Bancroft & Masters, v. Augusta National

• Decision Date: 13 April 2000
• Docket Number: No. 99-15099,99-15099
• Parties: (9th Cir. 2000) BANCROFT & MASTERS, INC., a California corporation, Plaintiff-Appellant, v. AUGUSTA NATIONAL INC., a Georgia corporation, Defendant-Appellee. Office of the Circuit Executive
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1082

223 F.3d 1082 (9th Cir. 2000)

BANCROFT & MASTERS, INC., a California corporation, Plaintiff-Appellant, v. AUGUSTA NATIONAL INC., a Georgia corporation, Defendant-Appellee.

No. 99-15099

Office of the Circuit Executive

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted April 13, 2000--San Francisco, California

Filed August 18, 2000

[Copyrighted Material Omitted]

Douglas A. Charkin, Peninsula IP Group, Morgan Hill, California, for the plaintiff-appellant.

Carla B. Oakley, Brobeck, Phleger & Harrison LLP, San Francisco, California, for the defendent-appellee.

Appeal from the United States District Court for the Northern District of California, D.C. No. CV-97-04412-TEH; Thelton E. Henderson, District Judge, Presiding

Before: Joseph T. Sneed, Mary M. Schroeder, and Stephen S. Trott, Circuit Judges.

SCHROEDER, Circuit Judge:

This is a trademark dispute. The principal issue is whether the district court in California has personal jurisdiction over the defendant, a Georgia corporation. We hold that the district court can exercise specific jurisdiction over this suit because the complaint alleges the defendant engaged in wrongful conduct that individually targeted the plaintiff in California.

BACKGROUND

Plaintiff-appellant Bancroft & Masters, Inc. ("B&M") is a small California corporation that sells computer and networking products and support services. B&M does almost all of its business in the San Francisco area. It brought this action against defendant-appellee Augusta National Inc. ("ANI"), which operates the Augusta National Golf Club in Augusta, Georgia and sponsors the annual PGA Tour event known as the Masters Tournament.

ANI holds several federally registered trademarks for the mark "Masters" and operates a website at the domain name "masters.org." B&M registered the domain name "masters.com" with Network Solutions, Inc. ("NSI") in 1995. Until recently, NSI was the sole registrar of domain names in the United States, under an exclusive contract with the U.S. government. B&M alleges that sometime in late 1997, ANI sent a letter to NSI's Virginia headquarters challenging B&M's use of the domain name "masters.com." ANI also sent a letter to B&M in California demanding that B&M cease and desist its use of masters.com and transfer it immediately to ANI.

ANI's letter to NSI triggered NSI's then-applicable dispute resolution policy. Under this policy, B&M had three options: (1) voluntarily transfer the masters.com domain name to ANI; (2) allow the domain name to be placed "on hold, " meaning that it could not be used by either party; or (3) obtain a declaratory judgment establishing its right to use the masters.com domain name. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 982 (9th Cir. 1999) (explaining NSI's procedures). Rather than give up its website, B&M chose the third option. B&M filed suit in the Northern District of California seeking a judgment declaring non-dilution and non-infringement. B&M's complaint also requested in a separate count that the court order the cancellation of ANI's federally registered trademarks.

The district court granted ANI's motion to dismiss for lack of personal jurisdiction, reasoning that the continuous and systematic contacts in California necessary for general jurisdiction were lacking and that B&M had not satisfied the criteria for specific jurisdiction. See Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 45 F. Supp. 2d 777 (1998). B&M appeals this dismissal. We now hold that the district court had specific jurisdiction and reverse and remand. ANI's contention that its settlement offer moots this appeal is without merit.

DISCUSSION

ANI's threshold argument is that this appeal has been rendered moot because ANI has offered to waive all trademark infringement, dilution, and unfair competition claims against B&M, so long as B&M stays out of the golf business. B&M's request for a declaratory judgment that it is entitled to use the domain name is not moot, however, because ANI has not made the requisite showing that it is absolutely clear that it will never seek to prevent B&M from using its domain name in the future. See FTC v. Affordable Media, LLC, 179 F.3d 1228, 1238 (9th Cir. 1999) (A declaratory judgment action is not moot unless it is absolutely clear that the defendant will never renew its allegedly wrongful behavior.). ANI's promise was an incomplete and qualified one.

Furthermore, even if ANI's promise had been unqualified, it would not have mooted B&M's separate request for cancellation of ANI's "Masters" trademarks. The trademark cancellation count is separate from the declaratory judgment count in the complaint and does not appear to be obviously meritless. Cf. Arizonans For Official English v. Arizona, 520 U.S. 43, 71 (1997) (obviously meritless and belatedly asserted damages claim cannot save appeal from mootness). The Lanham Act authorizes district courts to order trademark cancellation in any action involving a registered mark. See 15 U.S.C. S 1119.

ANI further suggested at oral argument that the case may be moot because NSI's dispute resolution procedures have recently changed. This argument was neither developed on appeal nor adequately supported in the record. As a result, we are unable to evaluate that suggestion on the record before us.

ANI also contends that there is insufficient evidence in the record to establish jurisdiction. Where, as here, however, the district court does not hold an evidentiary hearing but rather decides the jurisdictional issue on the basis of the pleadings and supporting declarations, we will presume that the facts set forth therein can be proven. See Omeluk v. Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 268 (9th Cir. 1995). ANI's challenge to the evidentiary basis for the district court's ruling is therefore irrelevant.

General Jurisdiction

California permits the exercise of personal jurisdiction to the full extent permitted by due process. See Cal. Civ. Code S 410.10. Whether a California court has personal jurisdiction over ANI thus depends on whether B&M has alleged "minimum contacts" between ANI and the state of California for purposes of general or specific jurisdiction. See International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

A defendant whose contacts with a state are "substantial" or "continuous and systematic" can be haled into court in that state in any action, even if the action is unrelated to those contacts. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984). This is known as general jurisdiction. The standard for establishing general jurisdiction is "fairly high," Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986), and requires that the defendant's contacts be of the sort that approximate physical presence. See Gates Lear Jet Corp. v. Jensen, 743 F.2d 1325, 1331 (9th Cir. 1984). Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there. See Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1478 (9th Cir. 1986).

The district court correctly found general jurisdiction lacking in this case, because ANI's contacts do not qualify as either substantial or continuous and systematic. ANI is not registered or licensed to do business in California. It pays no taxes in California, maintains no bank accounts in California, and targets no print, television, or radio advertising toward California. ANI's masters.org website is "passive," i.e., consumers cannot use it to make purchases. Furthermore, ANI's occasional, unsolicited sales of tournament tickets and merchandise to California residents are insufficient to create general jurisdiction. See Brand, 796 F.2d at 1073 (occasional sales to California residents insufficient to create general jurisdiction).

ANI continues to have license agreements with two television networks and a handful of California vendors. These agreements constitute doing business with California, but do not constitute doing business in California. See Helicopteros, 466 U.S. at 418 (no general jurisdiction in Texas over helicopter transportation company that purchased 80 percent of its helicopters, spare parts, and accessories from Texas sources over a four year period). This is because engaging in commerce with residents of the forum state is not in and of itself the kind of activity that approximates physical presence within the state's borders. See id. Compare Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 447 (1951) (upholding Ohio's exercise of general jurisdiction over corporation where corporation's president worked out of an office in Ohio from which he drew and distributed payroll checks, performed corporation's filing and correspondence, and held regular directors' meetings, and where the corporation held two Ohio bank accounts). ANI's limited contacts with California are insufficient to establish general jurisdiction.

Specific Jurisdiction

Even though there is no general jurisdiction over ANI in California, California courts may still exercise personal jurisdiction if the case arises out of certain forum-related acts. This "specific" jurisdiction exists if (1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant's forum-related activities, and (3) the exercise of jurisdiction is reasonable. See Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 416 (9th Cir. 1997).

The claims in this case center on ANI's letter to NSI in Virginia, which forced B&M to bring suit or lose control of its website. B&M argues that this letter, addressed to Virginia but intended to affect B&M in California,...