In-State Sales of Product Bearing Infringing Trademark Not Enough For Personal Jurisdiction, Says Seventh Circuit

In Advanced Tactical Ordnance Systems, LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir. 2014), the court held that the following was not sufficient to support personal jurisdiction consistent with the Constitution's Due Process Clause:

Real Action fulfilled several orders of the allegedly infringing projectiles for purchasers in Indiana; second, it knew that Advanced Tactical was an Indiana company and could foresee that the misleading emails and sales would harm Advanced Tactical in Indiana; third, it sent at least two misleading email blasts to a list that included Indiana residents; fourth, it had an interactive website available to residents of Indiana; and finally, it put customers on its email list when they made a purchase, thereby giving the company some economic advantage. In our view, none of these meets the standards that the Supreme Court has set.

This strikes me as surprising.  Generally, even very minimal sales of a product bearing an allegedly infringing trademark has been held to be sufficient by itself.  In Cartier v. Seah LLC, 598 F. Supp. 2d 422, 425(S.D.N.Y. 2009), for example,  the court wrote , "[a]s a general proposition, the offering for sale of even one copy of an allegedly infringing item, even if no sale results, is sufficient to give personal jurisdiction over the alleged infringer under" New York's longarm statute.

Also notable is that the the Seventh Circuit holds that the Supreme Court's recent decision in Walden v. Fiore, 134 S. Ct. 1115 (2014) effectively overturns Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Ltd. Partnership., 34 F.3d 410 (7th Cir. 1994), where it had held that an Indiana-based plaintiff had personal jurisdiction over an out-of-state defendant in Indiana merely because Indiana was the state where Plaintiff would feel the injury.

"By choosing a name that might be found to be confusingly similar to that of the Indianapolis Colts, the defendants assumed the risk of injuring valuable property located in Indiana," Indianapolis Colts held.  But Advanced Tactical Ordinance holds that "[A]fter Walden there can be no doubt that 'the plaintiff cannot be the only link between the defendant and the forum.' Walden, 134 S. Ct. at 1122. Any decision that implies otherwise can no longer be considered authoritative."

Factoring The Likelihood of Confusion Factors

The key question in a trademark infringement case is whether the defendant is using a mark that is "likely to cause confusion, or to cause mistake, or to deceive."  (See 15 U.S.C. § 1114, allowing a lawsuit for infringement of a federally registered trademark, and 15 U.S.C. § 1125(a), allowing a suit for infringement of mark that is not registered but  has come to symbolize its owner's goods or services.)

To give some examples, it was the question the court had to grapple with when

• the Polaroid Corporation sued a small electronics company using the trademark POLARAD;
• the makers of BEANIE BABIES stuffed animals sued a company selling plush toy race cars under the BEANIE RACERS trademark; and
• the Duluth News-Tribune sued another paper that started using the mark SATURDAY DAILY NEWS TRIBUNE in overlapping markets.

At first blush, it might seem like a simple question, but it is not just a matter of asking whether the marks are similar.  For even identical marks might be used on different products, or in different markets. (Consider DELTA for airlines and for faucets, or LEANING TOWER OF PIZZA, for pizzerias in different towns.)  And the federal statutes give no indication of the factors that a court should consider in deciding whether confusion is likely.

So the different federal circuit courts have adopted different lists of factors to determine whether there is a "likelihood of confusion" in a given case.  They are all trying to determine the same thing, but they approach it in different ways.

The Federal Circuit, and the Trademark Trial and Appeal Board, for example, look at thirteen different factors, including "[t]he similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation and commercial impression," and "[t]he number and nature of similar marks in use on similar goods."  The Eighth Circuit seems to ask the fewest questions, with six factors including "the degree to which the products compete with each other" and "the alleged infringer's intent to 'pass off' its goods as those of the trade dress owner."

But do the different approaches lead to any practical difference?  Even with ostensibly different sets of factors, aren't the courts really asking the same things?  Is it perhaps just a matter of "you know it when you see it?"

In upcoming posts I'll look at each circuit's test and how it's been applied in a recent case and see whether that suggests any answers to these questions.