Ubid Inc. v. The Godaddy Group Inc.

• Decision Date: 29 September 2010
• Docket Number: No. 09-3927.,09-3927.
• Parties: uBID, INC., Plaintiff-Appellant, v. The GODADDY GROUP, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

623 F.3d 421

uBID, INC., Plaintiff-Appellant,

v.The GODADDY GROUP, INC., et al., Defendants-Appellees.

No. 09-3927.

United States Court of Appeals,Seventh Circuit.

Argued May 19, 2010.

Decided Sept. 29, 2010.

COPYRIGHT MATERIAL OMITTED.

Robert M. Foote, Craig S. Mielke (argued), Foote, Meyers, Mielke & Flowers, St. Charles, IL, for Plaintiff-Appellant.

Tonia Ouellette Klausner (argued), Wilson, Sonsini, Goodrich & Rosati, New York, NY, for Defendants-Appellees.

Before FLAUM, MANION, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

Plaintiff uBID, Inc. is a Chicago-based company that auctions the excess inventory of manufacturers and retailers over the Internet. It brought suit in Illinois against The GoDaddy Group, Inc., which operates the well-known domain name registration site GoDaddy.com. In its complaint, uBID alleged that GoDaddy violated the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), by intentionally registering domain names that are confusingly similar to uBID's trademarks and domain names for the purpose of profiting from uBID's marks and exploiting web surfers' confusion by selling advertising for those confusingly similar websites. The district court dismissed the case for lack of personal jurisdiction, holding that GoDaddy, which is headquartered in Arizona, lacked sufficient contacts with Illinois to be sued there. See uBID, Inc. v. GoDaddy Group, Inc., 673 F.Supp.2d 621 (N.D.Ill.2009). We conclude that due process is not violated when a defendant is called to account for the alleged consequences of its deliberate exploitation of the market in the forum state.

Factual and Procedural Background

At this early stage in the litigation, and without the benefit of an evidentiary hearing, the plaintiff bears only the burden of making a prima facie case for personal jurisdiction. We take the plaintiff's asserted facts as true and resolve any factual disputes in its favor. See Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir.2010); Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.2003). Our review of the district court's legal analysis is de novo. State of Illinois v. Hemi Group LLC, 622 F.3d 754, 756-57 (7th Cir.2010).

GoDaddy, which has offered registration services since 2000, has tried to restrict its physical presence to Arizona. Its computer servers, which handle most of the work of registering and maintaining the domains that GoDaddy's customers buy, are all located in Arizona. GoDaddy is incorporated and headquartered in Arizona, and the vast majority of its offices and employees are located in Arizona.

While GoDaddy has taken pains to limit its physical presence to Arizona, its virtual presence in the rest of the country cannot be ignored. GoDaddy has imprinted itself on the national consumer consciousness with a series of television advertisements featuring the “GoDaddy Girls”-celebrities who invite viewers to register a domain name at a low price. In recent years these ads have aired throughout the country with great frequency, including during the last six Super Bowl broadcasts. The company's advertising extends well beyond television. Potential customers who might step away from the television during GoDaddy's ads can still see the company's logo stamped on driver Danica Patrick's race car and golfer Anna Rawson's hat. In Illinois, GoDaddy has put up billboards in the home ballparks of the Chicago Cubs and White Sox, and fans who attend Chicago Bulls or Blackhawks games or races at the Chicagoland Speedway have been treated to GoDaddy ads as well.

This nationwide advertising campaign has paid dividends for GoDaddy from the Illinois market. In 2008, the company counted its Illinois customers in the hundreds of thousands, and those customers delivered many millions of dollars in revenue to GoDaddy that year. (GoDaddy asked that the exact numbers be kept confidential. The orders of magnitude are sufficient for our purposes.) There is no evidence that GoDaddy's business in Illinois has fallen off since then.

GoDaddy's customers, including those in Illinois, buy a variety of services. Some buy domain names and build websites under those domain names. Others buy domain names and do nothing with them, but allow GoDaddy and its partner, Google, to place ads on the websites (known as “parked pages”) and to collect fees when visitors click on the ads. Still others buy domain names and pay GoDaddy a further fee, which allows the buyers themselves to take a share of the ad revenues from their parked pages (known as “cash parking”).

According to uBID's complaint, some of GoDaddy's customers engage in a form of cybersquatting. They allegedly buy and park their domain names not to build websites there in the future, but rather to profit merely by owning them. These GoDaddy customers register domain names that are confusingly similar to existing domain names, and they hope either to sell the similar domain to the original site's owner for a premium or to generate fees from wayward web surfers who click on a link to their site and then click on ads, leading the advertisers to pay GoDaddy, Google, and the GoDaddy customer. According to uBID's allegations, GoDaddy also wants confused consumers to click on its customers' parked pages, instead of uBID's website, because more clicks on the confusingly-named parked pages mean more revenue for GoDaddy, too. Complaint ¶ ¶ 2, 20-25.

In its complaint, uBID alleges that this practice has harmed the value of its trademarks, which include UBID and UBID.COM. The complaint points to dozens of domain names registered with GoDaddy that may be confusingly similar to its marks, such as ubid4homes.com, ubidr.com, and ubidauctionsale.com. Regarding the merits of its claim under the federal anti-cybersquatting law, GoDaddy intends in bad faith, uBID alleges, to profit from the confusion of people who visit such sites. Complaint ¶¶ 20-25. Although most of the customers who registered offending sites on uBID's list appear to be located outside of Illinois, two gave Illinois addresses.

GoDaddy responded to uBID's suit with a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction. The district court granted GoDaddy's motion. The court rejected uBID's argument that GoDaddy was subject to both general and specific personal jurisdiction in Illinois. Defining GoDaddy's contacts with Illinois to include only the two Illinois-registered domain names listed in uBID's complaint, the court held that those contacts were “created at the initiative of Illinois residents” and could not be attributed to GoDaddy. Moreover, the court held, because GoDaddy enters into thousands of contracts with thousands of customers across the country, GoDaddy “should not reasonably expect” to be subject to personal jurisdiction in each of those customers' states.

Analysis

In this federal question case where federal statutes do not authorize nationwide service of process, a federal court in Illinois may exercise personal jurisdiction over GoDaddy if it would be permitted to do so under the Illinois long-arm statute. See Fed.R.Civ.P. 4(k)(1)(A). A state's exercise of personal jurisdiction is also subject to the demands of the Fourteenth Amendment's due process clause. Because Illinois permits personal jurisdiction if it would be authorized by either the Illinois Constitution or the United States Constitution, the state statutory and federal constitutional requirements merge. See State of Illinois v. Hemi Group LLC, 622 F.3d at 756-57; Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir.2010), citing 735 Ill. Comp. Stat. 5/2-209(c).

Personal jurisdiction can be either general or specific, depending on the extent of the defendant's contacts with the forum state. If the defendant's contacts are so extensive that it is subject to general personal jurisdiction, then it can be sued in the forum state for any cause of action arising in any place. More limited contacts may subject the defendant only to specific personal jurisdiction, in which case the plaintiff must show that its claims against the defendant arise out of the defendant's constitutionally sufficient contacts with the state. In either case, the ultimate constitutional standard is whether the defendant had “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940). In uBID's estimation, GoDaddy should be subject to either general or specific jurisdiction in Illinois. We conclude that GoDaddy is not subject to general jurisdiction in Illinois, but it is subject to specific jurisdiction in this suit.

I. General Jurisdiction

A defendant is subject to general jurisdiction when it has “continuous and systematic general business contacts” with the forum state. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). This is a demanding standard that requires the defendant to have such extensive contacts with the state that it can be treated as present in the state for essentially all purposes. See Tamburo, 601 F.3d at 701; Purdue Research, 338 F.3d at 787. The standard for general jurisdiction is demanding because the consequences can be severe: if a defendant is subject to general jurisdiction in a state, then it may be called into court there to answer for any alleged wrong, committed in any place, no matter how unrelated to the defendant's contacts with the forum. See id.

GoDaddy's contacts with Illinois do not satisfy this standard. Although its contacts are extensive and deliberate, they are limited to the marketing and sale of registrations for Internet domain names, as well as contracts with many Illinois customers and the hosting of websites...