The United States Federal District Court for the District of Nevada has dismissed a trademark infringement lawsuit against a foreign Internet poker site in a ruling that signals a rather substantial win for Internet businesses at large. The decision narrows the types of contacts that would confer general jurisdiction against foreign companies. The case is Best Odds Corp. vs iBus Media Limited, docket number 2:13-cv-020080RCJ-VCF.
Nevada-based online poker news site Best Odds Corp. sued the Isle of Man-based iBus Media Holdings for infringement of its MacPoker ® trademark, claiming that the Nevada courts had general jurisdiction over iBus Media’s poker news sites. Best Odds pointed to the defendants’ media kit, which alleged a significant U.S. presence. The court disagreed that these promotional statements conferred general jurisdiction over iBus Media.
In a June 4, 2014, ruling Judge Robert C. Jones granted iBus Media Holdings’ motion for dismissal of Best Odds Corp.’s trademark infringement lawsuit. Judge Jones said the plaintiff failed to make a case that Nevada courts had general jurisdiction over the foreign-based iBus Media, citing the Supreme Court’s recent Daimler AG v. Bauman decision, which Jones said “clarified that the reach of general jurisdiction is narrower than had been supposed in lower courts for many years.”
In Daimler, the Supreme Court explained that the development of the law of specific jurisdiction and general jurisdiction has been quite different over the last several generations. These two types of jurisdiction are indeed quite different. Specific jurisdiction exists where there are sufficient minimum contacts with a forum state such that the exercise of jurisdiction does not offend the “traditional notions of fair play and substantial justice.” See International Shoe v. State of Washington. On the other hand, general jurisdiction exists only when there are continuous and systematic contacts with a state such that the assertion of personal jurisdiction will be considered fair even where the claims brought by the plaintiff do not relate to those contacts with the forum state. See Helicopteros v. Hall.
In Daimler, the Supreme Court reiterated that “[a] court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.”
Under the Daimler ruling, Judge Jones concluded that it’s not enough for plaintiffs to show that a foreign defendant merely conducts business in a forum state. Instead, they must demonstrate that defendant’s “contacts are so pervasive as to render the defendant ‘essentially at home’ in the forum state.” The plaintiff failed to satisfy that burden.
“This dismissal is one of the first cases we’ve seen where the Supreme Court’s Daimler ruling has begun to set a new precedent,” said attorney Jeff Ifrah, who defended iBus Media in the lawsuit. “This ruling will make it much more difficult for plaintiffs to sue internet companies based on general jurisdiction.”
“[T]he exhibits Plaintiff has attached to its complaint provide little support for the majority of these allegations,” Judge Jones wrote, noting that the PokerNews site was a “passive news site” that had little interactivity with site visitors. Judge Jones also noted that screenshots of the PokerNews website submitted by Best Odds featured links that were clearly labeled “Not Accepting U.S. Players.”
“The court basically took the plaintiff’s exhibits and turned them against them,” said Ifrah Law attorney Rachel Hirsch. “The plaintiff essentially argued that as a global website, defendants would naturally do some business in the United States, and that should be enough for the Ninth Circuit to have jurisdiction. But using the Daimler ruling, the court said that’s not enough.”
The district court’s narrowing of general jurisdiction will likely be a boon to foreign-based corporations, Hirsch said. “Foreign defendants aren’t going to be hauled into U.S. courts so easily,” she said. “It’s going to be much harder for plaintiffs to prove that a foreign company is ‘essentially at home’ in the U.S.”
Given that principles of general jurisdiction relate to both foreign corporations and out-of-state corporations, it seems likely that if this decision becomes broadly applicable it would make it harder for plaintiffs to establish general jurisdiction against any corporate entity residing outside the forum state.