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 Finds Personal Jurisdiction in Copyright Infringement Action

In a March 28, 2014 ruling, Judge Andrew L. Carter denied defendant Na El, Inc.’s motion to dismiss plaintiff Zelouf International Corp.’s copyright infringement action for lack of personal jurisdiction. “Zelouf designs, manufactures, and sells textile fabrics,” in which it obtains copyright registrations. It accused Na El of copying Zelouf’s designs, and supplying the infringing fabric to defendant Lito Children’s Wear, Inc., which manufactured it into children’s apparel. Although Na El sold other fabric to customers in New York in twenty-five different transactions, all the fabric at issue in this action was sold to Lito in California, and had no New York connection.

Zoulef argued for jurisdiction over Na El under the provision in New York’s Long Arm statute conferring “personal jurisdiction over an out-of-state defendant who commits a tortious act outside New York that causes injury to “person or property’ in New York, if the defendant ‘expects or should reasonably expect the act to have consequences in [New York] and derives substantial revenue from interstate or international commerce.’” Na El conceded for purposes of argument that it committed a tortious act outside New York with consequences in the state, but contested whether it expected consequences here. Judge Carter rejected Na El’s contention, and ruled that “Na El’s allegedly tortious conduct created a foreseeable risk of having to defend its actions in a New York court.” In particular, the Court noted that Na El was aware of Zoulef’s activities in New York, making it “conceivable that Na El knew that Zelouf, a New York company had intellectual property rights in those designs.” Judge Carter also found that Na El made a conscious effort to serve the New York market by dealing directly with New York customers, and selling to Lito, which Na El knew to have national sales. In concluding that the Long Arm statute applies, the Court examined Na El’s sales, and found that both “numerically and as a percentage of total revenue, Na El ‘derives substantial revenue from interstate and international commerce.’”

Defendant Who Wins Dismissal on Personal Jurisdiction Grounds Is Not a Prevailing Party Under the Lanham Act

In a March 17, 2014 ruling, Judge Paul G. Gardephe adopted Magistrate Judge Gorenstein’s Report and Recommendation denying attorneys’ fees to defendants who secured dismissal of a trademark infringement action on personal jurisdiction grounds. After the Court dismissed the action on jurisdictional grounds, the defendants “moved for an award of attorneys’ fees under Section 35(a) of the Lanham Act” and under the Court’s inherent authority. Judge Gardephe adopted Judge Gorenstein’s reasoning that the defendants were not “prevailing parties” under the Lanham Act, and thus not entitled to fees. The Court approved of Judge Gorenstein’s application of the “closely analogous” decision of the Second Circuit in Dattner v. Conagra Foods, Inc., 458 F.3d 98 (2d Cir. 2006) which found that a defendant who secures a dismissal on forum non conveniens grounds is likewise not a “prevailing party” entitled to fees.

Judge Gardephe disagreed with the Report and Recommendation’s conclusion that the defendants had waived their argument for fees under the Court inherent authority “because their briefs were ‘devoid of any citations to relevant case law’ and did not ‘advance any reasoned argument supporting such an award.’” Instead, the Court noted that the defendants “included their ‘inherent authority’ argument in the headings of their opening brief and addressed this claim in several paragraphs in their reply.” Judge Gardephe concluded that the defendants’ “moving papers are ‘devoid of any relevant citations’ or ‘reasoned argument’ on this point” but did “not hold that these deficiencies result in a waiver of the argument.” On the merits, though, the Court found that fees were not warranted under its inherent authority because “it cannot be said that Plaintiffs engaged in bad faith or vexatious conduct amounting to an abuse of the judicial proves.”

Court Denied Defendant’s Motion To Dismiss For Lack of Personal Jurisdiction Where A Hong Kong Based Website Shipped A Single Allegedly Counterfeit Good Into New York.

In a February 18, 2014 ruling, Judge Richard J. Sullivan ruled that New York’s Long Arm statute conferred personal jurisdiction over Defendant Dress Market Ltd., a Hong Kong based dress distributor which sells its dresses through its interactive website, when it shipped a single, allegedly counterfeit product into New York in response to an order from plaintiff’s counsel. The defendant did not challenge whether it been properly served with process. Rather, the defendant argued that it did not have “sufficient contacts” with New York for the court to exercise personal jurisdiction.

Pursuant to Federal Rule of Civil Procedure 4(k)(1)(A), a federal court has jurisdiction over a defendant that has been properly served if the defendant "is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located." Fed. R. Civ. P. 4(k)(1)(A). Absent personal service within the state, New York state courts may exercise personal jurisdiction over a non-domiciliary only as permitted by New York's long-arm statute. N.Y. C.P.L.R. § 302. In addition, even if New York law allows for jurisdiction, personal jurisdiction in the case must "comport with the Due Process Clause of the United States Constitution" – i.e., there must be minimum contacts with the forum jurisdiction.

The Court deemed it unnecessary to engage in a detailed “minimum contacts” analysis because it found that the facts in this matter were legally indistinguishable from the facts of the Second Circuit’s controlling decision in Abc v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 161 (2d Cir. 2010). In Queen Bee, the Second Circuit found that New York's long-arm statute and the "minimal contacts" inquiry of Due Process were satisfied when the defendant (l) shipped a single, allegedly counterfeit product into New York; (2) "operated a highly interactive website offering such [products] for sale to New York customers"; and (3) "engaged in fifty-two other transactions where merchandise was shipped to New York." Here, defendant shipped at least one dress into New York that allegedly infringes Plaintiffs' Sherri Hill’s copyrights, albeit in response to an order from plaintiffs' attorneys.

The only distinction between the fact pattern in this matter and Queen Bee was that plaintiff had not shown evidence of fifty-two other transactions in New York. The Court found, however, that this difference was irrelevant. Queen Bee emphasized that the crux of the long-arm statute and the Due Process Clause was whether the defendant had "purposefully availed himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." That requirement was met, the court ruled, where the defendant has "developed and served a market for its products" within New York, and "might well be" satisfied by the shipping of a single product alone. Accordingly, the Court determined that personal jurisdiction was appropriate under New York’s long-arm statute and the Due Process “minimal contacts” inquiry.

The Court denied the defendant’s motion to dismiss.

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.

Court Finds Personal Jurisdicition in Patent Infringement Action Based on Acts of Subsidiaries

In a January 6, 2014 ruling, Judge Shira A. Scheindlin declined to dismiss plaintiff Rates Technology Inc.’s patent infringement action against Broadvox Holding Company, LLC and others for lack of personal jurisdiction. In considering the jurisdictional issue, the Court applied Federal Circuit law which, like Second Circuit law, applies “the personal jurisdiction rules of the forum state.”

Noting that “Broadvox Holding, through its subsidiaries, operates a VoIP [voice over internet] network in New York, which is among its top ten retail markets,” Judge Scheindlin wrote that where “a defendant who has purposefully directed its activities at the forum state seeks to defeat jurisdiction, it must ‘present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.’” The issue thus became whether the actions of Broadvox Holding’s subsidiaries in New York should be imputed to Broadvox Holding. The Court wrote that under “certain circumstances, a court may assert jurisdiction over a foreign parent corporation based of its subsidiaries in New York,” if the subsidiary is “either an ‘agent’ or a ‘mere department’ of a foreign parent.”

Judge Scheindlin concluded that Broadvox Holding’s subsidiaries carrying out business in New York are its agents under the applicable agency test. In particular, the Court found that “Broadvox Holding is more than just an ‘investment mechanism [that] diversif[ies] risk through corporate acquisitions.’ Instead, it is in the same business as its subsidiaries – providing IP-based communication services to customers.” So the Court ruled that “[g]iven the importance of its subsidiaries’ activities in New York – one of its ‘top ten retail markets’ – it is fair to say that Broadvox Holding would perform these functions if no agent were available.” Before finding personal jurisdiction, though, Judge Scheindlin considered whether the assertion of jurisdiction comports with due process. The Court noted that because “Broadvox Holding purposefully directed its business toward New York, it must make a ‘compelling case that the presence of some other considerations would rendered jurisdiction unreasonable,” and ruled that Broadvox Holding failed to do so. The Court thus found personal jurisdiction, and denied the motion to dismiss.

"Manufactured" Sale in District to Party's Counsel Insufficient for Personal Jurisdiction

In a September 20, 2013 ruling, Judge Robert W. Sweet granted defendant Roger Nunn's motion to dismiss plaintiff North Jersey Media Group, Inc.'s copyright infringement complaint against him for lack of personal jurisdiction.  North Jersey Media alleged that Nunn violated its copyright "of a photographic impage depicting firefighters raising an American flag at the site of the World Trade Center in the immediate aftermath of the events that took place in New York City on September 11, 2001 . . . by selling a copy of the WTC Photo over the internet." 

Judge Sweet wrote that in "order for a federal court sitting in New York to assert personal jurisdiction over Nunn, a California resident, NJ must satisfy the requirements of both New York's long-arm statute, N.Y. C.P.L.R. § 302 . . ., as well as the Due Process Clause."  The Court noted that in "general, an allegation of a defendant's infringing sales to residents in New York is sufficient to satisfy § 302," and found that the complaint did allege such a sale, thus complying with New York's long-arm statute.  Judge Sweet held, though, that Nunn's single sale in New York -- a "manufactured" sale to North Jersey Media's counsel -- failed to satisfy the Due Process Clause.  In particular, the Court ruled that North Jersey "has failed to establish that Nunn's conduct satisfies either the minimum contacts inquiry or the reasonableness inquiry; accordingly, Nunn's right to due process bars this Court's exercise of personal jurisdiction over him in the instant action."