Millennium Enterprises v. Millennium Music, Lp

Decision Date04 January 1999
Docket NumberNo. 98-1058-AA.,98-1058-AA.
Citation33 F.Supp.2d 907
PartiesMILLENNIUM ENTERPRISES, INC., dba Music Millennium and Millennium Music, an Oregon corporation, Plaintiff, v. MILLENNIUM MUSIC, LP, a South Carolina limited partnership; Millennium Music, Inc., a South Carolina corporation, Defendants.
CourtU.S. District Court — District of Oregon

Darin D. Honn, James C. Loy, Christopher D. Bell, Duncan Honn, P.C., Portland, OR, for plaintiff.

Julianne Ross Davis, Robert K. Lau, Chernoff, Vilhauer, McClung & Stenzel, LLP, Portland, OR, for defendants.

OPINION AND ORDER

AIKEN, District Judge.

Plaintiff files suit seeking damages and injunctive relief for alleged trademark infringement under the Lanham Act, 15 U.S.C. §§ 1051-1127. Plaintiff also alleges state statutory claims for unlawful trade practices, trademark infringement and dilution, and common law claims of unfair competition and trademark infringement. Defendants seek dismissal for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). For the reasons discussed below, defendants' motion is granted.

I. FACTUAL BACKGROUND

Plaintiff, Music Millennium, is a business incorporated in Oregon with its principal place of business located in Portland, Oregon. Plaintiff opened its first retail outlet under the name "Music Millennium" in 1969. Plaintiff now operates two retail music stores in Portland and also sells products through mail and telephone orders and its Internet Web site.

Defendant Millennium Music, Inc., is a South Carolina corporation and general partner of defendant Millennium Music, L.P., a South Carolina limited partnership. Defendants operate retail music stores in South Carolina under the name "Millennium Music." Defendants sell products through their retail outlets and their Internet Web site, although the vast majority of sales occur at their retail stores. From March 1998 through September 1998, defendants sold fifteen compact discs to nine separate customers in six states and one foreign country. The sales totaled approximately $225. During the same period, defendants' retail sales were $2,180,000. Defendants also offer franchising circulars through the Internet and have two franchised stores in North Carolina.

Defendants have purchased a small amount of compact discs from Allegro Corporation ("Allegro"), a distributor located in Portland, Oregon. Defendants' purchases from Allegro in 1994-1997 totaled approximately one-half of one percent of defendants' inventory purchases for those years.

On or about July 7, 1998, plaintiff received a credit document from Allegro. The credit was mailed to plaintiff in error; the document apparently was intended for defendants. See Affidavit of Donna Cleaver, Exhibit A.

On August 21, 1998, an Oregon resident, Linda Lufkin, purchased a compact disc from defendants through their Web site. During oral argument on defendants' motion to dismiss, the court learned from defendants that an attorney at the law firm for which Ms. Lufkin works requested that she purchase a compact disc from defendant. Apparently, the attorney is an acquaintance of plaintiff's counsel. Plaintiff did not dispute these facts. Defendants have sold no other merchandise to any Oregon resident.

Plaintiffs filed suit on August 28, 1998. According to plaintiff's complaint, defendants' use of the name "Millennium Music" in connection with the sale of goods in interstate commerce violates plaintiff's state and common law trademark rights. Plaintiff further alleges that consumers familiar with plaintiff will likely be confused as to the source or origin of defendants' goods, thereby causing plaintiff harm.

In September of 1998, defendants added a disclaimer to their Web site indicating that their products and franchise circulars were not available in Oregon.

II. JURISDICTIONAL STANDARDS

Determining whether personal jurisdiction exists over an out-of-state defendant involves two inquiries: whether the forum state's long-arm statute permits the assertion of jurisdiction and whether assertion of personal jurisdiction violates federal due process. Fireman's Fund Ins. Co. v. National Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996); Chan v. Society Expeditions, Inc., 39 F.3d 1398, 1404-05 (9th Cir.1994), cert. denied, 514 U.S. 1004, 115 S.Ct. 1314, 131 L.Ed.2d 196 (1995). The relevant state statute applies even when the cause of action is purely federal. Fed.R.Civ.P. 4(k). Oregon's long-arm legislation is found in Rule 4 of the Oregon Rules of Civil Procedure. Plaintiff maintains that Rules 4C and 4D confer personal jurisdiction over defendants.1 However, Oregon's catch-all jurisdictional rule confers personal jurisdiction coextensive with due process. Or. R. Civ. P. 4L. Thus, the analysis collapses into a single framework and the court proceeds under federal due process standards.

Due process requires that a defendant, if not present in the state, "have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 315, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted). Minimum contacts can be demonstrated through facts supporting either general or specific jurisdiction over the defendant. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Plaintiff bears the burden of establishing personal jurisdiction through a prima facie showing of jurisdictional facts. American Telephone & Telegraph Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir.1996); Farmers Ins. Exchange v. Portage La Prairie Mut. Ins. Co., 907 F.2d 911, 912 (9th Cir.1990).

A. General Jurisdiction

General jurisdiction refers to the authority of a court to hear any cause of action involving a defendant, regardless of whether the cause of action arose from the defendant's activities within the forum state. Helicopteros, 466 U.S. at 415, 104 S.Ct. 1868. In order for a court to assert general jurisdiction, the defendant must have "continuous and systematic" contacts with the forum state. Id. at 416, 104 S.Ct. 1868.

It is undisputed that defendants' business operations and retail outlets are located in South Carolina. Further, defendants have no physical presence within the state of Oregon. Defendants are not registered to conduct business in Oregon and have no registered agents, employees or sales representatives located in Oregon. No principles or personnel of defendants have ever traveled to Oregon. Defendants have never received a franchise inquiry from Oregon and have never offered a franchise to an Oregon resident or corporation. The only possible "contacts" defendant have had with Oregon include the sale of one compact disc to an Oregon resident, the purchase of inventory from an Oregon distributor and, according to plaintiff, the maintenance of an Internet Web site.

Plaintiff does not and cannot assert that any of these bases support general jurisdiction over defendants. Defendants' sale of one compact disc and sporadic purchases from a supplier are neither substantial nor "continuous and systematic" contacts with this forum. Further, the court is aware of no case in which a court asserted general jurisdiction based on the existence of an Internet Web site. In fact, a California district court declined to assert general jurisdiction on this ground. McDonough v. Fallon McElligott, Inc., 40 U.S.P.Q.2d 1826, 1996 WL 753991 (S.D.Cal.1996). The court reasoned that "allowing computer interaction via the web to supply sufficient contracts to establish jurisdiction would eviscerate the personal jurisdiction requirement as it currently exists." 1996 WL 753991 at *3; c.f. Mieczkowski v. Masco Corp., 997 F.Supp. 782, 785-86 (E.D.Tex.1998) (Internet Web site plus traditional business contacts with forum created basis for general jurisdiction). Thus, the sole issue is whether the court may assert specific jurisdiction over defendants.

B. Specific Jurisdiction

Specific jurisdiction refers to a situation in which the cause of action arises directly from a defendant's contacts with the forum state. See Sher v. Johnson, 911 F.2d 1357, 1361 (1990). The Ninth Circuit employs a three-part test to determine whether the exercise of specific jurisdiction comports with due process. Ballard v. Savage, 65 F.3d 1495 (9th Cir.1995); Roth v. Garcia Marquez, 942 F.2d 617, 620 (9th Cir.1991). First, the defendant must perform some act or consummate some transaction within the forum by which it "purposefully avails" itself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of the forum and having "fair warning" that a particular activity may subject it to jurisdiction. See Burger King v. Rudzewicz, 471 U.S. 462, 472, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Second, the claim must be one which arises out of or results from the defendant's forum-related activities. Third, the court's exercise of jurisdiction must be reasonable. Ballard, 65 F.3d at 1498; Roth, 942 F.2d at 620-21.

Purposeful availment is shown "if the defendant has taken deliberate action within the forum state or if he has created continuing obligations to forum residents." Ballard, 65 F.3d at 1498. Although contacts that are "isolated" or "sporadic" may support specific jurisdiction if they create a "substantial connection" with the forum, the contacts must be more than random, fortuitous, or attenuated. Burger King, 471 U.S. at 472-73, 475, 105 S.Ct. 2174. Furthermore, it is not required that a defendant be physically present within the forum, provided its efforts are purposefully directed toward forum residents. Id. at 476, 105 S.Ct. 2174. For example, jurisdiction may be properly asserted over a defendant who directs its tortious conduct toward the forum state, knowing the effects of the conduct will cause harm. Calder v. Jones, 465 U.S. 783, 789-90, ...

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