One sale sufficient to support personal jurisdiction under ACPA

In Mattel Inc v Procount Business Services, the US District Court for the Southern District of New York has ruled that a court can assert jurisdiction over out-of-state defendants in a suit filed under the Anti-cybersquatting Consumer Protection Act (ACPA) on the basis of a single sale over the Internet to the judicial district where the suit was filed.

Mattel filed suit against Procount Business Services, 877netmall Inc and Gary A Giddings (collectively Procount) for, among other things, violations of the ACPA as a result of Procount's sale of BARBIE-marked products on a website hosted at the domain name 'metaltoys.com'. Mattel filed the suit in the US District Court for the Southern District of New York, even though:

• Mattel was incorporated in Delaware;
  
  
• its principal place of business is California; and
  
  
• Procount was incorporated, and carries out most of its business, in Texas.

Procount filed motions to dismiss or to transfer the suit.

As evidence that it properly filed suit in New York, Mattel showed that during its investigation prior to filing suit, a Mattel investigator in New York ordered merchandise from Procount's website. Procount then shipped the order to the investigator in New York. The court held that it had personal jurisdiction over Procount because it "solicited sales over the Internet, accepted an order from a resident of [New York] and shipped goods into this state to fill that order". The court explicitly stated that it was irrelevant that the sale was made to Mattel's investigator. The court also found further evidence of proper New York jurisdiction over Procount because the latter had emailed and had a live online chat session with the Mattel investigator regarding the order.

While the court found that personal jurisdiction was proper and rejected Procount's motion to dismiss, it granted Procount's motion to transfer based on a balancing of the equities between the parties. The court concluded that the interests of justice favoured the transfer of the suit to Procount's home jurisdiction in the Southern District of Texas, based principally on the relative size of the companies and the heavy financial burden that would be placed on Procount if the case was heard in New York.

Annie D'Agostino, Kilpatrick Stockton LLP, Atlanta