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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

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Erienet, Inc., et al. v. Velocity Net, Inc., et al.

156 F. 3d 513 (3rd Cir., September 25, 1998)

Plaintiffs were an Internet Service Provider and various of its subscribers. Plaintiffs charged that defendants sent the plaintiff subscribers unsolicited e-mail or spam. Plaintiffs further alleged that this conduct violated the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, which, inter alia, prohibits the use of any device to send an unsolicited advertisement to a telephone facsimile machine. Plaintiffs sought redress for this wrong in federal district court pursuant to the provisions of the TCPA which created a private right of action in the consumer victims of unwanted telemarketing solicitations.

Defendants moved to dismiss on the ground that the federal district court lacked subject matter jurisdiction over the suit. Such suits, if they could be brought at all, urged the defendants, had to be commenced in state not federal courts. The district court agreed, and dismissed plaintiffs' suit. On appeal, the Third Circuit also agreed, and affirmed the dismissal of the suit.

The provision at issue was 47 U.S.C. § 227(b)(3), which provides that "a person or entity may, if otherwise permitted by the laws or rules of court of a state, bring in an appropriate court of that State -- an action ...." seeking redress for a violation of the TCPA. The Third Circuit held that this language reflected "Congress' intent[] to authorize private causes of action only in state courts, and to withhold federal jurisdiction." By its decision, the Third Circuit "join[ed] the Fourth, Fifth and Eleventh Circuits in concluding that Congress intended that private enforcement suits under the TCPA be brought in state, and not federal courts."

The Third Circuit found support for its decision in the structure of the TCPA, where Congress, expressly mandated exclusive federal jurisdiction with respect to some causes of action created under the statute, while expressly mandating concurrent jurisdiction between the state and federal courts with respect to other causes of action. This statutory scheme underscored the Court's belief that if Congress had meant to create concurrent jurisdiction between the state and federal courts, it would have expressly provided for the same. The Third Circuit also found support for its determination in the legislative history of the TCPA.

The court rejected plaintiffs' argument that because the action arose under a federal statute, jurisdiction was conferred on the federal courts by operation of 28 U.S.C. § 1331. That section confers jurisdiction on the federal courts in any "civil actions arising under the Constitution, laws, or treaties of the United States." The court held that to establish jurisdiction under this section, the plaintiff must not only show that the case arises under a federal statute, but also that "section 1331 jurisdiction is not preempted by a more specific statutory provision conferring exclusive jurisdiction elsewhere." Because the statute, in the court's opinion, mandated exclusive jurisdiction in the state courts, it barred a grant of jurisdiction under section 1331.

The court left for another day the question of whether the TCPA is indeed applicable to unsolicited e-mail.

The Third Circuit's decision was subject to a vigorous dissent.

The full text of the court's decision can be found on a web site maintained by Findlaw.

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