Opinion
Case No. 2:03 CV 613 TC.
March 17, 2005
ORDER
Plaintiff Darryl Peterson, a.k.a. Maxx Payne, initiated the current lawsuit against Defendants Rockstar Games, Inc. ("Rockstar"), Apogee Software, Ltd. ("Apogee"), Gathering of Developers, Inc. ("Gathering"), Remedy Entertainment, Ltd. ("Remedy"), Take-Two Interactive Software, Inc., ("Take-Two"), and MaxCorp, Ltd. ("MaxCorp"), alleging misappropriation and violations of the Lanham Act. Specifically, Mr. Peterson alleges that the various Defendants misappropriated his persona and name in the production, marketing, and sales, of the video games "Max Payne" and "Max Payne 2: The Fall of Max Payne."
Mr. Peterson claims to have used the name "Maxx Payne" spelled in various ways, but predominantly as "Maxx Payne," The video games spell the name "Max Payne." As such, in the course of this Order Mr. Peterson's persona will be referred to with the spelling "Maxx" while the video games will be spelled "Max."
Mr. Peterson claims that he began developing and using the name and image of "Maxx Payne" in 1988. According to Mr. Peterson, he is now known by that name as a wrestler, actor, musician, and through his involvement in video game production.
The matter is now before the court on motions by Defendant Remedy and Defendant MaxCorp to dismiss Mr. Peterson's complaint for lack of personal jurisdiction. Both Defendants maintain that they do not have sufficient contacts to subject them to either general or personal jurisdiction in the State of Utah.
For the reasons set forth below, the court concludes that Mr. Peterson has failed to establish that Remedy and MaxCorp have sufficient contacts with the State of Utah so as to support a finding of personal jurisdiction.
Factual Background
The submissions of the parties, including affidavits, deposition testimony, and other exhibits, establish the following:
Remedy
Remedy is a Finnish software development company founded in 1995. It maintains approximately twenty employees, all of whom live and work in Finland. Remedy was formed and exists under the laws of Finland and its only offices are located in Espoo, Finland.
Remedy does not own, lease or control any real estate or other property in Utah. It has no employees in Utah. Remedy does not maintain any bank accounts, investments or assets in Utah and does not pay taxes in Utah. Remedy is not registered or licensed to conduct business in Utah and does not solicit business or advertise here.
In May 1997, Remedy entered into a Co-Development and Game Franchise Agreement ("Co-Development Agreement") with Apogee. In accordance with the Co-Development Agreement, Remedy developed the software for the Max Payne video games. The Co-Development Agreement made clear that Apogee and Remedy would remain independent entities: "No partnership or joint venture is created by this Agreement, nor any principal-agent or employer-employee relationship." (Pla.'s Mem. Opp. Mot. Dismiss, Ex. B ("Co-Development Agreement") at Art. 11.9.) Generally, the Co-Development Agreement contemplates a "co-operative business relationship for [a] common goal." (Id. at Art. 1.1) The common goal was the development of "the Game Universe based on a main character . . . known as `Max Payne.'" (Id. at Art. 3.1)
At the time of the Co-Development Agreement, Remedy was paid $100,000.00 for its development services. In addition, Remedy is entitled to a percentage of the sales of the game. (Co-Development Agreement at Art. 6) Remedy is not responsible for the packaging, distribution, or sales of the Max Payne video games in the United States. (Id. at Arts. 3 4). Article 5.3 of the Co-Development Agreement grants Apogee the "exclusive, perpetual, and world-wide license . . . to all [the Game Software's] copyrights . . . including all rights . . . to duplicate, market, sell . . . and otherwise exploit the game software." (Id. at Art. 5.3 (emphasis added)) Additionally, Article 4.2 provides that "Apogee shall be the exclusive marketer of the Game Franchise" and that "Remedy shall not market, license, or otherwise exploit the Game Software." (Id. at Art. 4.2)
After Remedy developed the software, Remedy and Apogee delivered it to Take-Two pursuant to an Asset Purchase Agreement between Apogee and Remedy as sellers, and Take-Two and MaxCorp as purchasers. (Def. Remedy's Reply Mem. Supp. Mot. Dismiss, Ex. M ("Asset Purchase Agreement")) Take-Two and MaxCorp purchased the U.S. and International rights to the Max Payne video games. Take-Two's subsidiaries, Rockstar and Gathering became exclusively responsible for the reproduction, packaging and distribution of the games in the United States. Remedy is not a subsidiary or affiliate of Take-Two or any of its subsidiaries.
Although Remedy maintains a website, remedy.fi, it primarily provides information about the company and its products. The Max Payne video games are not offered for sale on that website. A visitor to the Remedy website can download a video game, "Death Rally." Also, there is a link to the maxpayne.com. website for visitors seeking information about the Max Payne video game. The maxpayne.com website was initially owned by Apogee. Pursuant to the Asset Purchase Agreement, Take-Two and Rockstar own and operate both the maxpayne.com website and the maxpayne2.com website. (Asset Purchase Agreement at Sched. A-3) On the Maxpayne.com website there was a link to Apogee's internet storefront maintained by Yahoo where consumers could purchase the Max Payne video game.
Remedy provided information regarding the Max Payne video game to Apogee for maxpayne.com pursuant to the Co-Development Agreement. This information included graphics, text, screen shots, and other information. However, the Co-Development Agreement prohibits Remedy from pursuing any marketing activities for the Max Payne games including any internet website marketing or promotion. (Co-Development Agreement at Arts. 4.2 5)
There is evidence that as early as 1998, Petri Jarvilehto, a Remedy employee, knew about Mr. Peterson's use of the Maxx Payne name as a professional wrestler. (See Def. Remedy's Reply Mem. Supp. Mot. Dismiss, Ex. Q) There is nothing else in the record indicating that Remedy was aware of Maxx Payne before July 2002, when it received correspondence leading to this current litigation. (See Def. Remedy's Reply Mem. Supp. Mot. Dismiss, Ex. O)
MaxCorp
MaxCorp is a wholly-owned subsidiary of Defendant Take-Two. MaxCorp was organized under the laws of Bermuda. MaxCorp receives no revenue from the United States and does not maintain a U.S. office. MaxCorp does not hold any U.S. real estate, and it does not maintain a U.S. telephone number. It does not market, advertise, or conduct any business operations in the United States.
MaxCorp does not maintain any websites, although Take-Two owns and operates the maxpayne.com website and the maxpayne2.com website. MaxCorp receives no revenue from the sales of either of the Max Payne video games in the United States. MaxCorp's corporate structure is such that it is prohibited from receiving any revenue from the United States and serves only as a holding company for international intellectual property rights.
From its formation until March 29, 2004, four of the five MaxCorp officers were not U.S. citizens and half of its directors were not U.S. citizens. Three of the five current MaxCorp officers are non-U.S. citizens, and are not affiliated in any way with Take-Two.
There is no evidence in the record indicating that MaxCorp was aware of the existence of Mr. Peterson's Maxx Payne character until 2004, after this litigation began.
Analysis
Defendants Remedy and MaxCorp each claim that the causes of actions asserted against them should be dismissed for lack of personal jurisdiction. Mr. Peterson contends that Remedy and MaxCorp are subject to both general and specific jurisdiction. To defeat the current motions, Mr. Peterson is required to make a prima facie showing of personal jurisdiction. Doehring v. Copper Mountain, Inc., 259 F.3d 1202, 1210 (10th Cir. 2001); see also OMI Holdings, Inc. v. Royal Ins. Co., 149 F.3d 1086, 1091 (10th Cir. 1998). Where discovery has been conducted on the jurisdictional issues, but no evidentiary hearing has been held, the plaintiff's prima facie showing "must include an averment of facts that, if credited . . . would suffice to establish jurisdiction over the defendant." In re Magnetic Audiotape Antitrust Litigation, 334 F.3d 204, 206 (2d Cir. 2004) (quotation omitted). A plaintiff must provide more than "conclusory allegations" to meet his burden. Ten Mile Indus. Park v. Western Plains Serv. Corp., 810 F.2d 1518, 1524 (10th Cir. 1987).
A court has general jurisdiction over a defendant if the defendant has continuously and systematically purposefully availed himself of the privilege of conducting activities within the forum state, such that the defendant should reasonably anticipate being haled into court there. See Asahi Metal Indus. Co. v. Superior Crt., 480 U.S. 102, 109 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985); World-Wide Volkswagen, 444 U.S. at 291. "A nonresident defendant may be subjected to the forum's general jurisdiction even where the alleged activities of the defendant upon which the claims are based are unrelated to his contacts with the forum." In re Application to Enforce Admin. Subpoenas Duces Tecum of S.E.C. v. Knowles, 87 F.3d 413, 418 (10th Cir. 1996) (quotation and citation omitted).
"[S]pecific jurisdiction may be exercised where the defendant has `purposely directed' its activities toward the forum jurisdiction and where the underlying action is based upon activities that arise out of or relate to the defendant's contacts with the forum." Id. (citation omitted). "Even a single purposeful contact may be sufficient to meet the minimum contacts standard when the underlying proceeding is directly related to that contact." Id. at 419 (citation omitted).
Utah's Long Arm Statute provides the following analytical basis for determining whether specific jurisdiction is appropriate: (1) identifying defendant's activities in Utah; (2) determining whether a nexus exists between plaintiff's claim and defendant's conduct in Utah; and (3) determining whether the exercise of jurisdiction comports with due process limitations.Far West Capital, Inc. v. Towne, 828 F.Supp. 909, 912 (D.Utah 1993) (citing U.C.A. § 78-27-24).
To determine whether the exercise of personal jurisdiction over a defendant is proper under the laws of Utah, the court first considers whether the defendant's activities fall within the activities listed in Utah's long-arm statute. Utah's long-arm statute provides that "[a]ny person . . . who . . . does any of the following enumerated acts, submits himself . . . to the jurisdiction of the courts of this state as to any claim arising out of or related to: (1) the transaction of any business within this state; . . . (3) the causing of any injury within this state. . . ." U.C.A. § 78-27-24. The statute defines the transaction of business as "activities of a non-resident person . . . in this state which affect persons or businesses within the state of Utah." Id. § 78-27-23 (emphasis added). Utah's "legislature has declared that the long-arm statute must be interpreted broadly `so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the Fourteenth Amendment to the United States Constitution.'" Soma Med. Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1297 (10th Cir. 1999).
Under the Due Process Clause, personal jurisdiction may be exercised over a nonresident defendant "so long as there exist minimum contacts between the defendant and the forum State."World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (quotation and citation omitted).
A court cannot exercise either general or specific jurisdiction over a defendant if it would "offend traditional notions of fair play and substantial justice." Trierweiler v. Croxton Trench Holding Corp., 90 F.3d 1523, 1533 (10th Cir. 1996) (quotation and citation omitted).
Mr. Peterson has argued that Remedy and MaxCorp are subject to both general and specific jurisdiction, often conflating the two issues. It is clear from the facts before the court that Remedy's contacts with Utah, standing alone, are not sufficiently continuous and systematic to support a finding of general jurisdiction. Therefore, the court centers its analysis on Mr. Peterson's arguments more directly related to specific jurisdiction.
REMEDY'S MOTION TO DISMISS
Mr. Peterson has opposed Remedy's motion to dismiss on the grounds that: (1) Remedy has purposely availed itself of the benefit of doing business in the forum through the stream of commerce, intentional acts, and its internet website; and (2) Remedy's relations with the other Defendants are sufficient to impute their contacts and actions to Remedy.
Purposeful Availment
In order to show that Remedy is subject to specific jurisdiction in Utah, Plaintiff must demonstrate that Remedy has purposely availed itself of the privilege of conducting activities in the State of Utah by engaging in activity "expressly aimed" or "intentionally" directed at Utah resident.Far West Capital, 46 F.3d 1071, 1074 (10th Cir. 1995).
"A defendant's contact are sufficient if the defendant `purposely avails itself of the privilege of conducting activities within the forum State.'" Far West Capital, 46 F.3d at 1074 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958). To exercise personal jurisdiction the defendant must have deliberately created some relationship with the forum state that would serve to make the potential exercise of jurisdiction foreseeable. Burger King, 471 U.S. at 475; see also First Mortgage Corp. v. State Street Bank Trust Co., 173 F.Supp.2d 1167, 1173 (D.Utah 2001).
(a) Stream of Commerce
Mr. Peterson asserts that Remedy sought to serve, directly or indirectly, the market for its products in the state of Utah and is therefore subject to jurisdiction in this forum. Mr. Peterson argues that Remedy manufactured the Max Payne video game for distribution by Apogee and Take-Two with the knowledge that it would be distributed throughout the United States. Mr. Peterson asserts that Remedy's creation of the game with the knowledge that it would be distributed in Utah is sufficient to allow the exercise of jurisdiction. Plaintiff relies on Asahi Metal Indus. Co., Ltd. v. Superior Court, 480 U.S. 102, 110 (1987). While recognizing the authority of Asahi, the Tenth Circuit has not adopted the broadly construed application of the stream of commerce theory advocated by Plaintiff.
Under the stream of commerce theory, an entity which places a product on the market is foreseeably subject to jurisdiction in any place where its products are sold. See Worldwide Volkswagen, 444 U.S. 286 (1980).
In Black Decker (U.S.) Inc. v. Pro-Tech Power Inc., 26 F.Supp.2d 834 (E.D.Va. 1998), the defendant manufacturer of power tools knew that the distributor of the tools would sell the products in the challenged forum state. The court wrote that: "the mere fact that [the defendants] manufacture power tools for [the distributor] with knowledge that some of those tools will be sold in Virginia is insufficient to support the assertion of personal jurisdiction." Black Decker, 26 F.Supp.2d at 843. The court required evidence that the defendants had structured their business relationship to facilitate the sale of the tools in Virginia. Id.; see also Bridgeport Music, Inc. v. Still N The Water Publ'g, 327 F.3d 472, 480-83 (6th Cir. 2003) (music publisher's knowledge that distributor was likely to distribute its product nationally, coupled with other indirect contacts, insufficient to establish purposeful availment).
Mr. Peterson has not shown that Remedy acted deliberately to create a relationship with Utah or that Remedy had anything to do with the sale of the Max Payne video game beyond its initial production and the provision of information to Apogee for inclusion on the maxpayne.com website. Accordingly, Mr. Peterson has not shown that personal jurisdiction over Remedy is appropriate under a stream of commerce theory.
(b) Intentional Direction of Wrongful Acts
Jurisdiction may be proper where a defendant's "intentional, and allegedly tortious, actions were expressly aimed at" the forum state. Calder v. Jones, 465 U.S. 783, 789 (1984). Mr. Peterson maintains that Remedy knew of Mr. Peterson's use of the Maxx Payne image and acted intentionally and tortiously through its own unauthorized use of the Maxx Payne image knowing that the harm was likely to be suffered in Utah. Mr. Peterson asserts that this is sufficient for a finding of personal jurisdiction.
Mr. Peterson argues that Remedy should have known about the harm being caused in Utah after a July 24, 2002 letter from his counsel. (Def. Remedy's Reply Mem. Supp. Mot. Dismiss, Ex. O). The letter, which was sent from Idaho, does not mention that Mr. Peterson resides in Utah. (Id.) The only geographical reference is found in the return addresses of Mr. Peterson's counsel which are located in Idaho. (Id.) This letter briefly explains Mr. Peterson's development of Maxx Payne and notes that Mr. Peterson considers it "one of his most valuable assets." The letter threatens possible legal action (Id.)
As noted earlier, the sole evidence that Remedy was aware of Mr. Peterson before the receipt of the July 2002 letter, is that a Remedy employee, Petri Jarvilehto, wrote an e-mail in 1998 in which he stated "I recently read an interview with former pro wrestler Max Payne and he was asked who where [ sic] the legit toughest guys that he ever wrestled. Keep in mind that Max was a pretty tough guy and wrestled for the University of Iowa." (Def. Remedy's Reply Mem. Supp. Mot. Dismiss, Ex. Q) There is no indication that Mr. Jarvilehto was aware of Mr. Peterson's continued development of the Maxx Payne character or of the fact that he resided in Utah.
The Tenth Circuit has explained that "mere allegation that an out-of-state defendant has tortiously interfered with contractual rights or has committed other business torts that have allegedly injured a forum resident does not necessarily establish that the defendant possesses the constitutionally required minimum contacts." Far West Capital, 46 F.3d at 1079. Mr. Peterson must establish that Remedy intentionally directed its activity toward him, or that Remedy at least knew of the potential for injury and could have reasonably anticipated being "haled into court" in Utah. See Calder, 465 U.S. at 784.
The tortious activity alleged by Mr. Peterson is the Defendants' alleged misappropriation of the Maxx Payne image. As far as evidence that Remedy knew of the potential harm to Mr. Peterson here in Utah, all the record shows is that, in 1998, Mr. Jarvilehto, a Remedy employee, knew of Maxx Payne in his capacity as a professional wrestler. This is not evidence that Remedy was a primary participant in intentional wrongdoing directed at Mr. Peterson or at Utah. Similarly, Remedy was aware of Mr. Peterson as a result of the cease and desist letter sent in July of 2002 by Mr. Peterson's attorney. But this gives no indication that Mr. Peterson resides in Utah, nor does it support the proposition that Remedy was a primary participant in intentional wrongdoing directed toward the forum.
Further, Remedy did not take part in the marketing and sales of the video games, the activities Mr. Peterson claims caused him harm. Under the plain terms of the Co-Development Agreement, Remedy has contractually ceded the marketing and sales responsibilities to Apogee and is responsible solely for the development of the game software. (Co-Development Agreement at Arts. 4.2 5)
Mr. Peterson has failed to establish that Remedy directed tortious actions at Utah. Accordingly, this theory is not a basis for the exercise of personal jurisdiction.
(c) Interactive Website
Mr. Peterson argues that because Remedy maintains a website that is accessible to Utah residents, the court can exercise jurisdiction over Remedy. Although Mr. Peterson is correct that operation of website may form the basis of personal jurisdiction, the court must examine the nature of the specific website. For example, a passive website that does no more than make information available, cannot serve as a basis for jurisdiction.Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1123-24 (W.D.Pa. 1997); iAccess, 182 F.Supp.2d at 1187. Courts generally require something more than a website's mere existence to indicate purposeful direction of activities toward the forum in a substantial way. GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1350 (D.C. Cir. 2000); iAccess, 182 F.Supp.2d at 1187.
The Tenth Circuit has held that the exercise of personal jurisdiction is not properly based on the maintenance of a "`passive Web site that does little more than make information available to those who are interested in it.' Under these circumstances, `a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions.'" Soma, 196 F.3d at 1296 (quoting Patriot Sys., Inc. v. C-Cubed Corp., 21 F.Supp.2d 1318, 1323-24 (D. Utah 1998)). Personal jurisdiction is proper when business is conducted by way of the website. Jurisdiction might also be appropriate in the case of an interactive website that allows a user to exchange information with the host computer. Id.; see also iAccess, 182 F.Supp.2d at 1187.
In iAccess, this court found that the allegation of one sale made over the internet, without further evidence of purposeful direction of activities to the forum, was insufficient for a finding of personal jurisdiction. iAccess, 182 F.Supp.2d at 1189. Despite the allegation of one sale to a Utah resident, the court wrote: "[N]o evidence exists that a single Utah resident has visited the website. Here, [the defendant] `has "consummated no transaction" and [has] made no "deliberate and repeated" contacts with [Utah] through its Web site.'" iAccess, 182 F.Supp.2d at 1189 (citing Millennium Enters., Inc. v. Millennium Music, LP, 33 F.Supp.2d 907, 921 (D.Or. 1999)).
As discussed previously, the Remedy website, remedy.fi, serves primarily as an informational resource about Remedy. The website provides a link to maxpayne.com for consumers wishing to learn more about that game and offers a free download of a different game developed by Remedy. The fact that the Remedy website does allow a download and allows for viewers to communicate with Remedy, demonstrates that the website is interactive to a degree, although not with respect to the Max Payne video games. Regarding the Max Payne video games Remedy provides basic information and a link to a separate website. There is no evidence of any business being transacted over this site, or that any Utah resident has even visited the site. The level of interactivity fails to indicate purposeful direction of activity toward the forum and is insufficient for a finding of personal jurisdiction. The Actions and Contacts of Others
Mr. Peterson argues that personal jurisdiction over Remedy is proper because of Apogee and Take-Two's contacts and actions in Utah. Specifically, Mr Peterson alleges that the actions of Apogee and Take-Two in the marketing, sales, and distribution of the Max Payne video games in Utah are sufficient to find that Remedy purposefully directed activity to the forum state. Additionally, Mr. Peterson argues that the internet websites maintained by the other Defendants are sufficient to establish the requisite contacts between Remedy and the forum.
In support of this proposition, Mr. Peterson claims that the Defendants created, produced, marketed, and sold the video games as part of a common venture or enterprise and that Remedy was a primary participant in that enterprise. Mr. Peterson asserts that this business relationship is sufficient to impute the actions of the other Defendants to Remedy.
In support, Mr. Peterson has directed the court to the language of the Supreme Court in Burger King v. Rudzewicz:
We have previously noted that when commercial activities are "carried on in behalf of" an out-of-state party those activities may sometimes be ascribed to the party, at least where he is a "primary participan[t]" in the enterprise and has acted purposefully in directing those activities.Burger King v. Rudzewicz, 417 U.S. 462, 480 n. 22 (1985) (citations omitted). Mr. Peterson asserts that, in reality, Remedy and Apogee were partners and that Apogee's contacts in Utah must be attributed to Remedy.
The record does not support Mr. Peterson's argument. Rather, it is clear that Remedy and Apogee remained separate business entities throughout the development of the Max Payne video games. Key to Remedy and Apogee's relationship is the Co-Development Agreement which states that: "No partnership or joint venture is created by this Agreement, nor any principal-agent or employer-employee relationship. Neither Company has . . . the authority to act as an agent for the other Company except as explicitly stated in this Agreement." (Co-Development Agreement at Art. 11.9) Remedy and Apogee agreed to a specific assignment of duties and obligations with Remedy generally responsible for software development and Apogee generally responsible for all marketing and sales. (Id. at Art. 3 (assigning to Remedy the development of the "Game Universe" and software and the delivery of the "Game Software"); Art. 4 (assigning to Remedy the marketing duties)). The Co-Development Agreement is, in essence, a sales contract in which Remedy agrees to develop the product for Apogee in return for a one-time fee of $100,000.00, development advances (subject to repayment), and royalty payments as a percentage of the game sales. (Id. at Art. 6)
Doing business with a company that does business in Utah is not the same as doing business in Utah. See Payless Shoe Source, Inc. v. Genfoot Inc., 2004 WL 2182184, *4 (D.Kan. 2004) (citing Red Wing Shoe Co., Inc. v. Hockerson-Hallberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998)). In the Tenth Circuit, the acts of an independent distributor are not attributable to a foreign manufacturer for purpose of establishing general jurisdiction in the absence of an "agency relationship." Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 459 (10th Cir. 1996); see also Purple Onion Foods, Inc. v. Blue Moose of Boulder, Inc., 45 F.Supp.2d 1255, 1259-60 (D.N.M. 1999) (the actions of an independent distributor of a product cannot be imputed to the developer of that product).
In Payless Shoe Source, defendant Genfoot was a Canadian manufacturer whose products were sold to a national distributor. The court, citing Red Wing Shoe, noted that it would be improper to apply the actions of the distributor to the manufacturer "because it would subject a defendant to nationwide personal jurisdiction if it does business with a company that does nationwide business." Payless Shoe Source, 2004 WL 2182184 at *4. But, the court found that Genfoot had additional contacts separate from those of its nationwide distributor sufficient for a finding of personal jurisdiction. Id. (among the various contacts, Genfoot sent a letter of infringement into the forum, utilized websites directing customers to retail locations in the forum, and at least two sales people had maintained a relationship with the Plaintiff in the forum for the purpose of selling Genfoot products).
Mr. Peterson has not shown that Remedy has any contacts with the State of Utah absent its relationship with Apogee and has not established an agency relationship that would justify the imputation of Apogee's contacts and actions to Remedy for the purpose of personal jurisdiction.
Mr. Peterson also claims that the internet sales of Apogee and Take-Two should be imputed to Remedy. Mr. Peterson maintains that Apogee's internet sales of the Max Payne video game are attributable to Remedy because of a hyperlink from Remedy's website to maxpayne.com, which, in turn, had a hyperlink to Apogee's internet storefront where consumers could purchase the game.
To purchase the Max Payne video game a visitor to Remedy's website had to click a link to the maxpayne.com website, and from there follow another link to a Yahoo storefront where the game could be purchased. The maxpayne.com website was originally owned and run by Apogee and the Yahoo storefront was maintained for Apogee. It appears, from the materials submitted by the parties, that this Yahoo storefront no longer exists and that the maxpayne.com website has since been transferred to Take-Two.
In support of his position, Mr. Peterson cites to Rainy Day Books, Inc. v. Rainy Day Books and Café, LLC, 186 F.Supp.2d 1158 (D.Kan. 2002). There, the court found that specific jurisdiction was appropriate over a defendant whose only contacts to the forum were through a website which was not owned or maintained by the defendant. Visitors to the defendant's website could click a link to a third-party website which offered the defendant's books for sale.Id. at 1164. However, the Rainy Day facts are significantly different from those before the court. In Rainy Day, the defendant set the sales price for its books and received all orders placed through the third-party website. All e-mail order confirmations, packing lists, and shipping labels, gave the appearance that the books were purchased from the defendant.Id.
In contrast, the website where a consumer could purchase the Max Payne video games was two steps removed from Remedy's website. Pursuant to the Co-Development agreement Remedy has no control over the marketing or pricing of the games. Remedy did not ship the games, and the product packaging gave no indication that the games were coming from Remedy.
MAXCORP'S MOTION TO DISMISS
Mr. Peterson raises several of the same arguments in opposition to MaxCorp's motion to dismiss as he raised in opposition to Remedy's motion to dismiss. Specifically, Mr. Peterson contends that: (1) MaxCorp intentionally directed its tortious actions toward Plaintiff in Utah; and (2) the contacts of Take-Two, MaxCorp's parent, can and should be imputed to MaxCorp for a finding of jurisdiction.
Intentional Direction of Wrongful Acts
In order to find jurisdiction over MaxCorp, Mr. Peterson must show that MaxCorp intentionally directed its activity toward him, or that MaxCorp, at least, knew of the potential for injury and could have reasonably anticipated being "haled into court" in the United States, let alone Utah. See Calder, 465 U.S. at 784;In re Magnetic Audiotape Antitrust Litigation, 334 F.3d 204, 208 (2d Cir. 2004).
MaxCorp, a subsidiary of Take-Two, was not formed until May 2002. Take-Two became aware of Mr. Peterson's claims in July of 2002. MaxCorp was formed and had already acquired its non-U.S. intellectual property rights to the Max Payne video game two months before Take-Two first became aware of Mr. Peterson's claims. (Reply Decl. of Kenneth Selterman at paras. 3-5) According to the declaration of Kenneth Selterman, General Counsel for Take-Two, MaxCorp was not aware of Mr. Peterson's claims until 2004, when it was added to this lawsuit. (Reply Decl. of Kenneth Selterman at para. 5)
MaxCorp was unaware of Mr. Peterson's use of the Maxx Payne image or his claims before May of 2004, and MaxCorp has received no revenue from the sales of the Max Payne video games in the United States. (Id. at para. 6) There is simply no evidence to support Mr. Peterson's argument that MaxCorp could reasonably have anticipated that it would be sued in Utah.
Contacts of Take-Two
Mr. Peterson argues that Take-Two has "exerted extensive control" over MaxCorp to the degree that Take-Two's contacts should be imputed to MaxCorp, its subsidiary. The question is whether the contacts and actions of a parent company may be imputed to its subsidiary based solely on that relationship.
This is a different issue than discussed with Remedy above. While the situations are similar, MaxCorp has a clearly established corporate relationship with Take-Two, while Remedy and Apogee were linked solely through a contractual arrangement.
As a general rule, personal jurisdiction over a non-resident corporation may not be based solely on the contacts of another affiliated corporate entity. Cannon Mfg. Co. v. Cudahy Packing Co., 267 U.S. 333, 335 (1925). In order to impute the contacts of a parent company to its subsidiary, a plaintiff must overcome the presumption of corporate separateness by establishing facts such as: (1) failure to observe corporate formalities; (2) failure to maintain separate accounting systems; (3) guarantee by one company of other company's obligations; (4) one company functioning as the other's sales and marketing agent; and (5) exercising complete control over the other's general policies and daily activities.See Magnetic Audiotape, 334 F.3d at 208; Freudensprung v. Offshore Technical Serv., Inc., 379 F.3d 327, 346 (5th Cir. 2004).
The Tenth Circuit has made clear that "it is unfair to impute to the dominated corporation the forum contacts of its alter ego." Home-Stake Prod. Co. v. Talon Petroleum, C.A., 907 F.2d 1012, 1021 (10th Cir. 1990); see also Purple Onion Foods, 45 F.Supp.2d at 1259 ("the alter-ego theory cannot be applied where the contacts of the dominating individual or corporation . . . are sought to be attributed to the dominated corporation."). Additionally, the mere overlap of directors and officers between a parent and its subsidiary is insufficient to impute one company's jurisdictional contacts to the other. Benton v. Cameco Corp., 375 F.3d 1070, 1081 (10th Cir. 2004).
In the present case, the evidence demonstrates that there is little, if any, control by Take-Two over MaxCorp. Three of the five current MaxCorp officers are not U.S. citizens and are not officers, directors, or otherwise' affiliated with Take-Two. (Reply Decl. of Kenneth Selterman at para. 3) Mr. Selterman has stated that "Take-Two does not `exert extensive control' over MaxCorp. Indeed, MaxCorp maintains separate and proper corporate formalities, controls its own operations and activities, and maintains separate financial records and accounting systems." (Id. at para. 4) Mr. Peterson has not demonstrated that MaxCorp failed to observe corporate formalities, maintain a separate accounting system, or that Take-Two guaranteed MaxCorp's obligations. There is no indication that Take-Two served as MaxCorp's sales or marketing agent, or that it exercised excessive control over MaxCorp's day-to-day operations. Mr. Peterson has not demonstrated that there is sufficient overlap in the officers and directors to warrant the imputation of Take-Two's contacts to MaxCorp.
Mr. Peterson has asserted a wide variety of conclusory allegations to support his assertion that Take-Two exercised control over MaxCorp, but these allegations are not supported by the factual record.
Mr. Peterson has also argued that Take-Two operated the maxpayne.com and maxpayne2.com websites for the benefit of MaxCorp, and through Take-Two's internet presence, MaxCorp is subject to personal jurisdiction in the State of Utah. This argument is unsupported by the facts. All the evidence indicates that MaxCorp derived no benefit from the operation of these websites, and was in fact prohibited from receiving U.S. revenue.
ORDER
The court hereby orders as follows:
1. Remedy's motion to dismiss is GRANTED (Dkt. 117);
2. MaxCorp's motion to dismiss is GRANTED (Dkt. 122).
SO ORDERED.