Abstract
A Massachusetts court found that it had jurisdiction to hear a patent and trademark infringement suit filed against a seller located.in Washington because the seller purposefully directed activities at residents of Massachusetts through the national online retailer A Massachusetts court found that it had jurisdiction to hear a patent and trademark infringement suit filed against a seller located.in Washington because the seller purposefully directed activities at residents of Massachusetts through the national online retailer Amazon.com.
The ability to sell goods online and across state lines raises
questions about a court's ability to exercise personal
jurisdiction over sellers located out of state. The questions have
become more complex when third parties are involved, for example,
when national retailers, such as Amazon.com, make it possible for
merchants to sell products throughout the U.S. without personally
entering the state or establishing their own websites to sell and
market their products.
Recently, in PetEdge, Inc. v. Fortress Secure Solutions,
LLC,1 a Massachusetts district court considered
whether it could hear a case involving an out-of-state merchant
accused of patent infringement that sold its product to two
residents of Massachusetts through Amazon.com.
Background
Fortress is a limited liability company based in Washington that
sells pet products. Fortress doesn't have an office in
Massachusetts and isn't registered to do business in
Massachusetts. Fortress's products are available for purchase
and delivery in Massachusetts, but only through online retailers
such as Amazon.com.
PetEdge, a Massachusetts-based pet products manufacturer, owns a
patent and trademarks covering a product that allows pets to climb
on to a bed. PetEdge purchased Fortress products on Amazon.com,
which were shipped to PetEdge in Massachusetts. PetEdge brought
suit against Fortress in the District of Massachusetts for patent
and trademark infringement. Fortress moved to dismiss the complaint
arguing that the court lacked personal jurisdiction to hear the
suit.
The PetEdge Decision
The court denied Fortress's motion, concluding that it had
personal jurisdiction over Fortress. To establish personal
jurisdiction over Fortress, the court required PetEdge to show
that: (1) Fortress purposefully directed activities at the
residents of Massachusetts; (2) PetEdge's claim arose out of or
related to those activities; and (3) the assertion of personal
jurisdiction is reasonable and fair.
The court found that Fortress purposefully directed activities at
the residents of Massachusetts. Fortress didn't control its own
sales by limiting its marketing and advertising to its own website.
Rather, Fortress listed and sold its products to Massachusetts
residents through national online retailers like Amazon.com.
Notably, the court proceeded under the assumption that Fortress,
not Amazon.com, shipped its product directly to Massachusetts
residents. The court also observed that whenever Massachusetts
Internet shoppers searched for "Pet Studio ramp steps" on
Amazon.com, Fortress's allegedly infringing product appeared
alongside PetEdge's patented product. The court held that
because Fortress advertised and sold its accused products to
residents of Massachusetts, sufficient minimum contacts existed for
the court to hold personal jurisdiction over Fortress.
Satisfying the second requirement of the personal jurisdiction
inquiry—the claims must arise from or be related to the
minimum contacts—the court found that Fortress's contacts
with Massachusetts were all related to PetEdge's claim for
patent infringement. Concluding with the third prong, the court
found that the assertion of personal jurisdiction was both
reasonable and fair. The court found, therefore, that it had
personal jurisdiction over Fortress, and denied Fortress's
motion to dismiss for lack of personal jurisdiction.
Strategy and Conclusion
This case demonstrates that using a national online retailer, such as Amazon.com, to sell products out of state may expose sellers to the possibility of defending suits in those states where the national retailer advertises or sells the accused products.
Footnote
1 The PetEdge decision can be found at http://www.finnegan.com/files/upload/LES_Insights_Column/2015/Petedge_ v_FortressSecureSolnsmad-1-15-cv-11988-24.pdf.
Previously published by LES Insights
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