When does the globally available website of a foreign company subject that company to jurisdiction in the United States for purposes of a trademark infringement action? Does it make a difference if the foreign company has applied for a United States trademark registration? In Plixner International v. Scrutinizer GmbH, the First Circuit was reluctant to adopt any rules of general applicability, but did determine that the globally accessible website in question subjected the defendant to personal jurisdiction in any U.S. federal court, including the District of Maine.
Scrutinizer v. Scrutinizer
Scrutinizer is a German company doing business in Germany. It runs an English language interactive website, called a “self-service platform,” for analyzing software. You upload your source code to Scrutinizer, which scrutinizes it for bugs and security vulnerabilities. Scrutinizer requires payment in Euros only, and its customer contracts provide for exclusive jurisdiction in German courts in the event a dispute arises. Scrutinizer provides services globally and has 156 customers in the United States, mostly in California, from which it has earned a total of under €200,000. However, it conducts no advertising in the United States, has no servers or offices in the U.S., and its employees have never set foot here on business.
Scrutinizer might sound like a company that does business far away from Maine, but it wasn’t far enough away for Plixner International, a Maine company that owns the registered federal trademark SCRUTINZER for software analysis services. Plixner brought a trademark infringement action against Scrutinizer in the District of Maine. The German company moved to dismiss for lack of personal jurisdiction.
The Personal Jurisdiction Analysis
The District of Maine decided, and the First Circuit affirmed, that personal jurisdiction was appropriate pursuant to Federal Rule of Civil Procedure 4(k)(2), which provides that a party is subject to jurisdiction in U.S. federal courts if:
- The cause of action arises under federal law (e.g., the Lanham Act);
- The defendant is not subject to the personal jurisdiction of any state court of general jurisdiction (e.g., a foreign company); and
- The federal court’s exercise of personal jurisdiction comports with due process.
The only disputed prong was the third one. The question under that prong was whether the German company had sufficient minimum contacts with the United States. Where the allegation is specific jurisdiction, as here, the Court goes through a second three-prong analysis:
- Relatedness: Whether the claim directly arises out of the forum activities;
- Purposeful Availment: Whether the defendant’s contacts with the U.S. represented a purposeful availment of the privilege of conducting business here, thus invoking the benefits and protections of the forum’s laws and making it foreseeable that the defendant would end up in a U.S. Court; and
- Reasonableness: Whether the exercise of jurisdiction is reasonable.
Scrutinizer conceded the first prong, relatedness, because the allegation was that the trademark was being used in connection with in-forum activity.
As to the second prong, purposeful availment, the First Circuit noted that this was a “close call” (including because of the Euros-only restriction and the lack of U.S. advertising) but ultimately held that Scrutinizer had purposefully availed itself of U.S. law and the U.S. courts because:
- Although simply making a website available to U.S. consumers is not enough by itself for jurisdiction, here Scrutinizer used the website in connection with “sizeable and continuing commerce with United States customers.”
- No intervening actor dictated the location of Scrutinizer’s customers by injecting the service into a “stream of commerce” and out of Scrutinizer’s control. Rather, Scrutinizer had control over what business it accepted.
- Scrutinizer could have – but did not – design its website so as to deny or limit access to U.S. customers.
- After designing the website, Scrutinizer knowingly served U.S. customers for three and a half years and took no action to stop that activity, thus demonstrating that its U.S. contacts were “voluntary.”
- After the litigation began, the German company filed an application to register its SCRUTINIZER mark in the United States. The Court acknowledged that, in most cases, post-complaint activity is irrelevant to a personal jurisdiction analysis. Here, while the action of filing the application did not “tip the scales,” it was a further indication of Scrutinizer’s “desire to deal with the U.S. Market.”
As to the third prong, reasonableness, the Court acknowledged the burden of litigating across the Atlantic, but failed to see how this was a “special or unusual” burden for Scrutinizer, particularly where it was clear that the United States had a reasonable interest in the adjudication of a U.S. trademark.
The District of Maine opinion is worth a read for its frank and cogent overview of how various appellate courts have addressed the issue of personal jurisdiction based on online activity, and how those courts might have treated the facts of this case.
This piece originally appeared on the Foley Hoag blog.