisdiction conflicts with the sovereignty of the defendant’s resident state;
  4. Washington’s interest in adjudicating the dispute;
  5. which forum is the most efficient for resolution of the dispute;
  6. plaintiff’s interest in choosing the Washington forum; and
  7. the existence of an alternative forum to adjudicate plaintiff’s claims.

The court discussed the factors one by one.  It found that factors one, three, four and six weigh in favor of the plaintiff and factors two, five and seven weigh in favor of the defendant.  SWS did not present a compelling case that jurisdiction in Washington State is unreasonable.  The court denied SWS’s request to dismiss for lack of personal jurisdiction.

Copyright.  The defendants questioned whether plaintiff’s works were copyrighted, but did not provide support for that argument.  Defendants next argued that plaintiff’s designs become a useful article when used with a paper punch.  However, the designs can be cut with scissors or drawn.  The court did not think they were useful articles.  Defendants also argued that plaintiff’s floral designs are scenes a faire, since their origins are objects of nature.  The court ruled that this doctrine is inapplicable, since plaintiff did not claim copyright protection for the shape of certain flowers, but only for the designs of those flowers as rendered in her books. 

Lanham Act claim.  Plaintiff argued that SWS’s products used a trade dress confusingly similar to her products, in violation of the Lanham Act, 15 U.S.C. §1125(a).  Defendants argued that plaintiff’s Lanham Act claims duplicated her copyright claims and failed as a matter of law.  The court stated that “parallel copyright and Lanham Act claims are not per se improper” and that courts limit the application of trademark law when copyright laws “provide an adequate remedy.”  (Order pdf page 12).  The court indicated that plaintiff’s Lanham Act claim includes other elements that are not necessarily compensable under copyright law, such as a false designation of origin and/or sponsorship and SWS passing off its products as plaintiff’s.  The court stated that “courts typically resolve the issue of whether the Lanham Act and copyright claims overlap at the summary judgment stage rather than on a motion to dismiss.”  (Order pdf page 13).  The court denied defendants’ motion to dismiss the Lanham Act claim.

State law claims.  The defendants argued that plaintiff’s state law claims are preempted by the Copyright Act.  Preemption was discussed in my May 10, 2011, post Ninth Circuit Upholds Script Writer’s Implied Contract Claim under California State Law.  The two part preemption test adopted by the Ninth Circuit is

  • courts must first determine whether the subject matter of the state law claim falls within the subject matter of copyright as described by 17 U.S.C. §§102 and 103, and
  • courts must determine whether the rights asserted under state law are equivalent to the rights contained in 17 U.S.C. §106.

To survive preemption, the state law claim must include an extra element that is not protected by the Copyright Act.  The court ruled that plaintiff’s Consumer Protection Act (CPA) claim does not include the required extra element and dismissed that claim as preempted.  Of note to attorneys practicing in the Western District of Washington, the court stated that

[P]laintiff’s response does not address her CPA claim, which the Court construes, pursuant to Local Rule 7, as a concession that defendants’ arguments regarding that claim have merit.

The court found that plaintiff’s Washington State trade dress claims are not preempted, for the same reason the Lanham Act claims are not preempted.

The court found that plaintiff’s state law trade name claim based on words used by plaintiff in her copyrighted works is preempted by copyright law. 

Plaintiff’s state law trade name claim based on the alleged misuse of her name by the defendants is not preempted by copyright law.  “A person’s name or likeness is not a work of authorship within the meaning of 17 U.S.C. §102.”  (Order pdf page 15).

Plaintiff’s state law constructive trust claim was dismissed as preempted, as it was based on defendants’ violation of plaintiff’s copyrights. 

This case is Susan Tierney Cockburn v. SWS Industries, Inc., et al., Case No. C10-1566 RSL, Western District of Washington at Seattle.

Personal Jurisdiction Found Lacking in Copyright Infringement Action

Marylou Dantonio filed a complaint alleging copyright infringement (pdf) against Southwest Educational Development Laboratory (SEDL) and Jill Slack.  Western District of Washington Court Judge Robert S. Lasnik granted defendants’ Fed. R. Civ.P. 12(b)(2) motion to dismiss for lack of personal jurisdiction on May 26, 2011. 

Facts.  Plaintiff Dantonio is a Washington resident.  She is an education professor whose research topics include critical thinking and curriculum development.  In 1990, she wrote a book entitled “How Can We Create Thinkers: Questioning Strategies That Work For Teachers.”  SEDL is a Texas entity engaged in developing and disseminating education-related publications.  Slack is a Louisiana resident, a program director at the Louisiana State Department of Education and a former employee in SEDL’s Metairie, Louisiana office.  Slack took some courses from Dantonio at the University of New Orleans in 1991.  Dantonio later became Slack’s doctoral adviser.  Dantonio’s complaint alleges that SEDL and Slack infringed the copyright in her book by including content from her book in materials published or distributed by Slack and SEDL.  One of defendants’ alleged contacts with Washington State was a page on the Spokane School District website which displayed what Dantonio claimed was a SEDL document written by Slack.  Slack and SEDL denied knowing that Dantonio was a resident of Washington State at the time the alleged infringement occurred.

Legal Standard for Personal JurisdictionPersonal jurisdiction is the power of a court over the parties in a case and is generally limited to a geographical area, such as a state.  A long-arm statute gives a state court jurisdiction over an out-of-state defendant.  There is no applicable federal long-arm statute, so the court applied the Washington State long-arm statute, the state where plaintiff filed the lawsuit.  Since Washington State’s long-arm statute “extends jurisdiction to the limit of federal due process,” the court was not required to examine Washington law, but needed only to determine whether exercising jurisdiction conformed to federal constitutional requirements.  (Order pdf page 3).  Specific jurisdiction, which is “jurisdiction based on the relationship between the defendant’s forum contacts and plaintiff’s claims,” was at issue. (Order pdf page 3). General jurisdiction, which is jurisdiction based on the defendant’s substantial, continuous and systematic contacts with the forum and under which defendant can be considered “present” in the forum for all purposes, was not at issue.

Although the court must decide a motion to dismiss for lack of personal jurisdiction without the benefit of an evidentiary hearing, the plaintiff must do more than rely on allegations in the complaint and must present facts to support personal jurisdiction.

Specific Personal Jurisdiction.  Whether the exercise of specific personal jurisdiction conforms to due process standards is determined by a three-pronged test:

  • The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
  • the claim must be one which arises out of or relates to the defendant’s forum-related activities; and
  • the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

(Order pdf page 4).

The first prong of the above test, purposeful direction, has its own three prong test:  “whether the defendant (1) committed an intentional act, which was (2) expressly aimed at the forum state, and (3) caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.”  (Order pdf page 5). 

The court found that Dantonio alleged an intentional act.  Her complaint and other documentation did not satisfy the “express aiming” test.  That test requires that the defendant knows the plaintiff is a resident of the forum state.  SEDL and Slack presented evidence that they had no knowledge that Dantonio was a resident of Washington State at the time of the allegedly infringing activity. 

As an alternative to “express aiming,” Dantonio argued that SEDL posted the infringing materials on its website for distribution throughout the country.  The court applied a sliding scale analysis to this argument.

[T]he likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet.

(Order pdf pages 8-9).

The court indicated that under this approach, the plaintiff must show something more purposefully directed at the forum state than just posting on a website, such as running radio or print advertisements in the forum state.  The court did not think SEDL’s Internet contacts with Washington were sufficient to support specific personal jurisdiction over the defendants.

Under the foreseeable harm prong of purposeful direction, the court indicated that the plaintiff could not allege foreseeable harm without first establishing that defendants knew she resided in Washington.  Defendants could not foresee harm happening in Washington State unless they knew that was where the plaintiff lived.

The second prong of the overall specific personal jurisdiction test is that the plaintiff’s claim must arise out of the defendants’ forum-related activities.  A direct causal relationship is required so that plaintiff’s claim would not have arisen “but for” defendant’s contacts with the forum state.  Plaintiff was not able to establish this “but-for” relationship between her claim and the defendants’ activities in Washington State.

The third prong of the overall specific personal jurisdiction test is that the exercise of jurisdiction must be reasonable.  Reasonableness is determined by the following seven factors:

  1. the extent of the defendants’ purposeful interjection into the forum state’s affairs;
  2. the burden on the defendant of defending in the forum;
  3. the extent of conflict with the sovereignty of the defendants’ state;
  4. the forum state’s interest in adjudicating the dispute;
  5. the most efficient judicial resolution of the controversy;
  6. the importance of the forum to the plaintiff’s interest in convenient and effective relief; and
  7. the existence of an alternative forum.

(Order pdf page 11).

The court discussed these factors one by one.  It found that the first, second, and seventh factors weigh in favor of the defendants, that the third and fifth factors are neutral and that the fourth and sixth factors weigh in favor of the plaintiff.  In balancing the factors, the court stated that “plaintiff has failed to demonstrate that exercising personal jurisdiction over SEDL and Dr. Slack is entirely reasonable.”  (Order pdf page 14).

The court also rejected plaintiff’s argument for personal jurisdiction under a stream of commerce theory.  “Under the stream of commerce test, the Court may assert jurisdiction where a defendant delivers its products into the stream of commerce with the expectation that they will reach the forum state.”  (Order pdf page 14).  The court found that the most that plaintiff could show was that the allegedly infringing materials somehow ended up in Washington State. 

The court denied Slack’s motion for attorney’s fees.  An award of attorney’s fees is discretionary under the Washington State long-arm statute.  The court indicated that the purpose of the attorney’s fees provision under the statute is to balance compensating out-of-state defendants with promoting the full exercise of state jurisdiction.  The court found that plaintiff’s “jurisdictional arguments were neither frivolous nor completely incapable of substantiation.”  (Order pdf page 16). 

The court dismissed plaintiff’s action without prejudice to allow her to refile in another jurisdiction in which personal jurisdiction over the defendants could be established.

This case is Marylou Dantonio v. Southwest Educational Development Laboratory (SEDL); and Jill Slack, Case No. C10-1193RSL, Western District of Washington at Seattle.