Collegesource Inc. v. Academyone Inc.

• Citation: 99 U.S.P.Q.2d 1672,653 F.3d 1066,11 Cal. Daily Op. Serv. 9968,2011 Daily Journal D.A.R. 11896
• Decision Date: 08 August 2011
• Docket Number: No. 09–56528.,09–56528.
• Parties: COLLEGESOURCE, INC., a California corporation, Plaintiff–Appellant,v.ACADEMYONE, INC., a Pennsylvania corporation, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

653 F.3d 1066

99 U.S.P.Q.2d 1672

11 Cal. Daily Op. Serv. 9968

2011 Daily Journal D.A.R. 11,896

COLLEGESOURCE, INC., a California corporation, Plaintiff–Appellant,

v.ACADEMYONE, INC., a Pennsylvania corporation, Defendant–Appellee.

No. 09–56528.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 8, 2010.Filed Aug. 8, 2011.

Alexander Papaefthimiou, Darren Quinn, Law Offices of Darren J. Quinn, Del Mar, CA, William F. Woods, San Diego, CA, for the appellant.John P. Cooley, Karen Shichman Crawford, Duane Morris, LLP, San Diego, CA, Aliza Rebecca Karetnick, David F. Landau, Duane Morris, LLP, Philadelphia, PA, for the appellee.Appeal from the United States District Court for the Southern District of California, Marilyn L. Huff, District Judge, Presiding. D.C. No. 3:08–cv–01987–H–CAB.Before: KIM McLANE WARDLAW and WILLIAM A. FLETCHER, Circuit Judges, and BARBARA M. LYNN, District Judge.^*

OPINION

W. FLETCHER, Circuit Judge:

CollegeSource, Inc. (“CollegeSource”) sued AcademyOne, Inc. (“AcademyOne”) in federal district court for the Southern District of California, alleging that AcademyOne misappropriated material from CollegeSource's websites. AcademyOne moved to dismiss for lack of personal jurisdiction. See Fed.R.Civ.P. 12(b)(2). After jurisdictional discovery, the district court granted AcademyOne's motion to dismiss. We reverse. We hold that AcademyOne is not subject to general personal jurisdiction in California, but that it is subject to specific personal jurisdiction there.

I. Background

CollegeSource and AcademyOne compete in the market to assist students and educational institutions with the college transfer process. CollegeSource, a California corporation with its principal place of business in California, maintains a digital collection of 44,000 course catalogs from 3,000 colleges and universities dating back to 1993. Each catalog is available as a .pdf file on CollegeSource's websites collegesource.com, collegesource.org, and tes.collegesource.org. Students and college administrators may consult the catalogs to compare courses at different schools, or to research what credits a transferring student will obtain or what prerequisites she will have satisfied by virtue of courses taken at her prior institution. CollegeSource compiled its collection in large part by digitizing paper catalogs using Optical Character Recognition software, which converts a printed page into a digital format that may be searched, copied, and pasted. CollegeSource alleges that its collection of catalogs cost more than $10 million to compile and has “significant commercial value.” Students, parents, guidance counselors, and teachers may use CollegeSource's collection of catalogs for free, but libraries and educational institutions must pay to do so. CollegeSource has also used the information in its collection of catalogs to construct a searchable database of individual course descriptions that permits rapid assessment of course equivalencies and is available to educational institutions for a fee.

AcademyOne is a Pennsylvania corporation with its principal place of business in Pennsylvania. AcademyOne's services resemble CollegeSource's. AcademyOne's “Course Atlas” contains course catalogs for the current academic year, and its “Course Equivalency Management Center” enables users to compare the equivalencies of courses at different schools. Both services are available on AcademyOne's websites academyone.com, collegetransfer.net, and courseatlas.com. Students who register with AcademyOne may search these websites for information on courses, educational institutions, and course equivalencies; create custom-designed “Equivalency Maps” and “Transfer Planning Guides”; upload documents such as letters of recommendation and resumes to a “Storage Center”; and post on a message board. AcademyOne permits students to use many of the websites' tools for free, but requires users to purchase subscriptions in order to access the websites' more advanced features, including the Course Equivalency Management Center. Most of AcademyOne's paying subscribers are educational institutions and state higher education agencies.

AcademyOne seeks to serve a national market, but it has specifically targeted California students and schools. For example, AcademyOne owns several Google AdWords that include the term “California.” An AdWord is a word or phrase that, when entered as a search term in Google, prompts Google to display an advertisement designed by the AdWord owner linking to the owner's website. For example, AcademyOne owns the AdWord “California college transfer.” When a Google user searches that phrase, Google returns both a list of relevant websites as determined by its own algorithm and advertisements for companies, including AcademyOne, interested in targeting people who have searched that phrase. The AdWord owner hopes that the user will visit its advertised website in addition to, or in lieu of, the websites returned in the search results proper. See generally Google AdWords, http:// www. google. com/ ads/ adwords 2 (last visited July 21, 2011); Network Automation, Inc. v. Advanced Sys. Concepts, 638 F.3d 1137, 1142–43 (9th Cir.2011). AcademyOne also solicited California colleges and state educational agencies by phone and email, and sponsored the keynote speaker at a conference of state higher education executive officers in San Diego.

AcademyOne's efforts have borne fruit. Approximately 26,000 unique California IP addresses have visited AcademyOne's websites, amounting to 19 percent of all visitors to the website. This is the highest number of visitors from any state. Three hundred California students have registered with AcademyOne. This is 15 percent of all students who have registered with and provided an address to AcademyOne. Forty-eight California colleges and universities have submitted institutional profiles for publication on AcademyOne's websites. Two of AcademyOne's paid subscribers have California offices, though neither is a California corporation. However, AcademyOne has no offices, real property, or staff in California; is not licensed to do business in California; has no agent for service of process in California; and pays no California taxes.

In late 2005 and early 2006, a few months after its founding, AcademyOne made a series of attempts to acquire rights to CollegeSource's collection of course catalogs. In September 2005, Ed Johnson, AcademyOne's vice president for marketing, signed up for a trial membership in order to view CollegeSource's catalogs. In October 2005, Johnson phoned a CollegeSource sales representative to ask what CollegeSource would charge for rights to its collection of catalogs. He then sent a follow-up email asking, “[W]hat does it cost to obtain ALL your catalogs in electronic form, ASAP?” In December 2005, Peggi Munkittrick, AcademyOne's executive director for product strategy, emailed CollegeSource's CEO, Kerry Cooper, “to determine whether CollegeSource has any interest in assisting us (AcademyOne) with the creation of an online course inventory” and “whether CollegeSource had the interest and/or ability to provide us with an electronic file of courses that could be loaded into our course inventory.” Munkittrick proposed “a conference call to further identify what our opportunities might be.” In January 2006, Munkittrick sent a follow-up email to Cooper “to determine whether a conversation is warranted to discuss how our companies might benefit from working together in an effort to create an online course inventory.” Munkittrick again proposed a conference call. Cooper filed a declaration in the district court stating that CollegeSource “briefly” pursued AcademyOne's proposed partnership, but “terminated the discussions ... because there was no point in selling away, at any price, our competitive advantage.”

Later in 2006, AcademyOne began building its own collection of catalogs and a database of course descriptions. Two more AcademyOne employees registered for trial memberships with CollegeSource that allowed them to download three catalogs each. AcademyOne also hired a China-based contractor to whom AcademyOne provided a list of U.S. colleges and universities, as well as the URLs of their homepages. AcademyOne directed its contractor to collect catalogs and course descriptions from those schools' websites, and then to provide that information to AcademyOne for publication. During the collection process, the contractor's employees downloaded .pdf files of catalogs that were linked from schools' websites but were actually hosted on CollegeSource's servers. The record does not reflect why these schools chose to host their catalogs on CollegeSource's servers rather than their own.

AcademyOne put 680 catalogs from CollegeSource's collection on its websites. The catalogs were easily identifiable as having come from CollegeSource. The first page of each .pdf file containing a catalog was a “splash page” bearing CollegeSource's URL. The second page of each file contained CollegeSource's terms of use, which prohibit redistribution, modification, or commercial use of the catalogs without the consent of CollegeSource and the relevant school. Both of these pages were reproduced on AcademyOne's websites. AcademyOne also copied individual course descriptions from CollegeSource's catalogs and pasted those course descriptions into its databases. The course descriptions were traceable to CollegeSource because they contained idiosyncratic errors created by CollegeSource's Optical Character Recognition software (for example, “cata1og” instead of “catalog”) that were also present in CollegeSource's catalogs.

In April 2007, CollegeSource hand-delivered to AcademyOne a cease-and-desist letter demanding the removal of CollegeSource's catalogs and course descriptions from AcademyOne's websites. David Moldoff, AcademyOne's CEO, filed a declaration in the district court stating...