ICG Am., Inc. v. Wine of the Month Club, Inc. - No. 3:09-cv-133 (PCD), 2009 U.S. Dist. LEXIS 77151 (D. Conn. Aug. 24, 2009)

Rule:

Interactive, commercial websites permit personal jurisdiction to be exercised over a defendant. One who uses a web site to make sales to customers in a distant state can thereby become subject to the jurisdiction of that state's courts.

Facts:

Defendant Wine of the Month Club, Inc. (WMCI) is the record owner of U.S. Trademark Registration No. 1,500,846 for the mark: WINE OF THE MONTH CLUB, registered for "mail order services in distribution of wine", the record owner of U.S. Trademark Registration No. 2,881,828 for the mark: WINE OF THE MONTH CLUB, registered for "newsletters pertaining to food and drink", and the record owner of U.S. Trademark Registration No. 1,246,348 for the mark: WINE OF THE MONTH, registered for "newsletters pertaining to food and drink." On December 3, 2007, WMCI sent two cease and desist letters (the "December 2007 Cease and Desist Letters") to Plaintiff ICG America, Inc.’s offices in Connecticut alleging that ICG Am., doing business as Amazing Clubs and California Reds, had infringed its trademark and service mark rights. In those letters, WMCI demanded monetary compensation and threatened legal action for the alleged infringement if ICG Am. did not immediately cease its use of Wine of the Month Club's marks and name. WMCI also contended that ICG Am. was guilty of false designation of origin and unfair competition. ICG Am. did not respond to the December 2007 Cease and Desist letters. On December 10, 2008, WMCI sent ICG Am., doing business as Flying Noodle, another cease and desist letter that contained the same allegations as the December 2007 Cease and Desist letters. ICG Am. did not respond. On January 13, 2009, WMCI sent another cease and desist letter to ICG Am. that requested an accounting of revenues, costs and profits so that WMCI could determine monetary damages. Again, ICG Am. did not respond. On or about November 19, 2008, ICG Am. discovered that the advertisements it had previously purchased from Google to advertise the monthly wine buying clubs offered by California Reds had been disapproved, which prevented Internet users from seeing its advertisements. On or about December 17, 2008, ICG Am. learned that Yahoo had similarly rejected all keyword purchases and advertisements that it had previously bought to advertise the monthly wine buying clubs offered by its Flying Noodle brand. ICG Am. contended that Google and Yahoo rejected its advertisements in direct response to WMCI’s complaints. ICG Am. alleged that WMCI’s actions interfered with its ability to market and advertise the monthly wine buying clubs that it sells through its websites, which resulted in lost revenues and significant injury to ICG Am. ICG Am. sought a declaratory judgment of the invalidity of WMCI’s trademark, a declaratory judgment of the unenforceability of WMCI’s trademark, and a declaratory judgment of its non-infringement. It also sought a declaratory judgment that its use of WMCI’s marks has not violated § 43(a) of the Lanham Act or constituted unfair competition. ICG Am. moved for cancellation of WMCI’s trademark and sought monetary damages for WMCI’s alleged violation of CUTPA. WMCI moved to dismiss the complaint for lack of jurisdiction and improper venue.

Issue:

Does the Connecticut long-arm statute authorize personal jurisdiction over WMCI, a Californian corporation?

Answer:

Yes.

Conclusion:

WMCI submitted that it does not ship its wine to Connecticut because state law prohibits doing so, and that WMCI therefore has not distributed its product for consumption in Connecticut. WMCI also contended that its website is passive in relation to the residents of Connecticut because neither the website nor WMCI’s advertisements specifically target Connecticut. However, this argument failed because its website and e-mail campaigns solicited business in Connecticut from Connecticut residents, and persons in Connecticut do purchase goods from WMCI, even if the wine is shipped elsewhere. This conduct satisfied the second condition of the Connecticut long-arm statute, specifically that "repeated business solicited in Connecticut by mail or otherwise." Further, WMCI relied on the fact that it does not ship wine to Connecticut to establish that its website was passive as to Connecticut's residents. However, where a product is shipped does not dictate whether the website is active or passive. Whether the exercise of personal jurisdiction is permissible is "directly proportionate to the nature and quality of commercial activity that an entity conducts over the internet." Because WMCI’s website sells its products, WMCI’s website was interactive and commercial. While stating that it cannot ship to Connecticut, WMCI’s website nonetheless explicitly advises consumers that they "may order from any state." Inviting residents of any state to order from its website amounted to a solicitation of business from Connecticut residents. Where the product is shipped does not negate that WMCI has invited Connecticut residents to purchase its products and they have done so.