Adidas Am., Inc. v. Topline Corp. - No. 04-174-KI, 2009 U.S. Dist. LEXIS 38244 (D. Or. May 5, 2009)

Rule:

When general jurisdiction is inappropriate, the Ninth Circuit has recognized application of a three-part test to determine whether specific jurisdiction exists: (1)  The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Facts:

Topline provides buying agent services to companies that purchase shoes manufactured in foreign countries. Its customers buy the shoes directly from the foreign manufacturer, import the shoes into the United States, and sell the shoes to customers. Topline does not manufacture, purchase, import, or sell the shoes. On the other hand, Philby describes buying agent services as assisting the customer in identifying shoe designs; sourcing the manufacturing with factories in Asia, India, and Brazil; negotiating prices; and inspecting for quality. Identifying designs includes traveling overseas to shop for trends, developing designs incorporating the trends, making samples overseas, and presenting samples to the customer at a trade show or the customer's place of business. Philby also states that Topline does not specifically design any products for the Oregon market, does not advertise in Oregon, has no established channels for providing regular advice to customers in Oregon, has not set up any distribution networks in Oregon, and has not marketed or sold any products through a retailer or distributor that agreed to serve as a sales agent in Oregon. All distribution of the accused Payless shoes was done by Payless with no control or input by Topline. Once the manufacturing order is placed, Topline notifies the factory of the location of the consolidator, the entity that arranges the shipping for Topline's customer. Topline has no further involvement in the shipping or distribution.

In 2001, there was a meeting between Topline sales staff and Payless buyers. A Payless employee's meeting notes state that Topline's job is "to find validated styles and interpret them for [Payless] and find a place to make those shoes." The notes also state: "An Adidas look a like 4 stripe (silver stripe) with a clearish blue bottom is coming in all stores." Before Topline provided buying agent services to Payless for any of the shoes at issue, Topline was advised by Payless that its 1994 agreement with Adidas allowed Payless to sell two and four striped shoes, as long as the stripes did not have serrated edges. Relying on Payless's representations, Topline believed that Payless could lawfully manufacture, import, and sell the two and four striped shoes for which Topline provided buying agent services. Topline was aware that Adidas sued Payless in November 2001 alleging that Payless's two and four striped shoes infringed Adidas's trademark and trade dress rights. Topline was aware that this court granted summary judgment in Payless's favor in January 2003, that the Ninth Circuit reversed the summary  [*5] judgment in January 2006, and that the Ninth Circuit returned the case to this court in April 2006 for eventual trial.

Adidas America, Inc. and Adidas AG (collectively, "Adidas") bring this trademark infringement action against The Topline Corporation ("Topline") over shoes for which Topline was the buying agent. Adidas claims the shoes bear confusingly similar imitations of a Adidas's registered trademarks and trade dresses. All of the allegedly infringing shoes are sold by Payless. Some of the models were sold in all Payless stores in the United States, including stores in Oregon. Topline filed a motion to dismiss for lack of personal jurisdiction.

Issue:

Does the court have personal jurisdiction over Topline?

Answer:

No.

Conclusion:

Re: Purposeful Direction — The first element ensures that “a defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” Adidas argued that Topline purposefully directed its activities towards Oregon under both the effects test and the stream of commerce test. However, Adidas failed to meet both these tests. It did not meet the effects test, as Topline's express aim was at Kansas as it found trends for Payless, had samples manufactured, presented the samples to Payless, and arranged for manufacturing. The fact that the shoes allegedly infringed Adidas' mark does not change Topline's aim to Oregon, just like the fact that Fred Martin used Schwarzenegger's image without permission did not change Fred Martin's aim to California. It also did not meet the stream of commerce test, since although it was foreseeable that the shoes would be sold in Oregon, there is no evidence of the "something more" that is required under Asahi and the Ninth Circuit cases explaining it. In particular, there is no evidence that Topline ever held title to the shoes or was a part of the distribution network that brought the shoes to Oregon. 

Re: arising out of forum-related activities — Topline that it has no contacts with Oregon related to the alleged infringement. Topline's Oregon contacts are limited to the purchase of a trade show booth from an Oregon company and use of an Oregon testing company, neither of which concerned the accused shoes sold at Payless. Accordingly, Adidas has not satisfied the second prong of the test for specific jurisdiction, namely, whether the claim arises out of Topline's forum-related activities.