INSET SYSTEMS, INC., Plaintiff, v. INSTRUCTION SET, INC., Defendant.
Civil No. 3:95CV-01314 (AVC)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT
937 F. Supp. 161
April 17, 1996, Decided
April 17, 1996, FILED
OPINION: [*162] MEMORANDUM OF DECISION ON MOTION TO DISMISS
This is an action for damages and injunctive relief based
upon an alleged infringement of a trademark. It is
brought pursuant to the Federal Trademark Act, 15 U.S.C.
§§ 1051-1127. In addition, the complaint alleges
violations of various state common law tenets concerning
unfair competition and trademark infringement, as
well as violations of C.G.S. § 35-11i(c) concerning
dilution and injury to business reputation, and C.G.S., ch.
735a, §§ 42-110a et seq. of the Connecticut
Unfair Trade Practices Act.
The defendant, Instruction Set, Inc., now moves pursuant
to Rules 12(b)(2) and 12(b)(3) of the Federal Rules
of Civil Procedure to dismiss the complaint in its entirety
based upon a lack of personal jurisdiction over the
defendant and for the further reason that venue is set
in the wrong forum n1. The issues presented are: 1)
whether the Connecticut long-arm statute, C.G.S. §
33-411(c) confers jurisdiction over the defendant,
Instruction Set, Inc.; 2) whether the statute's jurisdictional
reach as applied to Instruction Set, Inc. meets
the "minimum contacts" required to satisfy constitutional
due process; 3) whether venue is proper.
The court concludes: 1) that the plaintiff has established
solicitation by the defendant, Instruction Set, Inc.,
within the meaning of Connecticut long-arm statute, C.G.S.
§ 33-411(c)(2), so that long-arm jurisdiction is
proper; 2) that the plaintiff has established the minimum
contacts necessary to comport with due process; 3)
that venue is proper according to 28 U.S.C. 1391(b). Accordingly,
the motion to dismiss is denied.
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n1 28 U.S.C. § 1406(a) provides that: "The district
court of a district in which is filed a case laying venue in
the wrong division or district, shall dismiss, or if it
be in the interest of justice, transfer such case to any
district or division in which it could have been brought."
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FACTS
An examination of the complaint, memorandums, and accompanying
affidavit reveals the following: The
plaintiff, Inset Systems, Inc. ("Inset"), is a corporation
organized under the laws of the state of
Connecticut, with its office and principal place of business
in Brookfield, Connecticut. Inset develops and
markets computer software and other related services throughout
the world. The defendant, Instruction Set,
Inc. ("ISI"), is a corporation organized under the laws
of the state of Massachusetts, with its office and
principal place of business in Natick, Massachusetts.
ISI provides computer technology and support to
thousands of organizations throughout the world. ISI does
not have any employees, [*163] nor offices within
Connecticut, and it does not conduct business in Connecticut
on a regular basis.
On August 23, 1985, Inset filed for registration as the
owner of the federal trademark INSET. On October 21,
1986, Inset received registration number 1,414,031.
Thereafter, ISI obtained "INSET.COM" as its Internet domain
address. ISI uses this domain address to
advertise its goods and services.
The Internet is a global communications network linked
principally by modems which transmit electronic data
over telephone lines. Worldwide there are approximately
20 to 30 million users of the Internet. Domain
addresses are similar to street addresses, in that it
is through this domain address that Internet users
find one another. A domain address consists of three parts:
the first part identifies the part of the Internet
desired such as world wide web (www), the second part
is usually the name of the company or other
identifying words, and the third part identifies the type
of institution such as government (.gov) or commercial
(.com), etc. If a company uses a domain which is identical
to the name or trademark of a company, an
Internet user may inadvertently access an unintended company.
Thereafter, the Internet user may not realize
that the advertisement is actually from an unintended
company, or the Internet user may erroneously assume
that the source of information is the intended company.
As a result, confusion in the marketplace could
develop.
Unlike television and radio, in which advertisements are
broadcast at certain times only, or newspapers in
which advertisements are often disposed of quickly, advertisements
over the Internet are available to Internet
users continually, at the stroke of a few keys of a computer.
At this time there are at least 10,000 Internet
connected computer users in the state of Connecticut.
Inset first learned of ISI's Internet domain address in
March, 1995 when attempting to obtain the same
Internet domain address. ISI also uses the telephone number
"1-800-US-INSET" to further advertise its goods
and services. Inset did not authorize ISI's use of its
trademark, "INSET", in any capacity. ISI continues to use
"INSET" in relation to both its Internet domain address
and its toll-free number. On June 30, 1995, the plaintiff
filed the within action.
STANDARD
"On a [Federal Rules of Civil Procedure], Rule 12(b)(2)
motion to dismiss for lack of personal jurisdiction, the
plaintiff bears the burden of showing with 'actual proof'
that the court has personal jurisdiction over the
defendant." Ensign-Bickford Co. v. ICI Explosives USA
Inc., 817 F. Supp. 1018, 1026 (D.Conn. 1993); See also
Whelen Eng'g Co., Inc. v. Tomar Elecs., 672 F. Supp. 659,
661-662 (D.Conn. 1987). "To survive the motion,
the plaintiff must make a 'prima facie showing' through
affidavits or other evidence that the defendant's
conduct was sufficient for the court to exercise personal
jurisdiction." Ensign-Bickford Co., 817 F. Supp. at
1026; See also Whelen Eng'g Co., 672 F. Supp. at 661-662.
"A defendant's conduct is sufficient for
the exercise of personal jurisdiction if (1) the conduct
satisfies the requirements of the [Connecticut] long-arm
statute, [C.G.S. § 33-411(c)] . . . and (2) the conduct
satisfies the 'minimum contacts' requirement of the
Due Process Clause of the Fourteenth Amendment. Ensign-Bickford
Co., 817 F. Supp. 1018, 1026 (D.Conn.
1993); See also World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297, 62 L. Ed. 2d 490, 100 S. Ct.
559 (1980); International Shoe Co. v. Washington, 326
U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945).
DISCUSSION
1. Connecticut Long-Arm Statute
ISI, the defendant, in the within motion does not specifically
address whether the Connecticut long-arm
statute, C.G.S. § 33-411(c) n2 has been satisfied
in the present instance.
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n2 C.G.S. § 33-411(c) provides, in relevant part,
that: "Every foreign corporation shall be subject to suit in
this state, by a resident of this state or by a person
having a usual place of business in this state, whether or
not such foreign corporation is transacting or has transacted
business in this state and whether or not it is
engaged exclusively in interstate or foreign commerce,
on any cause of action arising . . . (2) out of any
business solicited in this state by mail or otherwise
if the corporation has repeatedly so solicited business,
whether the orders or offers relating thereto were accepted
within or without the state . . ."
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[*164] Inset, the plaintiff, on the other hand,
argues that the requirement of the Connecticut long-arm
statute, C.G.S. § 33-411(c)(2) has been satisfied
because ISI has repeatedly solicited business within
Connecticut via its Internet advertisement and the availability
of its toll-free number.
The Connecticut long-arm statute, C.G.S. § 33-411(c)(2)
states that "Every foreign corporation shall be
subject to suit in this state, by a resident of this state
. . . on any cause of action arising . . . (2) out of any
business solicited in this state . . . if the corporation
has repeatedly so solicited business, whether the orders
or offers relating thereto were accepted within or without
the state . . ."
In McFaddin v. National Executive Search, Inc., 354 F.
Supp. 1166, 1169 (D.Conn. 1973), the court held that
"the placing of at least six franchise ads over a six-month
period in a newspaper whose circulation clearly
includes Connecticut (citation omitted) demonstrates a
sufficiently repetitious pattern to satisfy subsection
(c)(2)" of the Connecticut long-arm statute, C.G.S. §
33-411. See also Whelen Eng'g Co., 672 F. Supp. 659
(advertising in 30 publications known to have been circulated
in Connecticut over the course of a year
and a half, plus delivery of 30 allegedly infringing catalogs
to Connecticut residents, plus two sales of the
allegedly infringing products to Connecticut residents,
which may or may not have been due to the solicitation
activities, satisfies C.G.S. § 33-411(c)(2)).
Similarly, since March, 1995, ISI has been continuously
advertising over the Internet, which includes at least
10,000 access sites in Connecticut. Further, unlike hard-copy
advertisements noted in the above two cases,
which are often quickly disposed of and reach a limited
number of potential consumers, Internet
advertisements are in electronic printed form so that
they can be accessed again and again by many more
potential consumers.
The court concludes that advertising via the Internet is
solicitation of a sufficient repetitive nature to satisfy
subsection (c)(2) of the Connecticut long-arm statute,
C.G.S. § 33-411, thereby conferring Connecticut's
long-arm jurisdiction upon ISI.
2. Minimum Contacts
The defendant claims that personal jurisdiction is lacking
here because it does not have sufficient minimum
contacts within Connecticut to satisfy constitutional
precepts concerning due process. Minimum
contacts are lacking, according to the defendant, because
it is a Massachusetts corporation with its office
and principal place of business in Natick, Massachusetts,
"it does not conduct business in Connecticut on a
regular basis," and it "does not maintain an office in
Connecticut, nor does it have a sales force or employees
in the State."
The plaintiff responds that minimum contacts comporting
with due process have been satisfied because the
defendant has used the Internet, as well as its toll-free
number to try to conduct business within the state of
Connecticut.
"[Due Process] limitations require that a nonresident corporate
defendant have 'minimum contacts' with the
forum state such that it would reasonably anticipate being
haled into court there. World-Wide Volkswagen
Corp. v. Woodson, 444 U.S. 286, 297, 62 L. Ed. 2d 490,
100 S. Ct. 559 (1980). [Further], maintenance of the
suit in the forum state cannot offend traditional notions
of fair play and substantial justice. International Shoe
Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66
S. Ct. 154 (1945), quoting Milliken v. Meyer, 311 U.S.
457, 463, 85 L. Ed. 278, 61 S. Ct. 339 (1940)." (internal
quotation marks omitted) Combustion Eng'g,
Inc. v. NEI Int'l Combustion, Ltd., 798 F. Supp. 100,
103 (D.Conn. 1992).
a. Reasonably Anticipate
The essence of the minimum contacts test is "that there
be some act by which the defendant purposefully
avails itself of the privilege of conducting activities
within the forum State, thus invoking the benefits and
protections of its laws." Hanson v. Denckla, 357 U.S.
235, 253, 2 [*165] L. Ed. 2d 1283, 78 S. Ct. 1228
(1958) (citing International Shoe Co., 326 U.S. at 319)."
See also Ensign-Bickford Co., 817 F. Supp. at 1029;
Combustion Eng'g, Inc., 798 F. Supp. at 105. This "due
process inquiry rests upon the totality of the
circumstances rather than any mechanical criteria . .
." Combustion Eng'g, Inc., 798 F. Supp. at 105.
In Whelen Eng'g Co., 672 F. Supp. at 664, the court concluded
that because "[the defendant] readily supplied
interested potential customers with catalogs advertised
in periodicals having Connecticut circulation, provided
products on order . . ., and demonstrated its readiness
to initiate telephone solicitation of Connecticut
customers," it purposefully availed itself of the privilege
of doing business within the state and
therefore, could reasonably be expected to be hailed into
court. See McFaddin, 354 F. Supp. 1166.
In the present case, Instruction has directed its advertising
activities via the Internet and its toll-free number
toward not only the state of Connecticut, but to all states.
The Internet as well as toll-free numbers are
designed to communicate with people and their businesses
in every state. Advertisement on the Internet can
reach as many as 10,000 Internet users within Connecticut
alone. Further, once posted on the Internet, unlike
television and radio advertising, the advertisement is
available continuously to any Internet user. ISI has
therefore, purposefully availed itself of the privilege
of doing business within Connecticut.
The court concludes that since ISI purposefully directed
its advertising activities toward this state on a
continuing basis since March, 1995, it could reasonably
anticipate the possibility of being hailed into court
here.
b. Fair Play and Substantial Justice
Since the defendant contends that no minimum contacts exist,
it did not address the fairness of such a
finding.
The plaintiff states that it is fair to adjudicate
the present case in Connecticut because travel time
between Natick, Massachusetts and Hartford, Connecticut
is less than two hours, and the defendant has
retained counsel within the state of Connecticut.
"The minimum requirements inherent in the concept of 'fair
play and substantial justice' may defeat the
reasonableness of jurisdiction even if the defendant has
the requisite minimum contacts with the forum.
However, where minimum contacts have been established
the defendant 'must present a compelling case that
the presence of some other considerations would render
jurisdiction unreasonable.'" Combustion Eng'g, Inc.,
798 F. Supp. at 106 (citing Burger King, 471 U.S. at 477).
The factors to be considered are "the relative
burdens on the plaintiff and defendant of litigating the
suit in this or another forum, the forum state's interest
in adjudicating the dispute, and the interstate judicial
system's interest in efficient resolution of
controversies." Combustion Eng'g, Inc., 798 F. Supp. at
106 (citing Burger King, 471 U.S. at 476-77).
In the present case, the distance between Connecticut and
Massachusetts is minimal. Further, since the
present action also concerns issues of Connecticut common
and statutory law, Connecticut has an
interest in adjudicating the dispute. This being the case,
adjudication in Connecticut would dispose of this
matter efficiently. Therefore, the court concludes that
its finding of minimum contacts in this case comports
with notions of fair play and substantial justice.
3. Venue
The defendant next claims that, according to 28 U.S.C.
§ 1391(b) n3, venue is improper because the
defendants reside in different states, the events or omissions
giving rise to this claim took place in
Massachusetts, and this action, therefore, should be prosecuted
in Massachusetts.
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n3 28 U.S.C. § 1391(b) provides, in relevant part,
that: "A civil action wherein jurisdiction is not founded solely
on diversity of citizenship may, . . ., be brought only
in (1) a judicial district where any defendant resides, if all
defendants reside in the same State, (2) a judicial district
in which a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial
part of property that is the subject of the action is
situated, or (3) a judicial district in which any defendant
may be found, if there is no district in which the
action may otherwise be brought."
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The plaintiff responds that subsection (1) of 28 U.S.C.
§ 1391(b) which states that "a [*166] civil action . .
.
may . . . be brought only in (1) a judicial district where
any defendant resides, if all defendants reside in the
same state . . .," has been satisfied in this case. This
is because 28 U.S.C. § 1391(c) n4 provides that: "a
defendant that is a corporation shall be deemed to reside
in any judicial district in which it is subject to
personal jurisdiction at the time the action is commenced
. . ." Since the defendant, ISI, a corporation, is
subject to personal jurisdiction in Connecticut, then
for venue purposes, it is deemed to reside in Connecticut.
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n4 28 U.S.C. § 1391(c) provides, in relevant part,
that: "For purposes of venue under this chapter, a
defendant that is a corporation shall be deemed to reside
in any judicial district in which it is subject to
personal jurisdiction at the time the action is commenced
. . ."
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The court concludes, therefore, that the provisions of
§ 1391(b)(1) having been [**15] complied with,
Connecticut venue is proper.
Conclusion
For the foregoing reasons, the motion to dismiss is denied (Document No. 7).
It is so ordered, this 17th day of April, 1996, at Hartford, Connecticut.
Alfred V. Covello
United States District Judge