Comparative ad creates personal jurisdiction in target's home state

SKEDCO, Inc. v. ARC Prods., LLC, 2013 WL 3965314 (D. Or. July 30, 2013)

SKEDCO, an Oregon corporation, sued its competitor ARC (dba Medsled), a Missouri corporation, alleging false advertising in violation of federal and Oregon law based on ARC’s comparative claims about the parties’ emergency medical rescue equipment in brochures, films, presentations, and online.

The court first found personal jurisdiction in Oregon.  SKEDCO had the burden of establishing personal jurisdiction by making a prima facie showing of facts that support the exercise of jurisdiction over defendant. Here, specific jurisdiction was adequately shown; the elements are (1) purposeful direction, (2) a claim arising out of the defendant’s forum-related activities, and (3) that the exercise of jurisdiction was reasonable; when the first two parts are shown, the burden shifts to the defendant to show unreasonableness.  For purposeful direction, the tort-based effects test applied: “the defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.”

The first part of the effects test was clearly satisfied, since ARC intended to publish ads that targeted SKEDCO and made comparisons.  This conduct was expressly aimed at Oregon because, under the 9^th Circuit’s test, there’s express aiming “when the defendant is alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the forum state.” Here, ARC targeted SKEDCO with its comparisons.

ARC argued that it operated an essentially passive website, which wasn’t enough to confer jurisdiction.  But SKEDCO’s claims weren’t just based on ARC’s website, but also in brochures and YouTube videos (why YouTube isn’t “passive” for these purposes is not clear to me).  A passive website in conjunction with “something more” directly targeting the forum is sufficient, and “something more” includes “individually target[ing] a plaintiff known to be a forum resident.” And the final element of the effects test was satisfied, because any harm suffered by SKEDCO would necessarily be felt in Oregon regardless of where it lost business.

The claims also arose out of/resulted from ARC’s forum-related activities: its allegedly false ads targeting an Oregon corporation.  ARC didn’t show that the exercise of jurisdiction would be unreasonable, despite its minimal contacts in Oregon.

The court also declined to dismiss the Lanham Act claims as laches-barred based on the pleadings; laches is usually fact-intensive.  The date of the comparative YouTube video was, ARC submitted, March 16, 2011.  ARC argued that SKEDCO therefore slept on its rights for over two years.  Assuming this to be true, the earliest date that laches could attach would be March 16, 2013, and SKEDCO sued on April 24.  It should have the opportunity to explain why the five-week delay was reasonable, and ARC also didn’t show prejudice, though it was free to renew its defense after discovery.

Finally, the court held, based on state appellate court cases, that common law unfair competition in Oregon covered only misappropriation of intellectual property, not false advertising.