Can you sue foreign corporations for trademark infringement?
E-commerce has allowed foreign corporations to reach new customers far beyond their borders. Sales to U.S. customers, though, might open up a foreign company to litigation in the United States. The U.S. Court of Appeals for the First Circuit has shed light on how a foreign defendant can land in federal court for alleged trademark infringement.
Plixer International, Inc., a Maine-based corporation, owns the registered mark “Scrutinizer.” The mark covers computer software and hardware for fighting malware infections and application performance problems.
German corporation Scrutinizer GmbH runs a cloud-based self-service platform that helps customers build better software through an interactive, English-language website. Customers pay in euros. The company maintains no U.S. office, phone number or agent for service of process. It directs no advertising to the United States, and its employees don’t travel there on business.
Plixer sued Scrutinizer for trademark infringement. After the trial court found that it had jurisdiction over Scrutinizer based on the company’s contacts with the United States, Scrutinizer appealed.
Scrutinizer argued that the finding of jurisdiction violated the Due Process Clause of the U.S. Constitution. This requires a plaintiff to show that the defendant has adequate contacts with the United States to justify jurisdiction.
To determine whether contacts are adequate, the appeals court uses a three-pronged minimum contacts framework, which requires a plaintiff to show three things:
- Its claim directly arises out of or relates to the defendant’s activities in the United States.
- The defendant’s contacts show “purposeful availment,” meaning the defendant intentionally took advantage of the privilege of conducting activities in the United States, thereby invoking the benefits and protections of U.S. laws and making the defendant’s involuntary presence in U.S. courts foreseeable.
- The exercise of jurisdiction is reasonable.
Scrutinizer conceded the first prong but challenged the second and third.
On the question of purposeful availment, the appeals court found that the company could have reasonably anticipated jurisdiction based on its U.S. contacts. It noted that Scrutinizer had used its website to obtain U.S. customer contracts that yielded almost $200,000 in business over 3½ years.
Turning to the reasonableness prong, the court found that the United States’ interest in adjudicating a dispute over U.S. trademark law, combined with the U.S. plaintiff’s interest in obtaining effective relief, outweighed any burden imposed on Scrutinizer by U.S. litigation. The company failed to show any travel burdens that were “special or unique,” and affidavits and video devices can resolve many of the logistical difficulties.
The U.S. Supreme Court has yet to provide clear guidance on how a defendant’s online activities translate into contacts for the minimum contacts analysis. Thus, as the court emphasized, its ruling here was specific to the facts of the case. If your business deals with foreign businesses, be sure to contact your intellectual property attorney to learn more. •
Plixer Int’l, Inc. v. Scrutinizer GmbH, No. 18-1195, Sept. 13, 2018, 1st Cir.