A blog about patent, copyright and trademark law in the U.S. District Court
for the Southern District of New York

Court Finds No Personal Jurisdiction Over Defendant in Trademark Infringment Action; Transfers It to Proper Court

In a February 5, 2014 ruling, Judge Ronnie Abrams granted defendant Positive Impact, Inc.’s motion to dismiss the trademark infringement claims against it for lack of personal jurisdiction, and transferred the action to the Northern District of Georgia. Having concluded that the Court lacks personal jurisdiction, Judge Abrams declined to reach Positive Impact’s motion to dismiss certain claims.

After the Atlanta-based Positive Impact sent New York-based plaintiff DH Services, LLC a cease and desist letter over DH Services use of the “Mister” mark for its online dating services and made a follow up telephone call to Positive Impact, Positive Impact started this action as a declaratory judgment of non-infringement. It later amended the complaint to add statutory and common law claims of unfair competition and deceptive practices.

Because Positive Impact is located outside New York, and the Lanham Act “‘does not specifically provide for national service of process,’” Judge Abrams applied the law of the forum state, New York’s Long Arm statute. It was undisputed that there was no general jurisdiction over Positive Impact in New York. So DH Services alleged jurisdiction based on Positive Impact’s transaction of business in New York, its alleged commission of a tort here, and its alleged commission of a tort outside New York that had a foreseeable impact in New York.
DH Services argued that Positive Impact transacted business in New York in four ways: (1) it purchased goods and services from New York vendors; (2) it sent a cease and desist letter to New York and made a follow up telephone call to New York about it; (3) it promoted Atlanta-based fundraising events in New York through its website; and (4) it solicited donations through its website, and in fact received a small percentage of its funding from New Yorkers. Judge Abrams considered and rejected each of the separate grounds as being sufficient for the transaction of business – i.e., the purposeful availment of the privilege of conducting activities in New York. The Court also considered “whether the totality of these contacts satisfies the statute,” and concluded that even in the aggregate the contacts were insufficient to establish jurisdiction under the transaction of business test.

The Court then considered and rejected DH Services’ argument that Positive Impact’s display of its website in New York using the allegedly infringing marks constituted the commission of a tort in New York. Judge Abrams wrote that this “argument is unpersuasive because it conflicts with the Second Circuit’s holding in Bensusan Restaurant Corp. v. King, 126 F.3d 25 (2d Cir. 1997).”

Judge Abrams next addressed DH Services’ contention that Positive Impact committed tortious acts outside New York with foreseeable consequences in New York. The Court accepted, for purposes of argument, that Positive Impact’s website, which used the allegedly infringing marks, amounted to the commission of tortious conduct outside New York. The Court further found, however, that DH Services failed to make even a “prima facie showing that Defendant ‘expected or should reasonably have expected the act to have consequences in the State.’” Judge Abrams noted DH Services did not even acquire the mark for which it claims priority until after the start of the lawsuit. In those circumstances, Positive Impact could not have objectively expected its use of the mark to have consequences in New York when it first started using the mark.
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