Summary
finding contract to supply internet services was unrelated to plaintiff's trademark infringement claim
Summary of this case from Mattel, Inc. v. AndersonOpinion
99 Civ. 11813 (JSM)
May 16, 2001
William Dunnegan, Perkins Dunnegan, New York, NY, for Plaintiff.
Jess Collen, Collen Law Assocs., P.C., Ossining, NY, for Defendant.
OPINION and ORDER
Mattel, Inc. ("Plaintiff") brought this action for trademark infringement, trademark dilution, and cybersquatting against Defendants Securenet Information Services ("Securenet") and 2857111 Canada, Inc. d/b/a Barbie's Grill ("Barbie's Grill") (collectively "Defendants"). After engaging in limited discovery on the issue of jurisdiction, Defendants now move to dismiss the complaint for lack of personal jurisdiction. For the reasons that follow, Defendants' motion is granted.
Defendant Barbie's Grill operates two restaurants in Montreal, Canada, approximately sixty miles from the New York border. In 1997, Barbie's Grill registered the domain name "barbiesgrill.com" for the purpose of promoting its restaurant businesses on the Internet. Defendant Securenet is an Internet Service Provider ("ISP") located in Montreal, Canada, and it contracted with Barbie's Grill to host its website. A portion of the Barbie's Grill site contained information about Securenet, including its address and telephone number. (Falsone Dec. Ex. A.)
In November 1999, Michael Falsone ("Falsone"), an investigator working for Plaintiff, accessed the Barbie's Grill website from his computer in Manhattan and obtained Securenet's telephone number. (Falsone Decl. ¶¶ 2-3.) Falsone then telephoned Securenet and signed up for an individual Internet access account, which allowed him to dial into the ISP using an 800-number. Other than Falsone, Securenet has no customers outside of Canada. Falsone obtained the account by representing to Securenet's agent that he was contemplating a move to Canada. (Falsone Decl. ¶ 3.)
A. Barbie's Grill
Plaintiff invokes C.P.L.R. 302(a)(3) (ii) as the basis for long-arm jurisdiction over Barbie's Grill. This Section provides for jurisdiction over an out-of-state resident who commits a tortious act outside the state that causes injury within the state, where that party "should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce." N.Y. C.P.L.R. 302(a)(3) (ii). In sole support of its assertion that Barbie's Grill derives "substantial" income from international commerce, Plaintiff points to the fact that the two restaurants are located sixty miles from New York's border and that they accept United States currency.
New York courts have frequently noted that Section 302(a)(3) (ii) is not intended to reach purely "local" types of entities. See Bensusan Rest. Corp. v. King, 126 F.3d 25, 29 (2d Cir. 1997); Telebyte, Inc. v. Kendaco, Inc., 105 F. Supp.2d 131, 136 (E.D.N.Y. 2000). The owner of Barbie's Grill has submitted a declaration indicating that his restaurants do not advertise in New York or in the United States, and have no other contacts with the United States. (Panopalis Decl. ¶¶ 8-12.) Barbie's Grill is precisely the type of local business exempt from the reach of Section 302(a)(3) (ii). The mere fact that the restaurants accept United States currency does not alone indicate that they derive "substantial" revenue from international commerce, nor is Plaintiff entitled to an inference that they do. These allegations are patently insufficient to subject Barbie's Grill to the jurisdiction of New York courts. See Bensusan, 126 F.3d at 29 (allegation that Missouri nightclub had out-of-state customers was alone insufficient to show substantial revenue from interstate commerce); Ingraham v. Carroll, 687 N.E.2d 1293, 1296-97 (N.Y. 1997) (allegation that doctor located just over the border in Vermont treated occasional New York residents was insufficient to show substantial revenue from interstate commerce).
B. Securenet
Plaintiff seeks to invoke jurisdiction over Securenet pursuant to C.P.L.R. 302(a)(1). This Section provides for jurisdiction over a non-domiciliary who "contracts anywhere to supply . . . services in the state" where the cause of action arises from that transaction. N.Y. C.P.L.R. § 302(a)(1). Plaintiff argues that when Securenet agreed to sign on Plaintiff's investigator for an individual Internet access account, it contracted to supply services in New York. While this may be true, the problem for Plaintiff is that its cause of action does not arise out of that transaction for the purpose of conferring jurisdiction over Securenet.
Where jurisdiction under Section 302(a)(1) is based on a single transaction of business in which the defendant never entered New York, the plaintiff must demonstrate that the cause of action sued upon "substantially" relates to the underlying transaction of business. See Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 31 (2d Cir. 1996); Kreutter v. McFadden Oil Corp., 522 N.E.2d 40, 43 (N.Y. 1988). Put another way, the plaintiff's claims "must be directly and proximately related to the business transacted in New York," and "a cause of action which bears only a remote and indirect relationship to the New York transaction will not support jurisdiction." Sherwin v. Indianapolis Colts, Inc., 752 F. Supp. 1172, 1182 (N.D.N.Y. 1990). In determining whether jurisdiction over a defendant has been adequately plead and fairly asserted, courts examine the totality of the circumstances. See Pilates, Inc. v. Pilates Inst., Inc., 891 F. Supp. 175, 179 (S.D.N Y 1995).
Plaintiff's claims in this action relate to the alleged infringement of the trademark "Barbie" by the web site's owner, Barbie's Grill, and vicariously by its host, Securenet. The only connection between the "barbiesgrill.com" website and Securenet's agreement to provide Falsone with an individual account is that Falsone obtained Securenet's telephone number from information provided on the Barbie's Grill site. This simple "but for" connection is insufficient where Plaintiff's claims against Securenet do not relate to a breach of the contract between Falsone and the ISP. In fact, Falsone's purchase of an account with Securenet caused no harm to Plaintiff or to its trademark, and has nothing to do with proving the elements of Plaintiff's action for trademark infringement. See Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 763-65 (2d Cir. 1983); Roberts-Gordon LLC v. Superior Radiant Prods. Ltd., 85 F. Supp.2d 202, 213 (W.D.N.Y. 2000)
In addition, Securenet's owner testified in his deposition that although it was not the normal practice for his company to accept customers outside of Canada, he made an exception because Falsone indicated that he was moving to Canada. (Vandette Dep. at 45-47.) In these circumstances, it would be unfair to conclude that a Canadian ISP that merely provided contact information on its clients' websites should be expected to defend itself in New York, particularly where it accepted its sole United States customer at the urging of the customer, who was in fact Plaintiff's agent.
Plaintiff relies on a recent opinion of Judge Sweet, see Mattel, Inc. v. Adventure Apparel, No. 00 Civ. 4085, 2001 WL 286728, at *3-4. S.D.N.Y. Mar. 22, 2001), in which jurisdiction was found over a non-domiciliary website owner that sold one of its products to the plaintiff's investigator, the ever-enterprising Mr. Falsone. In that case, Falsone visited the allegedly infringing website "barbiesbeachwear.com" and ordered a pair of hosiery directly from Adventure Apparel, the company that maintained the site. The ISP that hosted the site was not implicated in the litigation. Presumably, a customer would travel to the "barbiesbeachwear.com" website for the purpose of purchasing clothing, which is what Falsone did. One does not travel to a restaurant site for the purpose of obtaining an ISP account. Thus, the connection between the maintenance of the infringing site and the transaction of business in New York was much closer in Adventure Apparel than in the instant case.
Alternatively, Plaintiff attempts to invoke Section 302(a)(3) (ii) as a basis for jurisdiction over Securenet. Here again, evidence that Securenet derives substantial revenue from international commerce is utterly lacking. The only customer of Securenet outside of Canada was Mr. Falsone. (Vandette Decl. ¶ 6; Vandette Dep. at 46-48.) In addition, Securenet declares that it does no advertising and maintains no bank accounts in the United States, and that other than the Falsone transaction, it derived no revenue from sales between Canada and the United States in the last three years. (Vandette Decl. ¶¶ 88-11; Dunnegan Decl. Ex. F.) On these facts, there is no basis to infer that Securenet derives substantial revenue from international commerce. See Telebyte, 105 F. Supp.2d at 136.
C. Conclusion
Because Plaintiff has failed to make out a prima facie case of jurisdiction over Defendants, see Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir. 1999), the complaint is dismissed.
SO ORDERED.