Bensusan Restaurant v. King

96 Civ. 3992 (SHS)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
937 F. Supp. 295
September 9, 1996, Decided


   OPINION:
   SIDNEY H. STEIN, District Judge.

   Plaintiff Bensusan Restaurant Corp. ("Bensusan") brought this action against defendant Richard King,
   individually and doing business as The Blue Note, alleging that King is infringing on Bensusan's rights in its
   trademark "The Blue Note." King has moved to dismiss the complaint for lack of personal jurisdiction pursuant
   to Fed.R.Civ.P. 12(b)(2). The issue raised by that motion is whether the existence of a "site" on the World
   Wide Web of the Internet, without anything more, is sufficient to vest this Court with personal jurisdiction
   over defendant pursuant to New York's long-arm statute and the Due Process Clause of the United States
   Constitution. For the reasons that follow, the motion to dismiss the complaint  [**2]  is granted.

   I. BACKGROUND

   Bensusan, a New York corporation, is the creator of a jazz club in New York City known as "The Blue Note." It
   also operates other jazz clubs around the world. Bensusan owns all rights, title and interest in and to the
   federally registered mark "The Blue Note." (Complaint, PP 1, 5.) King is an individual who lives in Columbia,
   Missouri and he owns and operates a "small club" in that city which is also called "The Blue Note." (Complaint,
   PP 2, 6.)

   In April of 1996, King posted a "site" on the World Wide Web of the Internet to promote his club. n1 This Web
   site, which is located on a computer server in Missouri, allegedly contains "a fanciful logo which is substantially
   similar to the logo utilized by [Bensusan]." (Complaint, P 11.) The Web site is a general access site, which
   means that it requires no authentication or access code for entry, and is accessible to anyone around the
   world who has access to the Internet. (Meltzer Aff., P 2.) It contains general information about the club in
   Missouri as well as a calendar of events and ticketing information. (Id., PP 2-3; Exhs. A & B.) The ticketing
   information includes the names and addresses of  [**3]  ticket outlets in Columbia and a telephone number for
   charge-by-phone ticket orders, which are available for pick-up on the night of the show at the Blue Note box
   office in Columbia. (Id., Exh. B.)

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   n1 In MTV Networks v. Curry, 867 F. Supp. 202 (S.D.N.Y. 1994), Judge McKenna of this court described the
   Internet as follows:

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        The Internet is the world's largest computer network (a network consisting of two or more
        computers linked together to share electronic mail and files). The Internet is actually a network of
        thousands of independent networks, containing several million "host" computers that provide
        information services. An estimated 25 million individuals have some form of Internet access, and
        this audience is doubling each year. The Internet is a cooperative venture, owned by no one, but
        regulated by several volunteer agencies.
 

   Id. at 203 n.1 (citations omitted). A "site" is an Internet address which permits users to exchange digital
   information with a particular host, see id.  [**4]  at 203 n.2, and the World Wide Web refers to the collection
   of sites available on the Internet, see Shea v. Reno, 930 F. Supp. 916, 929 (1996). See also Malarkey-Taylor
   Assocs., Inc. v. Cellular Telecommunications Indus. Ass'n, 929 F. Supp. 473, 476 n.1 (D.D.C. 1996) (citing
   American Civil Liberties Union v. Reno, 929 F. Supp. 824 (E.D. Pa. 1996)); Religious Technology Ctr. v. Netcom
   On-Line Communication Servs., Inc., 923 F. Supp. 1231, 1238 n.1 (1995).

   At the time this action was brought, the first page of the Web site contained the following disclaimer: "The
   Blue Note's Cyberspot should not be contused with one of the world's finest jazz club[s] [the] Blue  [*298]
   Note, located in the heart of New York's Greenwich Village. If you should find yourself in the big apple give
   them a visit." (Complaint, P 9.) Furthermore, the reference to Bensusan's club in the disclaimer contained a
   "hyperlink" n2 which permits Internet users to connect directly to Bensusan's Web site by "clicking" on the link.
   (Id. at P 10.) After Bensusan objected to the Web site, King dropped the sentence "If you should find yourself
   in the big apple give them a visit" from the disclaimer and removed  [**5]  the hyperlink. (King Aff., P 14.)

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   n2 A "hyperlink" is "highlighted text or images that, when selected by the user, permit him to view another,
   related Web document." Shea, 930 F. Supp. at 929. With these links "a user can move seamlessly between
   documents, regardless of their location; when a user viewing the document located on one server selects a
   link to a document located elsewhere, the browser will automatically contact the second server and display
   the document." Id.

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   Bensusan brought this action asserting claims for trademark infringement, trademark dilution and unfair
   competition. King has now moved to dismiss the action for lack of personal jurisdiction pursuant to Fed. R. Civ.
   P. 12(b)(2).

   II. DISCUSSION

   At this stage of the litigation -- prior to an evidentiary hearing or discovery -- Bensusan may defeat a motion
   to dismiss the complaint for lack of personal jurisdiction by making merely a prima facie showing of jurisdiction.
   See A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80  [**6]  (2d Cir. 1993); Hoffritz for Cutlery,
   Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985); Rothschild v. Paramount Distillers, Inc., 923 F. Supp. 433,
   435 (S.D.N.Y. 1996); PI, Inc. v. Quality Prods., Inc., 907 F. Supp. 752, 758 (S.D.N.Y. 1995); Dave Guardala
   Mouthpieces, Inc. v. Sugal Mouthpieces, Inc., 779 F. Supp. 335, 336-37 (S.D.N.Y. 1991).

   In that regard, Bensusan is entitled to have its complaint and affidavits interpreted, and any doubts resolved,
   in the light most favorable to it. See Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d
   1039, 1043 (2d Cir. 1991); Hoffritz for Cutlery, 763 F.2d at 57; Linzer v. EMI Blackwood Music, Inc., 904 F.
   Supp. 207, 211 (S.D.N.Y. 1995); Editorial Musical Latino Americana, S.A. v. Mar Int'l Records, Inc., 829 F.
   Supp. 62, 64 (S.D.N.Y. 1993). This burden is satisfied even when the moving party makes contrary allegations
   that place in dispute the factual basis of plaintiff's prima facie case. See A.I. Trade Finance, 989 F.2d at
   79-80; Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981); Lancaster v. Zufle, 165 F.R.D.
   38, 40 (S.D.N.Y. 1996);  [**7]  National Cathode Corp. v. Mexus Co., 855 F. Supp. 644, 646 (S.D.N.Y. 1994).

   Furthermore, where, as in this case, discovery has not commenced on this issue or any other, plaintiff is
   entitled to rely on mere factual allegations to make its prima facie showing of jurisdiction. See Ball v.
   Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854, 111 S. Ct. 150,
   112 L. Ed. 2d 116 (1990); Rothschild, 923 F. Supp. at 436; Executive Telecard, Ltd. v. Engelman, 1996 U.S.
   Dist. LEXIS 5159, No. 95 Civ. 9505, 1996 WL 191967, at *2 (S.D.N.Y. Apr. 19, 1996); Pilates, Inc. v. Pilates
   Inst., Inc., 891 F. Supp. 175, 177 (S.D.N.Y. 1995); Palmieri v. Estefan, 793 F. Supp. 1182, 1186 (S.D.N.Y.
   1992); Kinetic Instruments, Inc. v. Lares, 802 F. Supp. 976, 981 (S.D.N.Y. 1992). Matters outside the
   pleadings, however, may also be considered in resolving a motion to dismiss for lack of personal jurisdiction
   pursuant to Fed.R.Civ.P. 12(b)(2) without converting it into one for summary judgment. See Visual Sciences,
   Inc. v. Integrated Communications, Inc., 660 F.2d 56, 58 (2d Cir. 1981); Rothschild, 923 F. Supp. at 436; John
   Hancock Property and Casualty Ins.  [**8]  Co. v. Universale Reinsurance Co., Ltd., 1992 U.S. Dist. LEXIS
   1113, No. 91 Civ. 3644, 1992 WL 26765, at *6 (S.D.N.Y. Feb. 5, 1992).

   Knowing that personal jurisdiction over a defendant is measured by the law of the jurisdiction in which the
   federal court sits, see Rothschild, 923 F. Supp. at 436 (citing Pilates, 891 F. Supp. at 179), Editorial Musical
   Latino Americana, 829 F. Supp. at 64, Bensusan relies on subdivisions (a)(2) and (a)(3)(ii) of N.Y. C.P.L.R. §
   302, New York's long-arm statute, to support its position that personal jurisdiction exists over King in this
   action. Each provision will be addressed in turn.

    [*299]  A. C.P.L.R. § 302(a)(2)

   C.P.L.R. § 302(a)(2) permits a court to exercise personal jurisdiction over any nondomiciliary who "commits a
   tortious act within the state" as long as the cause of action asserted arises from the tortious act. See Pilates,
   891 F. Supp. at 180; Exovir, Inc. v. Mandel, 1995 U.S. Dist. LEXIS 9677, No. 94 Civ. 3546, 1995 WL 413256,
   at *6 (S.D.N.Y. July 12, 1995); Dave Guardala Mouthpieces, 779 F. Supp. at 337; Business Trends Analysts v.
   Freedonia Group, Inc., 650 F. Supp. 1452, 1456 (S.D.N.Y. 1987).

   In Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F.2d 633, 639  [**9]  (2d Cir.), cert. denied, 352 U.S. 871, 77 S.
   Ct. 96, 1 L. Ed. 2d 76 (1956), the United States Court of Appeals for the Second Circuit held that trademark
   infringement occurs "where the passing off occurs, i.e., where the deceived customer buys the defendant's
   product in the belief that he is buying the plaintiff's." Under this standard, courts have found that an offering
   for sale of even one copy of an infringing product in New York, even if no sale results, is sufficient to vest a
   court with jurisdiction over the alleged infringer. See Editorial Musical Latino Americana, 829 F. Supp. at
   64-65; German Educational Television Network, Ltd. v. Oregon Public Broadcasting Co., 569 F. Supp. 1529
   (S.D.N.Y. 1983); Hertz Sys., Inc. v. Hervis Corp., 549 F. Supp. 796, 797-98 (S.D.N.Y. 1982); Honda Assocs.,
   Inc. v. Nozawa Trading Inc., 374 F. Supp. 886 (S.D.N.Y. 1974). Accordingly, the issue that arises in this
   action is whether the creation of a Web site, which exists either in Missouri or in cyberspace -- i.e., anywhere
   the Internet exists -- with a telephone number to order the allegedly infringing product, is an offer to sell the
   product in New York.

   Even after  [**10]  construing all allegations in the light most favorable to Bensusan, its allegations are
   insufficient to support a finding of long-arm jurisdiction over plaintiff. A New York resident with Internet access
   and either knowledge of King's Web site location or a "search engine" capable of finding it could gain access to
   the Web site and view information concerning the Blue Note in Missouri.

   It takes several affirmative steps by the New York resident, however, to obtain access to the Web site and
   utilize the information there. First, the New York resident has to access the Web site using his or her computer
   hardware and software. See Shea, 930 F. Supp. at 930. Then, if the user wished to attend a show in
   defendant's club, he or she would have to telephone the box office in Missouri and reserve tickets. Finally,
   that user would need to pick up the tickets in Missouri because King does not mail or otherwise transmit
   tickets to the user. Even assuming that the user was confused about the relationship of the Missouri club to
   the one in New York, such an act of infringement would have occurred in Missouri, not New York. The mere
   fact that a person can gain information on the allegedly infringing  [**11]  product is not the equivalent of a
   person advertising, promoting, selling or otherwise making an effort to target its product in New York. See
   Hertz, 549 F. Supp. at 797. Here, there is simply no allegation or proof that any infringing goods were shipped
   into New York or that any other infringing activity was directed at New York or caused by King to occur here.
   Cf. People v. Concert Connection, Ltd., 211 A.D.2d 310, 314, 629 N.Y.S.2d 254, 257 (2d Dep't 1995), appeal
   dismissed, 86 N.Y.2d 837, 634 N.Y.S.2d 445, 658 N.E.2d 223 (1995) (Table).

   Accordingly, C.P.L.R. § 302(a)(2) does not authorize this Court to exercise jurisdiction over King.

   B. C.P.L.R. § 302(a)(3)(ii)

   Bensusan also contends that personal jurisdiction is established pursuant to C.P.L.R. § 302(a)(3)(ii), which
   permits a court to exercise personal jurisdiction over any non-domiciliary for tortious acts committed outside
   the state that cause injury in the state if the non-domiciliary "expects or should reasonably expect the act to
   have consequences in the state and derives substantial revenue from interstate or international commerce."
   See American Eutectic Welding Alloys Sales Co. v. Dytron Alloys  [**12]  Corp., 439 F.2d 428, 432-35 (2d Cir.
   1971); In re Houbigant Inc., 914 F. Supp. 964, 979 (S.D.N.Y. 1995); Time Prods., Plc. v. J. Tiras Classic
   Handbags, Inc., 1994 U.S. Dist. LEXIS 9483, No. 93 Civ. 7856, 1994 WL 363930, at *7 (S.D.N.Y. July 13,
    [*300]  1994); Car-Freshner Corp. v. Broadway Mfg. Co., 337 F. Supp. 618, 619 (S.D.N.Y. 1971); see also
   Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 204-05, 413 N.Y.S.2d 127, 130-31, 385 N.E.2d 1055 (1978).

   As an initial matter, Bensusan does not allege that King derives substantial revenue from interstate or
   international commerce. Instead, it relies on arguments that King participates in interstate commerce by hiring
   and showcasing bands of national stature. Section 302(a)(3)(ii), however, explicitly states that substantial
   "revenue" is required from interstate commerce, not mere participation in it. King has submitted an affidavit
   stating that 99% of his patronage and revenue is derived from local residents of Columbia, Missouri (primarily
   students from the University of Missouri) and that most of the few out-of-state customers have either an
   existing or a prior connection to the area, such as graduates of the University of Missouri. (King Decl. PP 4, 8.)
 

   Moreover,  [**13]  Bensusan's allegations of foreseeability, which are based solely on the fact that King knew
   that Bensusan's club is located in New York, is insufficient to satisfy the requirement that a defendant
   "expects or should reasonably expect the act to have consequences in the state." That prong of the statute
   requires that a defendant make "a discernable effort . . . to serve, directly or indirectly, a market in the forum
   state." Darienzo v. Wise Shoe Stores, Inc., 74 A.D.2d 342, 346, 427 N.Y.S.2d 831, 834 (2d Dep't 1980).

   Finally, Bensusan's conclusory allegation of a loss in New York is nothing more that an allegation of an "indirect
   financial loss resulting from the fact that the injured person resides or is domiciled in New York," which is not
   the allegation of a "significant economic injury" required by section 302(a)(3). See ICC Primex Plastics Corp. v.
   LA/ES Laminati Estrusi Termo-Plastici S.P.A., 775 F. Supp. 650, 656 (S.D.N.Y. 1991); Arbitron Co. v. E.W.
   Scripps, Inc., 559 F. Supp. 400, 404 (S.D.N.Y. 1983); Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d
   317, 326-27, 425 N.Y.S.2d 783, 787, 402 N.E.2d 122 (1980); Sybron, 46 N.Y.2d at 205, 413 N.Y.S.2d at 131.
    [**14]

   Accordingly, C.P.L.R. § 302(a)(3) does not authorize this Court to exercise jurisdiction over King.

   Bensusan's primary argument in support of both statutory bases for personal jurisdiction is that, because
   defendant's Web site is accessible in New York, defendant could have foreseen that the site was able to be
   viewed in New York and taken steps to restrict access to his site only to users in a certain geographic region,
   presumably Missouri. Regardless of the technical feasibility of such a procedure, see Shea, 930 F. Supp. at
   929-30, 933-34, mere foreseeability of an in-state consequence and a failure to avert that consequence is
   not sufficient to establish personal jurisdiction. See Fox v. Boucher, 794 F.2d 34, 37 (2d Cir. 1986); Taurus
   Int'l Inc. v. Titan Wheel Int'l Inc., 892 F. Supp. 79, 82 (S.D.N.Y. 1995).

   C. Due Process

   Furthermore, even if jurisdiction were proper under New York's long arm statute, asserting personal jurisdiction
   over King in this forum would violate the Due Process Clause of the United States Constitution. See, e.g.,
   Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S. Ct. 2174, 2183-84, 85 L. Ed. 2d 528 (1985);
    [**15]  World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490
   (1980); see also Richard S. Zembek, Comment, Jurisdiction and the Internet: Fundamental Fairness in the
   Networked World of Cyperspace, 6 Alb. L.J. Sci. & Tech. 339, 367-80 (1996). Due process requires "that the
   non-resident defendant has purposefully established 'minimum contact' with the forum state such that the
   'maintenance of the suit does not offend "traditional notions of fair play and substantial justice."'" Darby v.
   Compagnie Nationale Air France, 769 F. Supp. 1255, 1262 (S.D.N.Y. 1991) (quoting International Shoe Co. v.
   Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945)).

   The following factors are relevant to this determination: "(1) whether the defendant purposefully availed
   himself of the benefits of the forum state; (2) whether the defendant's conduct and connection with the
   forum state  [*301]  are such that he should reasonably anticipate being haled into court there; and (3)
   whether the defendant carries on a continuous and systematic part of its general business within the forum
   state." Independent Nat'l Distributors, Inc. v. Black Rain Communications,  [**16]  Inc., 1995 U.S. Dist. LEXIS
   14086, No. 94 Civ. 8464, 1995 WL 571449, at *5-6 (S.D.N.Y. Sept. 28, 1995).

   As set forth above, King has done nothing to purposefully avail himself of the benefits of New York. King, like
   numerous others, simply created a Web site and permitted anyone who could find it to access it. Creating a
   site, like placing a product into the stream of commerce, may be felt nationwide -- or even worldwide -- but,
   without more, it is not an act purposefully directed toward the forum state. See Asahi Metal Indus. Co. v.
   Superior Court, 480 U.S. 102, 112, 107 S. Ct. 1026, 1032, 94 L. Ed. 2d 92 (1992) (plurality opinion). There are
   no allegations that King actively sought to encourage New Yorkers to access his site, or that he conducted
   any business -- let alone a continuous and systematic part of its business -- in New York. There is in fact no
   suggestion that King has any presence of any kind in New York other than the Web site that can be accessed
   worldwide. Bensusan's argument that King should have foreseen that users could access the site in New York
   and be contused as to the relationship of the two Blue Note clubs is insufficient to satisfy due process. See
   Fox, 794 F.2d at 37;  [**17]  Beckett v. Prudential Ins. Co. of Am., 893 F. Supp. 234, 239 (S.D.N.Y. 1995).

   Although CompuServe Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), a recent decision of the United States
   Court of Appeals for the Sixth Circuit, reached a different result, it was based on vastly different facts. In that
   case, the Sixth Circuit found personal jurisdiction proper in Ohio over an Internet user from Texas who
   subscribed to a network service based in Ohio. The user, however, specifically targeted Ohio by subscribing to
   the service and entering into a separate agreement with the service to sell his software over the Internet.
   Furthermore, he advertised his software through the service and repeatedly sent his software to the service in
   Ohio. Id. at 1264-65. This led that court to conclude that the Internet user "reached out" from Texas to Ohio
   and "originated and maintained" contacts with Ohio. Id. at 1266. n3 This action, on the other hand, contains
   no allegations that King in any way directed any contact to, or had any contact with, New York or intended to
   avail itself of any of New York's benefits.

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   n3 In CompuServe, the Sixth Circuit explicitly wrote that it was not addressing the issue of whether the
   Internet user "would be subject to suit in any state where his software was purchased or used . . ."
   CompuServe,89 F.3d at 1268.

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   Accordingly, the exercise of personal jurisdiction over King in this case would violate the protections of the
   Due Process Clause.

   III. CONCLUSION

   For the reasons set forth above, defendant's motion to dismiss the complaint pursuant to Fed.R.Civ.P.
   12(b)(2) for lack of personal jurisdiction is granted and the complaint is dismissed.

   Dated: New York, New York
   September 9, 1996

   SO ORDERED:

   Sidney H. Stein, U.S.D.J.