Designer Skin LLC v. S & L Vitamins, Inc., et al.
K.C.P.L., Inc. v. William Cary Nash
98 Civ. 3773 (LMM), 1998 U.S. Dist. Lexis 18464 (S.D.N.Y., November 23, 1998)
Plaintiff K.C.P.L., Inc. uses its federally registered trademark "Kenneth Cole Reaction," as well as its common law mark "Reaction," to market apparel and other goods. Defendant Nash is a resident of California who registered the domain name "reaction.com". Defendant did not operate a business at "reaction.com". Instead, all he had posted at this domain was a web page which stated "under construction". In response to plaintiff's inquiries, Nash offered to sell "reaction.com" for $8000. Plaintiff rejected this offer, and brought suit in New York federal court, charging that defendant's use of "Reaction" in his domain name constituted trademark infringement, dilution and unfair competition.
Defendant moved to dismiss the action on the ground that his contacts with New York were insufficient to permit the court to exercise personal jurisdiction over him. The court agreed, and dismissed the suit.
Defendant had no contacts with New York. He had no offices or agents in New York, nor had he supplied any goods or services in New York. Nor did defendant, who did not operate any business in connection with his website, use it to offer any goods or services for sale to anyone, including New York residents. As such, jurisdiction was not available under New York CPLR §302(a)(3), which only permits the assertion of jurisdiction over a defendant who commits a tortious act outside New York if that defendant either regularly does or solicits business in New York, or derives substantial revenue from interstate or international commerce.
Nor was jurisdiction available under CPLR §302(a)(1), which permits the court to assert jurisdiction over individuals who transact business in New York, provided the claim in suit arises out of those New York business activities. In so holding, the court determined that the mere registration of a domain name at which is posted an "under construction" web page available to forum residents neither constitutes the transaction of business in New York nor is sufficient contact with this forum to support the assertion of personal jurisdiction. Following Zippo and its progeny, the court stated:
At one end of the spectrum are cases in which the defendant's Internet use involves the mere posting of information on an essentially "passive" web site. In such cases, courts in this circuit and others have consistently held that jurisdiction does not exist absent other contacts with the forum. ... [C]ourts are in agreement that in order to exercise personal jurisdiction over a non-resident defendant, "something more" than the mere posting of information on a passive web site is required to indicate that the defendant purposefully directed his activities at the forum state.
Plaintiff argued that the court should follow Panavision v. Toeppen, 141 F.3d 1316 (9th Cir. 1998) and exercise personal jurisdiction over defendant because he was a "cyber pirate." The court rejected this argument, finding Panavision both factually and legally distinguishable from the case at bar. In Panavision, defendant Toeppen registered over 100 domain names that were based on the famous trademarks of well-known companies. Moreover, Toeppen admitted that he never made any attempt to use these domain names to engage in legitimate business activities. Unlike Toeppen, defendant Nash had registered four domain names, only one of which, "reaction.com," was arguably based on the famous mark of another. Also unlike Toeppen, Nash averred that he had attempted to set up an internet business at his "reaction.com" domain. For these reasons, the court rejected plaintiff's attempts to characterize defendant as a "cyber pirate".
The court also refused to apply the "effects" test relied upon by the Ninth Circuit Court of Appeals to find that it had jurisdiction over defendant Toeppen in Panavision to the case at bar. New York, unlike California, has not extended its jurisdictional reach to the maximum boundaries permitted by the United States Constitution. Instead, it has limited the exercise of long arm jurisdiction to those circumstances proscribed by CPLR 301 and 302. As set forth above, the court concluded that these statutes did not permit the exercise of jurisdiction over defendant Nash. As such, the court refused to use the "effects" test to assert jurisdiction over defendant, because to do so would impermissibly evade the strictures of CPLR §302.