Jurisdiction claim is bad business for Hy Cite's trademark

In Hy Cite Corporation v BadBusinessbureau.com, the US District Court for the Western District of Wisconsin has granted the defendant's motion to dismiss an action for alleged trademark infringement for lack of personal jurisdiction.

Upon discovering that BadBusinessbureau.com was operating a criticism website displaying consumer complaints about various companies, Hy Cite filed an action with the US District Court for the Western District of Wisconsin, alleging trademark infringement, as well as unfair competition, false advertising and disparagement. BadBusinessbureau.com is organized under the laws of St Kitts, West Indies. It does not own any assets, or have any offices or employees in the State of Wisconsin.

The district court dismissed the case. The court found that although the alleged infringing website was accessible from Wisconsin, BadBusinessbureau.com's only other link with that state was the sale of one book to a Wisconsin resident and an exchange of correspondence. This, the court found, did not constitute sufficient continuous and systematic general business contact with the state to give the court general jurisdiction.

The court also held that it had no specific jurisdiction. Specific jurisdiction calls for an examination of the nature and extent of the contacts with the forum state. This analysis has been broken down into two forms - 'purposeful availment' and 'effects'. Looking into the facts applicable to the first of these forms of analysis, the court found that (i) BadBusinessbureau.com had not purposefully established contact with Wisconsin, for instance by soliciting business there or otherwise taking advantage of the protection of its laws, and (ii) the cause of action was not a result of or related to the contact(s) that had been made (ie, availability of the website to Wisconsin residents).

The court also concluded that Hy Cite had failed to meet its burden to show the existence of specific jurisdiction under the effect test, which is satisfied when it can be shown that:

  • an intentional tort was expressly aimed at the forum state;

  • the brunt of the harm caused by this intentional tort was suffered in the forum; and

  • the defendant knew that the effects of its actions would occur in the forum.

However, there was no adequate showing in this case that Badbusinessbureau.com's website specifically aimed its activities at persons in the State of Wisconsin.

Accordingly, the exercise of personal jurisdiction over the foreign defendant was found to be constitutionally improper under the reasonableness factor set forth in the Worldwide Volkswagen Case.

Robert Lyon, Holland & Knight LLP, Los Angeles

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