Accutest Corp. v. Accu Test Systems, Inc.

• Decision Date: 06 January 1982
• Docket Number: Civ. A. No. 81-1858-G.
• Parties: ACCUTEST CORPORATION, a Massachusetts corporation, Plaintiff, v. ACCU TEST SYSTEMS, INC., a Delaware corporation, Defendant.
• Court: U.S. District Court — District of Massachusetts

532 F. Supp. 416

ACCUTEST CORPORATION, a Massachusetts corporation, Plaintiff, v. ACCU TEST SYSTEMS, INC., a Delaware corporation, Defendant.

Civ. A. No. 81-1858-G.

United States District Court, D. Massachusetts.

January 6, 1982.

David Wolf, Wolf, Greenfield & Sacks, P.C., Boston, Mass., for plaintiff.

Martin Stein, Phillips, Nizer, Benjamin, Krim & Ballon, George R. Fearon, New York City, for defendant.

MEMORANDUM AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

GARRITY, District Judge.

Plaintiff, Accutest Corporation, a Massachusetts corporation, brings this suit against defendant Accu Test Systems, Inc., for alleged trademark infringement, unfair competition, false designation of origin, and dilution. In essence, plaintiff claims injury from defendant's use of the name Accu Test (Accutest) in defendant's efforts to raise capital through a public offering of its common stock. Plaintiff claims that it has used Accutest as its name and trademark for some years prior to defendant's use, that plaintiff is engaged in a business requiring substantial capital investment, that plaintiff was contemplating use of the public capital market to raise funds and anticipates a public offering of its stock shortly, and that accordingly, defendant's use of a name which sounds and looks like plaintiff's name will cause confusion and impair plaintiff's ability to proceed. Thus, this case is not a conventional trademark infringement case in which the alleged violation arises from the sale of a product. Here, plaintiff complains of the alleged appropriation of its name for purposes of defendant's public stock offering.

Defendant has moved to dismiss this action for lack of personal jurisdiction and for improper venue. Defendant claims that it is a Delaware corporation with its principal place of business in Houston, Texas, and that it has done no business in Massachusetts. Upon consideration of the briefs and affidavits the parties have filed, and having heard oral argument of counsel on November 2, 1981, the court grants defendant's motion and dismisses plaintiff's action.

Plaintiff acknowledges in its complaint that defendant is a Delaware corporation with a principal place of business in Houston. Moreover, defendant has asserted, and plaintiff has either admitted in oral argument or not refuted, that defendant (a) is not incorporated in Massachusetts and (b) has no offices, employees, salesmen or phone listing in Massachusetts, (c) sells no product or service in Massachusetts, and (d) neither owns nor leases property in Massachusetts. Plaintiff argues, however, that the court has jurisdiction over defendant's person and that venue is proper here based on the following contacts between defendant and Massachusetts:

(1) Defendant's preliminary prospectus was available in Massachusetts;

(2) An advertisement regarding defendant's offer to sell its stock appeared in the New York Times on August 20, 1981;

(3) Two underwriters of defendant's publicly traded stock have offices in Massachusetts;

(4) Information regarding defendant's stock is available in Massachusetts through computer retrieval systems of at least two national stock firms;

(5) At least one discount stockbroker handles defendant's stock here.

(6) Defendant's stock is available and sold over the counter in Massachusetts. In affidavit defendant states that it instructed its underwriters not to sell stock to anyone in Massachusetts. Defendant concedes that once its stock began to trade publicly it could no longer control sales of its stock so that some may have been sold in Massachusetts.

I. Personal Jurisdiction¹

For a court to have personal jurisdiction over a foreign corporation, the court must find both that (a) a local statute authorizes personal jurisdiction in the circumstances of the case and (b) the exercise of such jurisdiction would comport with the due process requirement that a nonresident domiciliary have certain "minimum contacts" with the forum state. Commonwealth of Puerto Rico v. SS Zoe Colocotroni, 1 Cir. 1980, 628 F.2d 652, 667, cert. denied, 450 U.S. 912, 101 S.C. 1350, 67 L.Ed.2d 336. Federal courts must, therefore, determine questions of personal jurisdiction according to the laws of the forum state, United States v. First National City Bank, 1965, 379 U.S. 378, 381, 85 S.Ct. 528, 530, 13 L.Ed.2d 365, subject to the limits due process imposes.

Plaintiff asserts that personal jurisdiction exists under the two sections of the Massachusetts long-arm statute, Mass.G.L., c. 223A, § 3, set out below:

A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity arising from the person's

(a) transacting any business in this commonwealth;

(c) causing tortious injury by an act or omission in this commonwealth; ...

The Massachusetts long-arm statute asserts jurisdiction over the person to the extent the Constitution allows. "Automatic" Sprinkler Corp. of America v. Seneca Foods Corp., 1972, 361 Mass. 441, 443, 280 N.E.2d 423. Therefore, the two inquiries necessary in determining whether a court has jurisdiction over the person tend to converge. They do not coincide, however. Even where the statute's language can accommodate the fact pattern presented in support of jurisdiction the court cannot exercise jurisdiction which transcends the constitutional boundaries. And although the relevant facts fall within the constitutional limits, the court cannot assert jurisdiction unless the reach of the long-arm statute embraces those facts. See Nova Biomedical Corporation v. Moller, 1 Cir. 1980, 629 F.2d 190, 192; Good Hope Industries, Inc. v. Ryder Scott Company, 1979, 378 Mass. 1, 6, 389 N.E.2d 76, 80.

The Supreme Court has held that in order for a court to exercise personal jurisdiction over a nonresident and nonconsenting defendant, the defendant must have "certain minimum contacts" with the forum so that "the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 1945, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, quoting in part from Milliken v. Meyer, 1940, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278. Although the "minimum contacts" test relaxed significantly the constitutional requirements for personal jurisdiction, see, e.g., McGee v. International Life Insurance Co., 1957, 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223, it did not eliminate them. For under the minimum contacts test, the "essential constitutional question", SS Zoe Colocotroni, supra at 668, remains whether there is "some act by which the defendant purposefully availed itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 1958, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283. Foreseeability that a product will enter the forum state is not sufficient to confer personal jurisdiction. For "the foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 1980, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490.

Plaintiff first claims that this court has personal jurisdiction over defendants under c. 223A, § 3(a), on the ground that the cause of action arose from defendant's "transacting any business" in Massachusetts. Even accepting that this phrase "should be construed broadly", Nova Biomedical Corp. v. Moller, supra at 193-94, and that it covers a range of activities which include but are not limited to commerce, Ross v. Ross, 1976, 371 Mass. 439, 441, 358 N.E.2d 437, 439, we fail to discern anything defendant transacted in this commonwealth. As stated above, the usual indicia of contact with a forum — a local office, phone listing or the sale of products — are admittedly lacking. Moreover, plaintiffs do not claim that defendants even sold their stock in Massachusetts, and defendants, by affidavit, state that they directed their underwriters not to do so. Plaintiff thus predicates its argument for personal jurisdiction on the availability of defendant's preliminary prospectus in Massachusetts, the fact that two of defendant's underwriters for its initial sale of stock have local offices, the publication of defendant's "tombstone" advertisement in the New York Times, a newspaper circulated and read here, and the fact that defendant's stock has been sold by others in Massachusetts.

These data are plainly too scant to establish that defendant was "transacting any business" here. Indeed, opinions of the Massachusetts Supreme Judicial Court in other cases have found that greater levels of activity did not satisfy the statutory requisite. In Droukas v. Divers Training Academy, Inc., 1978, 375 Mass. 149, 376 N.E.2d 548, defendant's contacts — an advertisement in a publication distributed in Massachusetts, receipt of a phone call from Massachusetts regarding the purchase of merchandise, the sending of correspondence confirming the sale, and the shipment of the goods to Massachusetts — were insufficient to come within the ambit of § 3(a). Similarly, in "Automatic" Sprinkler, supra 361 Mass. at 444, 280 N.E.2d 423, mailings to and from Massachusetts first to form, and then to pay partially for performance of, a contract, were not within § 3(a).² Here the contacts are no more substantial. But even if these contacts did fit within the statutory language, they would not satisfy the constitutional requirement. For plaintiff has pointed to no way in which defendants "purposefully availed itself of the privilege of conducting activities" in Massachusetts. Hanson v. Denckla, supra 357 U.S. at 253, 78 S.Ct. at 1239. On the contrary, by instructing its...