Court Finds Personal Jurisdiction Based on Sales Through Amazon.com

In a July 8, 2016 ruling, Judge Lorna G. Schofield upheld personal jurisdiction at the motion to dismiss stage based in part on allegations that the defendants, who were based in Michigan, sold their allegedly infringing goods in New York through the Amazon.com Marketplace.  Construing New York's long-arm statute, CPLR § 302, Judge Schofield wrote:

The Complaint also alleges that Defendants sold goods that were shipped to New York
via Amazon.com. This conduct provides an alternative basis for personal jurisdiction over Defendants. Regularly offering and selling goods via an online marketplace such as Amazon.com can provide a basis for personal jurisdiction under CPLR § 302(a), even though Defendants do not control their Amazon.com “storefront” or its interactivity to the same extent that they control their own highly interactive website. . . . For internet sellers who use an internet storefront like Amazon, courts generally distinguish between two categories. First are commercial vendors who use it “as a means for establishing regular business with a remote forum.” . . . Jurisdiction is proper as to these defendants. In the second category are occasional sellers who use an internet service once to sell goods to the highest bidder who happens to be in the forum state. . . . Jurisdiction is improper as to these sellers assuming no additional contacts with the forum state. Defendants here are alleged to fall into the first category. They allegedly conduct their business of selling infringing garments on the Amazon platform; their sales are nationwide and include New York.  Consequently, jurisdiction is proper under § 302(a).

 The Court further found that the assertion of jurisdiction would comport with due process, and denied the motion to dismiss, ruling that "the allegations in the Complaint make a prima facie showing of personal jurisdiction over Defendants under CPLR § 302(a)(1), within the constitutional limits of due process."

Court Dismisses Copyright Infringement Claim Based on Choice of Law Provision in Contract

In a June 21, 2016 ruling, Judge Jesse M. Furman dismissed the plaintiff's copyright claim because of a choice of law provision in the parties' contract calling for the application of English law.  The plaintiff publishes a website with copyrighted content.  Subscribers are licensed to use it by being provided with a user name and password.  The defendant subscribed, but then allowed a number of its employees to use the single licensed user name and password.  The parties' agreement had a choice of law provision providing:

Where you visit, register and/or subscribe to a [Metal Bulletin] Site . . . these Terms (and any dispute or claim arising out of or in connection with these terms, including non-contractual disputes or claims), to the maximum extent permissible under the law of the territory that you are located in, will be governed by the laws of England and Wales and will be subject to the non-exclusive jurisdiction of the English courts.

The plaintiff sued the defendant in the Southern District, asserting U.S. copyright infringement and breach of contract claims.  Judge Furman dismissed the copyright claim based on the parties' choice of law provision.  In dismissing the claim, the Court reasoned:

As an initial matter, there is no question that [the plaintiff's] copyright claim falls within the scope of the parties’ choice-of-law clause. That clause provides broadly that English law applies to the Terms and, significantly, to “any dispute or claim arising out of or in connection with these terms, including non-contractual disputes or claims.” (Terms § 22.1). Where, as here, a defendant is alleged to have infringed a copyright by exceeding the scope of a license, “the copyright owner bears the burden of proving that the defendant’s copying was unauthorized under the license.” . . . Thus, the question of whether [the defendant] infringed [the plaintiff's] copyrights will necessarily turn, at least in part, on the Terms. . . . It follows that [the plaintiff's] copyright claim arises “in connection with” the Terms and thus falls within the scope of the choice-of-law clause.

Judge Furman also rejected the plaintiff's contention that the clause -- which the plaintiff drafted -- was somehow unenforceable, noting the high burden required to support such a contention.

Court Denies Preliminary Injunction in Trademark Infringement Action

In a June 17, 2016 ruling, Judge Coleen McMahon denied the plaintiff's motion for a preliminary injunction against trademark infringement, and ordered the plaintiff to show cause why the entire action should not be dismissed.  Despite two registration's for the plaintiff's mark with the PTO, the Court found that the mark was essentially a copy of the flag of the former Kingdom of Laos.  Judge McMahon ruled that "[i]t is axiomatic that a design comprising a flag cannot be trademarked."  The Court rejected the plaintiff's argument that the former Kingdom had abandoned the flag in 1975, similarly finding that under the PTO's Trademark Manual of Examining Procedures, "'former flags of existing countries, states or municipalities are refused.'"  Without a protectible mark, Judge McMahon noted that none of the plaintiff's claims appeared to state a claim for relief, and issued the order to show cause as to why they should not be dismissed.

Court Finds Registration of Domain Name Not Use in Commerce of a Trademark

In an April 12, 2016 ruling, Judge John G. Koetl ruled that a party’s registration of a domain name was not considered the use of a trademark in commerce, and so the party that actually first used the mark in commerce in connection with the offering and sale of goods was the legal owner of the mark. Judge Koetl wrote:

Without an offering of goods or services identified with the mark, a website that displays the . . . mark and contains simply a welcome page is insufficient to establish that the mark was used to identify goods to the public.

Court Upholds Sufficiency of Patent Infringement Complaint Under Iqbal

In a March 16, 2016 ruling, Judge Shira A. Scheindlin denied the defendant's motion to dismiss a complaint alleging willful direct, induced and contributory infringement. Applying the Iqbal standard for all three types of infringement, Judge Scheindlin found the allegations of direct infringement adequate, writing:

Allegations that plead that “a specific product [] allegedly infringes [the] patent by virtue of certain specific characteristics” meet the Iqbal plausibility standard. A plaintiff is not required to list which of the claims in the patent have been infringed in its pleading; as the Federal Circuit has recently reiterated, “a plaintiff need not even identify which claims are being infringed.”

With regard to the induced infringement claim, the Court found:

The Complaint also contains details regarding the printed instructional material and website instructions provided by [the defendant] instructing its customers as to how to use the [accused system] in a manner that allegedly directly violates the ‘641 Patent. This level of detail is sufficient to survive a motion to dismiss.

Judge Scheindlin also upheld the pleading of the contributory infringement claim, noting:

As explained above, [the plaintiff] has sufficiently pled direct infringement and that [the defendant} was aware of the ‘641 Patent. [The plaintiff] also alleges that the [accused system] and its various components have no substantial noninfringing use. While [the defendant] argues that [the plaintiff's] general allegation to that effect is insufficiently particular to satisfy Iqbal, “numerous post-Iqbal cases have not required detailed factual allegations in support of a plaintiff’s claim that a defendant’s product lacks substantial noninfringing uses.”

The Court did, however, find the claim for willful infringement to be inadequately pled, ruling:

The facts pled here offer a plausible risk that [the defendant] was infringing the ‘641 Patent by selling the [accused system] — and this is why [the plaintiff's] other claims survive [the defendant's] motion to dismiss. But these allegations do not rise to the much higher level of objectively reckless risk of infringement. Without additional facts to support a conclusion that the risk of infringement was highly likely, [the plaintiff] has failed to meet its burden.

Judge Scheindlin did all the plaintiff to file an amended complaint bolstering the willful infringement facts, if possible.

Court Denies Stay Pending PTAB's Consideration of Petition to Institute IPR

In a March 3, 2016 ruling, Judge Katherine Polk Failla denied the defendant's motion for a stay of the plaintiff's patent infringement claims pending the PTAB's decision on whether to institute an IPR.  The deciding factor in the Court's ruling was the parties' relationship as competitors, leading the Court to conclude that "in spite of Defendants’ contention that Plaintiff is the more powerful entity, Plaintiff nonetheless faces prejudice as the current patent-holder."  Judge Failla concluded by noting that "if the PTO later institutes IPR proceedings, the Court may be in a better position to revisit a potential stay, and Defendants may renew their motion at that time."

Court Refuses to Remand Complaint Finding Likelihood of Copyright Preemption

In a February 16, 2017 ruling, Judge Katherine B. Forrest declined to remand a complaint alleging claims for unjust enrichment, conversion and restitution, and an accounting arising from the defendant's exploitation of a taped ice skating performance by the plaintiff, finding that the Copyright Act likely preempted the claims.  First, the Court found that the taped performance was subject to copyright protection on either of two grounds, "that the motion picture recording of [the plaintiff's] performance is a work entitled to copyright protection," and that the plaintiff's ice skating performance is "akin to a choreographed dance" which is entitled to protection.  Judge Forrest further found that the plaintiff's claims, which are based on the defendant's use and exploitation of the recorded performance, essentially allege that the defendant violated the plaintiff's reproduction and distribution rights "that are encompassed within the bundle of rights afforded to copyright owners,"  Lastly, the Court concluded that the plaintiff's claim "does not contain an extra element in addition to reproduction or distribution," which would avoid copyright preemption.

Court Finds Computer Program to Be a Work-for-Hire

In a February 3, 2016 ruling, Judge Colleen McMahon declined to dismiss the plaintiff’s copyright infringement claim, finding that the defendant’s computing programming services under a written agreement constituted a “work-for-hire” under the Copyright Act. Judge McMahon found that the defendant’s work was specially commissioned pursuant to a written agreement designating the work as a “work-for-hire.” On the issue of whether the work fit into one of the nine statutory categories for which the work-for-hire doctrine applies, the Court found that the computer programs written by the defendant were either compilations or contributions to collective works. Specifically, the Court wrote:

Here, [the defendant] created and combined a number of different computer programs to create [the plaintiff’s] new software system. This new system was comprised of various elements including an open source framework, compression software, a multi-protocol library written by [the defendant’s associate], a "referral" program, anti-fraud software, routing algorithms, and code for an entirely new . . . website. . . .The system as a whole is properly deemed a compilation of computer programs. Alternatively, the source code for each program can be deemed a contribution to the "collective work" that is [the plaintiff’s] system. Thus, [the defendant’s] work falls into one of the nine categories enumerated in [17 U.S.C.] § 101(2).

Court Denies Extraterritorial Application of Lanham Act

In a February 1, 2016 ruling, Judge Jed S. Rakoff issued a decision explaining his reasoning for the dismissal of the plaintiff’s trademark action seeking to find that the holder of a presumptively valid foreign trademark had abandoned the mark. The plaintiff and defendant had originally been commonly owned. After a corporate reorganization, the plaintiff became an exclusive licensee of the defendant’s trademarks outside the United States. The plaintiff began this action contending that the defendant had abandoned the foreign marks under the Lanham Act by failing to exercise any control, including quality control, over the marks. Judge Rakoff ruled that

as a matter of law, . . . the Lanham Act may not be applied extraterritorially to adjudicate the validity or ownership status of foreign trademarks. This is because it is firmly settled that “[a] trademark has separate legal existence under each country’s laws, and trademark rights exist in each country solely according to that nation’s laws.” . . . Consistent with that principle, courts in this Circuit have repeatedly held that determination of the validity of foreign trademarks in their foreign applications is not just a matter of choice of law but that, rather, United States courts are simply not in the business of adjudicating foreign trademark rights in such circumstances.