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R.Q.C. Ltd. v. JKM Enterprises, Inc.

United States District Court, Western District of Pennsylvania

September 23, 2014

R.Q.C. LTD. d/b/a REMBRANDT CHARMS Plaintiff,
v.
JKM ENTERPRISES, INC. d/b/a CHARMS PLUS and PAUL T. MACHIELS, Defendant.

OPINION

MARK R. HORNAK JUDGE

Pending before the Court is a Motion to Dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) filed by Defendants JKM Enterprises d/b/a Charms Plus ("Charms Plus") and Paul T. Machiels ("Machiels") (collectively, "Defendants"). ECF No. 17. For the reasons which follow, Defendants' Motion is denied.

I. BACKGROUND

Plaintiff R.Q.C. Ltd. ("RQC") is a New York corporation that designs and manufactures charms and charm bracelets for sale to retailers. Compl. ¶ 2. Charms Plus is a North Carolina wholesale company that also sells charms and charm bracelets to retail companies. Id. ¶ 5. Machiels, a citizen of North Carolina, is the owner and Vice President of Charms Plus, Id. ¶ 7; Machiels Aff. ¶ 1.

RQC contends that Defendants have copied, reproduced, and sold charms that are substantially similar in design and presentation to those marketed and sold by RQC. Compl. ¶¶ 18-22. RQC also maintains that Defendants are using the same unique names used by RQC to describe the charms. Id. RQC has registered the vast majority of the charms at issue with the United States Copyright Office; many others are the subject of pending copyright registration applications. Id. ¶¶ 15-17. Consequently, RQC asserts that Defendants have unlawfully reproduced their copyrighted charm designs in violation of the United States Copyright Act of 1976, 17 U.S.C. §§ 101 et seq., and state unfair competition law.

Apropos to the instant motion, it is undisputed that Charms Plus is not incorporated in Pennsylvania and does not own or lease real estate, pay taxes, maintain any offices, or have any employees in Pennsylvania. Machiels Aff. ¶ 2. The same is true of Machiels individually. Id. ¶ 4. Consequently, RQC relies entirely upon Defendants' online activities as a basis for exercising personal jurisdiction over Charms Plus and Machiels in Pennsylvania. These activities include advertising on social media and operating an interactive website, www.ikmcharmsplus.com, through which Defendants market and sell the allegedly infringing charms. Subjeck Decl. ¶ 3; Subjeck Decl. Ex. A. The website includes links and forms that allow potential customers to view merchandise, contact the seller for more information, contact the seller to place an order through an "Order Form, " and submit a credit application. Id. ¶¶ 4-5; Subjeck Decl. Ex. B-C. According to Machiels, Charms Plus realized approximately $55, 000 in revenue from sales to Pennsylvania residents over the past five years, a figure representing 2.2% of its total sales revenue. Machiels Aff. ¶ 3.

II. STANDARD FOR REVIEW

Rule 12(b)(2) of the Federal Rules of Civil Procedure permits a court to dismiss a complaint for lack of personal jurisdiction. Fed, R. Civ. P. 12(b)(2). Once a challenge to personal jurisdiction has been fairly raised, the plaintiff has the burden of establishing "jurisdictional facts through sworn affidavits or other competent evidence." Patterson v. F.B.I., 893 F.2d 595, 604 (3 Cir. 1990) (citation omitted). Specifically, the plaintiff carries the burden of proving "either that the cause of action arose from the defendant's forum-related activities (specific jurisdiction) or that the defendant has 'continuous and systematic' contacts with the forum state (general jurisdiction)." Mellon Bank (East) PSFS, N.A. v. Di Veronica Bros, , Inc., 983 F.2d 551, 554 (3rd Cir, 1993) (citations omitted).[1]

In reviewing a motion to dismiss for lack of personal jurisdiction, the Court must accept as true all allegations in the complaint. See D'Jamoos v. Pilatus Aircraft Ltd., 566 F.3d 94, 102 (3rd Cir. 2009); Marten v. Godwin, 499 F.3d 290, 295-96 (3rd Cir. 2007). However, "a plaintiff may not solely rely on bare pleadings to satisfy his jurisdictional burden. Rather, the plaintiff must offer evidence that establishes with reasonable particularity sufficient contact between the defendant and the forum state to support jurisdiction." Square D Co. v. Scott Elec. Co., 2008 WL 4462298, *3 (W.D. Pa. Sept. 30, 2008) (quotations omitted). Disputes of fact created by affidavits and depositions "are generally resolved in favor of the non-moving party." McMullen v, European Adoption Consultants, Inc., 129 F.Supp.2d 805, 810 (W.D. Pa. 2001) (quoting Elbeco Inc. v. Estrella de Plato, Corp., 989 F.Supp. 669, 673 n. 3 (E.D. Pa. 1997)).

III. DISCUSSION

Federal courts "may assert personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of that state." D'Jamoos, 566 F.3d at 102 (quoting Provident Nat'I Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 436 (3rd Cir. 1987)). This determination entails a two-step inquiry. First, the court must determine whether the long-arm statute of the forum allows courts of that state to exercise jurisdiction over the defendant. Fed.R.Civ.P. 4(e)(1). Second, if the forum state allows jurisdiction, the court must determine whether exercising personal jurisdiction over the defendant in a given case is consistent with the Due Process Clause of the United States Constitution. See IMO Industries, Inc. v. KiekertAG, 155 F.3d 254, 259 (3rd Cir. 1998).

Pennsylvania's long-arm statute provides that jurisdiction may be exercised "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." 42 Pa.C.S.A. § 5322(b) (1981). Thus, because Pennsylvania's long-arm statute is coextensive with the dictates of the United States Constitution, the traditional two-step analysis is collapsed into a single inquiry: "whether the exercise of personal jurisdiction would conform with the Due Process Clause." Poole v. Sasson, 122 F.Supp.2d 556, 558 (E.D. Pa. 2000); see also Renner v. Lanard Toys Limited, 33 F.3d 277, 279 (3d Cir. 1994) ("[T]his court's inquiry is solely whether the exercise of personal jurisdiction over the defendant would be constitutional."). Due process requires that the defendant have "minimum contacts" with the forum state. Remick v. Manfredy, 238 F.3d 248, 255 (3rd Cir. 2001) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "Minimum contacts must have a basis in 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.'" Remick, 238 F.3d at 255 (quoting Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 109 (1987)).

In determining whether specific personal jurisdiction exists, courts are directed to undertake a three-part inquiry. See D'Jamoos, 566 F.3d at 102; Marten, 499 F.3d at 296. First, the defendant must have "purposefully directed [its] activities" at the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotation marks omitted); see Walden v. Fiore, 134 S.Ct. 1115, 1121-22, n.6 (2014). Second, "the litigation must 'arise out of or relate to' at least one of those activities." D'Jamoos, 566 F.3d at 102 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). Finally, if the first two requirements have been met, a court may consider whether the exercise of jurisdiction would otherwise comport with principles of "fair play and substantial justice." Burger King, 471 U.S. at 476.

As courts have frequently lamented, personal jurisdiction issues are "more complicated when a defendant's contact with the forum state is primarily done through internet contacts." Planet Goalie, Inc. v.Monkeysports, Inc., 2011 WL 3876178, *3 (M.D. Pa. Sept. 1, 2011). The seminal opinion in this regard is Zippo Mfg. Co, v. Zippo DOT Com, 952 F.Supp. 1119 (W.D. Pa. 1997). In Zippo, this court established a "sliding scale" analytical framework for internet-based personal jurisdiction cases based upon the "level of interactivity and ...


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