Ingeniador, LLC v. Jeffers, Inc.
| Decision Date | 26 June 2014 |
| Docket Number | CIV. NO.: 13-1654(SCC) |
| Parties | INGENIADOR, LLC, Plaintiff, v. JEFFERS, INC., Defendant. |
| Court | U.S. District Court — District of Puerto Rico |
Plaintiff Ingeniador, LLC, is the holder of U.S. Patent No. 7,895,127 (the "'127 patent"). The '127 patent teaches a rating-based method of sorting and displaying reviews, including on websites. Defendant Jeffers, Inc., is the operator of a web-based pet supply business. Via Jeffers's website, customers can buy a variety of pet-related products. Ingeniador alleges that Jeffers's website includes a system for permitting, storing, organizing, and displaying customer reviews that infringes the '127 patent.
Jeffers contends that this Court lacks personal jurisdiction over it. A district court has personal jurisdiction over a foreign defendant when the long-arm statute of the state in which the court sits "permits the assertion of jurisdiction without violating due process." 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1376-77 (Fed. Cir. 1998).1 Puerto Rico's long-arm statute is sufficiently capacious that the statutory and due process inquiries collapse into a single question. See Benitez-Allende v. Alcan Aluminio de Brasil, S.A., 857 F.2d 26, 29 (1st Cir. 1988) ). Precedent recognizes two types of personal jurisdiction: general and specific. Akro Corp. v. Luker, 45 F.3d 1541, 1546 (Fed. Cir. 1995). The parties agree that general jurisdiction over Jeffers does not exist here, and so we focus exclusively on whether we have specific jurisdiction over Jeffers. To establish specific jurisdiction, Ingeniador must show three things:2 (1) that Jeffers "purposefully directed" itsactivities towards Puerto Rico; (2) that the cause of action against Jeffers "arises out of" those activities; and (3) that the exercise of jurisdiction would be constitutionally reasonable. Id. at 1546-49.
Primarily, the parties' filings dispute whether Jeffers has purposefully directed its activities towards Puerto Rico; more specifically, the parties spend a great deal of time arguing about whether Jeffers's website, which allows customers from Puerto Rico to buy products and have them shipped to Puerto Rico, is sufficient to satisfy the first prong of the specific jurisdiction test under Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Penn. 1997). Zippo Manufacturing, which dates from near the beginning of the e-commerce revolution, is considered to be the seminal case on whether websites, which typically may be viewed from any jurisdiction, can create personal jurisdiction. Zippo Manufacturing held that the existence of personal jurisdiction over a foreign defendant depended on "the nature and quality of commercial activitythat [the defendant] conducts over the Internet." Id. at 1124. The court understood that there would be a spectrum of internet contacts. On one end, it placed defendants that "clearly do[] business over the Internet," e.g., by "enter[ing] into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet"; in these circumstances, the court held, "personal jurisdiction is proper." Id. On the other end of the spectrum were cases where the defendants simply operated "passive Web site[s] that do[] little more than make information available to those who are interested"; jurisdiction over these defendants would not be proper. Id. The harder cases, in the court's opinion, were defendants with "interactive Web sites where a user can exchange information with the host company"; in such circumstances, jurisdiction would depend on "the level of interactivity and commercial nature of the exchange of information that occurs." Id.
At a minimum, the Second, Third, Fourth, Fifth, Sixth, Eighth and Ninth Circuits have concluded that Zippo Manufacturing created a useful paradigm for considering minimumcontacts in the internet context.3 See, e.g., Best Van Lines, Inc. v. Walker, 490 F.3d 239, 252 (2d Cir. 2007); Lakin v. Prudential Secs., Inc., 348 F.3d 704, 711 (8th Cir. 2003); Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 452 (3d Cir. 2003); Revell v. Lidov, 317 F.3d 467, 470 (5th Cir. 2002); ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 713 (4th Cir. 2002); Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 418 (9th Cir. 1997). Only the Seventh Circuit has explicitly rejected Zippo Manufacturing, see Tamburo v. Dworkin, 601 F.3d 693, 703 n.7 (7th Cir. 2010) (), though it has considered the relevancy of website interactivity to the personal jurisdiction inquiry, see Jennings v. AC Hydraulics A/S, 383 F.3d 546, 549-50 (7th Cir. 2004) (). In any case, most courtsrelying on Zippo Manufacturing have not viewed it as a replacement for the typical due process inquiry; instead, they have seen it as offering helpful guideposts for applying that general inquiry to the specific context of interactive websites. See, e.g., Best Van Lines, 490 F.3d at 252 (); Roblor Mktg. Grp., Inc. v. GPS Indus., Inc., 645 F. Supp. 2d 1130, 1142 (S.D. Fla. 2009) ().
The Federal Circuit has only once cited Zippo Manufacturing, but it has done so in a way that suggests that it may offer useful guidance in a case like this. In Trintec Industries, Inv. v. Pedre Promotional Products, Inc., the Federal Circuit considered a district court's dismissal of a patent suit for lack of personal jurisdiction. See 395 F.3d 1275, 1277 (Fed. Cir. 2005). As part of its case for jurisdiction, the plaintiff in Trintec pointed to the fact that the defendant maintained an interactive website over which individuals in the court's jurisdiction could buy allegedly-infringing products. See id. at 1278. The Circuit held that because the website was "available to all customersthroughout the country," it did not by itself specifically target the jurisdiction. Id. at 1281 (internal quotations omitted). The Circuit then considered Zippo, but it concluded that its applicability to the case was not obvious because it was unclear whether or how often the website's interactive sales features had been used in the jurisdiction. Id. (citing Zippo Mfg., 952 F. Supp. at 1125-26). Furthermore, the other facts in addition to the website that the plaintiff had adduced, such as the dollar value of products sold in the district, were insufficiently specific because they did not say whether the products sold were infringing. Id. at 1282. Still, the Circuit concluded that the record before the district court "suggested that [the plaintiff] made a prima facie showing of personal jurisdiction." Id. at 1283. Reversing the district court's order of dismissal, the Circuit then remanded to the district court for further proceedings, including, if necessary, jurisdictional discovery.4 Id. . District courts have thus tended to understand Trintec as acknowledging that sales via a website may create specific personal jurisdiction. See, e.g., M2M Solutions LLC v. Simcom Wireless Solutions Co., 935 F. Supp. 2d 740, 745 (D. Del. 2013) (); see also Roblor Mktg. Grp., Inc. v. GPS Indus., Inc., 645 F. Supp. 2d 1130, 1139 (S.D. Fla. 2009); Laseraim Tools, Inc. v. SDA Mfg., LLC, 624 F. Supp. 2d 1027, 1032 (E.D. Ark. 2008).5
Here, the evidence shows that some 0.20% of Jeffers'sorders since 2011 have come from Puerto Rico. See Docket No. 7-1, ¶ 19. This amounts to a minimum of 200 orders fulfilled to Puerto Rico customers over that time period.6 Since January 2013, Jeffers's revenue from sales to Puerto Rico amounts to approximately 0.44% of its total revenue, which it says is in the "the tens of millions of dollars." Id. ¶ 20. This means that Jeffers has generated at least $44,000 (and perhaps much more)7 in revenue from sales to Puerto Rico customers in 2013 alone. Furthermore, Jeffers gives special treatment to orders made from Puerto Rico: because it cannot calculate shipping charges for Puerto Rico residents before the time of shipment, Jeffers sends a special confirmation email at the time of shipment informing the customer of those charges; the website also provides a special procedure whereby a Puerto Ricocustomer can learn of these charges prior to the order being shipped. See Docket No. 9-5, at 2. We conclude that these facts are sufficient to find that Jeffers has purposefully directed its activities at this forum. First, it operates a highly interactive website via which forum residents can make purchases. Second, Jeffers fulfills those orders by sending its products into the forum.8 Third, these sales are not potential or speculative; to the contrary, they number in the hundreds in the last several years alone, and they have generated a not insignificant amount of revenue for Jeffers. And finally, Jeffers has specifically targeted Puerto Rico by establishing special shipping procedures that apply to sales to the Commonwealth (and a few other jurisdictions), but not to most others. Cf. Illinois v. Hemi Grp. LLC, 622 F.3d 754, 757-58 (7th Cir. 2010) (...
To continue reading
Request your trial