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A New Jersey man in charge of an online matchmaking website did not target or exploit the Illinois market, and thus a trademark infringement case against him was dismissed by the U.S. Court of Appeals for the Seventh Circuit on April 27 for lack of personal jurisdiction (be2 LLC and be2 HOLDING A.G. v. Ivanov, 7th Cir., No. 10-2980, 4/27/11).
Reversing a district court's order denying the New Jersey man's postjudgment motion to vacate a default judgment against him as void for want of personal jurisdiction, the court ruled that simply having 20 people with profiles on the website was not sufficient to show the New Jersey man targeted the market. The court said that those 20 people could have simply stumbled across the website on their own.
Be2 LLC is an American company that runs an internet dating website at www.be2.com. Its parent company, be2 Holding A.G., is headquartered in Germany. Originally offering its dating services only in Europe, be2 has extended its reach to 36 countries, including the United States.
Nikolay Ivanov, a resident of New Jersey, started an online dating website, sladurana.com, later changing the address to be2.net.
Be2 sued Invanov, asserting claims of infringement and false designation of origin, stating that Ivanov chose to use an existing domain address and design that were confusingly similar to be2.com with the intention of misleading customers.
Judge Milton I. Shadur of the U.S. District Court for the Northern District of Illinois entered a default judgment for be2, as Ivanov did not answer the complaint or attend scheduled hearings. To prove its damages, be2 submitted a document showing that 10 men and 10 women with Chicago addresses had registered on be2.net for matchmaking services, a document highlighting Ivanov's position as CEO and co-founder of be2.net, and a third document showing Ivanov boasted on the social-networking website LinkedIn that he was the co-founder and CEO of be2.net.
After the default judgment was entered, Ivanov filed a motion to vacate the judgment as void for want of personal jurisdiction. He submitted an affidavit in which he claimed that he was merely a volunteer for Sladur, a Bulgarian company that had registered and owned be2.net. He claimed he was never compensated for his services, had never received any financial benefit from his association with be2.net, and had “never set foot in the state of Illinois.”
The district court denied the motion to vacate the judgment, relying on the list of Chicago contacts and Ivanov's internet activity, and saying that the idea of the absence of effective Illinois contacts sufficient to support in personam jurisdiction was undercut dramatically. Further, the district court pointed to Ivanov's “Internet boasting” in rejecting his argument that he was merely a volunteer.
As the Lanham Act does not authorize nationwide service of process, a federal court sitting in Illinois may exercise jurisdiction over Ivanov only if authorized both by Illinois law and by the Constitution, Judge David F. Hamilton said, citing Fed. R. Civ. P. 4(k)(1)(A). In turn, the Illinois long-arm statute permits its courts to exercise personal jurisdiction on any basis permitted by the constitutions of both Illinois and the United States.
The court said that, although the district court had ample grounds for questioning Ivanov's credibility, “even if we discount all such details in Ivanov's affidavit, he has still shown an absence of ties to or activities in Illinois.” Thus, the court said that the question was whether the evidence submitted by be2 was sufficient to show Ivanov could be required to defend himself on these claims in Illinois.
“We conclude on this record that the United States Constitution forbids an Illinois court to exercise personal jurisdiction over Ivanov in this case,” the court said.
“Our inquiry boils down to this: has Ivanov purposely exploited the Illinois market? … Beyond simply operating an interactive website that is accessible from the forum state, a defendant must in some way target the forum state's market.”
The court said that all that be2 submitted regarding Ivanov's activity related to Illinois was the internet printout showing that just 20 persons who listed Illinois addresses had at some point created free dating profiles on be2.net. The constitutional requirement of minimum contacts is not satisfied simply because 20 residents of Illinois registered accounts on the website, the court said. Further, the court said that there was no evidence that Ivanov had targeted the Illinois market because “[a]s far as we can tell … the 20 Chicagoans who created free profiles on be2.net may have done so unilaterally by stumbling across the website and clicking a button that automatically published their dating preferences online.”
As there was no evidence that Ivanov targeted or exploited the market in the state that would allow a conclusion that he availed himself of the privilege of doing business in the state, the court reversed the district court's order denying his postjudgment motion and remanded with instructions to vacate the judgment and dismiss the complaint for lack of personal jurisdiction.
Judges Joel M. Flaum and Diane P. Wood joined the opinion.
Be2 was represented by Jeana R. Lervick of Greer, Burns & Crain, Chicago. Ivanov was represented by Martin Jerisat of Chicago.
Opinion at http://pub.bna.com/ptcj/102980April27.pdf
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