Virtuality L.L.C. v. Bata Ltd., No. CIV H-00-3054.
| Decision Date | 03 April 2001 |
| Docket Number | No. CIV H-00-3054. |
| Parties | VIRTUALITY L.L.C. and Now Corporation, Plaintiffs, v. BATA LIMITED, Defendant. |
| Court | U.S. District Court — District of Maryland |
Timothy C. Lynch, Shar, Rosen & Warshaw, LLC, Baltimore, MD, Michael P. Marsalese, Bloomfield Hills, MI, for plaintiffs.
Thomas D. Renda, Siskind, Grady, Rosen & Hoover, P.A., Baltimore, MD, for defendant.
This civil action arises as a result of a an internet domain name1 dispute between the parties. Besides seeking under federal trademark law a declaratory judgment ordering that defendant Bata Limited ("Bata") has no rights or interests in certain domain names registered by plaintiff Virtuality, L.L.C. ("Virtuality"), plaintiffs seek compensatory damages under Maryland law.
Presently pending before the Court is defendant's motion to dismiss the complaint on the grounds that defendant Bata is not subject to jurisdiction in Maryland either as to plaintiffs' federal claim or as to their claims asserted under Maryland law. Memoranda and exhibits in support of and in opposition to this motion have been filed by the parties.
Following its review of the pleadings, memoranda and exhibits, this Court has concluded that no hearing is necessary for a decision on the pending motion. See Local Rule 105.6. For the reasons stated herein, the motion to dismiss of defendant Bata will be granted in part and denied in part.
Plaintiff Virtuality is a Michigan limited liability company which, according to the complaint, is the predecessor to plaintiff NOW Corporation ("NOW"), a Nevada corporation.2 Defendant Bata is a federally chartered Canadian corporation, having its headquarters in Toronto, Canada.
Bata and its affiliated companies throughout the world are the registered owners of numerous registered trademarks which use the word "POWER" in different forms. Licensees of Bata have made extensive use of its POWER trade-marks on footwear sold in the United States and elsewhere throughout the world. Bata is also the registered owner of the internet domain names "bata.com" and "powerfootwear.com." Bata has maintained a website at "www.bata.com" since 1995. In 1999, Virtuality began preliminary work on a website-based business which would provide internet users with a no-cost search engine. This website was to feature interactive advertising based upon search engine and browser software being developed. On September 29, 1999, Virtuality registered the domain name "powershoes.com", and on April 17, 2000, Virtuality registered the domain names "powershoes.net" and "powershoes.org". Each of these domain names was registered with domain name Registrar Alabanza, Inc. ("Alabanza"). On February 10, 2000, plaintiff NOW was incorporated under the laws of the State of Nevada.
Virtuality has agreed to submit disputes relating to its three domain names to the Uniform Domain Name Dispute Resolution Policy and Rules of the Internet Corporation of Assigned Names and Numbers ("ICANN"). On July 21, 2000, Bata filed a complaint against Virtuality before a dispute resolution provider authorized by ICANN. That provider is known as "eResolution" and is headquartered in Montreal, Canada. In that complaint, Bata sought to cancel, pursuant to the aforesaid Policy and Rules, Virtuality's domain names "powershoes.com," "powershoes.net" and "powershoes.org." Since Virtuality has agreed to submit domain name disputes to a dispute resolution provider authorized by ICANN, Bata challenged in the eResoluton administrative proceeding Virtuality's right to use the three domain names at issue.
On August 28, 2000, Virtuality filed with eResolution its response to Bata's complaint in the administrative proceeding. Plaintiff NOW did not join in that response nor did plaintiff NOW participate in any way in the Canadian administrative proceeding. Riccardo Roversi was the single adjudicator chosen by eResolution to decide the domain name dispute between Virtuality and Bata.
On September 20, 2000, Mr. Roversi rendered his decision. He found (1) that Virtuality's domain names were confusingly similar to Bata's registered domain name "powerfootwear.com"; (2) that Virtuality was making no legitimate use of its domain names; and (3) that Virtuality's behavior fell within the definition of "bad faith" established by Article 4(b)(1) of ICANN's Uniform Domain Name Dispute Resolution Policy. Accordingly, Mr. Roversi ordered that the domain names "powershoes.com," "powershoes.net," and "powershoes.org" be transferred to Bata. No decision was made by the adjudicator with respect to any interests which NOW might have in Virtuality's domain names.
As required by the ICANN Policy and Rules, Bata had agreed to:
submit, with respect to any challenge to a decision in this administrative proceeding canceling or transferring the domain name, to the jurisdiction of the Courts in at least one specified Mutual Jurisdiction (as that term is defined in the Policy).
Under the Policy and Rules, Bata therefore had, if there was a court challenge to a decision in the administrative proceeding, the choice of electing either the jurisdiction of the court where the registered owner of the domain name at issue carried on its business or the jurisdiction of the court where the domain name Registrar Alabanza carried on its business. As its choice of jurisdiction for any challenge by Virtuality to the adverse decision rendered in the Canadian administrative proceeding, Bata elected the jurisdiction of the court where Registrar Alabanza did business. Alabanza carries on its business in Baltimore, Maryland.
On October 11, 2000, plaintiffs filed the pending complaint in this Court.3 Inter alia, they assert that the adjudicator's award contains material errors of fact and misrepresentations and they seek appropriate redress in this civil action.
Count I of the complaint is brought under federal trademark law and asks this Court to order that plaintiff's use of the domain name "powershoes" does not cause confusion as to the origin, sponsorship or approval of the owner of the registered mark "POWER" and that plaintiff has all rights and interests in its three registered domain names.
Counts II — VII seek compensatory damages under Maryland law. Count II alleges that defendant Bata published false and defamatory statements in the administrative proceeding and branded plaintiff a "cybersquatter." Count III asserts that defendant Bata caused statements to be published slandering plaintiff's title in multiple domain name registrations and associated business units.
Count IV is based on a theory of conversion by fraud. It is alleged that defendant Bata caused to be published over the worldwide internet statements which were false and calculated to cause the arbitrator to mistakenly order a transfer of several domain name registrations from plaintiff to defendant. Count V seeks a recovery for "reverse passing off." It is alleged that plaintiff is the proper owner of the mark "powershoes" for internet and marketing services and that defendant does not have any right to the powershoes series of domain names.
Count VI seeks a recovery for fraud and unfair competition. In Count VII, plaintiffs allege that defendant's conduct constituted tortious interference with a prospective economic advantage.
As relief, plaintiff seeks a declaratory judgment, compensatory damages, punitive damages, attorneys' fees and costs.
Under Rule 12(b)(2), F.R.Civ.P., a civil action is subject to dismissal if the forum court lacks the requisite personal jurisdiction. In support of its motion to dismiss, defendant Bata argues that this Court lacks jurisdiction of plaintiffs' Count I claim because, according to the complaint, the three domain names were assigned by Virtuality to NOW and because Bata has never consented to jurisdiction in Maryland of any suit brought by NOW. Rule 17(a), F.R.Civ.P. requires that every action be commenced in the name of the real party in interest.
In support of its motion to dismiss Counts II — VII, defendant Bata argues that it is not subject to either the specific jurisdiction or the general jurisdiction of this Court by virtue of any activities within Maryland. With respect to causes of action not raising federal questions, personal jurisdiction may be exercised (1) if authorized by Maryland's Long Arm statute, Md.Code Ann. Cts. & Jud. Proc. § 6-103 and (2) if a defendant has "minimum contacts" in Maryland such that the exercise of personal jurisdiction would not offend traditional notions of fair play and substantial justice. Atlantech Distr., Inc. v. Credit General Ins. Co., 30 F.Supp.2d 534, 536 (D.Md.1998). Once a defendant raises a Rule 12(b)(2) defense, the plaintiff bears the burden of proving that the court can exercise personal jurisdiction over the defendant. Atlantech, 30 F.Supp.2d at 536. A plaintiff's burden is even higher when the defendant hails from a foreign nation rather than from another state. Amoco Egypt Oil Co. v. Leonis Navigation Co., 1 F.3d 848, 852 (9th Cir.1993).
A court may exercise either specific or general jurisdiction. Specific jurisdiction exists where the claim arises out of the defendant's contacts with the forum state. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). General jurisdiction permits a court to subject a nonresident defendant to a suit in the forum wholly unrelated to any contacts in the forum which resulted in the creation of the claim. General jurisdiction exists only where the foreign defendant's in-state activities amount to "continuous and systematic" contact with the state. Id. at 414-15, 104 S.Ct. 1868.
Applying these principles to the circumstances of this case, this Court concludes (1) that the claims of plaintiff NOW must be...
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