Jurisdictional hole in the ozone over Kansas

Oxion, Inc. v. O3 Zone Co., 2007 WL 2155675 (D. Kan.)

This declaratory judgment patent action was filed in Kansas, where plaintiff is based. Along with its request for a finding of noninfringement of an ozone generator product useful in agriculture, the plaintiff alleged affirmative false advertising and unfair competition claims. Defendant, an Idaho corporation that had no Kansas customers, contested personal jurisdiction.

Plaintiff argued that the facts alleged in its false advertising, tortious interference with business relationships, and defamation claims meant that defendant purposefully directed its conduct towards a Kansas resident. But circuit precedent held that alleging an intentional tort isn’t enough to show that personal jurisdiction exists. Plaintiff also relied on the Tenth Circuit’s Lanham Act precdedent that false statements can be presumed to injure direct competitors, but the court here was not satisfied that this made a prima facie showing of personal jurisdiction. So the court looked at the interactivity of defendant’s website, which it found insufficient to establish purposeful availment of the Kansas forum – the website didn’t allow purchases but just provided contact information and an email inquiry option.

What about those allegedly disparaging statements on the website? Here the court distinguished between falsehoods about the seller and falsehoods about the seller’s competitor. Defendant’s alleged website falsehoods were in the nature of “puffing” its own goods and contained no direct references to plaintiff, just vague references to “some companies,” “other current technology,” or “competitive technologies.” (If the parties were the only two competitors in the market, this would necessarily target plaintiff, but there’s no indication in the opinion that this is so.)

Moreover, the court considered excerpts from magazine articles linked from defendant’s website. (“Linked” appears to be a misstatement; the website itself hosts copies of the articles.) Defendant allegedly makes false claims about its patents in articles from magazines such as Spudman, Feed & Grain, and The Badger Common ‘Tater (who says potato farmers have no sense of humor?). The court noted that it was unclear whether defendant paid to run those articles, though it seems likely that there was some solicitation. Given that some of the magazines had as many as 16,000 subscribers, the court thought it possible that defendant might have intended to expand its marketing area if it did solicit self-promoting ads, but that would still make a Kansas presence dependent on the extent of circulation of those magazines within Kansas, which was apparently not in evidence.

Had the court found this sufficient as a jurisdictional matter, there would be an interesting issue of whether the articles could support false advertising claims. Some courts have held that articles in specialized publications written at the behest of an advertiser are subject to the Lanham Act despite formal designation as articles, but there may be First Amendment limits to such holdings. Under the circumstances, however, there was no need to define the substantive coverage of the Lanham Act, because defendant’s contacts with Kansas fell short of the minimum necessary for personal jurisdiction.