U.S. Court of Appeals for the Federal Circuit, In Re: Google LLC, Docket No. 2023-101

Motion to Transfer

 

Venue

 

Jurisdiction

 

Federal Law

 

 

 

 

On Petition for Writ of Mandamus to the United States District Court for the Western District of Texas in No. 6:21-cv-00985-ADA

 

 

 

Google LLC (“Google”) petitions for a writ of mandamus directing the United States District Court for the Western District of Texas to vacate its order denying Google’s motion to transfer and to transfer the case to the United States District Court for the Northern District of California. (…) For the following reasons, we grant the petition and direct transfer.

 

 

Pursuant to 28 U.S.C. § 1404(a), a district court may transfer any civil action to any other district court where the action might have been brought for the convenience of parties and witnesses and in the interest of justice.

 

 

In re Planned Parenthood Fed. of Am., Inc., 52 F.4th 625, 629 (5th Cir. 2022), when a movant “demonstrates that the transferee venue is clearly more convenient” the district court “should” grant transfer, In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en banc); see also Planned Parenthood, 52 F.4th at 629 (“The ultimate inquiry is whether the destination venue is ‘clearly more convenient than the venue chosen by the plaintiff.’”) (quoting Volkswagen, 545 F.3d at 315).

 

 

The Fifth Circuit has identified “private and public interest factors,” which are “not necessarily exhaustive or exclusive,” to be evaluated in connection with determining whether a case should be transferred. Planned Parenthood, 52 F.4th at 630 (internal quotation marks omitted). The private interest factors are: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious, and inexpensive. Id. The public interest factors are: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or in the application of foreign law. Id.

 

 

The district court held that the “administrative difficulties flowing from court congestion” factor weighed slightly against transfer. While we defer to the district court’s assessment of the average time to trial data, see Planned Parenthood, 52 F.4th at 631; In re Genentech, Inc., 566 F.3d 1338, 1347 (Fed. Cir. 2009) (“We do not disturb the district court’s suggestion that it could dispose of the case more quickly than if the case was transferred to the Northern District of California.”), in this case it was a clear abuse of discretion to accord this factor any weight, see Juniper, 14 F.4th at 1322 (discounting time-to-trial difference because there was no “need of a quick resolution” where patentee lacked “position in the market . . . being threatened”). It appears undisputed that Jawbone (unlike its predecessor owners of the patents) is not engaged in product competition in the marketplace and is not threatened in the market in a way that, in other patent cases, might add urgency to case resolution and give some significance to the time-to-trial difference. Nor does the record reveal any other basis on which to accord significance to whatever greater speed the district court speculates it could reach trial as compared to Northern California. See Genentech, 566 F.3d at 1347 (describing this factor as “most speculative”). This factor, then, is neutral.

 

 

By contrast, the events giving rise to this patent infringement suit clearly have a particularized connection with Northern California. The patented technology was invented in, and the patents prosecuted from, that forum. Additionally, the district court found that Google developed the accused products in the Northern District, notwithstanding Google’s separate office in Austin. Appx932; see also Def. Distributed v. Bruck, 30 F.4th 414, 435 (5th Cir. 2022) (“The local interest in having localized interests decided at home, ‘most notably regards not merely the parties’ significant connections to each forum writ large, but rather the significant connections between a particular venue and the events that gave rise to a suit.’”) (quoting In re Apple Inc., 979 F.3d 1332, 1345 (Fed. Cir. 2020)). It was clear error not to find that the local interest factor favors transfer.

 

 

We agree with the district court, and both parties, that the “familiarity of the forum with the law that will govern the case” and the “problems associated with conflicts of law” are neutral.

 

 

In sum, on the record before us, four factors favor transfer and four factors are neutral. No factor weighs against transfer. The center of gravity of this action, focusing on the Volkswagen factors and the overriding convenience inquiry, is clearly in the Northern District of California, not in the Western District of Texas. The district court clearly erred in finding otherwise and its decision to deny Google’s motion to transfer was a clear abuse of discretion.

 

 

 

 

(U.S. Court of Appeals for the Federal Circuit, Feb. 1^st, 2023, In Re: Google LLC, Docket No. 2023-101)

U.S. Court of Appeals for the Fourth Circuit, Berg v. Kingdom of the Netherlands, Docket No. 20-1765

Stolen Artworks

 

Suit is Brought in the U.S.

 

Defendants Are Municipal Museums in the Netherlands

 

Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602, et seq.

 

Expropriation Exception

 

Municipal Museums (NL)

 

Lack of Venue?

 

 

 

Appeal from the United States District Court for the District of South Carolina, at Charleston. Bruce H. Hendricks, District Judge. (2:18-cv-03123-BHH)

 

 

Bruce Berg, a resident of South Carolina, brought suit for recovery of paintings and other works of art taken under duress by the Nazis following the German invasion of theNetherlands in 1940. At the time of the German invasion, Berg’s grandfather, Benjamin Katz, was a partner in Firma D. Katz, which owned and operated three art galleries specializing in the sale of paintings by Dutch Old Masters. Following World War II, many of the stolen artworks were returned to the Netherlands by the United States military under Collection Point Agreements in which the Netherlands agreed to hold the art as “custodians pending the determination of the lawful owners thereof.” See, e.g., J.A. 100. Firma D. Katz was liquidated in 1974, and the artworks have not been returned to the heirs of its partners, Benjamin and Nathan Katz.

 

Berg brought suit in the District of South Carolina against the Kingdom of the Netherlands; Ministry of Education, Culture & Science of the Netherlands (“Ministry”); Cultural Heritage Agency of the Netherlands (“RCE”); and several private and public municipal museums in the Netherlands holding the artworks. Claiming ownership of the artworks, Berg brought claims for declaratory judgment, conversion, unjust enrichment, and constructive trust, arising from the alleged taking and retention of the artworks in violation of international law.

 

 

The four public municipal museums are Dordrechts Museum, Museum de Lakenhal, Museum Het Prinsenhof, and Historisch Centrum Het Markiezenhof. The amended complaint seeks restitution for 143 paintings and other artworks, thirteen of which are alleged to be held in the municipal museums. Am. Compl. ¶¶ 37, 38, 48, and 49.

 

 

As such, this appeal concerns only two groups of defendants: (1) the Ministry and RCE, and (2) the four municipal museums. As to the Ministry and RCE, we affirm the district court’s judgment that the Ministry and RCE, as political subdivisions of the Netherlands, are not subject to suit in federal court under the expropriation exception of the FSIA. As to the municipal museums, we affirm their dismissal for lack of venue.

 

 

Under the FSIA, “a federal court has subject matter jurisdiction over a claim against a foreign state only if that claim falls within one of the FSIA’s exceptions to immunity.” Wye Oak Tech., Inc. v. Republic of Iraq, 666 F.3d 205, 206 (4th Cir. 2011). As Berg’s claim does not arise from commercial activity by defendants in the United States, the only applicable exception to sovereign immunity under the FSIA is the expropriation exception found in 28 U.S.C. § 1605(a)(3).

 

 

As to the municipal museums, the district court dismissed the complaint against them for lack of venue. Venue in civil actions against a foreign state is governed by 28 U.S.C. § 1391(f), and the district court found that subsection 1391(f)(3) governed the municipal museums as agencies or instrumentalities of the Netherlands. That subsection permits venue in any judicial district in which an agency or instrumentality “is licensed to
do business or is doing business.” § 1391(f)(3). Though the district court found the municipal museums had engaged in commercial activity in the United States, the venue provision more narrowly focused on whether they did business in the District of South Carolina. So the allegations of nationwide solicitation and sales did little to show that the municipal museums are “doing business” in the District of South Carolina. 2020 WL 2829757, at *16. On appeal, Berg nowhere challenges this ruling.

 

 

(The district court concluded that the municipal museums were agencies or instrumentalities of the Netherlands lacking sovereign immunity pursuant to the second clause of the FSIA’s expropriation exception. That decision is not challenged on appeal and is consistent with the holding in Altmann v. Republic of Austria, 142 F. Supp. 2d 1187, 1204 (C.D. Cal. 2001) (“The paintings are owned by the Republic, but are exhibited by the Gallery. The exhibition of these paintings fulfills the ‘owned or operated by an agency of instrumentality’ requirement. Therefore, Plaintiff’s claim meets the ‘owned or operated’ requirement of the expropriation exception of the FSIA.”))

 

As to the municipal museums, the district court’s ruling was based on the lack of sufficient allegations that the municipal museums did business in South Carolina as required by § 1391(f)(3). In contrast, the district court did base its venue ruling as to the private museums on its finding that personal jurisdiction was lacking as to them.

 

(…) The district court’s dismissal for lack of venue over the municipal museums is forfeited. Nothing in this record suggests that the district court’s venue ruling as to the municipal museums constitutes fundamental error or results in a miscarriage of justice warranting reversal.

 

To be sure, Berg’s claim that the Nazi regime stole art owned by his grandfather’s partnership presents a strong moral claim. However, as the Second Circuit noted in Garb v. Republic of Poland, “strong moral claims are not easily converted into successful legal causes of action.” 440 F.3d at 581 (internal citation omitted). “Despite the severe injuries asserted by Berg, the capacity of United States courts to exercise jurisdiction over plaintiff’s claims hinges on a legal inquiry narrowly circumscribed by statute.” Id. Because the Ministry and RCE are political subdivisions of the Netherlands, the FSIA bars suit against them. While claims against the municipal museums, as agents and instrumentalities of the Netherlands, fall within the expropriation exception to the FSIA, as for venue, it is improper in South Carolina. As Berg did not ask the district court to transfer venue or otherwise appeal the venue ruling as to the municipal museums, the district court’s ruling as to venue compels affirmance of the judgment below. 

 

 

(U.S. Court of Appeals for the Fourth Circuit, Feb. 3, 2022, Berg v. Kingdom of the Netherlands, Docket No. 20-1765, Published)

U.S. Court of Appeals for the Federal Circuit, In Re: Google LLC, Docket No. 19-126

Venue

Jurisdiction

Patent Infringement

Place of Business:

-       Real Property Ownership

-       Leasehold Interest

-       Possession

-       Control

-       Local Caches for Data

-       Internet Service Providers (ISPs)’ Datacenter

-       Rack Space Occupied by the GGC Servers

-       Physical Presence of an Employee or Other Agent of the Defendant

-       Agency Relationship

-       Right of Interim Control

-       Maintaining Equipment

-       Production, Storage, Transport, and Exchange of Goods or Services

Writ of Mandamus

Writ – All Writs Act

Contract Drafting

On Petition for Writ of Mandamus to the United States District Court for the Eastern District of Texas in Nos. 2:18-cv-00462-JRG, 2:18-cv-00463-JRG

Google LLC (“Google”) petitions for a writ of mandamus ordering the United States District Court for the Eastern District of Texas to dismiss the case for lack of venue. See Super Interconnect Techs. LLC v. Google LLC, No. 2:18- CV-00463-JRG, 2019 U.S. Dist. LEXIS 132005 (E.D. Tex. Aug. 7, 2019). We hold that mandamus is warranted and order that the case either be dismissed or transferred.

Super Interconnect Technologies LLC (“SIT”) sued Google for patent infringement in the Eastern District of Texas. Under the patent venue statute, 28 U.S.C. § 1400(b), “any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” SIT filed its suit after the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514, 1517 (2017), which held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute,” and this court’s decision in In re Cray, Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017), which held that a “regular and established place of business” under the patent venue statute must be: (1) “a physical place in the district”; (2) “regular and established”; and (3) “the place of the defendant.”

(…) SIT’s allegation of venue was based on the presence of several Google Global Cache (“GGC”) servers, which function as local caches for Google’s data.

The GGC servers are not hosted within datacenters owned by Google. Instead, Google contracts with internet service providers (ISPs) within the district to host Google’s GGC servers within the ISP’s datacenter. When a user requests Google’s content, the ISP attempts to route the user’s request to a GGC server within its own network (within the district) before routing the request to Google’s central data storage servers (outside the district). The GGC servers cache only a small portion of content that is popular with nearby users but can serve that content at lower latency—which translates to shorter wait times— than Google’s central server infrastructure. This performance benefit is in part due to the physical proximity of the GGC servers to the ISP’s users. This arrangement allows Google to save on bandwidth costs and improve user experience on its various platforms.

At the time of the complaint, Google had entered into contracts with two ISPs to host GGC servers owned by Google in the Eastern District of Texas: Cable One Inc. (“Cable One”) and Suddenlink Communications (“Suddenlink”). The contracts provided that the ISPs would host Google’s GGC servers in their data centers. Specifically, the GGC servers are installed in the ISP’s server racks, which are cabinets that accept standard server components. Each contract states that the ISP must provide “rack space, power, network interfaces, and IP addresses,” for the GGC servers, and provide “network access between the GGC servers and the ISP’s network subscribers.” Supplemental Record, Dkt. 31, Ex. A, at 1; id., Ex. B, at 1. The contracts permit the ISPs to select the rack space for the GGC servers, but they tightly restrict the ISPs’ ability to relocate the servers without Google’s permission once a location is selected. Id., Ex. A, at 2; id., Ex. B at 2. The contracts also strictly limit any unauthorized access to the space used by Google’s servers. Id., Ex. A, at 6–7; id., Ex. B, at 5. The contracts state that the ISPs are required to provide “installation services,” i.e., installing the GGC servers in the server racks. Id., Ex. A, at 1; id., Ex. B at 1. While the contracts forbid the ISPs to “access, use, or dispose of” the GGC servers without Google’s permission, id., Ex. A, at 2; id., Ex. B at 2, they also require the ISPs to provide “remote assistance services,” which “involve basic maintenance activities” performed on the GGC servers by the ISP’s onsite technician, if requested by Google, id., Ex. A, at 1, 6; id., Ex. B, at 1, 5. It is undisputed that no Google employee performed installation of, performed maintenance on, or physically accessed any of the GGC servers hosted by Cable One or Suddenlink.

Google moved to dismiss the complaint for improper venue under 28 U.S.C. § 1406(a) and Federal Rule of Civil Procedure 12(b)(3). The district court denied Google’s motion (…) found that the GGC servers qualified as Google’s “regular and established place of business”.

Google now petitions for a writ for mandamus directing the district court to dismiss the case for lack of venue under § 1400(b). Acushnet and 17 other companies filed an amicus brief in support of Google’s petition. This court heard oral argument on December 13, 2019.

This court “may issue all writs necessary or appropriate in aid of its jurisdiction and agreeable to the usages and principles of law” under the All Writs Act. 28 U.S.C. § 1651(a). The Supreme Court has held that three conditions must be met before a writ may issue: (1) the petitioner “must have no other adequate means to attain . . . relief,” (2) the petitioner must show that the right to mandamus is “clear and indisputable,” and (3) the court must be “satisfied that the writ is appropriate under the circumstances.” Cheney v. U.S. Dist. Court for D.C., 542 U.S. 367, 380 (2004) (first alteration in original).

(…) This court has not addressed this fundamental and recurring issue of patent law. We thus conclude that mandamus is an available remedy.

Under Cray, there are three general requirements to establishing that the defendant has a regular and established place of business: “(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.” 871 F.3d at 1360.

The first question is whether the rack space occupied by the GGC servers constitutes a “place” under § 1400(b) as interpreted in Cray. As the court in Cray emphasized, “the first requirement [under § 1400(b)] is that there ‘must be a physical place in the district.’” 871 F.3d at 1362. A “place” merely needs to be a “physical, geographical location in the district from which the business of the defendant is carried out.” Id.

Google’s petition suggests that a court’s inquiry into whether the defendant has a physical “place of business” should focus on whether the defendant has real property ownership or a leasehold interest in real property. We hold that a “place” need not have such attributes. In Cray, we rejected the notion that a “virtual space” or “electronic communications from one person to another” could constitute a regular and established place of business. 871 F.3d at 1362. Here, the GGC servers are physically located in the district in a fixed, geographic location. Indeed, Cray itself recognized that a “place of business” is not restricted to real property that the defendant must “own or lease,” and that the statute could be satisfied by any physical place that the defendant could “possess or control.” Id. at 1363 (discussing the third Cray factor). (…) see also In re Cordis Corp., 769 F.2d 733, 735, 737 (Fed. Cir. 1985) (suggesting that defendant’s employees’ homes, which were used to store the defendant’s “literature, documents and products,” could constitute a “regular and established place of business”).

(…) We agree, however, with Google’s alternative argument that under the second Cray factor, a “place of business” generally requires an employee or agent of the defendant to be conducting business at that place. This is apparent from the service statute for patent cases, now codified at 28 U.S.C. § 1694.

We conclude that a “regular and established place of business” requires the regular, physical presence of an employee or other agent of the defendant conducting the defendant’s business at the alleged “place of business.”

The question then is whether Google had an employee or agent with a regular, physical presence at its “place of business” and whether that employee or agent was conducting Google’s business. The record is clear that there is no Google employee conducting business in the Eastern District of Texas. However, there is nonetheless the question of whether the ISPs are acting as Google’s agent.

An agency relationship is a “fiduciary relationship that arises when one person (a ‘principal’) manifests assent to another person (an ‘agent’) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents to act.” Restatement (Third) of Agency § 1.01. The essential elements of agency are (1) the principal’s “right to direct or control” the agent’s actions, (2) “the manifestation of consent by the principal to the agent that the agent shall act on his behalf,” and (3) the “consent by the agent to act.” Meyer v. Holley, 537 U.S. 280, 286 (2003).

Google contracted with two ISPs, Cable One and Suddenlink, to host its GGC servers. The contracts stated that, for each ISP, Google would provide the ISP with GGC server equipment, which the ISP would install and host in server racks within its datacenter. The contracts contemplated that the ISP would perform three functions.

First, the ISP provides the GGC servers with network access, i.e., a connection to the ISP’s customers, as well as the public Internet. The ISP provides Google with a service, and Google has no right of interim control over the ISP’s provision of network access beyond requiring that the ISP maintain network access to the GGC servers and allow the GGC servers to use certain ports for inbound and outbound network traffic. In this respect, the ISPs are not agents of Google. See Restatement (Third) of Agency § 1.01 cmt. f(1) (“The power to give interim instructions distinguishes principals in agency relationships from those who contract to receive services provided by persons who are not agents.”).

Second, the ISP performs installation of the GGC servers. The contracts with the ISPs stated that the ISP was responsible for the installation of the GGC servers, including “coordination with logistics and shipping personnel; inventory of equipment received; unpacking equipment; assembling equipment based on information and instructions provided by Google; . . . connecting equipment to power strip(s) and Ethernet cable(s); and powering up equipment & executing installation scripts configuring IP address information.” Supplemental Record, Ex. A at 6; id., Ex. B at 5. Although these provisions may be suggestive of an agency relationship, we do not consider the ISPs performing these installation functions to be conducting Google’s business within the meaning of the statute. The installation activity does not constitute the conduct of a “regular and established” business, since it is a one-time event for each server.

Third, the contracts provide that “Google may from time to time request that the ISP perform certain services” involving “basic maintenance activities” with respect to the GGC servers. Id., Ex. A at 6; id., Ex. B at 5. The contracts provided examples of these activities:

Physical switching of a toggle switch; power cycling equipment . . . ; remote visual observations and/or verbal reports to Google on its specific collocation [sic] cabinet(s) for environment status, display lights, or terminal display information; labeling and dress-up of cabling within cabinet; tightening screws, cable ties, or securing cabling to mechanical connections, plugs; replacing existing plug-in only hardware such as circuit cards with spares or upgrades.

Id., Ex. A at 6; id., Ex. B at 5. The ISP’s conduct as to these activities is permitted “only with specific and direct step-by-step instructions from Google.” Id., Ex. A at 6; id., Ex. B at 5. The ISP is also prohibited from “accessing, using, or disposing of the GGC servers, in whole or in part” without Google’s prior written consent. Id., Ex. A at 2; see also Ex. B at 2.

Although the maintenance provision, like the provision on installation, may be suggestive of an agency relationship, SIT has not established that the ISPs performing the specified maintenance functions are conducting Google’s business within the meaning of the statute. The better reading of the statute is that the maintenance activities cannot, standing alone, be considered the conduct of Google’s business.

Maintaining equipment is meaningfully different from—as only ancillary to—the actual producing, storing, and furnishing to customers of what the business offers. In 1897, Congress focused on the latter sorts of activities as the conduct of business. See 29 Cong. Rec. 1900 (1897) (statement of Rep. Lacey) (discussing venue in the context of agents performing traditional business functions, such as manufacturing, sales, or direct customer services); id. at 1902 (discussing similarities to a law conferring “jurisdiction” to sue agents of an insurance company). There is no suggestion in the legislative history that maintenance functions that existed at the time, such as the maintenance of railways or telegraph lines, constituted “conducting the defendant’s business” within the meaning of the statute. See id. at 1900–02.

(…) Clear intent of Congress in enacting the statute to restrict venue to where the defendant resides or is conducting business at a regular and established place of business, with agents there regularly conducting that business, lead us to our conclusion. The venue statute should be read to exclude agents’ activities, such as maintenance, that are merely connected to, but do not themselves constitute, the defendant’s conduct of business in the sense of production, storage, transport, and exchange of goods or services.

We conclude that the Eastern District of Texas was not a proper venue because Google lacked a “regular and established place of business” within the district since it has no employee or agent regularly conducting its business at its alleged “place of business” within the district.

To be clear, we do not hold today that a “regular and established place of business” will always require the regular presence of a human agent, that is, whether a machine could be an “agent.” Such a theory would require recognition that service could be made on a machine pursuant to 28 U.S.C. § 1694. Nor do we decide what might be inferred in this respect from Congress’ amendment to the venue statute in the AIA concerning automated teller machines. See AIA § 18(c).

(U.S. Court of Appeals for the Federal Circuit, February 13, 2020, In Re: Google LLC, Docket No. 19-126, Circuit Judge Dyk)

U.S. Court of Appeals for the Seventh Circuit, Charles Curry v. Revolution Laboratories, LLC, Docket No. 17-2900

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)