Tuesday, July 20, 2010

Music Makers Holdings, LLC v. Sarro (Maryland U.S.D.C.)

Filed: July 14, 2010
Opinion by Judge Roger W. Titus

Held: A foreign defendant was not subject to personal jurisdiction in Maryland on the basis of correspondence sent to and received from the jurisdiction, maintenance of a website, advertising, or tortious conduct not intentionally directed into the State.

Facts: A Maryland plaintiff sued a foreign defendant for infringing upon its trademark. The defendant moved to dismiss for lack of personal jurisdiction. The plaintiff argued that the defendant was subject to personal jurisdiction because it transacted business in the State, caused tortious injury in the State, and engaged in a "persistent course of conduct in the State." The plaintiff pointed to five things that justified the exercise of personal jurisdiction, which the court addressed in turn:


The defendant sent cease and desist letters to the plaintiff in the State: The plaintiff argued that the defendant subjected herself to personal jurisdiction by sending the plaintiff cease-and-desist letters in Maryland about the mark. Relying on multiple cases from outside the jurisdiction, the court held that cease and desist letters, alone, are an insufficient basis. A defendant does not "transact business" within the meaning of the long-arm statute by sending letters to a purported infringer of its rights. Moreover, the maintenance of a suit based solely on such letters would “offend traditional notions of fair play and substantial justice."

The defendant received e-mails and phone calls originating from Maryland inquiring about the mark: The plaintiff argued that such contacts were sufficient to establish personal jurisdiction. The court held that these contacts did not establish that the defendant was transacting business or engaging in a persistent course of conduct in the State. Moreover, the contacts would not satisfy due process because they did not show that the defendant purposefully availed herself of conducting activities in the State.

The defendant's website: The court articulated the standard in the Fourth Circuit for establishing personal jurisdiction by means of a website. In the Fourth Circuit, the mere act of “placing information on the Internet is not sufficient by itself to subject that person to personal jurisdiction in each State in which the information is accessed.” Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 399 (4th Cir. 2003). Rather, the defendant “must have acted with the manifest intent of targeting Marylanders.” Id. at 400.

The Fourth Circuit has adopted a “sliding scale” model for website-based specific jurisdiction. Under this sliding scale, there are passive, interactive, and semi-interactive websites. At one end of the spectrum are situations where a defendant clearly does business over the internet. If the defendant enters into contracts with residents that involve the knowing and repeated transmission of computer files over the internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on a web site. A passive web site that does little more than make information available is not grounds for the exercise of personal jurisdiction. The middle ground is occupied by interactive web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information.

The defendant's site provided information regarding her camp, a toll-free number, and a registration form which visitors could print and mail to defendant in New York. It also had a Google search box. It did not have an electronic application, a payment-by-credit card function, live chat, or an interactive e-mail form. Accordingly, the court deemed the site passive and an insufficient basis for personal jurisdiction.

The defendant advertised on camp marketing web sites: The plaintiff argued that this was a purposeful availment of the Maryland marketplace. The court concluded that, as with the defendant's own site, the third-party websites do not indicate that defendant “direct[ed] electronic activity into the State . . . with the manifested intent of engaging in business or other interactions within the state.” The generic advertising found on these third-party websites was insufficient to invoke personal jurisdiction.

The effects test: The plaintiff argued that the defendant's willful infringement of its rights satisfied the effects test. The effects test requires that a plaintiff show 1) an intentional tort, 2) suffered by the plaintiff in the forum, and 3) the defendant expressly aimed its conduct at the forum. The court found that the third requirement was lacking - there was no showing that the defendant aimed its conduct at Maryland.

Accordingly, the court dismissed for lack of personal jurisdiction.

The full opinion is available in pdf.

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