Zippo Manufacturing Co. v. Zippo Dot Com, Inc.
Civil Action No. 96-397 Erie
UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF PENNSYLVANIA
952 F. Supp. 1119; 1997 U.S. Dist. LEXIS 1701;
42 U.S.P.Q.2D (BNA) 1062
January 16, 1997, Decided
JUDGES: Sean J. McLaughlin, United States District Judge
OPINION:
McLAUGHLIN, J.
This is an Internet domain name n1
dispute. At this stage of the controversy, we must [*1121]
decide the
Constitutionally permissible reach
of Pennsylvania's Long Arm Statute, 42 Pa.C.S.A. § 5322, through
cyberspace. Plaintiff Zippo Manufacturing
Corporation ("Manufacturing") has filed a five count complaint
against Zippo Dot Com, Inc. ("Dot
Com") alleging trademark dilution, infringement, and false designation
under
the Federal Trademark Act, 15 U.S.C.
§ § 1051-1127. In addition, the Complaint alleges causes of action
based on state law trademark dilution
[**2] under 54 Pa.C.S.A. § 1124, and seeks equitable accounting
and
imposition of a constructive trust.
Dot Com has moved to dismiss for lack of personal jurisdiction and improper
venue pursuant to Fed.R.Civ.P 12(b)(2)
and (3) or, in the alternative, to transfer the case pursuant to 28
U.S.C. § 1406(a). For the reasons
set forth below, Defendant's motion is denied.
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n1 Domain names serve as a primary
identifier of an Internet user. Panavision Intern., L.P. v. Toeppen, 938
F.
Supp. 616 (S.D. Cal. 1996). Businesses
using the Internet commonly use their business names as part of the
domain name (e.g. IBM.com). Id.
The designation ".com" identifies the user as a commercial entity. Id.
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I. BACKGROUND
The facts relevant to this motion
are as follows. Manufacturing is a Pennsylvania corporation with its principal
place of business in Bradford, Pennsylvania.
Manufacturing makes, among other things, well known "Zippo"
tobacco lighters. Dot Com is a California
corporation with its principal place of business in [**3] Sunnyvale,
California. Dot Com operates an
Internet Web site n2 and an Internet news service and has obtained the
exclusive right to use the domain
names "zippo.com", "zippo.net" and "zipponews.com" on the Internet. n3
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n2 A "site" is an Internet address
that permits the exchange of information with a host computer. Bensusan
Restaurant Corp. v. King, 937 F.
Supp. 295 (S.D.N.Y. 1996). The "Web" or "World Wide Web" refers to the
collection of sites available on
the Internet. Id.
n3 Dot Com has registered these domain
names with Network Solutions, Inc. which has contracted with the
National Science Foundation to provide
registration services for Internet domain names. Once a domain name
is registered to one user, it may
not be used by another.
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Dot Com's Web site contains information
about the company, advertisements and an application for its
Internet news service. The news
service itself consists of three levels of membership - public/free, "Original"
and "Super." Each successive level
offers access [**4] to a greater number of Internet newsgroups.
A
customer who wants to subscribe
to either the "Original" or "Super" level of service, fills out an on-line
application that asks for a variety
of information including the person's name and address. Payment is made
by
credit card over the Internet or
the telephone. The application is then processed and the subscriber is
assigned a password which permits
the subscriber to view and/or download Internet newsgroup messages that
are stored on the Defendant's server
in California.
Dot Com's contacts with Pennsylvania
have occurred almost exclusively over the Internet. Dot Com's offices,
employees and Internet servers are
located in California. Dot Com maintains no offices, employees or agents
in
Pennsylvania. Dot Com's advertising
for its service to Pennsylvania residents involves posting information
about
its service on its Web page, which
is accessible to Pennsylvania residents via the Internet. Defendant has
approximately 140,000 paying subscribers
worldwide. Approximately two percent (3,000) of those subscribers
are Pennsylvania residents. These
subscribers have contracted to receive Dot Com's service by visiting its
Web site and filling [**5]
out the application. Additionally, Dot Com has entered into agreements
with seven
Internet access providers in Pennsylvania
to permit their subscribers to access Dot Com's news service. Two
of these providers are located in
the Western District of Pennsylvania.
The basis of the trademark claims
is Dot Com's use of the word "Zippo" in the domain names it holds, in
numerous locations in its Web site
and in the heading of Internet newsgroup messages that have been posted
by Dot Com subscribers. When an
Internet user views or downloads a newsgroup message posted by a Dot
Com subscriber, the word "Zippo"
appears in the "Message-Id" [*1122] and "Organization" sections
of the
heading. n4 The news message itself,
containing text and/or pictures, follows. Manufacturing points out that
some of the messages contain adult
oriented, sexually explicit subject matter.
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n4 For example, a typical message
heading might appear as:
Subject:
subject of the message
From:
name of person posting message
Date:
date posted
Message-Id:
identifying # @news.zippo.com
Reference:
reference #
organization:
Zippo
Newsgroups:
news groups to which sender has subscribed
The italicized text represents a generic description of specific information appearing in the message.
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II. STANDARD OF REVIEW
When a defendant raises the
defense of the court's lack of personal jurisdiction, the burden falls
upon the
plaintiff to come forward with sufficient
facts to establish that jurisdiction is proper. Mellon Bank (East) PSFS,
N.A. v Farino, 960 F.2d 1217, 1223
(3d Cir. 1992) (citing Carteret Savings Bank v. Shushan, 954 F.2d 141 (3d
Cir. 1992), cert. denied 506 U.S.
817, 121 L. Ed. 2d 29, 113 S. Ct. 61 (1992)). The plaintiff meets this
burden
by making a prima facie showing
of "sufficient contacts between the defendant and the forum state." Mellon
East, 960 F.2d at 1223 (citing Provident
Nat. Bank v. California Fed. Sav. & Loan Assoc., 819 F.2d 434 (3d Cir.
1987)).
III. DISCUSSION
A. Personal Jurisdiction
1. The Traditional Framework
Our authority to exercise personal
jurisdiction in this case is conferred by state law. Fed.R.Civ.P. 4(e);
Mellon,
960 F.2d at 1221. The extent to
which we may exercise that authority is governed by the Due Process
Clause of the Fourteenth Amendment
to the Federal Constitution. Kulko v. California Supreme Court, 436 U.S.
84, 91, 56 L. Ed. 2d 132, 98 S.
Ct. 1690 (1978).
Pennsylvania's long [**7]
arm jurisdiction statute is codified at 42 Pa.C.S.A. § 5322(a). The
portion of the
statute authorizing us to exercise
jurisdiction here permits the exercise of jurisdiction over non-resident
defendants upon:
(2)
Contracting to supply services or things in this Commonwealth.
42 Pa.C.S.A. § 5322(a).
It is undisputed that Dot Com contracted to supply Internet news services
to
approximately 3,000 Pennsylvania
residents and also entered into agreements with seven Internet access
providers in Pennsylvania. Moreover,
even if Dot Com's conduct did not satisfy a specific provision of the
statute, we would nevertheless be
authorized to exercise jurisdiction to the "fullest extent allowed under
the
Constitution of the United States."
42 Pa.C.S.A. § 5322(b).
The Constitutional limitations
on the exercise of personal jurisdiction differ depending upon whether
a court
seeks to exercise general or specific
jurisdiction over a non-resident defendant. Mellon, 960 F.2d at 1221.
General jurisdiction permits a court
to exercise personal jurisdiction over a non-resident defendant for
non-forum related activities when
the defendant has engaged in "systematic and continuous" activities
[**8]
in the forum state. Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16, 80 L. Ed. 2d
404,
104 S. Ct. 1868 (1984). In the absence
of general jurisdiction, specific jurisdiction permits a court to exercise
personal jurisdiction over a non-resident
defendant for forum-related activities where the "relationship
between the defendant and the forum
falls within the 'minimum contacts' framework" of International Shoe Co.
v. Washington, 326 U.S. 310, 90
L. Ed. 95, 66 S. Ct. 154 (1945) and its progeny. Mellon, 960 F.2d at 1221.
Manufacturing does not contend that
we should exercise general personal jurisdiction over Dot Com.
Manufacturing concedes that if personal
jurisdiction exists in this case, it must be specific.
A three-pronged test has emerged
for determining whether the exercise of specific personal jurisdiction
over
a non-resident defendant is appropriate:
(1) the defendant must have sufficient "minimum contacts" with the
forum state, (2) the claim asserted
[*1123] against the defendant must arise out of those contacts, and
(3) the exercise of jurisdiction
must be reasonable. Id. The "Constitutional touchstone" of the minimum
contacts analysis is embodied
[**9] in the first prong, "whether the defendant purposefully established"
contacts with the forum state. Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 475, 85 L. Ed. 2d 528, 105 S.
Ct. 2174 (1985) (citing International
Shoe Co. v. Washington, 326 U.S. 310, 319, 90 L. Ed. 95, 66 S. Ct. 154
(1945)). Defendants who "'reach
out beyond one state' and create continuing relationships and obligations
with the citizens of another state
are subject to regulation and sanctions in the other State for consequences
of their actions." Id. (citing Travelers
Health Assn. v. Virginia, 339 U.S. 643, 647, 94 L. Ed. 1154, 70 S. Ct.
927 (1950)). "The foreseeability
that is critical to the due process analysis is ... that the defendant's
conduct
and connection with the forum State
are such that he should reasonably expect to be haled into court there."
World Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 295, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980). This
protects defendants from being forced
to answer for their actions in a foreign jurisdiction based on "random,
fortuitous or attenuated" contacts.
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 79 L. Ed. 2d 790,
104 S. Ct. 1473 (1984). [**10]
"Jurisdiction is proper, however, where contacts proximately result from
actions by the defendant himself
that create a 'substantial connection' with the forum State." Burger King,
471 U.S. at 475 (citing McGee v.
International Life Insurance Co., 355 U.S. 220, 223, 2 L. Ed. 2d 223, 78
S.
Ct. 199 (1957)).
The "reasonableness" prong exists
to protect defendants against unfairly inconvenient litigation. World Wide
Volkswagen, 444 U.S. at 292. Under
this prong, the exercise of jurisdiction will be reasonable if it does
not
offend "traditional notions of fair
play and substantial justice." International Shoe, 326 U.S. at 316. When
determining the reasonableness of
a particular forum, the court must consider the burden on the defendant
in
light of other factors including:
"the forum state's interest in adjudicating the dispute; the plaintiff's
interest in
obtaining convenient and effective
relief, at least when that interest is not adequately protected by the
plaintiff's right to choose the
forum; the interstate judicial system's interest in obtaining the most
efficient
resolution of controversies; and
the shared interest of the several states in furthering fundamental
[**11]
substantive social policies." World
Wide Volkswagen, 444 U.S. at 292 (internal citations omitted).
2. The Internet and Jurisdiction
In Hanson v. Denckla, the Supreme
Court noted that "as technological progress has increased the flow of
commerce between States, the need
for jurisdiction has undergone a similar increase." Hanson v. Denckla,
357
U.S. 235, 250-51, 2 L. Ed. 2d 1283,
78 S. Ct. 1228 (1958). Twenty seven years later, the Court observed that
jurisdiction could not be avoided
"merely because the defendant did not physically enter the forum state.
Burger King, 471 U.S. at 476. The
Court observed that:
It
is an inescapable fact of modern commercial life that a substantial amount
of commercial
business
is transacted solely by mail and wire communications across state lines,
thus obviating
the
need for physical presence within a State in which business is conducted.
Id.
Enter the Internet, a global "'super-network'
of over 15,000 computer networks used by over 30 million
individuals, corporations, organizations,
and educational institutions worldwide." Panavision Intern., L.P. v.
Toeppen, 938 F. Supp. 616 (S.D.Cal.
1996) (citing [**12] American Civil Liberties Union v. Reno,
929 F.
Supp. 824, 830-48 (E.D.Pa. 1996).
"In recent years, businesses have begun to use the Internet to provide
information and products to consumers
and other businesses." Id. The Internet makes it possible to conduct
business throughout the world entirely
from a desktop. With this global revolution looming on the horizon, the
development of the law concerning
the permissible scope of personal jurisdiction based on Internet use is
in its
infant stages. The [*1124]
cases are scant. Nevertheless, our review of the available cases and materials
n5 reveals that the likelihood that
personal jurisdiction can be constitutionally exercised is directly
proportionate to the nature and
quality of commercial activity that an entity conducts over the Internet.
This
sliding scale is consistent with
well developed personal jurisdiction principles. At one end of the spectrum
are
situations where a defendant clearly
does business over the Internet. If the defendant enters into contracts
with residents of a foreign jurisdiction
that involve the knowing and repeated transmission of computer files
over the Internet, personal jurisdiction
is proper. E.g. Compuserve, [**13] Inc. v. Patterson, 89 F.3d
1257
(6th Cir. 1996). At the opposite
end are situations where a defendant has simply posted information on an
Internet Web site which is accessible
to users in foreign jurisdictions. A passive Web site that does little
more
than make information available
to those who are interested in it is not grounds for the exercise personal
jurisdiction. E.g. Bensusan Restaurant
Corp., v. King, 937 F. Supp. 295 (S.D.N.Y. 1996). The middle ground is
occupied by interactive Web sites
where a user can exchange information with the host computer. In these
cases, the exercise of jurisdiction
is determined by examining the level of interactivity and commercial nature
of the exchange of information that
occurs on the Web site. E.g. Maritz, Inc. v. Cybergold, Inc., 940 F. Supp.
96, 1996 U.S. Dist. LEXIS 14976
(E.D.Mo. 1996).
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n5 See, generally, Robert A. Bourque
and Kerry L. Konrad, Avoiding Jurisdiction Based on Internet Web Site,
New York Law Journal (Dec. 10, 1996);
David Bender, Emerging Personal Jurisdiction Issues on the Internet,
453 PLI/Pat 7 (1996); Comment, Richard
S. Zembek, Jurisdiction and the Internet: Fundamental Fairness in
the Networked World of Cyberspace,
6 Alb. L.J. Sci. & Tech. 339 (1996).
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Traditionally, when an entity intentionally
reaches beyond its boundaries to conduct business with foreign
residents, the exercise of specific
jurisdiction is proper. Burger King, 471 U.S. at 475. Different results
should
not be reached simply because business
is conducted over the Internet. In Compuserve, Inc. v. Patterson, 89
F.3d 1257 (6th Cir. 1996), the Sixth
Circuit addressed the significance of doing business over the Internet.
In
that case, Patterson, a Texas resident,
entered into a contract to distribute shareware n6 through
Compuserve's Internet server located
in Ohio. Compuserve, 89 F.3d at 1260. From Texas, Patterson
electronically uploaded thirty-two
master software files to Compuserve's server in Ohio via the Internet.
Id. at
1261. One of Patterson's software
products was designed to help people navigate the Internet. Id. When
Compuserve later began to market
a product that Patterson believed to be similar to his own, he threatened
to sue. Id. Compuserve brought an
action in the Southern District of Ohio, seeking a declaratory judgment.
Id.
The District Court granted Patterson's
motion to dismiss for lack of personal jurisdiction and Compuserve
[**15] appealed. Id.
The Sixth Circuit reversed, reasoning that Patterson had purposefully directed
his
business activities toward Ohio
by knowingly entering into a contract with an Ohio resident and then
"deliberately and repeatedly" transmitted
files to Ohio. Id. at 1264-66.
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n6 "Shareware" is software which
a user is permitted to download and use for a trial period, after which
the
user is asked to pay a fee to the
author for continued use. Compuserve, 89 F.3d at 1260.
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In Maritz, Inc. v. Cybergold, Inc.,
947 F. Supp. 1328, 1996 U.S. Dist. LEXIS 14978 (E.D. Mo. 1996), the
defendant had put up a Web site
as a promotion for its upcoming Internet service. The service consisted
of
assigning users an electronic mailbox
and then forwarding advertisements for products and services that
matched the users' interests to
those electronic mailboxes. Maritz, 947 F. Supp. 1328, 1996 U.S. Dist.
LEXIS
14978 at *7 The defendant planned
to charge advertisers and provide users with incentives to view the
advertisements. Id. Although the
[**16] service was not yet operational, users were encouraged to
add
their address to a mailing list
to receive updates about the service. Id. The court rejected the defendant's
contention that it operated a "passive
Web site." Id. at *16. The court reasoned that the defendant's conduct
amounted to "active solicitations"
[*1125] and "promotional activities" designed to "develop a mailing
list of
Internet users" and that the defendant
"indiscriminately responded to every user" who accessed the site. Id.
at *14-17.
Inset Systems, Inc. v. Instruction
Set, 937 F. Supp. 161 (D. Conn. 1996) represents the outer limits of the
exercise of personal jurisdiction
based on the Internet. In Inset Systems, a Connecticut corporation sued
a
Massachusetts corporation in the
District of Connecticut for trademark infringement based on the use of
an
Internet domain name. Inset Systems,
937 F. Supp. at 162. The defendant's contacts with Connecticut
consisted of posting a Web site
that was accessible to approximately 10,000 Connecticut residents and
maintaining a toll free number.
Id. at 165. The court exercised personal jurisdiction, reasoning that advertising
on the Internet constituted
[**17] the purposeful doing of business in Connecticut because "unlike
television
and radio advertising, the advertisement
is available continuously to any Internet user." Id. at 165.
Bensusan Restaurant Corp., v. King,
937 F. Supp. 295 (S.D. N.Y. 1996) reached a different conclusion based
on a similar Web site. In Bensusan,
the operator of a New York jazz club sued the operator of a Missouri jazz
club for trademark infringement.
Bensusan, 937 F. Supp. at 297. The Internet Web site at issue contained
general information about the defendant's
club, a calendar of events and ticket information. Id. However, the
site was not interactive. Id. If
a user wanted to go to the club, she would have to call or visit a ticket
outlet
and then pick up tickets at the
club on the night of the show. Id. The court refused to exercise jurisdiction
based on the Web Site alone, reasoning
that it did not rise to the level of purposeful availment of that
jurisdiction's laws. The court distinguished
the case from Compuserve, supra, where the user had "'reached
out' from Texas to Ohio and 'originated
and maintained' contacts with Ohio." Id. at 301.
Pres-Kap, Inc. v. System One Direct
[**18] Access, Inc., 636 So. 2d 1351 (Fla. App. 1994), review denied,
645 So. 2d 455 (Fla. 1994) is not
inconsistent with the above cases. In Pres-Kap, a majority of a three-judge
intermediate state appeals court
refused to exercise jurisdiction over a consumer of an on-line airline
ticketing
service. Pres-Kap involved a suit
on a contract dispute in a Florida court by a Delaware corporation against
its
New York customer. Pres-Kap, 636
So. 2d at 1351-52. The defendant had leased computer equipment which it
used to access an airline ticketing
computer located in Florida. Id. The contract was solicited, negotiated,
executed and serviced in New York.
Id. at 1352. The defendant's only contact with Florida consisted of
logging onto the computer located
in Florida and mailing payments for the leased equipment to Florida. Id.
at
1353. Pres-Kap is distinguishable
from the above cases and the case at bar because it addressed the exercise
of jurisdiction over a consumer
of on-line services as opposed to a provider. When a consumer logs onto
a
server in a foreign jurisdiction
he is engaging in a fundamentally different type of contact than an entity
that
is using the [**19]
Internet to sell or market products or services to residents of foreign
jurisdictions. The
Pres-Kap court specifically expressed
concern over the implications of subjecting users of "on-line" services
with contracts with out-of-state
networks to suit in foreign jurisdictions. Id. at 1353.
3. Application to this Case
First, we note that this is not an
Internet advertising case in the line of Inset Systems and Bensusan, supra.
Dot Com has not just posted information
on a Web site that is accessible to Pennsylvania residents who are
connected to the Internet. This
is not even an interactivity case in the line of Maritz, supra. Dot Com
has
done more than create an interactive
Web site through which it exchanges information with Pennsylvania
residents in hopes of using that
information for commercial gain later. We are not being asked to determine
whether Dot Com's Web site alone
constitutes the purposeful availment of doing business in Pennsylvania.
This
is a "doing business over the Internet"
case in the line of Compuserve, supra.. We are being asked to
determine whether Dot Com's conducting
of electronic commerce with Pennsylvania residents constitutes
[*1126] the [**20]
purposeful availment of doing business in Pennsylvania. We conclude that
it does. Dot
Com has contracted with approximately
3,000 individuals and seven Internet access providers in Pennsylvania.
The intended object of these transactions
has been the downloading of the electronic messages that form the
basis of this suit in Pennsylvania.
We find Dot Com's efforts to characterize
its conduct as falling short of purposeful availment of doing business
in Pennsylvania wholly unpersuasive.
At oral argument, Defendant repeatedly characterized its actions as
merely "operating a Web site" or
"advertising." Dot Com also cites to a number of cases from this Circuit
which,
it claims, stand for the proposition
that merely advertising in a forum, without more, is not a sufficient minimal
contact. n7 This argument is misplaced.
Dot Com has done more than advertise on the Internet in
Pennsylvania. Defendant has sold
passwords to approximately 3,000 subscribers in Pennsylvania and entered
into seven contracts with Internet
access providers to furnish its services to their customers in Pennsylvania.
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n7 Defendant has cited to: Gehling
v. St. George's School of Medicine, Ltd., 773 F.2d 539 (1985); Fields v.
Ramada Inn Inc., 816 F. Supp. 1033
(E.D. Pa. 1993); and Garofalo v. Praiss, 1990 U.S. Dist. LEXIS 8544, 1990
WL 97800 (E.D.Pa. 1990). We note
that these cases all involve the issue of whether advertising can rise
to
the level of "systematic and continuous"
contacts for the purpose of general jurisdiction.
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Dot Com also contends that its contacts
with Pennsylvania residents are "fortuitous" within the meaning of
World Wide Volkswagen, 444 U.S.
286, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980). Defendant argues that it
has
not 'actively' solicited business
in Pennsylvania and that any business it conducts with Pennsylvania residents
has resulted from contacts that
were initiated by Pennsylvanians who visited the Defendant's Web site.
The
fact that Dot Com's services have
been consumed in Pennsylvania is not "fortuitous" within the meaning of
World Wide Volkswagen. In World
Wide Volkswagen, a couple that had purchased a vehicle in New York, while
they were New York residents, were
injured while driving that vehicle through Oklahoma and brought suit in
an
Oklahoma state court. World Wide
Volkswagen, 444 U.S. at 288. The manufacturer did not sell its vehicles
in
Oklahoma and had not made an effort
to establish business relationships in Oklahoma. Id. at 295. The Supreme
Court characterized the manufacturer's
ties with Oklahoma as fortuitous because they resulted entirely out
the fact that the plaintiffs had
driven their car into that state. Id.
Here, Dot Com argues that [**22]
its contacts with Pennsylvania residents are fortuitous because
Pennsylvanians happened to find
its Web site or heard about its news service elsewhere and decided to
subscribe. This argument misconstrues
the concept of fortuitous contacts embodied in World Wide
Volkswagen. Dot Com's contacts with
Pennsylvania would be fortuitous within the meaning of World Wide
Volkswagen if it had no Pennsylvania
subscribers and an Ohio subscriber forwarded a copy of a file he obtained
from Dot Com to a friend in Pennsylvania
or an Ohio subscriber brought his computer along on a trip to
Pennsylvania and used it to access
Dot Com's service. That is not the situation here. Dot Com repeatedly and
consciously chose to process Pennsylvania
residents' applications and to assign them passwords. Dot Com
knew that the result of these contracts
would be the transmission of electronic messages into Pennsylvania.
The transmission of these files
was entirely within its control. Dot Com cannot maintain that these contracts
are "fortuitous" or "coincidental"
within the meaning of World Wide Volkswagen. When a defendant makes a
conscious choice to conduct business
with the residents of a forum state, [**23] "it has clear notice
that it
is subject to suit there." World
Wide Volkswagen, 444 U.S. at 297. Dot Com was under no obligation to sell
its
services to Pennsylvania residents.
It freely chose to do so, presumably in order to profit from those
transactions. If a corporation determines
that the risk of being subject to personal jurisdiction in a particular
forum is too great, it can choose
to sever its connection to the state. Id. If Dot Com had not wanted to
be
amenable to jurisdiction in
[*1127] Pennsylvania, the solution would have been simple - it could
have chosen
not to sell its services to Pennsylvania
residents.
Next, Dot Com argues that its forum-related
activities are not numerous or significant enough to create a
"substantial connection" with Pennsylvania.
Defendant points to the fact that only two percent of its
subscribers are Pennsylvania residents.
However, the Supreme Court has made clear that even a single
contact can be sufficient. McGee,
355 U.S. at 223. The test has always focused on the "nature and quality"
of the contacts with the forum and
not
the quantity of those contacts. International Shoe, 326 U.S. at 320.
The Sixth Circuit also rejected
a similar [**24] argument in Compuserve when it wrote that
the contacts
were "deliberate and repeated even
if they yielded little revenue." Compuserve, 89 F.3d at 1265.
We also conclude that the cause of
action arises out of Dot Com's forum-related conduct in this case. The
Third Circuit has stated that "a
cause of action for trademark infringement occurs where the passing off
occurs." Cottman Transmission Systems
Inc. v. Martino, 36 F.3d 291, 294 (citing Tefal, S.A. v. Products Int'l
Co., 529 F.2d 495, 496 n.1 (3d Cir.
1976); Indianapolis Colts v. Metro. Baltimore Football, 34 F.3d 410 (7th
Cir. 1994). In Tefal, the maker
and distributor of T-Fal cookware sued a partnership of California corporations
in the District of New Jersey for
trademark infringement. Tefal, 529 F.2d at 496. The defendants objected
to
venue in New Jersey, arguing that
the contested trademark accounted for only about five percent of national
sales. Id. On appeal, the Third
Circuit concluded that since substantial sales of the product bearing the
allegedly infringing mark took place
in New Jersey, the cause of action arose in New Jersey and venue was
proper. Tefal, 529 F.2d at 496-97.
In [**25] Indianapolis
Colts, also case cited by the Third Circuit in Cottman, an Indiana National
Football
League franchise sued a Maryland
Canadian Football League franchise in the Southern District of Indiana,
alleging trademark infringement.
Indianapolis Colts, 34 F.3d at 411. On appeal, the Seventh Circuit held
that
personal jurisdiction was appropriate
in Indiana because trademark infringement is a tort-like injury and a
substantial amount of the injury
from the alleged infringement was likely to occur in Indiana.' Id. at 412.
In the instant case, both a significant
amount of the alleged infringement and dilution, and resulting injury
have occurred in Pennsylvania. The
object of Dot Com's contracts with Pennsylvania residents is the
transmission of the messages that
Plaintiff claims dilute and infringe upon its trademark. When these messages
are transmitted into Pennsylvania
and viewed by Pennsylvania residents on their computers, there can be no
question that the alleged infringement
and dilution occur in Pennsylvania. Moreover, since Manufacturing is a
Pennsylvania corporation, a substantial
amount of the injury from the alleged wrongdoing is likely to occur in
Pennsylvania. [**26]
Thus, we conclude that the cause of action arises out of Dot Com's forum-related
activities under the authority of
both Tefal and Indianapolis Colts, supra.
Finally, Dot Com argues that the
exercise of jurisdiction would be unreasonable in this case. We disagree.
There can be no question that Pennsylvania
has a strong interest in adjudicating disputes involving the alleged
infringement of trademarks owned
by resident corporations. We must also give due regard to the Plaintiff's
choice to seek relief in Pennsylvania.
Kulko, 436 U.S. at 92. These concerns outweigh the burden created by
forcing the Defendant to defend
the suit in Pennsylvania, especially when Dot Com consciously chose to
conduct business in Pennsylvania,
pursuing profits from the actions that are now in question. The Due Process
Clause is not a "territorial shield
to interstate obligations that have been voluntarily assumed." Burger King,
471 U.S. at 474.
B. Venue Under 28 U.S.C § 1391
Defendant argues that, under the
law of this Circuit, venue is only proper in trademark cases in the judicial
district in which "a substantial
part of the events or omissions [*1128] giving rise to the
claim occurred." In
support [**27] of this
proposition, Defendant cites Cottman Transmission Systems, Inc. v. Martino,
36 F.3d
291 (3d Cir. 1994). We cannot agree.
Venue in this case is governed by 28 U.S.C. § 1391(b), the relevant portion of which provides:
(b)
A civil action wherein jurisdiction is not founded solely on diversity
of citizenship may, except
as
otherwise provided by law, 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 the property
that
is the subject of the action is situated, or (3) a judicial district in
which the defendant may
be
found if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(b). Subsection
(c) further provides that a corporate defendant is "deemed to reside in
any judicial district in which it
is subject to personal jurisdiction at the time the action is commenced."
28
U.S.C. § 1391(c). Dot Com is
the only defendant in this case and it is a corporation. Thus, under the
plain
language of 28 U.S.C. § 1391(b)(1),
our previous discussion [**28] of personal jurisdiction is
dispositive of
the venue issue. Contrary to Dot
Com's contention, Cottman does not command a different result.
Cottman involved a suit by a Pennsylvania
corporation against a former Michigan franchisee and his wholly
owned corporation for trademark
infringement arising out of the continued use of the plaintiff's trademark
after
termination of the franchise agreement.
The suit was brought in the Eastern District of Pennsylvania. Both
defendants were Michigan residents
and the corporation did business exclusively in Michigan. In the district
court, the plaintiff relied exclusively
on 28 U.S.C. § 1391(b)(2) to establish venue. The district court found
venue proper, reasoning that a "substantial
part of the events or omissions giving rise to the claim occurred" in
Pennsylvania. Cottman Transmission
v. Metro Distributing, 796 F. Supp. 838, 844 (E.D. Pa. 1992). Thus, on
appeal, the only issue before the
Third Circuit was the propriety of venue under § 1391(b)(2). In fact,
the
Third Circuit expressly stated that
it was analyzing the case under § 1391(b)(2). Cottman, 36 F.3d at
294.
The Third Circuit read the record
as only capable of supporting [**29] the contention that the
defendants
attempted to pass off the trademarks
at issue in the Eastern District of Michigan. Id. at 296. Thus, the Third
Circuit reversed, because a "substantial
part of the events or omissions giving rise to the claim" had not
occurred in the Eastern District
of Pennsylvania. Id.
The fact that the Third Circuit analyzed
Cottman under the standard in § 1391(b)(2) does not mean that it
applies to every trademark case.
In fact, at oral argument, Dot Com conceded that if its reading of Cottman
were the law, it would effectively
render § 1391(b)(1) inapplicable to trademark cases and require the
plaintiff
to always satisfy § 1391(b)(2)
in order to lay venue. If the Third Circuit had intended to create such
a radical
departure from the plain language
of § 1391, it would have said so.
Since venue has been properly laid
in this District, we cannot dismiss the action under 28 U.S.C § 1406(a).
Jumara v. State Farm Inc. Co., 55
F.3d 873, 877 (3d Cir. 1995). We are also not permitted to compel the
Plaintiff to accept a transfer against
its wishes. Carteret v. Shushan, 919 F.2d 225, 232 (3d Cir. 1990).
IV. CONCLUSION
We conclude that this Court
[**30] may appropriately exercise personal jurisdiction over the
Defendant and
that venue is proper in this judicial
district. An appropriate order follows.
ORDER
McLAUGHLIN, J.
AND NOW, this 16th day of January,
1997, IT IS HEREBY ORDERED that Defendant Zippo Dot Com's Motion to
Dismiss for Improper Venue and Transfer
under 28 U.S.C. § 1406(a); Alternatively to Dismiss for Lack of
Personal Jurisdiction [Doc. No.
9] is DENIED.
Sean J. McLaughlin
United States District Judge