Maritz, Inc. v. Cybergold, Inc.

• Decision Date: 19 August 1996
• Docket Number: No. 4:96CV01340 ERW.,4:96CV01340 ERW.
• Citation: 947 F.Supp. 1328
• Parties: MARITZ, INC., Plaintiff, v. CYBERGOLD, INC., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

Page 1328

947 F.Supp. 1328

MARITZ, INC., Plaintiff, v. CYBERGOLD, INC., Defendant.

No. 4:96CV01340 ERW.

United States District Court, E.D. Missouri, Eastern Division.

August 19, 1996.

Patricia S. Williams, Wayne Mitchell Barsky, Sonnenschein and Nath, St. Louis, MO, for plaintiff.

Richard E. Haferkamp, Anthony G. Simon, Howell and Haferkamp, L.C., St. Louis, MO, Paul R. Williams, Bowling Green, MO, for defendant.

MEMORANDUM AND ORDER

WEBBER, District Judge.

This matter is before the Court on the motion of defendant to dismiss for lack of personal jurisdiction and improper venue [document # 18], on the motion of defendant to dismiss for failure to state a claim and lack of subject matter jurisdiction [document # 23], and on the motion of defendant to stay the proceedings [document # 24].

Plaintiff Maritz, Inc., has brought this action alleging that defendant Cybergold, Inc., is violating Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), in connection with Cybergold's internet activities. Plaintiff seeks a preliminary injunction to enjoin Cybergold's alleged trademark infringement and unfair competition. Plaintiff also seeks an expedited hearing on the preliminary injunction hearing. Because of plaintiff's requests for an expedited hearing on plaintiff's motion for a preliminary injunction, the Court ordered expedited briefing on defendant's motions to dismiss and to stay, in order to resolve threshold jurisdictional questions in this action. See Falkirk Mining Co. v. Japan Steel Works, Ltd. 906 F.2d 369, 372 (8th Cir.1990) (court must determine threshold matter of whether it possesses personal jurisdiction over defendant before it can reach merits of dispute and enter legally binding orders).

I. Personal Jurisdiction and Venue

Defendant has moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), asserting that this Court cannot exercise personal jurisdiction over it. Defendant argues that plaintiff's first amended complaint fails to allege any facts on which personal jurisdiction over defendant can be based.

Whether the Court can exercise personal jurisdiction over defendant requires a two-part inquiry. The Court first examines whether personal jurisdiction exists under Missouri's long-arm statute.¹ Next, the Court must determine whether the exercise of personal jurisdiction is consistent with due process. Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818-19 (8th Cir.1994); CPC-Rexcell, Inc., v. La Corona Foods, Inc., 912 F.2d 241, 243 (8th Cir.1990).

In considering a motion under Rule 12(b)(2), the Court views the facts in a light most favorable to plaintiff, the party opposing the motion. Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir.1977). However, the burden remains on plaintiff to establish that jurisdiction exists. Bell Paper Box, Inc., 22 F.3d at 818; Taylor v. Uniden Corp. of Am., 622 F.Supp. 1011, 1012 (E.D.Mo.1985). Because the Court is ruling on the submissions of the parties, and is not conducting an evidentiary hearing on the matter, plaintiff is required to make a prima facie showing of personal jurisdiction over the defendant at this time. See Dakota Indus. v. Dakota Sportswear, 946 F.2d 1384, 1387 (8th Cir.1991) (citing CutCo Indus. Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986)).

Viewed in the light most favorable to plaintiff, defendant's contacts with Missouri are as follows. CyberGold maintains an internet site on the World Wide Web. The server for the website is presumably in Berkeley, California. The website is at present continually accessible to every internet-connected computer in Missouri and the world. CyberGold's website can be accessed at "www.cybergold.com" by any internet user.

It is estimated that there are 20 to 30 million users of the internet. Inset Systems, Inc. v. Instruction Set, Inc., 937 F.Supp. 161, 163 (D.Conn.1996). Today, there are around 9,400,000 computers that have present capability to access the internet. American Civil Liberties Union v. Janet Reno, 929 F.Supp. 824, 831 (E.D.Pa.1996). The "internet" is essentially a term that describes the interconnection of all of these computers to each other. It is also referred to as "the information superhighway." The connections of these computers are completed through the use of telephone lines, which electronically transmit information from one computer to another. The internet has created a tremendous global means of rapid exchange of information by the government, academic institutions, and commercial entities. Id. at 830-42 (describing the nature of the internet). There are at least 12,000 persons in Missouri who have internet access, although the number may be much higher. (Pl.Mem. in Opp'n to Def.Mot. to Dismiss at Pl.Ex.A.) Any internet user can access any website, of which there are presumably hundreds of thousands, by entering into the computer the internet address they are seeking. Internet users can also perform searches on the internet to find websites within targeted areas of interest. Via telephone lines, the user is connected to the website, and the user can obtain any information that has been posted at the website for the user. The user can also interact with and send messages to that website. Upon connecting to a website, the information is transmitted electronically to the user's computer and quickly appears on the users screen. This transmitted information can easily be downloaded to a disk or sent to a printer.

CyberGold's website, located at "www.cybergold.com," is operational. The website provides information about CyberGold's new upcoming service. The website explains that the forthcoming service will maintain a mailing list of internet users, presumably including many residents of Missouri. An internet user who wants to be on CyberGold's mailing list provides CyberGold with his or her particular areas of interest. CyberGold will then provide the user with a personal electronic mailbox and will forward to the user advertisements that match the users selected interests.² CyberGold plans to provide users incentives for reading the advertisements. CyberGold plans to charge advertisers for access to the internet users on its mailing list. CyberGold's actual service is not yet in operation.

Plaintiff asserts that this website acts as a state-wide advertisement for CyberGold's forthcoming internet service. Plaintiff asserts that the website "invites Missourians to put their names on CyberGold's mailing list and get up-to-date information about the company and its forthcoming Internet service." (Pl. Mem. in Opp'n to Def. Mot. to Dismiss at 4.) Plaintiff also asserts that through this website "CyberGold is also actively soliciting advertising customers" from Missouri. (Id.)

Since CyberGold has set up its website, the website has been accessed through internet users located in Missouri at least 311 times, although 180 of the 311 times were by Maritz and its employees. CyberGold attests that, other than maintaining the website "www.cybergold.com," it has no other contacts with the state of Missouri.

Missouri's long-arm statute allows the exercise of jurisdiction over non-residents to the extent permissible under the due process clause. See Federal Deposit Ins. Corp. v. Malmo, 939 F.2d 535, 537 (8th Cir.1991); State ex rel. Metal Serv. Ctr. v. Gaertner, 677 S.W.2d 325, 327 (Mo. banc 1984). The Missouri long-arm statute, Mo.Rev.Stat. § 506.500, provides, in relevant part:

Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts:

(1) The transaction of any business within this state

...

(3) The commission of a tortious act within this state

...

Id.

Plaintiff asserts first that defendant meets the "transaction of any business" within the state test. Plaintiff compares defendant's activities with those of the defendant in Danforth v. Reader's Digest Ass'n, Inc., 527 S.W.2d 355 (Mo. banc 1975). In Danforth, the Missouri supreme court held that the "transaction of any business" requirement was satisfied where defendant conducted promotional activities directed towards recipients located in Missouri. Id. at 358. The defendant in Danforth had mailed into Missouri, on two occasions, thousands of solicitations for magazine subscriptions. Id. at 356-57 n. 2.

Missouri courts have not addressed the issue of whether internet transmissions involving advertising meet the "transaction of any business" test. Plaintiff's comparison of the maintenance of a website to the active solicitation through mass mailings is to some extent unsatisfactory in resolving the question of whether defendant's internet activities amount to the "transaction of any business." As discussed below, there are considerable differences in the two mediums of communication and information exchange. Because the Missouri courts construe the Missouri long-arm statute to confer jurisdiction to the extent allowed by the Due Process Clause, this Court will resolve the long-arm statute question in the context of the due process clause. See State ex rel. Metal Serv. Ctr., 677 S.W.2d at 327.

It is unnecessary to decide whether defendant's activities satisfy the "transaction of any business" test because the Court concludes that defendant is amenable to service under the "commission of a tortious act" provision in Missouri's long-arm statute. Mo.Rev.Stat. § 506.500.1(3). Plaintiff argues that CyberGold is infringing on Maritz's trademark in violation of the Lanham Act, 15 U.S.C. § 1125(a), and that this infringement is causing economic harm and injury to Maritz. Plaintiff asserts that the injury from infringement is occurring in Missouri,...