IP Law Daily California lacked jurisdiction over Ohio-based online seller of sunglasses
Monday, January 25, 2021

California lacked jurisdiction over Ohio-based online seller of sunglasses

By Jody Coultas, J.D.

The online seller did not direct its sales to California sufficiently to confer jurisdiction.

Trademark infringement claims against an online seller of discounted name-brand goods were properly dismissed for lack of jurisdiction over the seller, according to the U.S. Court of Appeals in Pasadena. Luxury goods manufacturer Spy Optic, Inc. filed a trademark infringement suit in a California court against online seller AreaTrend LLC for selling Spy Optic sunglasses without a license. The district court found, and the Ninth Circuit agreed, that the California courts lacked personal jurisdiction over AreaTrend. The online seller did not advertise or market in California and only a tiny fraction of its sales were of Spy Optic glasses to California residents (Spy Optic, Inc. v. AreaTrend LLC, January 22, 2020, per curiam).

Spy Optic is a Southern California brand best known for its sunglasses and sports goggles. AreaTrend, an online store based in Ohio, allegedly sold Spy Optic-branded sunglasses for almost two years without a license. Spy Optic filed suit for infringement in the Southern District of California.

The California district court found that it lacked personal jurisdiction over AreaTrend because it had no offices or employees in California, did not advertise or market products in California, and less than 5% of its total sales across all product lines were to Californians. Spy Optic appealed.

In trademark cases, a plaintiff must generally show that the defendant purposefully directed activities at the forum, and that the claim "arises out of or relates to the defendant’s forum-related activities." Purposeful direction is a question of whether the defendant committed an intentional act aimed at the forum state that caused harm that the defendant knew was likely to be suffered in the forum state.

Because AreaTrend did not commit acts expressly aimed at California, the district court correctly found that it lacked specific jurisdiction. Spy Optic argued that AreaTrend targeted California when it sold Spy Optic-branded products online, but merely operating a universally accessible website alone cannot satisfy the express aiming prong. Here, AreaTrend did not advertise or market its products in California and did not maintain a mailing list, membership club, or other ongoing relationship with California customers. The allegedly infringing sales accounted for 0.0018% of AreaTrend’s total sales.

Also, the court rejected Spy Optic’s argument that AreaTrend knowingly caused harm in California. Spy Optic argued that AreaTrend knew Spy Optic was based in California and knew that its infringing sales would harm a California company. A defendant’s knowledge that the plaintiff resides in the forum state, "will not, on its own, support the exercise of specific jurisdiction."

The court also found that the district court did not err in not allowing jurisdictional discovery. AreaTrend sought "internal correspondence discussing targeting California customers." However, there was no reason to think the evidence Spy Optic sought would change the analysis.

The case is No. 20-55438.

Attorneys: Brent Herbert Blakely (Blakely Law Group) for Spy Optic Inc. Andrew J. Kubik (Ludwig APC) for Areatrend, LLC.

Companies: Spy Optic, Inc.; Areatrend, LLC

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