Pre-Enforcement Commercialization Isn’t “Impossible” Basis for Personal Jurisdiction of Nonresident Defendant

By on September 28, 2023
Posted In Trademarks

The US Court of Appeals for the Ninth Circuit reversed a district court’s dismissal of trademark declaratory judgment claims, finding that pre-enforcement commercialization activities can be used to establish personal jurisdiction. Impossible Foods Inc. v. Impossible X LLC, Case No. 21-16977 (9th Cir. Sept. 12, 2023) (Lucero, Bress, JJ.) (VanDyke, J., dissenting).

Impossible Foods is a Delaware corporation manufacturing plant-based meat substitutes, including the “Impossible Burger.” Impossible X, a Texas LLC, is Joel Runyon’s one-person company selling apparel and nutritional supplements using a website and social media. San Diego, California, was Impossible X’s “base point” for two years, serving as Runyon’s apartment and workspace. A LinkedIn profile listed San Diego as the headquarters, and social media frequently tagged San Diego as Impossible X’s location. When vacating his lease, Runyon signed the document as “Joel Runyon, Impossible X LLC.” Even after leaving, Runyon took at least eight trips to California between 2017 and 2019 for the purpose of performing Impossible X work and promoting the Impossible brand.

In 2020, Impossible X filed a notice of opposition at the Trademark Trial & Appeal Board for Impossible Food’s trademark application. Impossible Foods responded with a declaratory judgment action in 2021 in California, seeking a finding of noninfringement and that its rights to the IMPOSSIBLE mark were superior. Impossible X sought dismissal, arguing that the district court lacked personal jurisdiction.

The criteria to establish specific personal jurisdiction over a nonresident defendant are as follows:

  • The defendant must purposefully direct its activities toward the forum or purposefully avail itself of the privileges of conducting activities in the forum.
  • The claim must arise out of or relate to the defendant’s forum-related activities.
  • Exercise of jurisdiction must be reasonable.

The district court acknowledged that the personal jurisdiction question here was a “close one” and concluded that while Impossible Foods satisfied the purposeful direction or availment requirement, the declaratory judgment action did not arise out of or relate to Impossible X’s contact with California. Impossible Foods did not begin use of its mark in commerce until June 2016, at which point Runyon had already left California. The district court found that the parties did not have a live dispute until June 2016, and Impossible X’s contacts with California prior to that time were irrelevant to personal jurisdiction. Impossible Foods appealed.

The Ninth Circuit analyzed each prong of the jurisdiction test and reversed the dismissal. First, the Court agreed with the district court that Impossible X purposefully directed activities toward California and availed itself of privileges of conducting activities by building its brand and establishing trademark rights there. A court typically treats trademark infringement as tort-like for personal jurisdiction purposes and applies the purposeful direction framework. The Ninth Circuit explained that there is no need to adhere to an “iron-clad doctrinal dichotomy” between purposeful availment and direction, however. The Court leaned on “purposefulness” vis-à-vis the forum state and “easily” concluded that Impossible X purposefully directed its activities toward California and/or availed itself of the benefits and privileges of California’s laws. The Court declined to analyze Impossible Foods’ argument regarding whether trademark enforcement activities could serve as support for personal jurisdiction, finding Impossible X’s commercialization activities were sufficient to satisfy the purposeful direction/availment prong.

Turning to the arising under prong, the Ninth Circuit concluded that Impossible Foods’ declaratory judgment action arose out of or related to Impossible X’s conduct in California. The Court explained that Impossible X’s trademark-building activities formed the basis of the contested trademark rights. The Court found that the exclusion of pre-enforcement commercialization activities was too rigid when applied to personal jurisdiction related to trademark noninfringement declaratory judgment claims. Citing “trademark law’s focus on trademark use,” the Court explained that an action seeking a trademark noninfringement declaration can arise out of “or at the very least relate to, trademark building activities in a forum state.” The Court noted that in filing an opposition at the Board, Impossible X put at issue its pre-2016 use of the IMPOSSIBLE mark, including food and nutrition, the core of this dispute.

Turning to the reasonableness prong, the Ninth Circuit concluded that requiring Impossible X to defend a lawsuit based on trademark-building activities in California, which served as Impossible X’s headquarters and Runyon’s home base and continued to be a business destination, was not unreasonable.

Having decided that Impossible X was subject to specific personal jurisdiction in California because it previously operated out of and built its brand and trademarks in California, and because its activities were sufficiently affiliated with the underlying trademark dispute to satisfy the requirements of due process, the Ninth Circuit reversed the district court’s decision.

Judge VanDyke dissented, arguing that Impossible Foods waived Impossible X’s brand-building activities as creating specific jurisdiction. Explaining that Impossible Foods’ arguments amounted to a “nothingburger,” Judge VanDyke noted that Impossible Foods was “very clear” that it relied only on Impossible X’s enforcement activities for the first two prongs. In a footnote addressing the dissent, the panel majority explained that Impossible Foods had not only argued that Impossible X satisfied the intentional act requirement in multiple ways “at the risk of repetition,” but the district court spent several pages of analysis explaining why Impossible X’s trademark-building contacts were sufficient to establish purposeful direction/availment yet insufficient to meet the “arising out of or relating to” requirements. The Court explained that its ruling was far from an express disavowal of this basis for jurisdiction but more a matter of prioritization.

Cecilia Choy, Ph.D.
Cecilia Choy, Ph.D., focuses her practice on intellectual property matters and is a certified patent agent. Read Cecilia Choy's full bio.