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.

Personal Jurisdiction

To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment.  It is frequently helpful to undertake the due process analysis first, because any set of circumstances that satisfies due process will also satisfy the long-arm statute.  To satisfy the constitutional requirement of due process there must be ‘minimum contacts’ between the defendant and the forum state.

(Opinion pdf pages 2 and 3).

Establishing  “minimum contacts” in this case required showing that Risinger purposely availed himself of the privilege of conducting activities within Utah.

The district court ruled that Risinger was on notice that the SELECTHEALTH trademark was owned by a Utah company and that his actions in copying SelectHealth’s website content and posting it into the www.selecthealth.com website would be felt in Utah.  For example, Risinger made a point of informing SelectHealth that 622 of the 637 survey registrants were from Utah.

The district court ruled that Risinger’s actions in copying SelectHealth’s website and posting it to the www.selecthealth.com website purposely targeted Utah residents and not a nationwide audience.  Risinger copied the website of a Utah based company, resulting in the collection of information from people who were almost all Utah residents.  The district court also ruled that Risinger’s actions in copying SelectHealth’s website were expressly aimed at Utah residents and that he purposely directed his activities to the state of Utah.

Causation

SelectHealth must also show that its injuries arose out of Risinger’s contacts with Utah.  Risinger argued that SelectHealth could not show that it suffered injuries, as Risinger did not provide services to the Utah consumers or even contact them.  SelectHealth alleged copyright infringement claims arising from Risinger’s website copying.  At the complaint stage of the proceedings, there was no evidence to the contrary and the district court ruled that SelectHealth’s copyright claims arose out of Risinger’s contacts with Utah.

Fair Play and Substantial Justice

Exercising jurisdiction must not offend traditional notions of fair play and substantial justice. 

The Court considers the following five factors: (1) the burden on the defendant; (2) the forum state’s interest in resolving the dispute; (3) the plaintiff’s interest in receiving convenient and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental substantive policies.

(Opinion pdf pages 9 and 10).

Defendant argues that the burden to litigate this case in Utah would offend traditional notions of fair play and substantial justice.  However, Defendant has failed to identify any specific burden placed on him.  Further, the burden on the defendant, while always a primary concern, will be considered in light of the other relevant factors.  In this case, Utah has a considerable interest in resolving this dispute because Plaintiff is a Utah-based company engaged in supplying health-care insurance to Utah residents.  Moreover, Plaintiff has a significant interest in receiving convenient and effective relief in Utah because Plaintiff operates in the state of Utah and does not engage in business affairs in the state of Texas.  Finally, the interstate judicial system’s interest and the shared interest of Utah and Texas are well-served by resolving the dispute in Utah.  Therefore, the exercise of jurisdiction over Defendant in this forum will not offend traditional notions of fair play and substantial justice.

(Opinion pdf page 10).

This case is SelectHealth, Inc. v. Risinger, No. 2:13-CV-773 TS, U.S. District Court for the District of Utah.

Leave a Reply

Your email address will not be published. Required fields are marked *