Where to Sue Trademark Infringers (Part 2): Specific Jurisdiction
In the last blog post, we concluded that, under the principles of general jurisdiction, a trademark owner can sue an infringer where the infringer is essentially at home in the forum state. For a company, this means the state in which the company was formed or the state in which the company has its principal place of business. For an individual, this means the state in which the individual resides. But what if the trademark owner isn’t located in the same state that has general jurisdiction over the trademark infringer? Then it’s time to examine whether specific jurisdiction exists in the state in which the trademark owner is located (which is presumably where the trademark owner would like to file suit).
Minimum Contacts Based on Specific Jurisdiction
Again, federal due process requires that a defending trademark infringer have minimum contacts with the state in which the lawsuit is filed. Minimum contacts, in turn, can be based on either general jurisdiction or specific jurisdiction. We’ve already discussed general jurisdiction, which exists when the defendant’s contacts with the forum state are so substantial, continuous, and systematic that the defendant can be sued for any and all claims in that state. Now, we’ll review specific jurisdiction, which exists when the defendant’s contacts with the forum state are more limited, but the claims arise out of or are related to those contacts.
The Three-Prong Test for Specific Jurisdiction
The Ninth Circuit has established a three-prong test for analyzing whether specific jurisdiction exists: (1) the defendant must purposefully direct its activities or consummate some transaction with the forum state or a resident thereof; or perform some act by which it purposefully avails itself of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004).
Although I’m using Ninth Circuit law specifically, the law in other circuits is mostly the same or substantially similar. The purpose of this post is simply to give an overview of what it takes to assert specific jurisdiction, not to provide an in-depth treatise on each circuit’s law relating to specific jurisdiction. There’s the law library for that.
Before proceeding to discuss each prong, it is important to note the burden of proof for all the prongs is not on the plaintiff. The plaintiff only bears the burden of proof for the first two prongs. If the plaintiff satisfies the first two prongs, the burden shifts to the defendant to “present a compelling case” that exercising specific jurisdiction would be unreasonable. Delphix Corp. v. Embarcadero Technologies, Inc., 2016 U.S. Dist. LEXIS 114255, *19 (N.D. Cal. 2016).
Prong 1: Purposeful Direction
The first prong refers to either purposeful direction or purposeful availment. When a claim is based on tortious conduct, the Ninth Circuit uses purposeful direction under this first prong – i.e., whether the defendant purposefully directed its activities at the forum state. When a claim is based in contract, the Ninth Circuit uses purposeful availment under this first prong. For trademark infringement cases, the Ninth Circuit uses purposeful direction.
The Calders-Effects Test. In order to determine whether a defendant has purposely directed its activities at the forum state, the Ninth Circuit uses the Calder-effects test. Calder v. Jones, 465 U.S. 783, 788 (1984). Under the Calder-effects test, a defendant must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.
Element 1: An Intentional Act. An intentional act is exactly what it sounds like. The defendant must have acted “with the intent to perform an actual, physical act in the real world.” More specifically, the Ninth Circuit has explained the meaning of an “intentional act” as follows:
“Intentional act” has a specialized meaning in the context of the Calder effects test. We have generally applied the “intentional act” test to actions sounding in tort. The Restatement (Second) of Torts defines “act” as follows:
The word “act” is used throughout the Restatement  to denote an external manifestation of the actor’s will and does not include any of its results, even the most direct, immediate, and intended.
“Thus, if the actor, having pointed a pistol at another, pulls the trigger, the act is the pulling of the trigger and not the impingement of the bullet upon the other’s person.” We construe “intent” in the context of the “intentional act” test as referring to an intent to perform an actual, physical act in the real world, rather than an intent to accomplish a result or consequence of that act. (The result or consequence of the act is relevant, but with respect to the third part of the Calder test — “harm suffered in the forum.”)
Schwarzenegger, 374 F.3d at 806 (citations omitted).
So, for example, manufacturing, selling, and shipping goods bearing an infringing trademark is an intentional act. Fighter’s Market, Inc. v. Champion Courage LLC, 2016 U.S. Dist. LEXIS 125122, *13-14 (S.D. Cal. 2016). Likewise so is the creation and operation of a website. James Malinchak Int’l, Inc. v. Suzanne Evans Coaching, LLC, 2016 U.S. Dist. LEXIS 135825, *8 (D. Nev. 2016). And choosing to file a trademark opposition proceeding is an intentional act too. Delphix, 2016 U.S. Dist. LEXIS 114255, at *21.
Element 2: Expressly Aimed at the Forum State. It is important to distinguish the second element of the Calders-effects test from the third. The intentional act must be expressly aimed at the forum state. But an intentional act is not expressly aimed at the forum state just because the harm will be felt in the forum state. Otherwise, the third element would swallow the second element. Malinchak, 2016 U.S. Dist. LEXIS 135825, at *7.
In 2014, the U.S. Supreme Court issued its Walden v. Fiore decision, which made it clear that specific jurisdiction cannot be based in a forum state simply because it is the state in which the plaintiff’s injury is felt. Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014). Before the Walden decision, some courts (ahem, the Seventh Circuit) had taken the position that specific jurisdiction was proper in trademark infringement cases in the trademark owner’s home state on the theory that the trademark property is located there and the damage is felt there. Of course, after Walden, that view has changed. Advanced Tactical Ordinance Systems, LLC v. Real Action Paintball, Inc., 751 F.3d 796, 800 (7th Cir. 2014). Therefore, in trademark infringement cases, specific jurisdiction can no longer be based solely on the fact that the trademark owner is located in the forum state.
But even after Walden, this second element of the Calders-effects test can be met where the trademark infringement is intentional such that the infringing “defendant knows—as opposed to being able to foresee—that an intentional act will impact another state. Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *14-20. For example, in Fighter’s Market, the infringing defendant has a prior relationship with the plaintiff and knew it would be infringing plaintiff’s marks. This was sufficient to find that defendant’s infringing conduct was expressly aimed at the forum state.
This second element is clearly the most difficult part of the Calders-effects test, and it’s where both the parties and courts get tripped up. For example, courts have struggled with whether a nationally accessible website can constitute conduct that is expressly aimed at the forum state. Id. Whether it does usually turns on whether the website is active or passive and whether there is some additional conduct targeting the forum state. Id. (e.g., selling tickets for a speaking engagement in the forum state). Likewise, national advertising is usually insufficient to constitute expressly aiming at a forum state. But advertising in state-specific or city-specific publications might be enough.
Element 3: Harm Known to Be Suffered in Forum State. This last element of the Calders-effects test is relatively straightforward. If the plaintiff (trademark owner) has its principal place of business in the forum state or if the infringing acts took place in the forum state, then the defendant knows that the harm is likely to be suffered in that forum state. Malinchak, 2016 U.S. Dist. LEXIS 135825, at *9-10; Delphix, 2016 U.S. Dist. LEXIS 114255, at *25-26; Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *20-21.
Prong 2: Relatedness
The relatedness prong is relatively simple. The Ninth Circuit has adopted the “but for” test to determine whether the claim arises out of or relates to the defendant’s forum-related activities. For purposes of trademark infringement, the Ninth Circuit holds that “if the defendant’s infringing conduct harms the plaintiff in the forum,” then this prong is satisfied. Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *22.
Therefore, if the intentional act(s) identified under the first element of the Calders-effects test under the first prong constitute trademark infringement, then the second prong of relatedness will be satisfied.
Prong 3: Fair Play & Substantial Justice
If a trademark infringement plaintiff has satisfied the first two prongs (purposeful direction and relatedness), then there is a presumption that jurisdiction is reasonable (i.e., that the exercise of jurisdiction comports with fair play and substantial justice). Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *24. Therefore, the burden then shifts to the infringing defendant to present a compelling case that the exercise of jurisdiction would be unreasonable.
Seven Factors. In order to determine if whether the exercise of jurisdiction is reasonable, the Ninth Circuit considers seven factors: (1) the extent of the defendant’s purposeful interjection into the forum state’s affairs, (2) the burden on the defendant of defending in the forum state, (3) the extent of conflict with the sovereignty of the defendant’s state, (4) the forum state’s interest in adjudicating the dispute, (5) the most efficient judicial resolution of the controversy, (6) the importance of the forum to the plaintiff’s interest in convenient and effective relief; and (7) the existence of an alternate forum. Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1323 (9th Cir. 1998).
Factor 1: Defendant’s Purposeful Interjection. This first factor considers the degree to which the infringing defendant has interjected itself into the forum state. Under this first factor, some courts collapse the inquiry to be commensurate with the second factor of the Calders-effects test under the first prong. In such cases, having already found that the defendant expressly aimed its conduct at the forum state, the court will find that the defendant’s purposeful interjection is sufficiently substantial for jurisdiction. Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *24-25. Other courts will undertake the actual inquiry and examine the degree of interjection by examining things such as the number of employees in the forum state, the amount of goods or services sold in the forum state, the amount and nature of marketing and advertising in the forum state, intent and knowledge to injure the plaintiff, and any other contacts with the forum state. Lindora, LLC v. Isagenix Int’l, LLC, 2016 U.S. Dist. LEXIS 100413, *31-32 (S.D. Cal. 2016).
Factor 2: Burden on Defendant. This second factor considers the burden on the defendant of litigating in the forum state. However, unless the inconvenience is so great as to constitute a deprivation of due process, it will not overcome clear justifications for the exercise of jurisdiction. Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *25. The language in the cases makes it clear that an infringing defendant is going to have to show a substantial burden. As with fifth factor (discussed below), the courts find that the advances in transportation and technology has decreased the burden of litigating in another forum. Lindora, LLC, 2016 U.S. Dist. LEXIS 100413 at *32-33. If the defendant is a large company, such resources will lessen the burden. Id. If the forum state neighbors or is close to defendant’s home state, the burden is less. Id. And if the defendant has litigated in the forum state previously, the burden is presumed to be less. Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *25.
Factor 3: Conflict Between States. A trademark infringement case usually involves federal law, i.e., claims being brought under the Lanham Act. Therefore, the choice is usually between two federal courts in two different states, both of which would be applying federal trademark law. Therefore, there will usually not be a conflict under this factor in trademark cases. Lindora, 2016 U.S. Dist. LEXIS 100413 at *33.
Factor 4: Forum State’s Interest. This is another factor that is almost always resolved the same way in trademark cases. If infringing acts took place in the forum state, a court will almost always hold that the forum state “has a strong interest in discouraging trademark infringement injuries that occur within the state.” Lindora, 2016 U.S. Dist. LEXIS 100413 at*34-35.
Factor 5: Efficient Judicial Resolution. This is a factor where the infringing defendant may be able to make a case for unreasonableness. This factor focuses on the location of evidence and witnesses. Fighter’s Market, 2016 U.S. Dist. LEXIS 125122 at *27. But nowadays, the Ninth Circuit holds that this factor “is no longer weighed heavily given the modern advances in communication and transportation.” Id. Practically, in a trademark case, both parties will probably be able to point to evidence and witnesses located in their respective forums of choice. Lindora, 2016 U.S. Dist. LEXIS 100413 at*34-35.
Factor 6: Importance of Forum to Plaintiff. This is a listed factor, but whenever this factor is analyzed, the Ninth Circuit brushes it aside because “the plaintiff’s convenience is not of paramount importance” to the reasonableness inquiry. Lindora, 2016 U.S. Dist. LEXIS 100413, at *35-36. It is really more of a non-factor than a factor.
Factor 7: Existence of an Alternate Forum. This factor is a little bit strange because it is only considered when the defendant has shown that the forum state is unreasonable. Therefore, if the defendant has not made a compelling case that the forum state is unreasonable, then this factor is not an issue and is not reached. Lindora, 2016 U.S. Dist. LEXIS 100413, at *35-36. However, if the defendant does show that the forum state is unreasonable, then the defendant will also need to show the existence of an alternate forum to hear the lawsuit.
In trademark infringement cases, if the plaintiff has established the first two prongs of the test for specific jurisdiction, the reality is that it is going to be very difficult for the defendant to make a compelling case that exercise of specific jurisdiction is unreasonable such that a court will decline to exercise jurisdiction.
A Simple Conclusion About Specific Jurisdiction
Analyzing every possible scenario or permutation that could give rise to specific jurisdiction would be a Herculean task, maybe even an impossible one. If it’s even doable, you’d turn gray reading this blog post.
But we can say with relative certainty that, if the infringing defendant sells its infringing goods or services in the forum state, then specific jurisdiction almost certainly exists. If the infringing defendant markets or advertises its infringing goods or services in the forum state, you may have specific jurisdiction if the infringing defendant intentionally and specifically chose to market in the forum state (as opposed to national advertising not specifically aimed at the forum state). And if the infringing defendant’s infringement was intentional such that you can show the defendant knew and targeted the plaintiff with its infringement, you may have specific jurisdiction.