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Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc. - 751 F.3d 796 (7th Cir. 2014)

Rule:

Because the Lanham Act, 15 U.S.C.S. § 1111 et seq., does not have a special federal rule for personal jurisdiction, a court looks to the law of the forum for the governing rule. Fed. R. Civ. P. 4(k)(1)(A). Under Indiana's long-arm statute, Indiana state courts may exercise personal jurisdiction on a number of prescribed bases, as well as "on any basis not inconsistent with the Constitution of this state or the United States." Ind. R. Trial P. 4.4(A). The Supreme Court of Indiana has held that Indiana's long-arm provision reduces analysis of personal jurisdiction to the issue of whether the exercise of personal jurisdiction is consistent with the Federal Due Process Clause. Thus, to determine whether the district court had personal jurisdiction over a defendant. a court asks whether the exercise of jurisdiction comports with the limits imposed by federal due process.

Facts:

Advanced Tactical Ordnance Systems (Advanced Tactical) is the manufacturer of PepperBall branded items, including PepperBall projectile irritants; it became the manufacturer and seller of such after it acquired trademarks and other property in a foreclosure sale from a company called PepperBall Technologies Inc – a company located in California. Advanced Tactical, however, appeared to have its headquarters in Indiana. Before the foreclosure, PepperBall Technologies had purchased its irritant projectiles from at least two sources: Perfect Circle, half owner of Advanced Tactical, and a Mexican company called APON. Around the time of foreclosure, APON's chief operating officer, Conrad Sun, a citizen of California, contacted Real Action Paintball, Inc. (Real Action), to see if Real Action was interested in acquiring irritant projectiles from APON. The parties subsequently entered into a deal, after which, Real Action posted on its website and sent through its email list an announcement that it had acquired the "machinery, recipes, and materials once used by PepperBall Technologies Inc." Advanced Tactical soon caught wind of Real Action's announcement and fired off a cease-and-desist letter. In response, Real Action added a disclaimer to the original message, stating that it was neither associated nor affiliated with PepperBall Technologies and its brands, and that Real Action projectiles were not made by the current PepperBall Technologies. Unsatisfied, Advanced Tactical filed the present suit in the District Court for the Northern District of Indiana. The complaint alleged that personal jurisdiction was proper under Indiana's long-arm statute, found in Trial Rule 4.4(A). The complaint alleged that each defendant engaged in conduct satisfying one or more of the following: doing any business in Indiana, via an interactive website capable of accepting orders from citizens of Indiana (Rule 4.4(A)(1)); engaging in tortious acts outside Indiana while knowing they would harm citizens of Indiana (Rule 4.4(A)(3)); causing damage in Indiana while deriving substantial revenue from goods sold in Indiana (same); and conspiring to engage in tortious conduct calculated to harm a citizen of Indiana (same). Real Action contested personal jurisdiction. The district court concluded that personal jurisdiction was proper and that Advanced Tactical was entitled to a preliminary injunction. Real Action appealed.

Issue:

Was the exercise of personal jurisdiction over a California company by the district court in Indiana proper?

Answer:

No.

Conclusion:

Under Indiana's long-arm statute, Indiana state courts may exercise personal jurisdiction on a number of prescribed bases, as well as "on any basis not inconsistent with the Constitution of this state or the United States." The Supreme Court of Indiana has held that Indiana's long-arm provision reduced analysis of personal jurisdiction to the issue of whether the exercise of personal jurisdiction was consistent with the Federal Due Process Clause, Thus, according to the Court of Appeals for the Seventh Circuit, in order to determine whether the district court had personal jurisdiction over Real Action, it was necessary to know whether the exercise of jurisdiction comported with the limits imposed by federal due process. Due process was satisfied for this purpose so long as a defendant had certain minimum contacts with the forum state such that the maintenance of the suit did not offend traditional notions of fair play and substantial justice; The relation between defendant, an alleged trademark infringer, and the forum had to arise out of contacts that defendant itself created with the forum. The Court saw no evidence that defendant had the necessary minimum contacts with Indiana to support specific jurisdiction; hence, the Court remanded the case with instructions to vacate the judgment and dismiss the complaint for lack of personal jurisdiction.

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