Monday, January 30, 2012

Attacking national company's TMs doesn't create personal jurisdiction in California

Zero Motorcycles, Inc. v. Pirelli Tyre S.p.A., 802 F.Supp.2d 1078 (N.D. Cal. 2011)
Zero filed for declaratory relief against Pirelli seeking to protect its use of ZERO and ZERO-formative marks.  Zero makes electric motorcycles under the ZERO MOTORCYCLES mark in many foreign countries, since 2007.  It has US registrations for ZERO on electric vehicles, namely motorcycles, as well as ZERO MOTORCYLES, ZERO DS, ZERO S, ZERO SS, ZERO X and ZERO MX. Pirelli makes various products, including tires for vehicles, and owns a number of trademarks which incorporate the ZERO mark.  (There are a number of Pirelli companies; the one that conducts business in California is Pirelli Tire LLC.) 
Zero alleged that Pirelli began a global campaign against Zero’s trademark registrations in 2009, filing oppositions and cancellations in the USPTO and elsewhere, and that Pirelli submitted a declaration of use and incontestability claiming that the ZERO mark was in use in the US.  Its exemplar was marketing material showing a tire with the P ZERO mark, which Zero alleged was false because the exemplar was for P ZERO, not ZERO. 
Zero sought to join the US subsidiaries, a motion the court denied because of undue delay.  In addition, the new claims Zero sought to assert didn’t work.  Zero wanted to add a Lanham Act disparagement claim; it was unclear whether the disparagement was of Zero’s products or of its marks, but no claim for trademark disparagement exists under the Lanham Act.  The allegedly false assertions were that Pirelli has used a Zero mark identical to Zero’s mark and that Pirelli swore that Zero was confusing and diluting Pirelli’s marks.  But these misstatements were made to the PTO, not in commercial advertising or promotion. Moreover, they related to Zero’s marks, not to its goods or services (what about its commercial activities?). 
The California UCL claim failed; it was too conclusory, and Zero didn’t allege facts showing a willful intent to provide false testimony to the PTO, which would have been “unlawful.”  Pirelli allegedly lied about its use of the Zero mark, but it provided the exemplar using P ZERO, and the fact that it submitted that exemplar “undermines any assertion of a willful intent to deceive the PTO, since the PTO obviously could assess the accuracy of Defendants' representation by comparing it to the exemplar.”  Likewise Zero failed to plead unfairness; Pirelli “did little more” than seek to protect its IP rights. 
More interesting, perhaps, was the court’s ruling on personal jurisdiction over the non-US defendants. After finding no general jurisdiction, the court analyzed whether their alleged attempts to harm Zero’s marks created specific jurisdiction.  In the 9th Circuit, specific jurisdiction requires purposeful direction to the forum/resident or purposeful availment of the forum; the claim must arise out of or relate to those forum-related activities; and the exercise of jurisdiction must comport with fair play and substantial justice.  Satisfying the first two prongs shifts the burden to the defendant to show that the exercise of jurisdiction would be unreasonable. 
Purposeful direction applies to tort claims.  This means an intentional act, expressly aimed at the forum state, causing harm the defendant knows is likely to be suffered in the forum state.  A merely foreseeable effect in the forum state is generally insufficient.  Though Pirelli’s acts were intentional and may have had effects in California, the court found no express aiming.  Instead, Pirelli allegedly aimed its activities at the PTO, in DC.  (Compare the Second Circuit on copyright infringement.) 
Another case found that a letter sent to a Virginia domain name registrar challenging plaintiff's use of a particular domain name was expressly aimed at California because it individually targeted the plaintiff, a California corporation doing business almost exclusively in California.  But Zero is a Delaware corporation doing business worldwide.  Thus, Pirelli’s conduct didn’t individually target Zero in California with the intention of disrupting its California business. 
Likewise, Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Ltd. Partnership, 34 F.3d 410 (7th Cir.1994), was no help.  In that case, the only activity the Baltimore defendant had planned in Indiana was broadcast of its football games, which were going to be shown nationwide. But the court concluded that the plaintiff’s trademarks would be affected in Indiana, making jurisdiction proper.  The Ninth Circuit has rejected that expansive reading of Supreme Court precedent, refusing to hold that a foreign act with foreseeable effects in the forum state always gives rise to specific jurisdiction.  More is required: specific aiming at the forum. 
Likewise, Zero’s claim didn’t arise out of Pirelli’s forum-related activities: there was no showing that but for Pirelli’s forum-related conduct, the injury wouldn’t have occurred.  The conduct at issue here took place outside of and was not related to California.  Even if Zero had succeeded on the first two prongs, the court found that exercising jurisdiction would be unreasonable in this case, because defendants are Italian entities that have no reason to be in California.  They purposefully availed themselves of the benefits of DC through proceedings before the PTO, and can be sued there.

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