Trademark Infringement
First Use in Commerce
Advertisement and Sale
Unfair Competition
E-Commerce
E-Mail
Online Contacts with
a Forum
Subject Matter Jurisdiction
Personal Jurisdiction
Purposefully directed activities at a forum even in the
“absence of physical contacts” with a forum
Supplemental Jurisdiction (State and Federal Claims)
Venue
Illinois Law
Illinois Long-Arm Statute
Contract
Drafting
The district court had subject
matter jurisdiction over Mr. Curry’s four claims “arising under” federal
statutes related to trademarks and unfair competition. See 28 U.S.C. §§
1331, 1338(a)–(b). With regard to Mr. Curry’s remaining three claims for fraud,
unfair competition, and trademark infringement arising under state law, amicus
counsel for Mr. Curry submits that subject matter jurisdiction exists over
those claims as well because the state and federal claims share a “common
nucleus of operative fact.” United Mine Workers v. Gibbs, 383 U.S. 715,
725 (1966), and they are part of the “same case or controversy.” 28 U.S.C. §
1367(a). We agree. Thus, the district court had supplemental jurisdiction over
the state claims. See Ammerman v. Sween, 54 F.3d 423, 424 (7th Cir.
1995) (“A loose factual connection between the claims is generally
sufficient.”).
Charles Curry is the founder and Chief Executive Officer
(“CEO”) of a company named “Get Diesel Nutrition” that sells dietary
supplements to fitness enthusiasts and athletes. Mr. Curry contends that the
“essence” of his brand is “Diesel.” Indeed, he has adopted the alter ego “Chuck Diesel,” and his
company name, website address, and the product at issue, Diesel Test, all
contain the word “Diesel.” He has paid for advertising for his products, including
Diesel Test, in nationally distributed fitness magazines since 2002. He first
manufactured Diesel Test in March 2005 and has advertised the product since
June 2005. Diesel
Test received awards from Planet Muscle magazine in 2015 and 2016.
In October 2016, the defendants began to sell the product
that is at the heart of Mr. Curry’s complaint; the defendants’ product is a
sports nutritional supplement branded Diesel Test Red Series, All Natural
Testosterone Booster. Like Mr. Curry’s Diesel Test product, the defendants’
product comes in red and white packaging with right-slanted all-caps typeface
bearing the words “Diesel Test.”
The defendants admittedly sold their product exclusively
online through the following websites: (1) www.revlabs.com; (2)
www.boostedtestforyou.com; (3) www.amazon.com; and (4) www.ebay.com. Although the
defendants did not sell their product until 2016, they claimed in
advertisements that their product was ranked “Best Product and Number 1” in
2015. The
defendants have not denied that they concocted a fake ESPN news webpage and
created a fake ESPN article touting their product. The defendants conducted all
their marketing and advertising for their product through the Internet. In just
over seven months, they received more than $1.6 million in gross sales from
their product. At
least 767 of the sales were to consumers in Illinois.
Mr. Curry promptly demanded that the defendants cease and
desist selling their product. The defendants responded and said that they
wished to find an “amicable resolution.” On November 15, Mr. Curry sent a
second email to Revolution in which he renewed his claims and instructed them
to contact his attorney. Two weeks later, however, Joshua Nussbaum, President
of Revolution, filed a trademark appli- cation for the Diesel Test mark to be
used in connection with dietary and nutritional supplements. In the trademark
application, Mr. Nussbaum, as signatory, declared that “he believes that to the
best of his knowledge and belief, no other persons ... have the right to use
the mark in commerce.” He further indicated on the application that the “filing base”
was “Intent to Use.” At the time he filed this application, however, the defendants
already were selling their product in commerce bearing the Diesel Test mark.
On December 9, 2016, Mr. Curry filed a federal trademark
application for the Diesel Test mark for dietary and nutritional supplements
indicating that he had first used the mark in commerce in April 2005. The United
States Patent and Trademark Office (“USPTO”) suspended the processing of both
applications, citing a likelihood of confusion between the defendants’ and Mr.
Curry’s marks.
(…) Federal
law protects trademarks even if the owner has not yet sought federal
registration.
(…) According
to these affidavits, “Revolution does not hold itself out to do business in
Illinois” on its website. Although Revolution lists on its website several companies where
its products can be purchased, none of the listed companies are located in
Illinois. It is not disputed that the defendants (1) are not registered to do
business and do not have a registered agent in Illinois; (2) do not have a
place of business in Illinois, a telephone, or a mailing address in Illinois;
(3) do not have any employees located in Illinois or any who have traveled to
Illinois for business; (4) do not have any real or personal property in
Illinois; and (5) have never attended any trade shows or participated in any
business- related meetings in Illinois.
(…) Specifically,
the defendants contended that jurisdiction was not proper over Revolution
because, “while Revolution does have some minimal sales to Illinois, those
sales represent only 1.8% of Revolution’s total gross sales nationwide.”
(…) Because
this case involves claims under both federal law and state law, the district
court’s jurisdiction rested on a federal question, 28 U.S.C. § 1331, and
supplemental jurisdiction, 28 U.S.C. § 1367. In a case involving federal
question jurisdiction, “a federal court has personal jurisdiction over the
defendant if either federal law or the law of the state in which the court sits
authorizes service of process to that defendant.” Mobile Anesthesiologists
Chicago, LLC v. Anesthesia Assocs. of Houston Metroplex, P.A., 623 F.3d
440, 443 (7th Cir. 2010). The only federal statute under which Mr. Curry brings
his claims is the Lanham Act, which does not authorize nationwide service of
process. See be2 LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir. 2011). Thus,
“a federal court sitting in Illinois may exercise jurisdiction over the
defendants in this case only if authorized both by Illinois law and by the
United States Constitution.” Id. (citing Fed. R. Civ. P. 4(k)(1)(A)).
The Illinois long-arm statute provides that “a court may also exercise
jurisdiction on any other basis now or hereafter permitted by the Illinois
Constitution and the Constitution of the United States.” 735 ILCS 5/2-209(c).
We have held that “the Illinois long-arm statute permits the exercise of
jurisdiction to the full extent permitted by the Fourteenth Amendment’s Due
Process Clause.” Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010).
Thus, the question we must answer is whether the exercise of personal
jurisdiction over the defendants “comports with the limits imposed by federal
due process.” Walden v. Fiore, 571 U.S. 277, 283 (2014); Mobile
Anesthesiologists, 623 F.3d at 443 (noting that “there is no operative
difference between” the constitutional limits of the Illinois Constitution and
the United States Constitution in terms of subjecting a defendant to personal
jurisdiction).
(…) For
the exercise of specific jurisdiction over an out-of-state defendant: First,
the defendant’s contacts with the forum state must show that it “purposefully
availed itself of the privilege of conducting business in the forum state or
purposefully directed its activities at the state. Second, the plaintiff’s
alleged injury must have arisen out of the defendant’s forum-related
activities. And finally, any exercise of personal jurisdiction must comport
with traditional notions of fair play and substantial justice.
(…) We
also note that, although Revolution’s sales of the allegedly infringing product
to Illinois consumers all took place through either its interactive website or
a third party’s website, we consistently have declined “to fashion a special
jurisdictional test for Internet-based cases.” Tamburo, 601 F.3d at 703
n.7. “We think that the traditional due process inquiry ... is not so difficult
to apply to cases involving Internet contacts that courts need some sort of
easier-to-apply categorical test.” Illinois v. Hemi Grp. LLC, 622 F.3d
754, 759 (7th Cir. 2010).
We first examine whether Revolution’s activity can be
characterized as purposefully directed at Illinois, the forum state. Revolution
has no physical presence in Illinois. Our cases make clear, however, that
physical presence is not necessary for a defendant to have sufficient minimum
contacts with a forum state. Indeed, we have noted that the
“purposeful-direction inquiry ‘can appear in different guises.’” Tamburo,
601 F.3d at 702 (quoting Dudnikov v. Chalk & Vermilion Fine Arts, Inc.,
514 F.3d 1063, 1071 (10th Cir. 2008)). The essential point of the inquiry is to
“ensure that an out-of-state defendant is not bound to appear to account for
merely ‘random, fortuitous, or attenuated contacts’ with the forum state.” Dudnikov,
514 F.3d at 1071 (quoting Burger King, 471 U.S. at 475).
The principal approach employed to ensure that a defendant’s
contacts with a state are not random, fortuitous, or attenuated is to inquire
whether the record demonstrates that the defendant has “‘purposefully directed’”
his activities at a forum even in the “absence of physical contacts” with a
forum. Burger King, 471 U.S. at 476 (quoting Keeton v. Hustler
Magazine, Inc., 465 U.S. 770, 774–75 (1984)). Such “purposeful direction”
may be shown by evidence that the defendant’s actions, even if initiated
outside of the forum state, nevertheless were directed at the forum state. For
example, a defendant may cause its product to be distributed in the forum
state. See, e.g., Keeton, 465 U.S. at 774–75 (finding
purposeful direction where defendant published magazines outside the forum
state and circulated them in the forum state). Among our recent cases, Hemi is
particularly instructive. There, the State of Illinois sued Hemi Group LLC
(“Hemi”) for selling cigarettes to Illinois residents in violation of state law
and for failing to report the sales in violation of federal law. Hemi was based
in New Mexico; it “was not incorporated or organized under Illinois law, it was
not registered to do business in Illinois, it did not have any offices or
employees in Illinois, it did not bank in Illinois, and it had not advertised
in print media in Illinois.” Hemi, 622 F.3d at 755–56. Hemi sold its
cigarettes through its websites, and the complaint identified only one Illinois
resident, a special senior agent of the Illinois Department of Revenue, who had
purchased cigarettes from Hemi through its websites. This agent had purchased
over three hundred packs of cigarettes from Hemi over the course of two years. Id.
at 755.
We held that Hemi’s contacts with Illinois were sufficient
to support personal jurisdiction in that state. We based our decision in part
on Hemi’s maintenance of “commercial websites through which customers could
purchase cigarettes, calculate their shipping charges using their zip codes,
and create accounts.” Id. at 757–58. Because Hemi “knowingly did do
business with Illinois residents ... , Hemi’s argument that it did not
purposefully avail itself of doing business in Illinois rang particularly
hollow.” Id. at 758.
(…) The
Supreme Court has held that an out-of-state insurer who sold only a single
policy within the state is subject to personal jurisdiction within the state at
least with respect to a cause of action related to that policy. See McGee v.
Int’l Life Ins. Co., 355 U.S. 220, 222 (1957).
We are satisfied that Revolution has formed sufficient
minimum contacts with Illinois. Like Hemi, Revolution sells its products only
online through its website and third-party websites. Revolution’s interactive website
for the sale of its products requires the customer to select a shipping
address. Illinois is among the “ship-to” options from which the customer must
choose. Illinois residents purchasing Revolution’s products also receive an
email from Revolution thanking them for their business, confirming their order,
and listing the Illinois shipping address. Revolution admittedly sold its
Diesel Test product to 767 Illinois residents between October 14, 2016, and
June 1, 2017.
(…) See Hemi, 622 F.3d at
758; uBid, 623 F.3d at 428 (stating that defendant’s argument that its
sales to Illinois residents were merely “automated transactions unilaterally
initiated by those residents” was not persuasive because those “customers ...
are not simply typing their credit card numbers into a web form and hoping they
get something in return”; the defendant “itself set the system up this way”).
In the face of this sales arrangement, it is not persuasive
to say that Revolution did not exploit the Illinois market simply because its
advertising was not especially aimed at that state. See uBid, 623 F.3d
at 428–29. There is no per se requirement that the defendant especially target
the forum in its business activity; it is sufficient that the defendant
reasonably could foresee that its product would be sold in the forum. See
Keeton, 465 U.S. at 781. In Keeton, the Supreme Court upheld the
exercise of personal jurisdiction even though the defendant magazine publisher
had not targeted specifically the forum. The Court determined that, with a
nationwide market, the publisher reasonably should have anticipated that it
could be held accountable in the forum state for activities arising from the
“substantial number” of sales in the forum state. Id. In Hemi, we concluded
that personal jurisdiction was proper irrespective of the fact that Hemi “had
not advertised in print media in Illinois.” Hemi, 622 F.3d at 756.
Revolution’s nationwide advertisements were accessible in Illinois.
Significant caution is certainly appropriate when assessing
a defendant’s online contacts with a forum “to ensure that a defendant is not
haled into court simply because the defendant owns or operates a website that
is accessible in the forum state.” Hemi, 622 F.3d at 760. Here, however,
Revolution’s 767 sales of Diesel Test to Illinois residents provides solid
evidence that Revolution has “purposely exploited the Illinois market.” be2,
642 F.3d at 558 (collecting cases). These sales certainly distinguish Revolution
from “the defendant that merely operates a website, even a ‘highly interactive’
website, that is accessible from, but does not target, the forum state.” Id.
at 559 (collecting cases).
The proper exercise of specific jurisdiction also requires that
the defendant’s minimum contacts with the forum state be “suit-related.”
Advanced Tactical, 751 F.3d at 801 (quoting Walden, 571 U.S. at
284). There must be a “connection between the forum and the specific claims at
issue.” Bristol-Myers Squibb, 137 S. Ct. at 1781. “Even regularly
occurring sales of a product in a State do not justify the exercise of
jurisdiction over a claim unrelated to those sales.” Goodyear, 564 U.S.
at 931 n.6.
We held that Advanced Tactical failed to establish personal
jurisdiction. Real Action’s email to its customer list, which included
customers in Indiana, could not support jurisdiction because, we explained, any
connection between the lawsuit and where the email was opened would be
“entirely fortuitous.” Although Real Action made at least one sale to an
Indiana resident, Advanced Tactical did not provide evidence that the sale had
any connection to the underlying claims of trademark infringement. No evidence,
for example, suggested that Indiana residents saw Real Action’s email or
website before purchasing products from Real Action. “The only sales that would
be relevant,” we explained, “are those that were related to Real Action’s
alleged unlawful activity,” and Advanced Tactical did “not provide evidence of
any such sales.” We emphasized in Advanced Tactical that the defendant’s
contacts with the forum state must be related to the plaintiff’s claims to
support specific personal jurisdiction. Advanced Tactical, 751 F.3d at
801.
Mr. Curry, on the other hand, certainly has met his burden.
Unlike the sales in Advanced Tactical, which were made by the defendant
in the forum state but were not related to the claims underlying the suit, Mr.
Curry has shown that the direct sales that Revolution made in Illinois involved
Diesel Test, a product that bears the allegedly infringing trademark that forms
the very basis of this action. Mr. Curry submits that Revolution participated
in the Illinois market by selling its product in a manner that would lead the
consumer to confuse Revolution’s product with his. The gravamen of his case is
that Revolution’s advertisement and sale of its product in the national market
caused confusion and consequently deprived Mr. Curry of the value of his
trademark in those states, including Illinois, where the product was
sold.
(…) Advanced Tactical cannot
be read as requiring, at this stage of the litigation, anything more. As we
have just noted, Revolution’s sales are inextricably linked to the alleged
tortious activity underlying Mr. Curry’s claims. By contrast, the allegations
of trademark infringement in Advanced Tactical appear to be based solely
on statements made on the defendant’s website about its affiliations. The sales
in the forum state therefore did not have, as the court noted, any relevance to
the allegations of the complaint. Notably, Advanced Tactical made no
attempt to limit our earlier decision in Hemi, which had upheld an
assertion of personal jurisdiction based on sales of cigarettes to one
individual in the forum state.
(U.S. Court of Appeals for the Seventh Circuit,
February 10, 2020, Charles Curry v. Revolution Laboratories, LLC, Docket No.
17-2900)
