Case Number: 99 C 5532
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS,
EASTERN DIVISION
2000 U.S. Dist. LEXIS 383
January 13, 2000, Decided
JUDGES: David H. Coar, United States District Judge.
OPINIONBY: David H. Coar
For the following reasons, plaintiff Ty Inc.'s action for
trademark infringement, unfair competition, trademark
dilution, common law trademark infringement, consumer
fraud and deceptive business and trade practices,
against defendants Max Clark and Expedient I.T. Solutions
Ltd., is dismissed without prejudice because of lack
of personal jurisdiction.
Background
The plaintiff, Ty Inc. ("plaintiff" or "Ty") is a Delaware
corporation with its principal place of business in
Westmont, Illinois. (Complaint P 1). Ty is the creator
of the world famous plush stuffed toys named "Beanie
Babies." Ty markets these Beanie Babies throughout the
world and sells them through authorized dealers.
(Complaint P 6). Since their introduction in 1994, Beanie
Babies have become extremely [*2] popular, with
sales over one billion dollars. (Complaint PP 6, 9). Ty
has obtained a federal registration from the United States
Patent and Trademark Office for the marks "Ty" (Reg. Nos.
1,722,141 and 2,118,114) and "Beanie Babies"
(Reg. No. 1,049,196). (Complaint P 7).
One aspect of Ty's marketing strategy for Beanie Babies
and related products is Ty's web site on the Internet,
which contains the domain names, "www.beaniebabies.com"
and "www.ty.com." (Complaint P 8).
One of the defendants, Expedient I.T. Solutions Ltd. ("EIS")
is a private English corporation with its principal
place of business in Cheshire, England. (Complaint P 2).
Max Clark ("Clark"), an individual who also resides in
Cheshire, England, has the primary responsibility for
the control, management, operation and maintenance of
the affairs of EIS (jointly referred to as "defendants").
(Complaint P 3). EIS and Clark acquired a registration
for the Internet domain name "beaniebabiesuk.com" through
Network Solutions, Inc. ("NSI"). n1 (Complaint
P11). Through this domain name, the defendants established
an Internet web site with the URL
"http://www.beaniebabiesuk.com." This Internet web site
is accessible to Internet [*3] users in Illinois and
throughout the world. (Complaint P 12).
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n1 Network Solutions, Inc. has contracted with the National
Science Foundation to provide registration
services for all Internet domain names. Once a domain
name is registered to one user, it may not be used by
another.
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The defendants' Internet web site "beaniebabiesuk.com"
is hosted by the Internet service provider, Simple
Network Communications, Inc. ("SimpleNet"), a California
corporation located in San Diego. Internet users
seeking access to the "beaniebabiesuk.com" web site have
been directed to two domain name servers
operated by SimpleNet in San Diego, California. (Complaint
P 14). Therefore, one could argue, the
"beaniebabies.com" web site is located in the State of
California. (Id.).
On the "beaniebabiesuk.com" web site, the defendants offer
for sale, among other things, the majority of Ty's
Beanie Babies toy products. (Complaint P 5). The defendants
display images of Ty's Beanie Babies toys on the
web site. (Complaint P 16). The defendants [*4]
also market and offer for sale on the web site a variety of
British products, such as British candies, British baskets
filled with teas and crackers, British foods and
preserves, and chine tea cups and tea pots. (Complaint
P 15).
Ty alleges that the defendants have solicited orders for
Beanie Babies toy products and have represented that
they accept United States currency for payment. (Complaint
P 17). On the web site, the defendants provide a
price list of all the Beanie Babie models they offer.
(Pl. Ex. B). An icon on the web site also allows consumers
to click on an icon to send e-mail messages to the defendants
to obtain specific information about any
product on the web site. (Pl. Ex. B). However, a closer
examination of the web site reveals that the
defendants do not take orders over the web site itself.
Instead, consumers must print out a order form on the
web site and then either fax, telephone, or send their
order to ESI. (Pl's Ex. B).
Ty brings a six-count complaint against the defendants,
alleging trademark infringement, unfair competition,
trademark dilution, common law trademark infringement,
Illinois consumer fraud and deceptive business
practices, and Illinois uniform [*5] deceptive
trade practices. (Complaint PP 19 - 45). The court requested
that the plaintiff brief the court on the issues regarding
venue.
Analysis
The plaintiff begins its argument by citing the Federal Venue Statute, 28 U.S.C. § 1391(b), which provides:
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 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.
The plaintiff argues that venue in the Northern District
of Illinois is appropriate for this action, pursuant to 28
U.S.C. § 1391(b)(2), because a substantial part of
the events or omissions giving rise to the plaintiff's claims
occurred in this District and a substantial part of property
that is the subject [*6] of this action--Ty's
trademarks--is situated in this District. (Pl's Mem.,
p. 3). However, in the plaintiff's argument for venue, the
plaintiff assumes that this court has personal jurisdiction
over the defendants. (Pl's Mem., p. 3). As a review of
the case law will show, this is not an assumption the
plaintiff can make.
As there is no federal statute governing personal
jurisdiction in this case, this court has authority to exercise
personal jurisdiction as conferred by state law. Fed.R.Civ.P.
4(e). The extent to which the court may exercise
that authority is governed by the Due Process Clause of
the Fourteenth Amendment of the United States
Constitution. Kulko v. Superior Court of California, 436
U.S. 84, 91, 98 S. Ct. 1690, 1696, 56 L. Ed. 2d 132
(1978).
The State of Illinois' long-arm jurisdiction statute
is codified under 735 Ill. Comp. Stat. 5/2-209. In particular,
the statute covers individuals or corporations who transact
any business within Illinois, commit a tortious act
within Illinois, or do business within Illinois. 735 Ill.
Comp. Stat. 5/2-209(a)(1), (a)(2), (b)(4). It seems that
the plaintiff is arguing that the defendants, through
the use of the web [*7] site "www.beaniebabiesuk.com,"
transact business within Illinois and have committed a
tortious act.
However, there are constitutional limitations on the exercise
of personal jurisdiction, depending upon whether
general or specific jurisdiction over a non-resident defendant
is sought. Mink v. AAAA Development LLC, 190
F.3d 333, 335-36 (5th Cir. 1999); Panavision International,
L.P. v. Toeppen, 141 F.3d 1316, 1319 (9th Cir.
1998); Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414,
416 (9th Cir. 1997). General jurisdiction allows 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
in the forum state. Helicopteros Nacionales
de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16, 104 S.
Ct. 1868, 1872-73, 80 L. Ed. 2d 404 (1984). Specific
jurisdiction allows 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, 66 S. Ct. 154, 90 L. Ed. 95 (1945). [*8]
Mink, 190 F.3d at 336.
A significant number of Circuit who have addressed the
issue of personal jurisdiction and Internet sites have
relied on the three-category "sliding scale" model developed
by the District Court in the Western District of
Pennsylvania in Zippo Manufacturing Co. v. Zippo Dot Com,
Inc., 952 F. Supp. 1119 (W.D.Penn., 1997). See,
Soma Medical International v. Standard Chartered Bank,
196 F.3d 1292 (10th Cir. 1999); Mink, 190 F.3d at 336
(5th Cir. 1999); Cybersell, 130 F.3d at 418-419 (9th Cir.
1997); Molnlycke Health Care AB v. Dumex Medical
Surgical Products Ltd., 64 F. Supp. 2d 448, 451 (E.D.Penn.
1999). In Zippo, the court found 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." Zippo, 952 F. Supp. 1119 at
1124. The court presented the "sliding scale" as follows:
At one end of the spectrum
are situations where a defendant clearly does business over the
Internet. If the defendant
enters into [*9] contracts with residents of a foreign jurisdiction
that
involve the knowing and
repeated transmission of computer files over the Internet, personal
jurisdiction is proper.
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
of personal jurisdiction. 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. Zippo, 952 F. Supp. at 1124
(citations omitted).
The present case falls in the "middle ground" of the sliding
scale model of Zippo. The defendants in the present
case do not run a completely passive web site, for it
is possible for consumers to e-mail the defendants
questions about products and to receive information about
placing orders, etc. However, at the same time,
the defendants [*10] do not clearly do business
over their web site, for they do not take orders nor enter
into contracts over the web site. In fact, the defendants
make it extremely clear on their web site that they
do not conduct on-line transactions. (See Pl. Ex. B, "Section
3: Payment Arrangements"). Instead, the
defendants have consumers print out an order form and
either fax, telephone, or send their orders through
traditional mail to the defendants' offices in Great Britain.
(See Pl. Ex. Be, "Section 1: How to Order," "Beanie
Baby Airmail Form").
The Fifth Circuit, in an extremely similar case, found
that personal jurisdiction could not be exercised over the
defendant through its web site. In Mink v. AAAA Development,
a copyright infringement case, the plaintiff, an
individual in Texas, argued for personal jurisdiction
over the defendant, a Vermont corporation, based upon the
defendant's web site. The Fifth Circuit, using the Zippo
sliding scale analysis, found that personal jurisdiction
could not be exercised over the Vermont corporation for
two reasons. First, the only exchange of information
over the web site was informational e-mails between consumers
and the company. Second, the web [*11]
site did not allow consumers to order or purchase products
or services on-line. In fact, consumers were
instructed by the web site to complete an order form and
submit it by either fax or traditional mail. Mink, 190
F.3d at 337. The Fifth Circuit found these activities
were not enough to exercise personal jurisdiction, for
there was no evidence that the defendant conducted business
over the Internet by engaging in business
transactions with forum residents or by entering into
contracts over the Internet. Id. The present case is the
exact same situation. n2
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n2 While Mink was a copyright infringement case and the
present case is a trademark case, courts have found
that simply registering someone else's trademark as a
domain name and posting a web site is not sufficient to
subject a party to jurisdiction in another state. Instead,
there must be "something more" to demonstrate that
the defendants directed their activity toward the forum
state. Panavision, 141 F.3d at 1322 (9th Cir. 1998);
Cybersell, 130 F.3d at 418 (9th Cir. 1997). As the above
discussion demonstrates, the defendants in the
present situation have not done "something more" to direct
their activity toward Illinois.
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This court finds that personal jurisdiction over the defendants
based upon the presence of their web site is
not appropriate. Therefore, this case is dismissed without
prejudice. n3
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n3 In CompuServe, Inc. v. Patterson, the Sixth Circuit
held that a Texas resident who had advertised his
product through a computer information service located
in Ohio was subject to personal jurisdiction in Ohio
because the defendant had taken direct action to create
that commercial connection with Ohio. 89 F.3d 1257,
1264 (6th Cir. 1996). Therefore, one could argue in the
present case that personal jurisdiction could be
exercised over defendants in the Southern District of
California, for the defendants contracted with SimpleNet,
based in San Diego, California, to host their Internet
web site. Thus, the defendants' web site is located in
San Diego, California. (Complaint P 14).
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Conclusion
For the foregoing reasons, plaintiff Ty Inc.'s action for
trademark infringement, unfair competition, trademark
dilution, [*13] common law trademark infringement,
consumer fraud and deceptive business and trade
practices, against defendants Max Clark and Expedient
I.T. Solutions Ltd., is dismissed without prejudice
because of lack of personal jurisdiction.
Enter:
David H. Coar
United States District Judge
Dated: JAN 13 2000
JUDGMENT IN A CIVIL CASE
Decision by Court. This action came to trial or hearing
before the Court. The issues have been tried or heard
and a decision has been rendered.
IT IS HEREBY ORDERED AND ADJUDGED that this action is
dismissed without prejudice for lack of personal
jurisdiction. This case is closed.
Date: 1/13/2000