Opinion
Civil Action SA-98-CA-171-EP.
June 3, 1998.
ORDER
On this date came to be considered Defendants B.R. Garrison and Employee Selection Developments' ("Employee Selection") Motions to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Failure to State Proper Causes of Action Upon Which Relief Can Be Granted, filed April 6, 1998, and the Plaintiff's Responses, filed April 16, 1998 in the above-styled and numbered cause. After careful consideration, this Court is of the opinion that Defendants' motions should be denied.
BACKGROUND
Plaintiff Advanced Psychometrics, Inc. brought this action asserting claims against Defendants for trademark infringement, unfair competition, dilution, unjust enrichment, and misappropriation. The Plaintiff, a Texas corporation with its principal place of business in Bexar County, Texas, sells pre-employment and job-related-character-trait testing goods and services identified by the trademark PERSONALITY PLUS. The Plaintiff, who has been selling these goods and services in interstate commerce since 1979, has a federal trademark registration protecting its PERSONALITY PLUS trademark for "consultation concerning pre-employment test and job-related character traits."
The Defendants also use the term PERSONALITY PLUS as the trademark identifying and distinguishing their goods and services from those of others. B.R. Garrison is the individual who allegedly created the PERSONALITY PLUS employment software being sold by the Defendants. Although B.R. Garrison is not a Texas citizen, his PERSONALITY PLUS software is distributed in Texas by Manuel Filreis in Austin, Texas. Furthermore, the Defendants offer interactive free PERSONALITY PLUS tests over the Internet to encourage potential customers to purchase their software. Defendant Employee Selection sells Garrison's PERSONALITY PLUS software, and, although it states that it does not target Texas clients, it admits the percentage of business conducted with clients in Texas is 4.6%.
The Plaintiff claims that the term PERSONALITY PLUS used by the Defendants is identical to the mark used by the Plaintiff, and this has caused injury to the Plaintiff. The Plaintiff alleges that the Defendants have infringed upon its trademark rights through the use of the Internet. The Defendants advertise their allegedly infringing products via the Internet in all the states, including Texas.
PERSONAL JURISDICTION
A court must conduct a two-step analysis to establish personal jurisdiction in a diversity case. First, the court must determine that nonresident defendants can be served under the law of the forum state. Second, the court must examine whether the grant of jurisdiction under state law comports with the due process clause of the fourteenth amendment. Stuart v. Spademan, 772 F.2d 1185, 1189 (5th Cir. 1985). In Texas, federal courts must only examine the second step because the Texas long arm statute extends as far as constitutionally permissible. See U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 762 (Tex. 1977),cert. denied 434 U.S. 1063, 98 S.Ct. 1235 (1978); Stuart, 772 F.2d at 1189.
Due process analysis for personal jurisdiction also requires a two-step analysis. As the Fifth Circuit stated in Stuart:
(a) the nonresident must have some minimum contact with the forum which results from an affirmative act on his part; (b) it must be fair and reasonable to require the nonresident to defend the suit in the forum state.Id. To be amenable to suit in a forum, the nonresident defendant must have purposely conducted activities in the state which invoke the benefits and protections of the forum state's laws. The contacts with the state must put the defendant on notice "that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567 (1980).
Minimum contacts analysis takes two forms. Jurisdiction can be specific or general. Specific jurisdiction focuses the minimum contacts analysis on the relationship between the defendant, the forum, and the litigation. A court has specific jurisdiction when a cause of action arises out of a defendant's contact with the forum. In such cases, a single act can support jurisdiction. Bearry v. Beech Aircraft Corporation, 818 F.2d 370, 374 (5th Cir. 1987). When the cause of action is not predicated on the defendant's contacts with the forum, the court may exercise general jurisdiction. Unlike specific jurisdiction, general jurisdiction requires more than one contact. General jurisdiction requires a set of continuous and systematic contacts between the defendant and the forum state. Id. Given the nature of general jurisdiction, corporations have a right to structure their affairs to avoid the general jurisdiction of a state's courts. Id. at 375-76.
When a defendant challenges personal jurisdiction, the plaintiff bears the burden of proof on the issue. D.J. Investments v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 545 (5th Cir. 1985). However, The plaintiff does not need to prove personal jurisdiction by a preponderance of the evidence. The plaintiff need only establish a prima facie case for personal jurisdiction. Furthermore, the Court must accept uncontroverted allegations in the plaintiff's complaint as true and all factual disputes in the parties' affidavits must be resolved in favor of the plaintiff.Id. at 545-46.
Minimum Contacts
Due process limitations require that a nonresident corporate Defendant have minimum contacts with the forum state such that it could "reasonably anticipate being haled into court there." World-Wide Volkswagen, 444 U.S. at 297. Further, maintenance of the suit in the forum state cannot offend traditional notions of "fair play and substantial justice."International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Both of the Defendants challenging personal jurisdiction, Garrison and Employee Selection, have the necessary minimum contacts with Texas to satisfy personal jurisdiction.
1) Defendant Employee Selection's Minimum Contacts
Defendant Employee Selection claims that it does not have sufficient minimum contacts within Texas to satisfy due process. Minimum contacts are lacking, according to Employee Selection, because it is a Florida corporation with its principal place of business in Florida. It does not maintain an office in Texas nor does it have a sales force or employees in the state. The corporation claims that it does not direct any advertising for such program specifically to any clients in the State of Texas, nor does it target any clients in Texas. It further claims that, although the percentage of business conducted with clients in Texas is 4.6%, any sale of the said programs are incidental to its business.
However, Defendant Employee Selection clearly has sufficient contacts within Texas to satisfy due process. It conducts 4.6 percent of its business with clients in Texas, which is a substantial amount. In addition, it advertises its PERSONALITY PLUS employment software systems over the Internet knowing that Texas citizens will see its advertisements. Moreover, Employee Selection offers free interactive PERSONALITY PLUS tests over the Internet, and allows potential customers to download the software in order to encourage them to purchase its products. Further, it conducts business within Texas over the Internet by entering into contracts with Texas citizens to purchase its PERSONALITY PLUS employment software. Finally, Employee Selection's trademark infringement has caused injury to the Plaintiff in Texas. These contacts are clearly more than sufficient to satisfy due process. See Vault Corporation v. Quaid Software Limited, 775 F.2d 638 (5th Cir. 1985) (conducting .3% of sales in forum state in addition to national advertising satisfies minimum contacts).
Although the Fifth Circuit has not spoken on the issue, a number of courts outside of the Fifth Circuit have relied upon a website to sustain personal jurisdiction, some in addition to other factors present in the cases. See Gary Scott Int'l. Inc. v. Baroudi, 981 F. Supp. 714, 717 (D.Mass. 1997) (voluntarily creating a national market through website solicitation and other sales constitutes purposeful availment); Digital Equip. Corp. v. Altavista Tech., Inc., 960 F. Supp. 456, 470 (D.Mass. 1997) (purposeful availment is satisfied when a website, arguably in violation of plaintiff's trademark rights and a licensing agreement, plainly attracts the forum's residents); Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1126 (W.D.Pa. 1997) (conducting electronic commerce constitutes purposeful availment); Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328, 1334 (E.D.Mo. 1996) (maintaining a website was sufficient for minimum contacts); Inset Systems, Inc. v. Instruction Set, 937 F. Supp. 161, 165 (D.Conn. 1996) (advertising via the Internet and maintaining a toll-free number are sufficient for defendant to purposefully avail itself of the privilege of doing business in the forum). In addition, all the Federal District Courts located in Texas that have confronted the issue of personal jurisdiction and the Internet have relied upon a website, in addition to other factors present in those cases, to sustain personal jurisdiction. See Thompson v. Handa-Lopez, Inc. 1998 WL 142300 (W.D.Tex. 1998); Telephone Audio Productions, Inc. v. Smith, 1998 WL 159932 (N.D.Tex. 1998); Mieczkowski v. Masco Corp., 1998 WL 125678 (E.D.Tex. 1998).
CD Solutions, Inc. v. Tooker, 965 F. Supp. 17 (N.D.Tex. 1997) presents the one exception to this statement. However, CD Solutions was very different from the present case because it involved a declaratory judgment action brought by the alleged infringer, seeking judgment declaring that its actions did not constitute trademark infringement. The court declined to exercise jurisdiction, reasoning that there was no injury to the Plaintiff in Texas. The Court cited a Fifth Circuit case that addressed copyright infringement involving a declaratory judgment action, Ham v. La Cienga Music Company, 4 F.3d 413 (5th Cir. 1993). There the court dismissed the case for lack of jurisdiction, but it noted that "We might reach a different result in an action asserting "Boogie Chillen" as infringing the copyright on another work." (emphasis added)Id. at 416, note 13.
Today, this Court need not determine if maintenance of a passive website alone is sufficient to sustain personal jurisdiction, because the present case involves an interactive website, where a user can exchange information with the host computer. Following the reasoning employed by the courts who have spoken on the issue, this court finds that the level of interactivity and the commercial nature of the exchange of information rise to a level sufficient for the exercise of jurisdiction.
The present case involves extensive interaction between the Defendant and Texas users/purchasers. Defendant Employee Selection does more than advertise and maintain a toll free telephone number, which, by itself, was enough to confer jurisdiction in Inset and Maritz. Employee Selection continuously interacts with its users and purchasers, allowing them to take personality tests, IQ exams, spelling tests, employment profiles, and so forth over the Internet, and also allowing them to download its software. It has created a "national market" through website solicitations and conducts "electronic commerce" by entering into contracts with Texas purchasers. In addition, the website, arguably in violation of Plaintiff's trademark rights, plainly attracts Texas residents. Therefore, Employee Selection is clearly subject to personal jurisdiction in Texas based on the reasoning asserted in any of the above-mentioned cases. In addition, Employee Selection conducts 4.6% of its business with clients in Texas, which makes it even more certain that Employee Selection is subject to jurisdiction in Texas.
Although many cases involving the Internet have chosen to exercise jurisdiction, others have declined to do so. See Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996), aff'd, 126 F.3d 25 (2nd Cir. 1997); McDonough v. Fallon McElligott, Inc., 1996 WL 753991 (S.D.Cal. 1996); Hearst Corp. v. Goldberger, 1997 WL 97097 (S.D.N Y 1997); and Smith v. Hobby Lobby Stores, 968 F. Supp. 1356 (W.D.Ark. 1997). However, these cases are distinguishable from the present case because they involve passive, not active websites.
1) Defendant Garrison's Minimum contacts
Garrison clearly has minimum contacts within Texas to satisfy due process. Not only does he advertise his products via the Internet and sell his products to Texas residents, but he also has a distributer of his products located in Austin, Texas. This is clearly sufficient to subject him to the jurisdiction of this court. See Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 112, 107 S.Ct. 1026, 1032, 94 L.Ed.2d 92 (1987). Fair Play and Substantial Justice
Garrison's Affidavit denies that Garrison owns a PERSONALITY PLUS software program, distributes it anywhere or solicits in or has any contacts with Texas. However, there is a sufficient factual dispute as to whether or not this is true. A B.R. Garrison of 3647 Country Place Blvd., Sarasota, Florida, having telephone number (941) 927-3932, claims that PERSONALITY PLUS is his registered trademark for an employment testing system, which B.R. Garrison has caused to be offered, sold, and delivered into Texas, both by direct mail advertising and via commercial interactive Internet web sites. (Johnson Affidavit, Sirbasku Affidavit, Miller Affidavit). A B.R. Garrison was named as a Defendant and served with this suit at 3647 Country Place Blvd., Sarasota, Florida. This is sufficient to raise a factual controversy concerning whether the Defendant B.R. Garrison served at 3647 Country Place Blvd., Sarasota, Florida is the same B.R. Garrison of 3647 Country Place Blvd., Sarasota, Florida, who is distributing the infringing PERSONALITY PLUS program.
The minimum requirements inherent in the concept of "fair play and substantial justice" may defeat the reasonableness of jurisdiction even if the defendant has the requisite minimum contacts with the forum. However, where minimum contacts have been established, the defendant "must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King Corporation v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 2184-85, 85 L.Ed.2d 528 (1985). The factors to be considered are the relative burdens on the plaintiff and defendant of litigating the suit in this or another forum, the forum state's interest in adjudicating the dispute, and the interstate judicial system's interest in efficient resolution of controversies. Id. at 477.
In the instant case, the exercise of jurisdiction is reasonable. The burden on the Plaintiff of litigating the suit in other forums would be greater than would be the burden on the Defendants of defending suits in other forums. The Plaintiff has asserted causes of action against four corporations and two individuals, located in five different states, who are allegedly infringing on Plaintiff's trademark rights. If the Plaintiff was not allowed to bring a cause of action against these Defendants in Texas, it would be required to bring lawsuits in Florida, Iowa, Georgia, Indiana, and Texas. Requiring the Plaintiff to sue in five different states would not only be extremely burdensome for the Plaintiff, but it would also be an inefficient resolution of controversies.
Furthermore, Texas clearly has a strong interest in protecting its Corporations from trademark infringement, unfair competition, dilution, and unjust enrichment and misappropriation, and it can do so by adjudicating disputes concerning these issues in Texas. The Plaintiff alleges that each sale of the Defendants' PERSONALITY PLUS software is a tortious act. Therefore, Texas has a significant interest in redressing any injuries caused by the sale of the PERSONALITY PLUS software in Texas. See Vault Corporation v. Quaid Software Limited, 775 F.2d 638 (5th Cir. 1985). These concerns outweigh the burden created by requiring these Defendants to defend the suit in Texas.
VENUE
The Defendants also move to dismiss this cause of action on the grounds of improper venue. Under the general venue statute, a civil action is proper in:
(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, . . . or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.28 U.S.C. § 1391(b). Venue is proper as to the action against the Defendants if a substantial part of the events or omissions arose in the Western District of Texas. "[T]here may be more than one district in which a substantial part of the events giving rise to the claim occurred, and . . . venue would be proper in each such district." Sidco Indus. Inc. v. Wimar Tahoe Corp., 768 F. Supp. 1343, 1346 (D.Oregon 1991). In the case at bar, a substantial part of the events giving rise to Plaintiff's claim occurred in this district. The Defendants' website was accessible in the Western District of Texas. The Plaintiff, who is incorporated in Texas and has its principal place of business in the Western District of Texas, was clearly injured in this district. In addition, a distributer of Garrison's allegedly infringing software is located in Austin, Texas. Because venue is proper as to the action against Defendants, the Court denies their motion to dismiss for improper venue.
Some courts have held that venue is proper in a trademark infringement suit if a defendant solicits business in the forum through its website. See Gary Scott Int'l v. Baroudi, 981 F. Supp. 714, 718 (D.Mass. 1997). In the present action, however, the Court need not determine if advertising on a website alone is sufficient for purposes of venue.
FAILURE TO STATE A PROPER CAUSE OF ACTION
The Defendants also move to dismiss Plaintiff's Amended Complaint because they state that the "form of the Amended Complaint is confusing and does not comply with Federal Rules of Civil Procedure 8(e) and 10(b)." However, this is not true, and the Defendants' arguments, discussed below, are meritless.
The Defendants' first three arguments attack the form of Plaintiff's complaint. First, the Defendants state that although the Plaintiff divides its complaint into six different sections, these sections do not correspond to the different causes of action. Second, the Defendants complain that under the section labeled "Causes of Action," the Plaintiff alleges "Punitive and Exemplary Damages," which is a remedy, not a cause of action. Finally, the Defendants argue that all of Plaintiff's causes of action should be stated in separate counts. However, these arguments are frivolous because they do not address the merits of Plaintiff's complaint and appear to be devised solely for the purpose of harassment. They will therefore be dismissed.
The Defendants also complain that the various elements of the Plaintiff's State Law causes of action are not alleged, and, further, the Plaintiff cites the wrong statute for trademark infringement (The Plaintiff cites 15 U.S.C. § 1115(a) when the Plaintiff should have cited 15 U.S.C. § 1114). However, these arguments are also without merit. The Plaintiff is not required to state the various elements of the alleged causes of action, nor is the Plaintiff required to state the applicable statutes. See Federal Rule of Civil Procedure 8(a). However, the Plaintiff clearly mentions all of the facts giving rise to the elements for the various causes of action in the complaint, which is clearly adequate. Federal Rule of Civil Procedure 8(a) states:
Claims for Relief. A pleading which sets forth a claim for relief, whether an original claim, counter-claim, cross-claim, or third-party claim, shall contain (1) a short and plain statement of the grounds upon which the court's jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds of jurisdiction to support it, (2) a short and plain statement of the claim showing that the pleader is entitled to relief, and (3) a demand for judgment for the relief the pleader seeks. Relief in the alternative or of several different types may be demanded.
The plaintiff has complied with this rule, and the Plaintiff's complaint is clearly sufficient and will not be dismissed.
CONCLUSION
Accordingly, it is hereby ORDERED that Defendants' Motions to Dismiss for Lack of Personal Jurisdiction, Improper Venue, and Failure to State Proper Causes of Action Upon Which Relief Can Be Granted are DENIED.