NBA Props., Inc. v. Hanwjh

• Decision Date: 16 August 2022
• Docket Number: 21-2909
• Citation: 46 F.4th 614
• Parties: NBA PROPERTIES, INCORPORATED, et al., Plaintiffs-Appellees, v. HANWJH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

46 F.4th 614

NBA PROPERTIES, INCORPORATED, et al., Plaintiffs-Appellees,

v.HANWJH, Defendant-Appellant.

No. 21-2909

United States Court of Appeals, Seventh Circuit.

Argued April 7, 2022

Decided August 16, 2022

Justin R. Gaudio, Amy Crout Ziegler, Allyson Martin, Attorneys, Greer, Burns & Crain, Chicago, IL, for Plaintiffs-Appellees.

He Cheng, Tao Liu, Tianyu Ju, Attorneys, Glacier Law LLP, New York, NY, for Defendant-Appellant.

Before Ripple and Scudder, Circuit Judges.^*

Ripple, Circuit Judge.

The plaintiffs in the underlying litigation are professional or collegiate sports associations who own, or license, trademarks related to their respective sports. The plaintiffs filed this action under the Lanham Act, 15 U.S.C. § 1051, et seq., against a list of defendants listed in Schedule A of the complaint. In the complaint, NBA Properties, Inc. alleged that HANWJH, a China-based online retailer, infringed NBA Properties' trademarks by selling counterfeit products in its online stores. After the deadline to answer expired, HANWJH moved to dismiss the complaint for lack of personal jurisdiction. The district court denied the motion and entered a default under Federal Rule of Civil Procedure 55(a). The district court instructed the parties to file any objections to the motion for default judgment. After the deadline expired without objection, the district court entered a final judgment. HANWJH timely appealed. For the reasons set forth in this opinion, we affirm the judgment of the district court.

I

A.

NBA Properties is the owner and exclusive licensee of the trademarks of the National Basketball Association ("NBA") and NBA teams. HANWJH sells products allegedly infringing on the NBA trademarks via Amazon.com. NBA Properties filed an affidavit from its investigator asserting that HANWJH sold 205 infringing products, available for purchase in Illinois, on its Amazon site. HANWJH offered forty-one different basketball shorts in five different size options.

On September 16, 2020, an investigator for NBA Properties accessed HANWJH's online Amazon store and purchased a pair of shorts. In placing the order, the investigator designated an address in Illinois as the delivery destination. The sale went through, and the product was delivered to the Illinois address on October 6, 2020. NBA Properties has not alleged any other contacts between HANWJH and Illinois other than the single sale to its investigator and the accessibility of HANWJH's online store from Illinois. In an affidavit filed in the district court, HANWJH maintained that it had never sold any other product to any consumer in Illinois nor had it any "offices, employees," "real or personal property," "bank accounts," or any other commercial dealings with Illinois.¹

B.

NBA Properties filed its complaint on December 18, 2020, consisting of two counts: 1) trademark infringement and counterfeiting, in violation of 15 U.S.C. § 1114 ; 2) false designation of origin, in violation of 15 U.S.C. § 1125(a). The complaint alleges that the "Defendants create e-commerce stores operating under one or more Seller Aliases that are advertising, offering for sale and selling Counterfeit Products to unknowing consumers."² Count I alleges that "Defendants have sold, offered to sell, marketed, distributed and advertised, and are still selling, offering to sell, marketing, distributing and advertising products using counterfeit or infringing reproductions of one or more of Plaintiffs' Trademarks without Plaintiffs' permission or consent."³ Count II alleges that "[b]y using one or more of Plaintiffs' Trademarks on the Counterfeit Products, Defendants create a false designation of origin and a misleading representation of fact as to the origin and sponsorship of the Counterfeit Products."⁴

NBA Properties sought and received a temporary restraining order and preliminary injunction, including a temporary asset restraint on HANWJH's bank account. It then moved for a default under Rule 55(a), positing that, despite having been served, HANWJH had not answered or otherwise defended the suit. Moreover, it added that a default judgment was proper under Rule 55(b)(2) because, although more than twenty-one days had passed since service upon HANWJH, see Rule 12(a)(1)(A)(i), HANWJH had not filed an answer or responsive pleading.

HANWJH next moved to dismiss and to lift the injunction, arguing that the court lacked personal jurisdiction over it because it did not expressly aim any conduct at Illinois. It contended that it lacked any connections with Illinois other than the "sham" transaction initiated by NBA Properties.⁵ First, it argued that operating a website alone is not enough to establish that it has expressly aimed its commercial activity at Illinois. Second, it submitted that a single transaction initiated by the plaintiff cannot constitute a sufficient basis for jurisdiction. Third, it reasoned that, even if exercising jurisdiction over it were otherwise appropriate, doing so would offend the traditional notions of fair play and substantial justice because Illinois had very little interest in resolving the matter, the burden on HANWJH for defending the litigation in Illinois would be great, and Illinois courts provided no "efficiencies in resolving this matter."⁶

The district court denied HANWJH's motion to dismiss and simultaneously entered a default. In its memorandum opinion, the district court set forth a three-part standard for analyzing specific personal jurisdiction:

First, the defendant must have "minimum contacts with the forum state." To determine whether the defendant has such contacts, the court must ask whether "the defendant should reasonably anticipate being haled into court in the forum State, because the defendant has purposefully availed itself of the privilege of conducting activities there." Second, the plaintiff's claims must "arise out of" the defendant's contacts with the forum. Third, and finally, maintenance of the suit must not "offend traditional notions of fair play and substantial justice."⁷

The court concluded that these requirements were met as to HANWJH.

The district court acknowledged that "specific personal jurisdiction over an online retailer is not established merely because the retailer's website is available in the forum" but rather it is necessary that the retailer " ‘st[and] ready and willing to do business with’ residents of the forum and then ‘knowingly do ... business with’ those residents."⁸ This test was satisfied, in the district court's view, by the fact that HANWJH "admit[ted] that it both offered to ship and in fact shipped products to Illinois."⁹ Relying on our opinions in Curry v. Revolution Laboratories, LLC , 949 F.3d 385 (7th Cir. 2020) and Illinois v. Hemi Group LLC , 622 F.3d 754 (7th Cir. 2010), the district court observed that "minimum contacts [can be] formed even though a defendant ‘s[old] its products only online through its website and third-party websites’ " in situations where the defendant "(1) included the forum in the ‘ship-to’ options from which the customer had to choose; (2) sent a customer an email confirming a shipping address in the forum; and (3) shipped product to an address in the forum."¹⁰ The district court did not view the lack of a confirmation email as dispositive and held that jurisdiction was proper over HANWJH.

The district court then rejected HANWJH's arguments that be2 LLC v. Ivanov , 642 F.3d 555 (7th Cir. 2011) and Advanced Tactical Ordnance Systems, LLC v. Real Action Paintball, Inc. , 751 F.3d 796 (7th Cir. 2014), required the action to be dismissed for lack of personal jurisdiction. The district court determined these cases to be materially distinguishable because neither involved sales of infringing products to the forum state. The district court also rejected HANWJH's contention that our opinion in Hemi , 622 F.3d 754, should not apply. HANWJH had urged that "because the transactions in Illinois in this case were exclusively the product of ‘entrapment and enticement’ by Plaintiffs, Hemi should not apply."¹¹ The district court disagreed.

Hemi 's reasoning is on point. In that case, the defendant had a website that offered Illinois as a "ship-to" forum and in fact shipped products to Illinois. As this Court sees things, Hemi did not impose any bar to evidence generated from a plaintiff's pretextual purchase of an infringing product; and Defendant does not offer any authority establishing such a rule. In the absence of contrary authority, the Court finds that Plaintiffs' reasons for purchasing the allegedly infringing material provided by products is not relevant to the personal jurisdiction analysis.¹²

Finally, the district court also rejected HANWJH's contention that "exercising personal jurisdiction would ‘offend traditional notions of fair play and substantial justice.’ "¹³ It explained that HANWJH had offered no support for this argument. It added that it was hardly unfair to subject HANWJH to jurisdiction because HANWJH "willingly shipped an allegedly infringing product to this forum."¹⁴

Following the entry of the default, the district court ordered that any objections to the motion for default judgment be filed no later than July 26, 2021. On July 26, HANWJH appealed the denial of the motion to dismiss. After we ordered supplemental briefing on the issue of appellate jurisdiction, HANWJH voluntarily dismissed its appeal. Because HANWJH did not object to the motion for default judgment, the district court then entered a final judgment on September 20, 2021. HANWJH timely appealed that order.

II

A.

We review a district court's determination of personal jurisdiction de novo. See Curry , 949 F.3d at 392. We "take the plaintiff's asserted facts as true and resolve any factual disputes in its favor." uBID, Inc. v. GoDaddy Grp., Inc. , 623 F.3d 421, 423–24 (7th Cir. 2010). When a defendant challenges personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), however, "the plaintiff bears the burden of...