Shippitsa Ltd. v. Slack - Civil Action No. 3:18-CV-1036-D, 2019 U.S. Dist. LEXIS 9602 (N.D. Tex. Jan. 22, 2019)

Rule:

When specific jurisdiction is based on online interactions via an Internet website, the Fifth Circuit follows the sliding scale adopted in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997).  Zippo requires the court to assess the level of interactivity of the defendant's website. It prescribes different outcomes to the personal jurisdiction question depending on which of following three categories the website falls into: (1) where a website is nothing more than a passive advertisement, the court must decline to exercise personal jurisdiction; (2) where a website facilitates contractual relationships and the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper; and (3) where a website falls somewhere in between, "the exercise of jurisdiction is determined by the level of interactivity and commercial nature of the exchange of information that occurs on the [w]ebsite." 

Facts:

According to Shippitsa's complaint, it manufactures a dietary supplement called Phen375, which it sells through its website at the domain name phen375.com. Shippitsa is organized under the laws of the United Kingdom ("UK"), is registered in Scotland, and maintains its headquarters in Scotland. It owns the U.S. registered trademark for the standard characters "PHEN375." In 2011 Shippitsa contracted with MoreNiche (the "Contract") to join MoreNiche's affiliate marketing network as an advertiser. MoreNiche is organized under the laws of, and is headquartered in, the UK. Slack, a citizen and resident of the UK, is MoreNiche's founder and director. Shippitsa advertised its Phen375 product through MoreNiche's network until March 2018, when the Contract between the two companies expired. According to Shippitsa, after the Contract expired, certain affiliate websites continued to display information about Phen375. Instead of linking to Shippitsa's phen375.com website, however, they instead linked visitors to a webpage—mixi.mn—operated by MoreNiche and Slack. The mixi.mn webpage consists only of the following lines of text: "Phen375 is no longer available via this link, we will be redirecting you to an alternative in 5 seconds. If you do not want us to do that click here." Shippitsa sued Slack, MoreNiche, and Wolfson Berg, asserting federal-law claims for trademark infringement, false designation of origin, trademark dilution, cybersquatting, and violations of the Racketeer Influenced and Corrupt Organizations Act. Shippitsa also asserted Texas-law claims for tortious interference with a prospective contractual relationship, trademark dilution, and unfair competition. Wolfson Berg, MoreNiche, and Slack have each filed a motion to dismiss. Each motion seeks dismissal on the grounds of lack of personal jurisdiction, improper venue, and failure to state a claim on which relief can be granted. MoreNiche and Slack have also filed a joint motion for Rule 11 sanctions against Shippitsa.

Issue:

Did MoreNiche and Slack, by operating a "redirect" webpage that is accessible to Texas residents, establish sufficient contacts with the court to support the exercise of specific personal jurisdiction over them?

Answer:

No

Conclusion:

The court held that, under the Zippo test, Shippitsa failed to present a prima facie case that the mixi.mn website subjected Slack and MoreNiche to specific personal jurisdiction. Even if mixi.mn were the kind of website that could support the assertion of personal jurisdiction, Shippitsa must offer evidence or non-conclusory allegations that Texas residents have actually interacted with the website. Zippo emphasizes the importance of a website operator's "conscious choice to conduct business with the residents of a forum state"—which in that case is demonstrated by the defendant's "repeatedly and consciously [choosing] to process [forum] residents' applications and to assign them passwords."  A person or company that wishes to avoid being haled into court in a particular jurisdiction can simply choose not to interact with forum residents online. It follows that where a defendant has not interacted at all with residents of a forum, consciously or otherwise, personal jurisdiction is improper. Because the plaintiff bears the burden of establishing a prima facie case for personal jurisdiction, the plaintiff must allege or show that the defendant has in fact interacted with forum residents. Shippitsa did offer evidence that at least two people have visited mixi.mn from within Texas: Shippitsa's counsel, and a private investigator whom Shippitsa hired. But a plaintiff cannot unilaterally manufacture jurisdiction by instructing its own agents, with litigation in mind, to visit a defendant's allegedly infringing website. Accordingly, the court granted the motions to dismiss and entered final judgment under Rule 54(b) dismissing Shippitsa's actions against MoreNiche and Slack for lack of personal jurisdiction. The court denied the motion for sanctions filed by MoreNiche and Slack because it concluded that Shippitsa's legal contentions in support of personal jurisdiction are not objectively unreasonable.