U.S. Court of Appeals for the First Circuit, Plixer International, Inc. v. Scrutinizer GMBH, Docket No. 18-1195

Jurisdiction: Specific personal jurisdiction: Trademark infringement: Internet: Websites: Due Process: Fifth Amendment: Interlocutory appeal:

Given the particular facts of this case, we affirm the thoughtful holding of the district court that the exercise of specific personal jurisdiction against a German corporation under Federal Rule of Civil Procedure 4(k)(2) does not offend the Due Process Clause of the United States Constitution. We note that this is an area in which the Supreme Court has not yet had the occasion to give clear guidance, and so we deliberately avoid creating any broad rules.

Scrutinizer GmbH (Scrutinizer) is a German corporation with its principal place of business in Kassel, Germany. Through its interactive, English-language website, Scrutinizer runs a "selfservice platform" that helps customers build better software. Scrutinizer brings its customers' code from a third-party hosting service like GitHub2 to its "controlled cloud environment," where it runs "software analysis tools" meant to "improve source-code quality, eliminate bugs, and find security vulnerabilities."

Customers who contract to use Scrutinizer's online service can pay only in euros. Scrutinizer's standard contract with those customers contains a forum-selection clause and a choice-of-law clause that provide that all lawsuits relating to the contract be brought in German courts and under German law. Scrutinizer maintains no U.S. office, phone number, or agent for service of process; it directs no advertising at the United States; and its employees do not go to the United States on business.

Scrutinizer provides its service globally.

Plixer International, Inc. (Plixer), a Maine corporation, sued Scrutinizer in federal district court in Maine on November 21, 2016, for trademark infringement.

(…) Scrutinizer moved for permission to file an interlocutory appeal under 28 U.S.C. § 1292(b). The district court granted that motion. The district court found that the matter met the standard for such an appeal: it involved a controlling question of law on which there was substantial ground for difference of opinion and the resolution of which would help bring an end to the litigation.

We granted this interlocutory appeal on the district court's recommendation.

Plixer's basis for asserting personal jurisdiction over Scrutinizer is Federal Rule of Civil Procedure 4(k)(2).

Rule 4(k)(2) states: For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.

Rule 4(k)(2) has three requirements: (1) the cause of action must arise under federal law; (2) the defendant must not be subject to the personal jurisdiction of any state court of general jurisdiction; and (3) the federal court's exercise of personal jurisdiction must comport with due process.

All parties agree that the first two requirements are met here. The question is whether personal jurisdiction comports with due process.

This is a federal question case, so constitutional limits on jurisdiction come from the Due Process Clause of the Fifth Amendment. The Fifth Amendment Due Process Clause requires the plaintiff to "show that the defendant has adequate contacts with the United States as a whole, rather than with a particular state."

To see if Scrutinizer's nationwide contacts are adequate, we turn to the familiar "minimum contacts" framework.

Plixer has asserted specific personal jurisdiction over Scrutinizer, so the minimum contacts inquiry has three prongs: relatedness, purposeful availment, and reasonableness.

That is, Plixer must show that (1) its claim directly arises out of or relates to the defendant's forum activities; (2) the defendant's forum contacts represent a purposeful availment of the privilege of conducting activities in that forum, thus invoking the benefits and protections of the forum's laws and rendering the defendant's involuntary presence in the forum's courts foreseeable; and (3) the exercise of jurisdiction is reasonable. A Corp., 812 F.3d at 59.

Scrutinizer has conceded the first requirement; we hold that Plixer has met the remaining two.

A Corp., 812 F.3d at 61 (holding that "the mere availability of a passive website" cannot by itself subject a defendant to personal jurisdiction in the forum).

Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 35 (1st Cir. 2010) (noting that the running of a "website that is visible in a forum and that gives information about a company and its products" cannot alone support the exercise of jurisdiction).

The district court held that Scrutinizer had not merely made its website available in the United States; it had used that website to engage "in sizeable and continuing commerce with United States customers." Plixer, 293 F. Supp. 3d at 242. As a result, Scrutinizer "should not be surprised at United States-based litigation." Id. We agree.

(…) An objectively clearer picture of Scrutinizer's intent to serve the forum, the crux of the purposeful availment inquiry. See C.W. Downer, 771 F.3d at 66.

(…) Scrutinizer can take steps to limit access to its website. For instance, Scrutinizer could design its site to not interact with U.S. users, cf. Yahoo! Inc. v. La Ligue Contre Le Racisme et L'Antisemitisme, 433 F.3d 1199, 1203 (9th Cir. 2006), but it has not done so.

And Scrutinizer could take the low-tech step of posting a disclaimer that its service is not intended for U.S. users. See Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997); cf. Illinois v. Hemi Group LLC, 622 F.3d 754, 755 (7^th Cir. 2010). Again, it has not done so. Instead, Scrutinizer's website (https://scrutinizer-ci.com/) is globally accessible.

In contrast, Scrutinizer did take a step to deal with foreign contract-based litigation -- it included a forum-selection clause and a choice-of-law clause in its standard customer contract. Those clauses provide that all lawsuits be brought in German courts and under German law. But Scrutinizer never suggests that Plixer could bring this suit in an alternate forum, whether Germany or elsewhere. And the clauses do not apply here; Plixer is not a party to Scrutinizer's contract, and Scrutinizer does not suggest that Plixer is bound by the contract. As the district court correctly noted, those clauses suggest that Scrutinizer "knew it was extending its reach outside Germany." Plixer, 293 F. Supp. 3d at 241.

(…) Second, Scrutinizer voluntarily served U.S. customers. Specific personal jurisdiction must be based on a defendant's voluntary contact with the forum.

Third, Scrutinizer's purposeful U.S. contacts were sufficient to put Scrutinizer on notice that it should expect to be haled into U.S. court. Scrutinizer has "targeted the world" by making its website globally accessible. See Nicastro, 564 U.S. at 890 (Breyer, J., concurring). But Scrutinizer says that it could not reasonably anticipate specific jurisdiction because it did not specifically target the United States with its business. We disagree.

(…) Ultimately, although a close call, we conclude that the German company could have "reasonably anticipated" the exercise of specific personal jurisdiction based on its U.S. contacts. Scrutinizer's "regular flow or regular course of sales" in the United States show that it has purposefully availed itself of the U.S. forum. The record does not reveal what percentage of Scrutinizer's business came from the United States. Nor does the record reveal whether Scrutinizer ever did an online trademark search for the term "Scrutinizer," either before or after it sought U.S. customers.

(Since 2000, the public has been able to search and retrieve for free "the almost millions of pending, registered, abandoned, cancelled or expired trademark registrations" online. McCarthy on Trademarks and Unfair Competition § 19:6 (5th ed.)).

(…) The record does show that Scrutinizer used its website to obtain U.S. customer contracts. Those contracts yielded nearly $200,000 in business over three-and-a-half years. This is not a situation where a defendant merely made a website accessible in the forum.

In contrast, a New Jersey federal district court found no regular course of sales when, over about a year, fewer than ten in-state sales brought the defendant "less than $3,383 in revenue." Oticon, Inc. v. Sebotek Hearing Sys., LLC, 865 F. Supp. 2d 501, 514-15 (D. N.J. 2011). "Such scant sales activity" did not "justify the exercise of specific jurisdiction" there.

Reasonableness: Though Plixer has satisfied the first two prongs of the analysis, we must still see whether the exercise of jurisdiction here is fair and reasonable. We consider five "gestalt" factors: (1) the defendant's burden of appearing in the forum, (2) the forum's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.

We consider first the burden on Scrutinizer. (…) For further support, Scrutinizer points to the burden of cross-Atlantic travel. (…) and modern travel "creates no especially ponderous burden for business travelers," (…) A defendant hoping to show that travel burdens should make the difference must show that those burdens are "special or unusual." (…) many of the case's logistical challenges "can be resolved through the use of affidavits and video devices."

On the second factor, Scrutinizer does not dispute that the United States has an interest in adjudicating a dispute over the application of U.S. trademark law. (…) Further, the United States has an interest in remedying an alleged injury that occurs in the United States.

(…) "When minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant."

(U.S. Court of Appeals for the First Circuit, Sept. 13, 2018, Plixer International, Inc. v. Scrutinizer GMBH, Docket No. 18-1195, Circuit Judge Lynch)

Une entreprise allemande propose ses services (dans le domaine digital) par le biais de son site Internet. Le site et les services sont accessibles dans le monde entier. Un certain nombre de clients sont domiciliés dans divers états U.S. Ils rapportent à l’entreprise un chiffre d’affaire non négligeable.

L’entreprise n’a pas davantage de présence aux Etats-Unis. Elle n’y a ni présence physique ni employé. Elle n’a pas nommé d’agent auquel un envoi officiel pourrait être notifiée.

Une entreprise de l’état du Maine ouvre action devant la cour de district fédérale pour violation du droit des marques.

La question de la compétence de la cour est litigieuse.

En application du Cinquième Amendement de la Constitution fédérale (Due Process Clause), et tout en reconnaissant l’absence de jurisprudence de la Cour Suprême fédérale sur les questions précises que pose le cas d’espèce, le Premier Circuit fédéral juge que les conditions de la juridiction personnelle spécifique sont données, en précisant que la décision se limite aux faits de la cause et ne doit pas être interprétée largement. Le critère déterminant au sens du Cinquième Amendement est celui des contacts suffisants avec les Etats-Unis plutôt qu’avec l’un de ses états en particulier.

L’entreprise allemande n’a pas bloqué l’accès de son site aux clients U.S., n’a même pas posté un disclaimer refusant les clients U.S., mais, au contraire, leur propose, ainsi qu’au reste du monde, de contracter avec elle par le biais d’un site Internet en anglais. Elle a exécuté contre paiement nombre de prestations en faveur de nombre de clients U.S., et devait ainsi s’attendre à être actionnée devant une cour U.S. Le fait d’avoir inséré dans ses conditions contractuelles la loi allemande comme droit applicable et une cour allemande comme Tribunal compétent n’est d’aucun secours à l’entreprise allemande : bien au contraire, ces indications démontrent une volonté de s’engager internationalement, et la demanderesse à l’action en violation du droit à la marque n’est pas en rapport contractuel avec l’entreprise allemande.

Enfin, reconnaître la compétence de la cour de district fédérale satisfait aussi la condition d’une reconnaissance équitable : les voyages transatlantiques ne sont pas un fardeau qui ne saurait être exigé. D’autant que les productions de pièces et l’usage de moyens vidéos peuvent permettre d’éviter le déplacement de personnes. Un voyage transatlantique qui serait spécialement problématique peut permettre une décision d’incompétence de la cour U.S.