Agreeing To An Injunction Waives Personal Jurisdiction Challenge; But Alleging "Deliberate" Copyright Infringement Justifies Personal Jurisdiction?

Gainesville Coins operates a website for selling precious medals.  So does Vanguard Capital Group.  But Vanguard copied product descriptions and pictures off of Gainesville's website.  So Gainesville sued for copyright infringement.  First, Gainesville sought and obtained a temporary restraining order.  Next, the Court referred Gainesville's request for a preliminary injunction the Magistrate Judge, who extended the restraining order and set a hearing.   Three days before the hearing, Vanguard's attorney appeared, and the parties agreed to a stipulated preliminary injunction - presumably to obviate the need for the hearing.

Vanguard next moved the Court to dismiss the case for lack of personal jurisdiction, arguing that merely operating a website was insufficient contacts with Florida to justify a lawsuit here.  The Court was not persuaded:

As Gainesville Coins points out, Vanguard moved to dismiss the complaint for lack of personal jurisdiction after Vanguard stipulated to a preliminary injunction and participated in the case management conference.  Importantly, Vanguard did not reserve its right to contest the Court’s jurisdiction over it at any of these junctures. Under these facts, Vanguard waived the defense and its motion to dismiss is denied on this ground. See Aeration Solutions, Inc. v. Dickman, 85 Fed.Appx. 772, 774 (Fed. Cir. 2004) (finding defendants voluntarily acknowledged and acquiesced to the district court’s jurisdiction over them by stipulating to an injunction); Nat. Union Fire Ins. Co. of Pittsburgh, PA v. Beta Constr. LLC, 8:10-CV-1541-T-26TBM, 2010 WL 4316573, at *1 (M.D. Fla. Oct. 26, 2010) (finding defendant “waived his right to attack the personal jurisdiction of [the] Court by entering an appearance and participating in the case management conference without objecting to the Court’s personal jurisdiction”).

Turning next to the substance of Vanguard's argument, the Court also found personal jurisdiction proper under Florida's long-arm statute and the "effect's test."  As to Florida's long-arm statute:

Copyright infringement is a tortious act that satisfies Florida’s long-arm statute. See Smith v. Trans-Siberian Orchestra, 8:09-CV-1013-T-33EAJ, 2011 WL 824675, at *4 (M.D. Fla. Mar. 3, 2011); see also Cable/Home Commc’ns [v. Network Productions, Inc], 902 F.2d at 854 [(11th Cir. 1990)]. Also, the infringement occurred in Florida to the extent that Vanguard’s website is accessible in Florida and has been accessed by Florida residents.

The Court next turned to the "effects test" and relied on the Calder decision, which found personal jurisdiction appropriate for an intentional tort committed against a Florida resident.  Calder concerned a California plaintiff that sued a Florida newspapers for an alleged libelous article.  The Court held that such an intentional tort committed against a California resident justified jurisdiction over the Florida company in California.

But here, copyright infringement is a strict liability tort.  Intent is irrelevant for purposes of a direct infringement claim, although intent can increase a statutory damage award.  No matter.  The Court concluded because Gainseville alleged deliberate and willful infringement, the cause was akin to an intentional tort such as Calder justifying jurisdiction:

The Court concludes that Vanguard’s alleged actions of: deliberately and willfully infringing upon Gainesville Coins’ copyright by copying nearly the entire website for Gainesville Coins; and displaying the Work at its competing website, the Vanguard Website, for commercial gain because Vanguard is a competitor of Gainesville Coins, are sufficient to meet the “effects test”. In other words, Vanguard’s alleged acts purposefully availed itself of this forum. See Waterproof Gear, Inc. v. Leisure Pro, Ltd., 8:08-cv-2191-T-33MAP, 2009 WL 1066249, at *1 (M.D. Fla. Apr. 20, 2009) (finding that defendant purposefully availed itself of the forum when defendant copied and placed plaintiff’s copyrighted marketing materials on defendant’s website).

Motion to Dismiss for Lack of Personal Jurisdiction, Denied.
Gainesville Coins, LLC. v. VCG Ventures, Inc., Case No. 8:13-CV-1402 (M.D. Fla. Aug. 28, 2013) (J. Moody)

If you sell airplane parts in South Carolina to a customer who advertises and flies in Florida, are you subjected to personal jurisdiction in Florida for patent infringement?

No.

William Fondriest sued Chippewa Aerospace and Icore International for infringement of U.S. Pat. No. 7,135,790 related to jet aircraft landing gear.  Icore was dismissed earlier with the Plaintiff's consent.  

Plaintiff alleged both general jurisdiction and specific jurisdiction.  As to general jurisdiction, which requires "continuous and systematic general business contacts between the defendant and the forum state," Plaintiff relied on Chippewa's long standing and ongoing relationships with multiple companies that maintain significant operations in Florida.  Chippewa's customers's significant connections to Florida did not carry over to justify suing Chippewa here:

The fact that Chippewa allegedly provides Harness Products to airlines that advertise in Florida and fly throughout Florida does not demonstrate the continuous and systematic contacts that warrant the exercise of jurisdiction over Chippewa.

Plaintiff next tried specific jurisdiction, which involves a three-prong test: (1) defendant purposefully directed its activities at the residents of Florida; (2) the claim arises out of or is related to those activities; and (3) asserting personal jurisdiction is reasonable and fair.  Plaintiff argued that the regional airlines Chippewa sells to use Chippewa's allegedly infringing product in flights to and from Florida (and thus commit infringement in Florida). Chippewa responded that it manufactures the products in South Carolina, has never sold one in Florida or to a customer in Florida, has never received any payment from anyone in Florida, and has never delivered the allegedly infringing product to Florida.  Instead, Chippewa has sold the product to a customer in North Carolina and another in Utah and those sold to the North Carolina entity were installed on landing gear for companies in Wisconsin and Canada.

There is no evidence before this court to indicate that Chippewa purposefully directed its activities at residents of Florida.  Thus, Plaintiff's claim does not arise out of tor relate to activities that Chippewa purposefully directed at residents of Florida.  Assertion of personal jurisdiction over Chippewa would be unreasonable and unfair, as there are no contacts between Chippewa and Florida that give rise to the claims asserted by Plaintiff in this case.

Motion to dismiss for lack of personal jurisdiction granted.

Fondriest v. Chippewa Aerospace, Inc., Case No. 6:11-cv-1206 (M.D. Fla. Mar. 16, 2012) (J. Honeywell)

Personal jurisdiction for patent infringement on an out-of-state subsidiary with its own operational control? Nope.

Digitech Information Systems sued Ally Financial and Capital Auto Receivables, Inc. ("CARI") for infringement of U.S. Patent No. 7,739,180.  The '180 Patent relates to a method of selecting leases to optimize an investment portfolio.  Ally leases new and used vehicles from GM and non-GM franchised dealers.  CARI, a wholly-owned subsidiary of Ally, acts as a depositor and initial certificate holder for various asset-backed securities.  CARI is not registered in Florida, and does not do business here.  On this basis, CARI moved for dismissal for lack of personal jurisdiction.

Digitech opposed that motion, arguing that Ally's actions should be imputed to CARI for purposes of establishing personal jurisdiction.  The Court was not convinced.

General Jurisdiction


Digitech argued the Court could exercise general jurisdiction over CARI because "it is reasonable to assume that the creation and operation of CARI is a mere corporate formality."  This wasn't enough -- just being a subsidiary of a company subjected to personal jurisdiction in Florida does not necessarily extend personal jurisdiction to the sub:

“It is well settled in Florida that the mere presence of a subsidiary in Florida, without more, does not subject a non-Florida corporate parent to long-arm jurisdiction.”  Enic, PLC v. F.F. South & Co., 870 So. 2d 888, 891 (Fla. 5th DCA 2004) (citations omitted); Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1272 (11th Cir. 2002) (“Generally, a foreign parent corporation is not subject to the jurisdiction of a forum state merely because a subsidiary is doing business there.”).  However, a corporation that engages in substantial activity in Florida through a subsidiary may be subject to personal jurisdiction in Florida.  Universal Caribbean Establishment v. Bard, 543 So. 2d 447, 448 (Fla. 4th DCA 1989).  In order “[t]o determine whether a foreign corporation is liable based on a subsidiary’s substantial activity, [courts] consider the ownership of the subsidiary, the business activities of the subsidiary, and the financial relationship between the corporation and the subsidiary.” Abramson v. Walt Disney Co., 132 F. App’x 273, 275-76 (11th Cir. 2005) (citing Meier, 288 F.3d at1272-73).  

What is required for jurisdiction based on the relationship between a parent corporation and a subsidiary “is not some control but ‘operational control’ by the parent over the subsidiary.”  Gen. Cigar Holdings, Inc. v. Altadis, S.A., 205 F. Supp. 2d 1335, 1344 (S.D. Fla. 2002) (quoting State v. Am. Tobacco Co., 707 So. 2d 851, 856 (Fla. 4th DCA 1998); see also Dev. Corp. of Palm Beach v. WBC Constr., L.L.C., 925 So. 2d 1156, 1161-62 (Fla. 4th DCA 2006) (“The amount of control exercised by the parent must be high and very significant.”). 

Here, Digitech did not establish operational control by Ally over CARI.  Thus, no personal jurisdiction.

The Court next rejected Digitech's argument that CARI should be subjected to specific jurisdiction because there was not sufficient evidence to support such jurisdiction.

Motion to dismiss granted.

Digitech Information Systems, Inc. v. Ally Financial, Inc., slip op., Case No. 6:10-cv-1398 (M.D. Fla. Sept. 1, 2011)(J. Antoon)

[Note.  GrayRobinson, PA. was involved in the above-captioned matter]

The long arm of the law. Specifically, website postings and Florida's long arm statute.

Tabatha Marshall, who lives in Washington, posted comments on her website where she accused Internet Solutions Corporation of criminal activity. ISC, whose principal place of business is in Florida, sued her for defamation in federal court here in Florida. Marc Randazza (the editor of Legal Satyricon) represented Marshall. His blog described the background of the case briefly here.

The Middle District of Florida dismissed the case for lack of personal jurisdiction over Marshall. Internet Solutions appealed to the Eleventh Circuit. The Eleventh Circuit then a certified the question to the Florida Supreme Court on whether Marshall’s alleged activities were within the scope of Florida’s long-arm statute.

The Florida Supreme Court phrased the certified question as:

DOES A NONRESIDENT COMMIT A TORTIOUS ACT WITHIN FLORIDA FOR PURPOSES OF SECTION 48.193(1)(b) WHEN HE OR SHE MAKES ALLEGEDLY DEFAMATORY STATEMENTS ABOUT A COMPANY WITH ITS PRINCIPAL PLACE OF BUSINESS IN FLORIDA BY POSTING THOSE STATEMENTS ON A WEBSITE, WHERE THE WEBSITE POSTS CONTAINING THE STATEMENTS ARE ACCESSIBLE AND ACCESSED IN FLORIDA?

The Florida Supreme Court answered -- yes.

We answer the rephrased certified question in the affirmative. We conclude that posting defamatory material on a website alone does not constitute the commission of a tortious act within Florida for purposes of section 48.193(1)(b), Florida Statutes. Rather, the material posted on the website about a Florida resident must not only be accessible in Florida, but also be accessed in Florida in order to constitute the commission of the tortious act of defamation within Florida under section 48.193(1)(b).

(emphasis in original). So, a defendant is subject to personal jurisdiction in Florida if she: (1) posts something on a webpage; (2) the webpage is accessible in Florida; and (3) someone also access it in Florida. But if nobody accesses it here (even if it's accessible), she's not subject to personal jurisdiction?

My colleague Jeffrey Kuntz has additional information here.

Internet Solutions Corp. v. Marshall, No. SC09-272 (Fla. June 17, 2010)