Internet Sales Lead to Personal Jurisdiction Despite No Physical Presence

By on March 12, 2020
Posted In Trademarks

Addressing the issue of personal jurisdiction in a trademark infringement case, the US Court of Appeals for the Seventh Circuit reversed the district court and concluded that the plaintiff had made a prima facie showing that defendants, who had no physical presence in the forum state, were subject to personal jurisdiction based on sales to consumers through an interactive website. Charles Curry d/b/a/ Get Diesel Nutrition v. Revolution Labs. LLC, Case No. 17-2900 (7th Cir. Feb. 10, 2020) (Ripple, J).

Charles Curry owns Get Diesel Nutrition, which has advertised and sold DIESEL TEST, a nutritional supplement for athletes, since 2005. In October 2016, Revolution Laboratories, Rev Labs Management, and Joshua and Barry Nussbaum (collectively, Revolution) began selling Diesel Test Red Series, All Natural Testosterone Booster (DIESEL TEST RED) using red and white packaging with slanted writing that was similar to Curry’s packaging. On learning of Revolution and its product, Curry sent two cease-and-desist emails and shortly thereafter filed a pro se complaint against Revolution asserting trademark infringement, dilution, false advertising and cybersquatting under the Lanham Act, as well as common law trademark infringement, fraud and unfair competition under the Illinois Deceptive Trademark Practices Act.

Revolution filed a motion to dismiss for lack of personal jurisdiction, arguing that Revolution:

  • Does not hold itself out as doing business in Illinois on its website
  • Is not registered to do business in Illinois
  • Does not have a place of business, a telephone, a mailing address or employees in Illinois
  • Does not have any real or personal property in Illinois
  • Has never attended any trade shows or business meetings in Illinois.

In response, Curry pointed out that individuals in Illinois can access Revolution’s interactive website and other third-party websites to purchase supplements, and can select Illinois as a “ship to state.” Curry further alleged (and Revolution acknowledged) that Revolution has sold and shipped its DIESEL TEST RED product to individuals in Illinois, and has sent “thank you again for your business” emails acknowledging the order and containing the Illinois shipping address. Revolution asserted that jurisdiction was not proper given these minimal contacts, and that it only sold DIESEL TEST RED products to 767 Illinois residents, which accounted for only 1.8% of overall sales.

The district court granted Revolution’s motion to dismiss without an evidentiary hearing, and Curry appealed.

The Seventh Circuit reviewed (de novo) the denial of personal jurisdiction over Revolution, taking all facts asserted by Curry as true and resolving any disputed facts in his favor. As the court explained, while Curry had the burden of proof to establish personal jurisdiction over Revolution, Curry only had to make a prima facie showing that jurisdiction was proper because the district court did not have an evidentiary hearing on the motion to dismiss.

To determine whether specific personal jurisdiction over Revolution was proper under Seventh Circuit law, Curry was required to establish the following in order to make a prima facie case:

  • Revolution purposely availed itself of the privilege of conducting business in Illinois.
  • Curry’s alleged injuries arose from Revolution’s activities in Illinois.
  • The exercise of personal jurisdiction over Revolution comported with the traditional notions of fair play and substantial justice.

At the outset, the Seventh Circuit noted that personal jurisdiction is not dependent on having some type of physical presence in Illinois. Rather, the purposeful-direction inquiry may be satisfied by actions that are taken outside of Illinois and directed at the state. Here, the Court viewed Revolution’s use of an interactive website through which customers could purchase DIESEL TEST RED and select Illinois as a “ship to” state,” along with Revolution’s “thank you” emails, as purposefully directed to Illinois residents. The Court found Revolution’s argument that its sales in Illinois were simply automated transactions unilaterally initiated by Illinois residents to be unpersuasive, given that Revolution set up its web-based system to specifically address Illinois residents. The argument that jurisdiction was improper because Revolution had not aimed any advertising at the state was found to be similarly unavailing because Revolution could have reasonable foreseen that its product would be sold in Illinois. Thus, the Court held that Revolution purposely availed itself of the privilege to do business in Illinois.

The Seventh Circuit next analyzed whether there was a connection between Revolution’s sales of its DIESEL TEST RED product and Curry’s claims for infringement. Curry established that Revolution sold DIESEL TEST RED products, which displayed the allegedly infringing trademark, to customers in Illinois. According to Curry, Revolution’s sales of these products allegedly created confusion in the marketplace and formed the basis for the litigation. On that basis, the Court held that Curry had made a prima facie showing that his claims were related to Revolution’s sales in Illinois.

Finally, the Seventh Circuit considered whether exercising personal jurisdiction over Revolution complied with the notions of fair play and substantial justice. Although Revolution had no physical contacts with Illinois, the Court found that it would not be unfair to subject it to jurisdiction there, because Revolution held itself out as doing business nationwide through its own and third-party websites. The Court further noted that Illinois has a strong interest in providing a venue for its residents, such as Mr. Curry, to bring claims against out-of-state defendants, such as Revolution. As a result, the Court held that any burden on Revolution to defend an action in Illinois was minimal.

Holding that Curry made a prima facie showing of specific personal jurisdiction over Revolution, the Court vacated the dismissal of the claims against the defendants and remanded the case back to the district court.

Paul Devinsky
Paul Devinsky advises clients on patent, trademark and trademark litigation and counseling, as well as copyright counseling. He is also active in intellectual property (IP) licensing, transactions and due diligence, as well as post-issuance US Patent and Trademark Office (USPTO) proceedings such as reissues and inter partes review, covered business method patent review and post grant review, and appellate (Federal Circuit) advocacy. Read Paul Devinsky's full bio.