No Personal Jurisdiction in Trademark Action Based on Website, E-mails and Plaintiff's Contacts with Forum State: Seventh Circuit | Practical Law

No Personal Jurisdiction in Trademark Action Based on Website, E-mails and Plaintiff's Contacts with Forum State: Seventh Circuit | Practical Law

In Advanced Tactical Ordnance Systems, LLC v. Real Action Paintball, Inc., the US Court of Appeals for the Seventh Circuit held that the plaintiff had not proven by a preponderance of the evidence that the defendant had minimum contacts with Indiana even though the defendant had fulfilled several orders to Indiana purchasers; the defendant knew that the plaintiff was an Indiana company and would be harmed in Indiana; the defendant sent allegedly misleading e-mail blasts to a list including Indiana residents; and the defendant operated an interactive website available to residents of Indiana.

No Personal Jurisdiction in Trademark Action Based on Website, E-mails and Plaintiff's Contacts with Forum State: Seventh Circuit

by Practical Law Intellectual Property & Technology
Published on 13 May 2014 • USA (National/Federal)
In Advanced Tactical Ordnance Systems, LLC v. Real Action Paintball, Inc., the US Court of Appeals for the Seventh Circuit held that the plaintiff had not proven by a preponderance of the evidence that the defendant had minimum contacts with Indiana even though the defendant had fulfilled several orders to Indiana purchasers; the defendant knew that the plaintiff was an Indiana company and would be harmed in Indiana; the defendant sent allegedly misleading e-mail blasts to a list including Indiana residents; and the defendant operated an interactive website available to residents of Indiana.
On May 9, 2014, in Advanced Tactical Ordnance Systems, LLC v. Real Action Paintball, Inc., the US Court of Appeals for the Seventh Circuit vacated the US District Court for the Northern District of Indiana's judgment that Advanced Tactical Ordnance Systems (Advanced Tactical) had established personal jurisdiction over Real Action Paintball Inc. (Real Action) in Indiana (No. 13-3005, (7th Cir. May 9, 2014)).
Advanced Tactical became the manufacturer and seller of "PepperBall"-branded pepper-spray projectiles after it purchased PepperBall Technologies Inc.'s trademarks and property in 2012 at a foreclosure sale. After the foreclosure, one of PepperBall's two sources for projectile irritants, APON, chose not to work for Advanced Tactical and offered its services to Real Action.
Real Action, a California company, concluded a deal with APON in 2012. Real Action posted on its website and sent an e-mail to its customer e-mail list that it had acquired the "machinery, recipes and materials once used by PepperBall Technologies Inc."
In response, Advanced Tactical sued Real Action and its president in Indiana, alleging:
  • Intentional violations of the Lanham Act (15 U.S.C. § 1111 et seq.).
  • Common law trademark and unfair competition.
  • Trade dress infringement.
  • Misappropriation of trade secrets.
Advanced Tactical alleged that personal jurisdiction was proper under Indiana's long-arm statute. The district court held an evidentiary hearing, after which it concluded that Advanced Tactical had proven personal jurisdiction by a preponderance of the evidence and issued a preliminary injunction. Real Action appealed both the finding of personal jurisdiction and the preliminary injunction.
In vacating the district court's judgment that Real Action had established personal jurisdiction, the Seventh Circuit looked to Indiana's long-arm statute, noting that the Lanham Act does not have a special federal rule for personal jurisdiction. Indiana's long-arm statute extends to the limits of the Federal Due Process Clause. Because Advanced Tactical conceded that it could not rely on general jurisdiction, the Seventh Circuit analyzed only whether Real Action's forum-related activity gave rise to sufficient minimum contacts to establish specific jurisdiction.
The Seventh Circuit emphasized that the relevant facts for personal jurisdiction "are those that center on the relations among the defendant, the forum and the litigation." The court rejected all of the bases on which the district court had found personal jurisdiction, namely, that Real Action:
  • Fulfilled several orders of the allegedly infringing projectiles for purchasers in Indiana.
  • Knew that Advanced Tactical was an Indiana company and could foresee that its misleading e-mails and sales would harm Advanced Tactical in Indiana.
  • Sent at least two misleading e-mail blasts to a list that included Indiana residents.
  • Had an interactive website available to residents of Indiana.
  • Put customers on its e-mail list when they made a purchase, thereby giving the company an economic advantage.
The Seventh Circuit took a narrow view of how these factors related to the litigation. For example, it stated that:
  • Although Real Action had made sales to Indiana residents after putting the message on its website that it had purchased the "machinery, recipes and materials once used by PepperBall Technologies Inc.," there was no evidence that the Indiana residents saw that post before making their purchase.
  • Real Action's 600-plus sales to Indiana residents in the preceding two years were irrelevant, because they did not establish litigation-specific conduct.
  • Even if Advanced Tactical linked these few sales to Real Action's litigation-specific activity, those few sales, without evidence linking them to the allegedly tortious activity, would not make jurisdiction proper.
The Seventh Circuit also quoted the US Supreme Court's recent conclusion in Walden v. Fiore that "the plaintiff cannot be the only link between the defendant and the forum" (134 S.Ct. 1115, 1122 (2014)). Therefore, the Seventh Circuit found that whether Real Action knew that Advanced Tactical was an Indiana company and that its actions would harm Advanced Tactical in Indiana was irrelevant.
Finally, the Seventh Circuit rejected as insufficient minimum contacts Real Action's e-mail and interactive website. In analyzing Real Action's online activities for the minimum contacts analysis, the court questioned how Real Action had "purposefully exploited" the Indiana market. It held that:
  • Maintaining and utilizing an e-mail list of past customers does not show a relationship between Real Action and Indiana.
  • Operation of an interactive website does not show that a defendant has formed a contact with the forum state.
  • Any interactivity in this case had no effect on the alleged trademark infringement.
In so holding, the Seventh Circuit explained that e-mail "does not exist in any location at all" and any connection that it may make with a recipient's in-state location is "entirely fortuitous." Further, the court minimized the role that a website's interactivity may play a role in the personal jurisdiction analysis.
In line with the Supreme Court's decision in Walden v. Fiore, this case makes it clear that, to establish personal jurisdiction over an out-of-state defendant in a trademark infringement case, it is insufficient to rely on the contacts between the plaintiff and the forum state. Moreover, a plaintiff may not simply rely on the fact that a defendant maintains a website or sends e-mails to customers in the forum state to establish personal jurisdiction.