South-Western Legal Studies in Business

Jurisdiction Requirements for U.S. Court Over Spanish Web Site Operator Explained
Description Appeals court held that a Spanish web site operator that used a valid trademark and domain name of a U.S. firm did not do business in the U.S. so as to create personal jurisdiction in U.S. court. However, the U.S. firm claiming infringement has discovery jurisdiction to explore its claims of trademark infringement.
Topic Cyberlaw
Key Words Jurisdiction; Minimum Contacts; Discovery; Cybersquatting
C A S E   S U M M A R Y
Facts Toys "R" Us, owner and user of the trademark Imaginarium in the toy market since the late 1980s, sued Step Two, a Spanish company, for cybersquatting and other claims for using the same mark in toy stores in Europe beginning in the 1990s. Step Two has no stores or employees in the U.S. Toys registered the domain name imaginarium.com in 1995; Step Two registered the domain name imaginarium.es in 1996. Step Two later registered imaginarium.net and other versions of the word. The Step Two websites sell toys, but all transactions are based in Spain and prices are in Spanish currency. An employee of Toys, in the U.S., made a purchase from Spain via the website. There was no other evidence of sales to the U.S. when Toys sued Step Two in federal court. The court dismissed the suit for lack of personal jurisdiction. Toys appealed.
Decision

Reversed in part. Mere operation of a commercially interactive web site should not subject the operator to jurisdiction anywhere in the world; rather, there must be evidence that the defendant "purposefully availed" itself of conducting activity in the forum state, by directly targeting its web site to the state, knowingly interacting with residents of the forum state via its web site, or through sufficient other related contacts. There were not sufficient contacts to support personal jurisdiction in federal court in the U.S. However, the claim by Toys that Step Two had copied Toys' marketing plan was entitled to jurisdictional discovery with respect to forcing production of business plans and other documents that may result in support of personal jurisdiction for trademark infringement. Courts will assist plaintiffs by allowing jurisdictional discovery unless the claim is clearly frivolous.

Citation Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446 (3rd Cir., 2003)

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