United States: Intellectual Property - Trademark - The World In U.S. Courts: Winter 2019

Last Updated: April 2 2019
Article by   Orrick

Personal Jurisdiction to Support Preliminary Injunction Against Dubai- and Belarus-Based Defendants in Trademark Infringement Suit Based on Three Purchases of Cryptocurrency in New York

Alibaba Group Holding Limited v. Alibabacoin Foundation, US District Court for the Southern District of New York, October 22, 2019

The parent of the Alibaba web services conglomerate sued various Dubai- and Belarus-based companies and individuals for trademark infringement, alleging improper use of Alibaba marks to promote a cryptocurrency called AlibabaCoin. Alibaba sought a preliminary injunction, which requires at least a “reasonable probability” that the Court could assert personal jurisdiction over the defendants. The Court explained that jurisdiction would be proper if consistent with New York law and the Due Process Clause of the US Constitution.

The key New York provision authorizes jurisdiction over parties that “transact business” in the state, a requirement that has been defined potentially to be satisfied by even one commercial contact with a New York resident if “purposeful and there is a substantial relationship between the transaction and the claim asserted.” Jurisdictional discovery revealed at least three transactions in which a New York resident purchased AlibabaCoin. The defendants argued that these purchases were not New York transactions but rather “ledger entries made in Minsk, Belarus, following observation of changes in ‘blockchain’ data outside the United States.” The Court rejected this description, concluding instead that the purchases should be deemed to have occurred “where the buyer clicks the button that commits her to the terms of sale.” The defendants next argued that any contacts with New York residents could not have been “purposeful” since the fact of a New York purchaser was a matter of happenstance. The Court also rejected this argument, citing authority finding purposeful conduct in the electronic transmission of files in response to an order and the maintenance of an interactive website that could be accessed in the US. Finally, the Court rejected the defendants’ argument that isolated contacts could not support specific personal jurisdiction over transactions with residents of other States, observing that jurisdiction attaches not only to claims arising out of a defendant’s contacts with the forum but also claims that are “related” to those contacts. While at some point Alibaba would be required to establish personal jurisdiction over each defendant, the Court concluded that it had met the “reasonable probability” standard for a preliminary injunction through evidence that the defendants collectively were responsible for the sale and marketing of AlibabaCoin and had blurred their own distinct roles in promotional materials.

The Court explained that satisfaction of New York’s requirements for the assertion of personal jurisdiction meant that Due Process requirements of minimum contacts and a relation between those contacts and the plaintiff’s claims were also met. Due Process does, however, impose an independent “reasonableness” requirement, and the Court found this was satisfied by Alibaba’s and New York’s interest in litigating the matter and the defendants’ failure to demonstrate that litigation in the US would pose an extraordinary burden for them.

[Editor’s note: The Alibaba Group case is also discussed in the Personal Jurisdiction/Forum non Conveniens section of this report.]

Alleged Trademark Infringement on Non-US Websites and Failure to Plead Effect on US Commerce Doom Lanham Act Claim

Levy v. Adidas AG, US District Court for the Central District of California, November 13, 2018

The plaintiff Levy sued the US subsidiary of the sports mega-brand Adidas for infringement of a US trademark. The Court observed that Levy’s citations of allegedly infringing promotional materials all came from Adidas websites outside the US, with the complaint’s only “explicit” reference to conduct in the US the allegation that “[t]he foregoing depictions on Adidas’ sales web sites shows that Adidas has sold and is marketing and selling its products bearing the Marks directly to consumers, as well as to retailers, who in turn have sold and are selling that clothing to consumers within and outside the US.”

The Court explained that suits for trademark infringement under the Lanham Act may apply to extraterritorial conduct in limit circumstances, where:

(1) the alleged violations create some effect on American foreign commerce;
(2) the effect is sufficiently great to present a cognizable injury to the plaintiffs under the Lanham Act; and
(3) the interests of and links to American foreign commerce are sufficiently strong in relation to those of other nations to justify an assertion of extraterritorial authority.

The Court found this test not met as regards alleged infringement appearing on non-US websites. It noted that only “some” effect on US commerce need be shown, with the first and second requirements above usually satisfied in such case where infringement has occurred outside the US and infringing goods were imported into the US, causing monetary or reputational injury to a US plaintiff. However, Levy’s naked allegation that the value of his trademark has been injured, with no “details” of that injury, were improperly “conclusory” and inadequate to satisfy his pleading burden.

Lanham Act Claim Proceeds Based Solely on Use of Allegedly Infringing Trademark at Trade Fair in Germany Attended by Major US Buyers

Luv N’ Care, Ltd. v. Laurain, US District Court for the Western District of Louisiana, November 29, 2018

The parties both sell silicone feeding mats for young children. As relevant here, the counterclaim-plaintiff, a company referred to as EZPZ, sued Luv N’ Care (LNC) for trademark infringement and other claims under the Lanham Act. LNC argued that it was entitled to summary judgment on the claim because it engaged in no allegedly infringing conduct in the US—specifically, that it advertised the allegedly infringing product at a trade fair in Germany and had “never advertised, promoted, marketed, packaged, used, offered for sale, or sold any product” in the US market—and the Lanham Act thus could not apply. EZPZ responded that the trade fair was attended by major US buyers, and that established the likelihood of significant sales warranting discovery of the facts.

The Court agreed that the Lanham Act could apply to conduct outside the US only in limited circumstances, notably where such conduct had “some” effect on US commerce. The Court stated that the statute’s extraterritorial application would generally be guided by consideration of three factors: “the citizenship of the defendant, the effect on US commerce, and the existence of a conflict with [non-US] law.” In reaching its decision, however, the Court focused just on the inference if major US buyers were present at a trade show in Germany it was plausible that “some” effect on US commerce occurred as a result. The court thus declined to enter judgment for LNC motion and set the matter for further litigation.

German Company’s Use of a US Affiliate as its Distributor of an Allegedly Infringing Product Supports Assertion of Personal Jurisdiction

T.R.P. Company, Inc. v. Similasan AG, US District Court for the District of Nevada, November 27, 2018

T.R.P. sued Similasan, a German company, for trademark infringement. Similasan moved to dismiss the complaint on grounds that it had insufficient contacts with the US to support the assertion of personal jurisdiction over it consistent with the Due Process Clause of the US Constitution.

The Court stated that a trademark infringement claim would be treated as a tort for purposes of the jurisdictional analysis, and thus the plaintiff must show that Similasan “purposefully directed” its activities toward the forum, that its claims “arise out of or relate to” those contacts, and that the assertion of jurisdiction otherwise would be “reasonable.” Moreover, because a federal trademark infringement claim had been brought and Similasan had identified no US State in which it claimed sufficient contacts to be sued, the Due Process inquiry under Federal Rule of Civil Procedure 4(k) would look to the German company’s contacts with the US as a whole.

The Court stated that the “purposeful direction” requirement would be judged under the “Calder effects test,” which requires a plaintiff to show that the defendant “(1) committed an intentional act; (2) expressly aimed at the forum state; and (3) the defendant knew that the brunt of the harm was likely to be suffered in the forum state.” The “intentional” nature of Similasan’s alleged infringement was found through the denial of trademark protection for the company’s product because of T.R.P.’s preexisting mark. Targeting of the US (requirements (2) and (3)) was found through the German company’s designation of an affiliate as its US distributor.

The requirement that the plaintiff’s claim arise from or relate to the defendant’s contacts with the forum was construed to mean that the plaintiff’s claim would not have arisen “but for” the defendant’s conduct, and the Court found this requirement easily satisfied as well.

Finally, the Court found the exercise of personal jurisdiction over Similasan to be reasonable, concluding that every relevant factor supported that determination. In so doing it focused on Similasan’s substantial focus on the US, the relatively modest burden imposed on it by the litigation (especially in light of the presence in the US of Similasan’s distributor-affiliate), and the fact that no forum could litigate the matter more efficiently given the location of the witnesses and the progress of the case.

[Editor’s Note: The T.R.P. case is also discussed in the Personal Jurisdiction/Forum non Conveniens section of this report]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
1 Oct 2019, Other, Washington, DC, United States

Orrick is proud to host the AIPN for its final breakfast meeting of 2019 for a session titled “Helping the World Gasify”. As natural gas production and use is very unevenly distributed throughout the world, often gas produced in association with crude oil is sold below cost or flared.

25 Nov 2019, Speaking Engagement, New York, United States

Lorraine McGowen will be speaking on the upcoming “Evaluating the Financial Health of an Entity” panel at the New York session of the Pocket MBA: Finance for Lawyers and Other Professionals program, hosted by the Practising Law Institute.

2 Dec 2019, Speaking Engagement, New York, United States

Evan Hollander will co-chair the Practising Law Institute’s annual Nuts and Bolts of Corporate Bankruptcy this year.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions