German Cloud Company’s Global Site Created U.S. Jurisdiction

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By Alexis Kramer

A federal district court in Maine Oct. 18 ruled it has jurisdiction over a German cloud-based service provider even though the company didn’t advertise in the U.S. and had no computer servers there ( Plixer Int’l, Inc. v. Scrutinizer GmbH , 2017 BL 373958, D. Me., CIVIL NO. 2:16-CV-578-DBH, 10/18/17 ).

The decision shows that a foreign company can be subject to jurisdiction in a U.S. state without directly targeting the country, if it knowingly does business through an interactive website with a substantial number of U.S. residents.

Plixer International Inc., a Maine-based information technology company, brought a trademark infringement claim against German-based Scrutinizer GmbH. Scrutinizer moved to dismiss the claim for lack of personal jurisdiction.

Plixer argued the court had nationwide personal jurisdiction over Scrutinizer pursuant to Federal Rule of Civil Procedure 4(k)(2). Under that rule, personal jurisdiction exists over a foreign defendant if the claim arises under federal law and exercising jurisdiction is consistent with constitutional due process. Due process requires a showing that the defendant purposefully directed its activities at residents of the forum state, and that the cause of action arose out of those activities.

Judge David Brock Hornby of the U.S. District Court for the District of Maine held that Scrutinizer purposefully availed itself of U.S. jurisdiction because it sold its services directly through a website accessible around the world and conducted more than 150 transactions with U.S. customers.

A majority of courts have held that the mere operation of an interactive website, available to internet users worldwide, doesn’t subject a defendant to jurisdiction anywhere in the world. But in this case, the court said, Scrutinizer engaged in “sizeable and continuing commerce” with U.S. customers. “It should not be surprised at United States-based litigation,” the court said.

To contact the reporter on this story: Alexis Kramer in Washington at aKramer@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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