The US Court of Appeals for the First Circuit affirmed a district court order dismissing a trademark infringement case for lack of personal jurisdiction, finding that if challenged, personal jurisdiction cannot be assumed into existence. Motus, LLC v. CarData Consultants, Inc., Case No. 21-1226 (1st Cir. Jan. 18, 2022) (Lynch, Selya, McConnell, JJ.)
Motus is a Delaware corporation headquartered in Boston, Massachusetts. CarData is a Canadian corporation with offices in Colorado, New York and Toronto. Both Motus and CarData offer tools for companies to manage employee expense reimbursement. Motus asserted a trademark over the phrase “corporate reimbursement services,” which was present in the meta title of CarData’s website. In November 2019, Motus asked CarData to remove the phrase from its website, and CarData did so within three days.
Motus nevertheless filed a federal lawsuit in the District of Massachusetts asserting Lanham Act claims for trademark infringement, trademark dilution and other state and federal causes of action. CarData moved to dismiss for lack of personal jurisdiction, among other grounds. The district court granted the motion to dismiss, finding that Motus failed to demonstrate either the existence of personal jurisdiction over CarData or that discovery into CarData’s jurisdictional claims were warranted. Motus appealed.
On appeal, the First Circuit reiterated that Motus bore the burden of demonstrating that the district court’s exercise of personal jurisdiction over CarData was proper, noting that although a plaintiff is not required to plead facts sufficient for personal jurisdiction, “it must—if challenged—ensure that the record contains such facts.” To demonstrate that personal jurisdiction over CarData was proper, Motus had to show that CarData had sufficient “minimum contacts” with the forum that were sufficiently related to the matter at issue and evidenced a “purposeful availment of the privilege of conducting business in the forum,” and also had to show the reasonableness of the exercise of personal jurisdiction in that forum. Motus argued that CarData had sufficient “minimum contacts” with Massachusetts for personal jurisdiction to lie there, primarily because CarData had offices elsewhere in the United States and because CarData maintained a website that was available to serve Massachusetts residents.
Given that Motus’s arguments for personal jurisdiction related primarily to the publicly available nature of CarData’s website to residents of Massachusetts, the First Circuit explained that “[i]n website cases we have recognized that the ‘purposeful availment’ element often proves dispositive.” Here, the Court found nothing in the record suggesting that CarData specifically targeted or did business with Massachusetts residents. The Court rejected Motus’s citation to informational content on the website because it was not specific enough to evidence intentional solicitation of business from any particular state. Nor was there evidence of substantial CarData revenue from Massachusetts. Thus, the Court found that there was no “purposeful availment.”
Finally, the First Circuit affirmed the district court’s denial of jurisdictional discovery into CarData’s “minimum contacts” with Massachusetts. The Court found that although Motus mentioned the availability of jurisdictional discovery in a single sentence in a footnote to its opposition to CarData’s motion to dismiss, this was insufficient to adequately preserve the claim. The Court agreed with the district court’s conclusion that Motus “had not acted diligently to present facts to the court which shows why jurisdiction would be found if discovery were permitted.”
Practice Note: The affirmance of dismissal for lack of personal jurisdiction demonstrates the importance of jurisdictional allegations to plaintiffs in trademark and other intellectual property cases involving allegedly infringing internet content. In order to ensure that the choice of desired forum for adjudicating the plaintiff’s intellectual property claims is honored, plaintiffs should allege facts that demonstrate that the allegedly infringing party has sufficient “minimum contacts” with the forum of choice to show that the defendant has “purposefully availed” itself of doing business in the chosen forum. As Motus demonstrates, a general assertion that the defendant operates a publicly available website often is not enough. Motus also demonstrates that courts will not hesitate to find waiver of important arguments, such as the request for jurisdictional discovery, where those arguments are not preserved via formal motion before the court. Especially in circumstances where the court has discretion over the relief sought, parties should be assiduous in preserving and justifying their claims.