Mink v. AAAA Development LLC

Decision Date17 September 1999
Docket NumberNo. 98-20770,98-20770
Parties(5th Cir. 1999) DAVID MINK, Plaintiff/Appellant, v. AAAA DEVELOPMENT LLC, doing business as Adamant Development, doing business as Four A Development, doing business as Upfront, ET AL, Defendants, AAAA DEVELOPMENT LLC, doing business as Adamant Development, doing business as Four A Development, doing business as Upfront, and DAVID MIDDLEBROOK, Defendants/Appellees
CourtU.S. Court of Appeals — Fifth Circuit

Appeal from the United States District Court for the Southern District of Texas

Before WIENER, DeMOSS, and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

David Mink appeals the district court's dismissal of his complaint for lack of personal jurisdiction. We affirm.

I. FACTS AND PROCEEDINGS

David Mink is a Texas resident who works in the retail furniture business. In January 1997, Mink claims that he began to develop a computer program, the Opportunity Tracking Computer System ("OTC"), designed to track information on sales made and opportunities missed on sales not made. On May 13, 1997, Mink submitted a patent application for the computer software and hardware that he developed to the United States Patent and Trademark Office. He also submitted a copyright application for the OTC to the United States Copyright Office.

Mink claims that in June 1997 he was approached by a Colorado resident named Richard Stark at a trade show. Stark allegedly asked Mink if he would be interested in marketing the OTC product with Stark's software at an upcoming computer seminar. Mink gave Stark a full demonstration of the OTC system, including its written material. While Mink initially declined Stark's offer to market the software together, Mink later contacted Stark to discuss the possibility of Stark marketing his product.

Between June 1997 and October 1997, Stark allegedly shared all of Mink's ideas and information on the OTC system with David Middlebrook. According to Mink's complaint, Middlebrook and two companies, AAAA Development and Profitsystems, conspired to copy Mink's copyrighted and patent-pending OTC system and create an identical system of their own for financial gain.

AAAA Development is a Vermont corporation with its principal place of business in Vermont. Middlebrook is a Vermont resident. Neither AAAA Development nor Middlebrook own property in Texas. Mink is silent concerning where his contacts with the defendants occurred. However, we infer that the contacts were not in Texas based on the statement in Middlebrook's affidavit that AAAA has not made any sales in Texas nor has it had any agents or employees travel to Texas or represent it in Texas. The company has advertised in a national furniture trade journal and maintains a website advertising its sales management software on the Internet.

On November 7, 1997, Mink filed his original complaint in the United States District Court for the Southern District of Texas against AAAA Development and David Middlebrook, alleging that they conspired to copy Mink's computer program in violation of federal copyright and patent pending rights. AAAA Development and Middlebrook moved to dismiss for lack of personal jurisdiction. The district court granted their motions. Mink filed a motion for reconsideration of the order dismissing AAAA and Middlebrook, adding allegations that the defendants had been actively targeting customers in Texas with cold calls and asserting for the first time that AAAA's Internet website, accessible from Texas, could fulfill the minimum contacts requirement for the exercise of personal jurisdiction. The district court denied the motion for reconsideration. We affirm.

II. DISCUSSION

The sole issue on appeal is whether the district court erred in dismissing defendants AAAA and Middlebrook for a lack of personal jurisdiction. The district court's determination of the exercise of personal jurisdiction over a defendant is a question of law subject to de novo review. See Felch v. Transportes Lar-Mex S.A. de CV, 92 F.3d 320, 324 (5th Cir. 1996). When a nonresident defendant challenges personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the defendant. See Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994). We conclude the district court did not err in dismissing the defendants for lack of personal jurisdiction.

A federal court sitting in diversity may exercise personal jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution. See Latshaw v. H.E. Johnston, 167 F.3d 208, 211 (5th Cir. 1999). Because Texas's long-arm statute has been interpreted to extend to the limits of due process, we only need to determine whether subjecting AAAA and Middlebrook to suit in Texas would be consistent with the Due Process Clause of the Fourteenth Amendment. See Electrosource, Inc. v. Horizon Battery Technologies Ltd., 176 F.3d 867, 871 (5th Cir. 1999) (citing Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990)).

The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has purposefully availed himself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend "traditional notions of fair play and substantial justice." Latshaw, 167 F.3d at 211 (quoting International Shoe Co. v. State of Washington, 326 U.S. 310, 316 (1945)).

The "minimum contacts" aspect of the analysis can be established through "contacts that give rise to 'specific' personal jurisdiction or those that give rise to 'general' personal jurisdiction." Wilson, 20 F.3d at 647. Specific jurisdiction exists when the nonresident defendant's contacts with the forum state arise from, or are directly related to, the cause of action. See id. (citing Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984)). General jurisdiction exists when a defendant's contacts with the forum state are unrelated to the cause of action but are "continuous and systematic." See id. (citing Helicopteros, 466 U.S. at 414 n.9). Because we conclude that Mink has not established any contacts directly related to the cause of action required for specific jurisdiction, we turn to the question of whether general jurisdiction has been established.

At the outset, we note that Mink has not met his burden of establishing that the district court had personal jurisdiction over defendant Middlebrook. Mink, however, contends that the district court could exercise personal jurisdiction over AAAA because its World Wide Website is accessible by Texas residents. The issue of exercising personal jurisdiction over a defendant who operates an Internet website without other contacts with the forum state is a question of first impression in the Fifth Circuit.

Courts addressing the issue of whether personal jurisdiction can be constitutionally exercised over a defendant look to the "nature and quality of commercial activity that an entity conducts over the Internet." Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997). The Zippo decision categorized Internet use into a spectrum of...

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