Monday, January 25, 2016

Court rejects Zippo jurisdiction test but allows suit over alleged copying

Kindig It Design, Inc. v. Creative Controls, Inc., --- F. Supp. 3d ----, 2016 WL 247574,  No. 2:14-cv-00867 (D. Utah Jan. 20, 2016)
Mostly a personal jurisdiction ruling in this copyright/patent infringement/false advertising case brought by Kindig, which customizes hot rods.  Creative Controls, which customizes vehicles for accessibility purposes, is a Michigan corporation with no place of business, property, employees, etc. in Utah.  Creative Controls did have a website allowing Utah residents to order; it donated a custom parking brake for use on a car Kindig was customizing in Utah; it sold a single door handle to a Utah customer; and it allegedly copied photographs and contents from Kindig’s Utah-based website.  (In return for the donated brake, Kindig sent Creative Controls a disk with photos of the finished car, and a letter indicating that it could use the photos for promotional purposes; these are among the allegedly copied photos at issue.)   The door handle was ordered by a Kindig employee’s relative, and the parties agreed that personal jurisdiction could not be based on this plaintiff-generated contact.
The court found that it didn’t have personal jurisdiction over Kindig’s patent claims, but did have personal jurisdiction over copyright and related claims.  The court further held that the patent claims weren’t so related as to justify the exercise of pendent personal jurisdiction.  Among other things, the court rejected the Zippo website jurisdiction test as incompatible with modern internet practices, holding that traditional tests were readily applicable to internet-based conduct.  As the court pointed out, many now-ubiquitous interactive features didn’t exist in 1997 when Zippo was decided, and also the presence of intermediaries such as Facebook makes it hard to figure out how to judge the “interactivity” of something like a Facebook page related to the defendant’s own activity.  Moreover, the traditional purposeful availment test doesn’t require that the purposeful availment be for commercial purposes; without that limit, pretty much everybody looks like they’re personally availing themselves of pretty much any jurisdiction under Zippo.
The allegedly infringing copying of Kindig’s photos from its Utah website, however, gave rise to personal jurisdiction over Creative Controls on all claims related to the alleged copying.  Kindig sufficiently identified the works at issue by including copyright registration information and date of first publication.  By alleging that Creative Controls’ website “contains photographs of customized automobiles which [sic] are nearly identical to [the copyrighted] photographs of customized automobiles found on the Kindig website,” the complaint provided sufficient notice of the allegedly infringing works, even if it didn’t otherwise identified them.
Likewise, Kindig sufficiently pled false advertising/deceptive trade practices.  Creative Controls argued that the claims should be dismissed because the photos weren’t materially misleading: it was implausible that any differences in door handles displayed in photos of cars and actual Creative Controls door handles would be material to consumers, given the small size of the photos.  But the court found that it was plausible that consumers would be influenced by the photos.  “Indeed, the reasonable inference is that Creative Controls included the photographs of the unique customized cars with the very intent of influencing potential customers.”
Nor would the court dismiss unjust enrichment or conversion claims as preempted at this stage.  And here the court just errs: it said that, because some of the photo copyrights might be invalid, unjust enrichment and conversion claims might not be preempted if based on invalid copyrights.  But that’s backwards under §301, which was specifically designed to prevent claims replicating the subject matter of copyright, whether or not the work (or idea/fact) at issue was copyrightable.  It should be immediately evident that §301 applies to an unjust enrichment/conversion claim based on copying a work in the public domain due to expiration of federal copyright protection; so too here.  (And that’s setting aside the issue that, even if a registration is invalid for some reason, the copyright still exists if the work is copyrightable.  Only the details of federal jurisdiction/availability of certain remedies turn on the validity of the registration.)
The court did hold that Kindig failed to state a claim for fraud.  There were no facts indicating Creative Controls defrauded Kindig; a fraud on the public at large didn’t allow Kindig to sue, and Kindig didn’t allege it acted in reliance on Creative Controls’ misrepresentations.

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