Baker Donelson - USA
On February 1 2017 President Trump nominated Neil Gorsuch to fill the US Supreme Court slot vacated by deceased Justice Antonin Scalia. Gorsuch is a native of Colorado who has served on the US Court of Appeals for the Tenth Circuit since 2006. Much is currently being written and reported about him, particularly with regard to his previous writings and writing style over the past 10 years. However, nothing has been said thus far about intellectual property. This may be because there is not much to say.
When it comes to patents, the Federal Circuit holds exclusive appellate jurisdiction. While it was thus not possible to locate a decision presented by a panel on which Gorsuch served addressing a patent question, he did prepare an oft-cited opinion which reviewed a question of personal jurisdiction in an IP dispute.
In Dudnikov v Chalk & Vermillion Fine Arts, Inc (514 F 3d 1063 (10th Cir 2008)), the court heard an appeal of an order of dismissal by the trial court, finding a lack of personal jurisdiction. The case arose following a claim of copyright infringement by a company based in Greenwich, Connecticut called Chalk & Vermillion Fine Arts, which served as the US agent for a UK copyright owner, SevenArts. As the agent of SevenArts, Chalk & Vermillion asserted rights in a painting by the artist Erte’. The original artwork – titled Symphony in Black – portrayed a slender woman wearing fur, with a tall, regal dog being held by a leash.
The accused infringers operated an e-commerce business in Colorado which sold fabrics and handmade crafts through eBay. One of the fabrics listed for sale made a play on the Erte’ work – specifically, it portrayed Betty Boop holding a dog on a leash in a similar posture to that of the painting’s subject. In a twist of irony, or perhaps commentary, Betty Boop’s dog was named Pudgy and was not at all regal.
Chalk & Vermillion sent a notice of claimed infringement to eBay through its Verified Rights Owner Programme (VeRO). Under this programme, eBay will terminate an item’s auction when it is notified by a VeRO member, who certifies – under penalty of perjury – that it believes an item infringes its copyright. Dudnikov received the notice through eBay and then cancelled its auction. At the same time, Dudnikov contacted Chalk & Vermilion and its principal, SevenArts, to request that the notice be withdrawn.
The Connecticut agent refused to withdraw the notice and further threatened to bring suit in federal court for copyright infringement. This prompted Dudnikov to file a pre-emptive suit for declaratory judgment in Colorado. The accused infringer asserted that the contested fabric portraying Betty Boop did not infringe on SevenArts’ copyright and further claimed that Chalk & Vermilion was interfering with Dudnikov’s own business operations – a cause of action sounding in tort.
The defendant filed a motion under Rule 12(b)(6) to dismiss for lack of personal jurisdiction. The trial court granted the motion, prompting Dudnikov to appeal. The opinion on appeal was authored by Gorsuch, who overturned the trial court’s order of dismissal. He held that the copyright owners wrote the notice to eBay with the knowledge and intent that it be forwarded to Colorado where the accused infringers resided. In addition, the copyright owners wrote to the Colorado residents directly, threatening to sue to prevent the future sale of the fabric at issue.
Judge Gorsuch wrote:
Thus, while, as defendants emphasize, the [notice] formally traveled only to [eBay in] California, it can be fairly characterized as an intended means to the further intended end of cancelling plaintiffs’ auction in Colorado. In this way, it is something like a bank shot in basketball. A player who shoots the ball off of the backboard intends to hit the backboard, but he does so in the service of his further intention of putting the ball into the basket. Here, defendants intended to send the NOCI [notice of claimed infringement] to eBay in California, but they did so with the ultimate purpose of cancelling plaintiffs’ auction in Colorado. Their 'express aim' thus can be said to have reached into Colorado in much the same way that a basketball player’s express aim in shooting off of the backboard is not simply to hit the backboard, but to make a basket.
The opinion has been cited on several occasions in disputes over claims of personal jurisdiction, at least where these intersect with the Internet. Some might say that it is a somewhat expansive view of venue. However, when it comes to companies that are accused of infringing patent rights and which are sometimes sued in allegedly inconvenient forums (eg, the Eastern District of Texas), an expansive view of personal jurisdiction may encourage the prompt filing of declaratory judgment complaints closer to home.
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