IP Law Daily Internet seller that shipped to Illinois customers subject to personal jurisdiction there
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Tuesday, February 11, 2020

Internet seller that shipped to Illinois customers subject to personal jurisdiction there

By Robert Margolis, J.D.

Interactive website’s option allowing customers to select Illinois as "ship-to" destination for defendant’s supplement products was among factors cited in reversal of district court’s dismissal of trademark infringement claims.

The U.S. Court of Appeals in Chicago has reversed the dismissal of Lanham Act and state law claims for lack of personal jurisdiction, finding that defendant Revolution Laboratories, LLC’s sales of "Diesel"-branded sports nutritional supplements through an interactive website that specifically offered the option of shipping products into Illinois, among other forum "contacts," met the circuit’s three-part test for specific personal jurisdiction. The court remanded trademark infringement and other claims brought by dietary supplement seller Charles Curry to the federal district court in Chicago for further proceedings (Curry v. Revolution Laboratories, LLC, February 10, 2020, Ripple, K.).

Curry, doing business as Get Diesel Nutrition, has been selling dietary supplements since 2005. He alleges that the "essence" of his brand is "Diesel"—he sells products called "Diesel Test," and his website address and company name contain the word "Diesel." In October 2016, Revolution began selling a sports nutritional supplement branded "Diesel Test Red Series, All Natural Testosterone Booster." Like Curry’s product, it comes in a red and white package with "right-slanted all-caps typeface" with the words "Diesel Test." Curry alleges that when Revolution started advertising its product, it caused confusion among customers.

Revolution sells its products entirely online, through its own and third-party websites. All marketing and advertising was conducted through the Internet as well. In slightly more than seven months, Revolution achieved more than $1.6 million in gross sales from its Diesel Test product, including at least 767 sales to consumers in Illinois.

After receiving a cease and desist letter, in November 2016 Revolution applied for an "intent to use" trademark registration for the Diesel Test mark in connection with dietary and nutritional supplements. Shortly thereafter, Curry filed an application for his own Diesel Test trademark for dietary and nutritional supplements, indicating a date of first use in commerce of April 2005. The USPTO suspended the processing of both applications, citing a likelihood of confusion between the parties’ marks. Curry ultimately sued, pro se, bringing several claims, including for violating: (1) the Illinois Consumer Fraud and Deceptive Practices Act; (2) the Lanham Act (trademark infringement, false designation of origin and false advertising, trademark dilution by tarnishment, and cybersquatting); and (3) common law. Revolution moved to dismiss for lack of personal jurisdiction, and the district court granted the motion without a hearing, leading to Curry’s appeal.

Illinois contacts. It was not disputed that Revolution (including the individual defendant officers of Revolution) (1) is not registered to do business and does not have a registered agent in Illinois; (2) has no place of business in Illinois, a telephone, or a mailing address in Illinois; (3) has no employees in Illinois, and none have traveled to Illinois for business; (4) has no real or personal property in Illinois; and (5) has never attended any trade shows or participated in any business-related meetings in Illinois. However, Curry provided evidence that Revolution has a "fully interactive website," making the Diesel Test products available with shipping options that allow customers to choose Illinois "as a ship to state." Further, Revolution has shipped and sold Diesel Test to at least 767 Illinois customers, with those who order from Revolution’s website receiving a written acknowledgement of their Illinois shipping address and a note saying, "Thank you again for your business." Revolution countered that while it did make those sales, Illinois sales are "minimal," representing only 1.8% of Revolution’s total gross sales.

Three-part test. After a thorough retracing of the evolution of the Supreme Court’s personal jurisdiction jurisprudence, the appellate court applied the governing principles to Revolution’s Illinois contacts. The court "distilled three ‘essential requirements’" for proper exercise of specific personal jurisdiction over a defendant based on that defendant’s lawsuit-related forum contacts: (1) the defendant must have "purposefully availed" itself of the privilege of conducting business in the forum state; (2) the plaintiff’s injury must have arisen from the defendant’s forum-related activities; and (3) the exercise of personal jurisdiction must "comport with traditional notions of fair play and substantial justice." In addition, while all of the allegedly infringing sales took place over the Internet, the appellate court noted that it consistently has declined to create a different test for internet-based sales. The court then determined that all three requirements were met in this case.

Purposeful availment. The court highlighted how physical presence is not required for a defendant to have sufficient minimum contacts with a forum state, since Revolution had no such presence in Illinois. In the absence of physical contacts, a defendant must "purposefully direct" lawsuit-related activities to the forum state. The appellate court relied on a prior decision in which it held that personal jurisdiction was proper over a cigarette seller that sold its products in part through commercial websites "through which customers could purchase cigarettes, calculate their shipping charges using their zip codes, and create accounts" such that the defendant knew it was doing business with Illinois residents." Illinois v. Hemi Grp. LLC, 622 F.3d 754, 757-58 (7th Cir. 2010). Like the defendant in Hemi, Revolution’s interactive website requires customers to select a shipping address and includes Illinois among the "ship-to" options from which the customer must choose. In addition, Revolution sends Illinois purchasers of its products an email thanking them for their business, confirming their order, and listing the Illinois shipping address. Revolution also admittedly sold Diesel Test to 767 Illinois residents between October 14, 2016, and June 1, 2017.

Revolution’s own actions in establishing these contacts—it created the interactive website that expressly provided that Illinois residents can purchase the allegedly infringing products, sent the written confirmations, and shipped the products knowingly to Illinois— constituted sufficient "purposeful availment" to satisfy the first element of the Seventh Circuit’s three-part test, the court held, since it knew it was selling to Illinois customers.

The court rejected Revolution’s argument that its advertising did not specifically target Illinois, as distinct from any other state, finding no "per se requirement" that it have done so. All that is necessary is that it be reasonably foreseeable to the defendant that its product would be sold in the forum.

Connection to claim. Because direct sales of Revolution’s Diesel Test product were made in Illinois, which allegedly infringed Curry’s mark, he satisfied the second element of the Seventh Circuit’s three-part test.

Fair play. Finally, because Revolution has held itself out as conducting nationwide business, and "structured its marketing" so it can serve Illinois consumers, the appellate court found the burden of requiring it to defend a lawsuit in Illinois to be "minimal," thus satisfying the third element.

This case is No. 17-2900.

Attorneys: Charles Curry, pro se d/b/a Get Diesel Nutrition. Amy M. Gibson (Aronberg Goldgehn Davis & Garmisa) for Revolution Laboratories, LLC, Rev Labs Management, Inc. and Joshua Nussbaum.

Companies: Get Diesel Nutrition; Revolution Laboratories, LLC; Rev Labs Management, Inc.

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