Dudnikov v. Chalk & Vermilion Fine Arts, Inc.

FILED
United States Court of Appeals
Tenth Circuit

January 28, 2008
PU B L ISH
Elisabeth A. Shumaker
Clerk of Court
U N IT E D STA T E S C O U R T O F A PPE A L S

T E N T H C IR C U IT

KAREN DUDNIKOV, and M ICHAEL
M EADORS ,

Plaintiffs-Appellants ,
v. No. 06-1458

CHALK & VERM ILION FINE ARTS,
INC., a Delaware corporation, and
SEVENARTS, LTD., a British
corporation,

Defendants-Appellees .

A ppeal from the U nited States D istrict C ourt
for the D istrict of C olorado
( D .C . N o. 05-cv-02505-W D M -M E H )

Gregory A. Beck , Public Citizen Litigation Group, W ashington, D.C., for
Plaintiffs-Appellants.

Scott C. Sandberg , Snell & W ilmer, LLP, Denver, CO, for Defendants-Appellees.

Before M cC O N N E L L , E B E L , and G O R SU C H , Circuit Judges.

G O R SU C H , Circuit Judge.

Plaintiffs are eBay “power sellers.” Through the Internet auction site, they

sell a variety of fabrics from their home in Colorado. This case concerns two of
plaintiffs’ prints, both of which play on famous images by the artist Erté,

Symphony in Black and Ebony on White. W hile Erté’s images depict elegant

women walking aquiline dogs, plaintiffs’ prints portray Betty Boop next to her

aptly named canine companion, Pudgy.

Defendants, owners of the rights to the Erté images, saw plaintiffs’ eBay

auction page (which disclosed plaintiffs’ Colorado location), and came to the

conclusion that plaintiffs’ prints infringed their copyrights. Defendants promptly

contacted eBay in California and successfully suspended plaintiffs’ auction, an

action that allegedly had adverse consequences for plaintiffs’ business and future

dealings with the auction site. By e-mail, defendants also threatened plaintiffs

with suit in federal court. Before defendants could carry out that threat, however,

plaintiffs initiated this action in federal district court in Colorado seeking a

declaratory judgment that their prints do not infringe defendants’ copyrights.

Defendants responded with a motion to dismiss, arguing that the court lacked

personal jurisdiction over them. The district court concurred and dismissed

plaintiffs’ complaint. For reasons we explore below, we reverse.

Taken in the light most favorable to plaintiffs, as they must be at this

stage in the litigation, the facts of this case establish that Karen Dudnikov and

M ichael M eadors, a husband-and-wife team, operate a small and unincorporated

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Internet-based business from their home in Colorado. Together, they sell fabric

and handmade crafts such as aprons, blankets, and placemats under the name

“Tabber’s Temptations.” The majority of their income is derived from selling

these products on eBay, whose operations are based in California. Tabber’s

Temptations is described by eBay as a “power seller,” and has received over

6,000 “feedback messages” in the past year from its eBay customers, and over

13,000 positive feedback messages since 1998. M s. Dudnikov’s and M r.

M eadors’s eBay auction pages clearly list the location of their merchandise as

Hartsel, Colorado, and link to their personal website which contains more

information about their business, including its location in Colorado.

In October 2005, M s. Dudnikov and M r. M eadors launched an auction on

eBay offering fabric for sale with the imprint of the cartoon character Betty Boop

wearing various gowns. One of these gowns, M s. Dudnikov and M r. M eadors

concede for purposes of defendants’ motion to dismiss, is easily recognizable as a

design of the artist known as Erté, a 20th century Russian-born French artist and

fashion designer. In Erté’s original works, Symphony In Black and Ebony On

White, a tall, slender woman is pictured wearing a floor length form-fitting dress

that trails her feet, and holding the leash of a thin, regal dog. The fabric offered

for sale by M s. Dudnikov and M r. M eadors replaced the rather elegant woman in

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Erté’s images with the rather less elegant Betty Boop, and substituted Erté’s

svelte canine with Betty Boop’s pet, Pudgy.

SevenArts, a British corporation, owns the copyright in these Erté works.

Chalk & Vermilion, a Delaware corporation with its principal place of business in

Connecticut, is SevenArts’ American agent. Chalk & Vermilion is also a member

of eBay’s “Verified Rights Owner” (“VeRO”) program.1 Under this program,

eBay will automatically terminate an ongoing auction when it receives a notice of

claimed infringement (“NOCI”) from a VeRO member stating, under penalty of

perjury, that it has a good-faith belief that an item up for auction infringes its

seller’s account. Under the VeRO program, a targeted seller may file a “counter

notice” with eBay contesting the validity of the copyright claim. Upon receipt of

such a filing, eBay notifies the initial complainant that it will reinstate the

contested auction in 10 days unless it is notified that there is pending legal action

1
M s. Dudnikov and M r. M eadors contend that the VeRO program was
created to take advantage of the safe harbor provision of the Digital M illennium
Copyright Act (“DM CA”), 17 U.S.C. § 512, which absolves an Internet Service
Provider (“ISP”) of liability for infringing material posted by a user as long as the
ISP takes down the allegedly infringing copyrighted material in response to a
notice of claimed infringement. Despite the similarities between the DM CA
requirements and the VeRO program, defendants assert that “eBay makes no
reference to the DM CA in its statement of the VeRO program.” W e need not
resolve this issue, however, as the origins of the VeRO program are irrelevant for
this appeal.

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seeking to adjudicate the parties’ rights. If the complaining party does initiate

legal proceedings within 10 days, eBay will continue to suppress the contested

auction pending the outcome of litigation.

Invoking the VeRO program on behalf of SevenArts, Chalk & Vermilion

filed a NOCI with eBay contesting plaintiffs’ sale of the Betty Boop fabric. In

turn, eBay cancelled the auction and notified M s. Dudnikov and M r. M eadors of

the NOCI. M s. Dudnikov then contacted Chalk & Vermilion and SevenArts by e-

mail to ask that the NOCI be withdrawn. M s. Dudnikov indicated that she would

voluntarily refrain from relisting the disputed fabric, but said that she was worried

about having a black mark on her eBay record as a result of having a NOCI filed

against her. “I make my living on eBay. I have a 99.9% satisfaction rating . . . .

Your action puts my business in danger of going under. Nothing to you perhaps

but everything to me.” Applt’s App. at 39. W hen SevenArts declined to

withdraw the NOCI, plaintiffs submitted a counter notice to eBay contesting the

validity of SevenArts’ copyright claim. In response, SevenArts notified M s.

Dudnikov by e-mail that, in order to prevent the auction from being reinstated

under eBay procedures, it intended to “file an action in the federal court[s]”

within 10 days. Id. at 44.

Six days after receiving this notice, and before defendants followed through

on their threat to sue, M s. Dudnikov and M r. M eadors filed a pro se complaint in

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the United States District Court for the District of Colorado. Their suit sought a

declaratory judgment clarifying that their sale of the contested Betty Boop fabric

did not infringe defendants’ copyrights, and an injunction preventing defendants

from interfering with future sales of the fabric.

SevenArts and Chalk & Vermilion responded by entering a special

appearance and moving to dismiss for lack of personal jurisdiction. 2 In a very

thorough opinion, the magistrate judge assigned the case for a recommended

disposition, see 28 U.S.C. § 636(b)(1)(A), reasoned that, while the court lacked

general jurisdiction over defendants, specific jurisdiction did exist. Defendants

objected to the magistrate judge’s recommendation and the district court sustained

their objection, held that neither specific nor general jurisdiction existed, and thus

granted defendants’ motion to dismiss. M s. Dudnikov and M r. M eadors now

appeal the dismissal of their action, though they contest only the district court’s

disposition of the specific jurisdiction question.

In conducting our review, we are mindful that plaintiffs bear the burden of

establishing personal jurisdiction. Intercon, Inc. v. Bell Atl. Internet Solutions,

2
Defendants also moved to dismiss for improper venue, but the only basis
for challenging venue in copyright actions is that the absence of personal
jurisdiction in a forum renders venue improper. See N. Am. Philips Corp. v. Am.
Vending Sales, Inc., 35 F.3d 1576, 1577, n. 1 (Fed. Cir. 1994). Accordingly, the
question of venue is essentially swallowed by the jurisdictional analysis.

-6-
Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). The extent of their burden, and the

scope of our appellate review, however, depend in part on the nature of the

district court’s response to defendants’ motion seeking dismissal for lack of

personal jurisdiction. A district court has discretion to resolve such a motion in a

variety of ways – including by reference to the complaint and affidavits, a pre-

trial evidentiary hearing, or sometimes at trial itself. 3

W hen, as here, personal jurisdiction is found wanting on the basis of the

complaint and affidavits, our review of the district court’s dismissal is de novo,

taking as true all well-pled (that is, plausible, non-conclusory, and non-

speculative, see Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007))

facts alleged in plaintiffs’ complaint. Similarly, any factual disputes in the

parties’ affidavits must be resolved in plaintiffs’ favor. FDIC v. Oaklawn

Apartments, 959 F.2d 170, 174 (10th Cir. 1992). W e have further held that, at

this stage, plaintiffs need only make a prima facie showing of personal

jurisdiction. Wenz v. M emery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). 4

3
Of course, even if personal jurisdiction is contested and found initially on
the pleadings and by affidavit, it may be reviewed again at subsequent stages in
the trial court proceedings as evidence accumulates. See FDIC v. Oaklawn
Apartments, 959 F.2d 170, 174 (10th Cir. 1992).
4
Few such solicitous rules apply in the district court when personal
jurisdiction is assessed in an evidentiary hearing or at trial; in such cases, the
plaintiff generally must establish, by a preponderance of the evidence, that
personal jurisdiction exists. Dennis Garberg & Assoc., Inc. v. Pack-Tech Int’l
(continued...)

-7-
Turning to the test for personal jurisdiction to which these rules of review

apply, our analysis begins with two questions. First, we ask whether any

applicable statute authorizes the service of process on defendants. Second, we

examine whether the exercise of such statutory jurisdiction comports with

constitutional due process demands. Trujillo v. Williams, 465 F.3d 1210, 1217

(10th Cir. 2006).

On the first of these scores, neither the federal Copyright Act, 17 U.S.C.

§ 101 et seq., nor the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq,

provides for nationwide service of process, so Fed. R. Civ. P. 4(k)(1)(A)

commands the district court (and us) to apply the law of the state in which the

district court sits. Colorado’s long-arm statute, in turn, confers the maximum

jurisdiction permissible consistent with the Due Process Clause. Archangel

Diamon Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005). Thus, in our case,

the first, statutory, inquiry effectively collapses into the second, constitutional,

analysis.

The Supreme Court has held that, to exercise jurisdiction in harmony with

due process, defendants must have “minimum contacts” with the forum state, such

that having to defend a lawsuit there would not “offend traditional notions of fair

4
(...continued)
Corp., 115 F.3d 767, 773 (10th Cir. 1997).

-8-
play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316

(1945) (internal quotation marks omitted). Because a state’s sovereignty is

territorial in nature, a defendant’s contacts with the forum state must be sufficient

such that, notwithstanding its lack of physical presence in the state, the state’s

exercise of sovereignty over it can be described as fair and just. A venerated

principle to be sure, it is also one that has long eluded a definitive legal test and

proven fertile ground for debate by law students, lawyers, and judges alike. 5

Because plaintiffs do not appeal the district court’s adverse ruling on general

jurisdiction, however, we are able at least to cabin our inquiry in this case to what

“minimum contacts” means for purposes of specific jurisdiction.

In this arena, the Supreme Court has instructed that the “minimum

contacts” standard requires, first, that the out-of-state defendant must have

“purposefully directed” its activities at residents of the forum state, and second,

that the plaintiff’s injuries must “arise out of” defendant’s forum-related

activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985).

5
See, e.g., Kevin C. M cM unigal, Desert, Utility, and M inimum Contacts:
Toward a M ixed Theory of Personal Jurisdiction, 108 Yale L.J. 189, 189 (1998)
(“Ambiguity and incoherence have plagued the minimum contacts test for the
more than five decades during which it was served as a cornerstone of the
Supreme Court’s personal jurisdiction doctrine.”); Christopher D. Cameron and
Kevin R. Johnson, Death of a Salesman? Forum Shopping and Outcome
Determination Under International Shoe, 28 U.C. Davis L. Rev. 769, 809-15
(1995) (discussing the “mysterious origins” of the minimum contacts test).

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Additionally, exercising personal jurisdiction over defendants must always be

consonant with traditional notions of fair play and substantial justice. Int’l Shoe,

326 U.S. at 316. W hile these elements afford some shape to the due process

inquiry, each is, as we shall see, not without its own interpretative difficulties.

III

The first element can appear in different guises. In the tort context, we

often ask whether the nonresident defendant “purposefully directed” its activities

at the forum state; in contract cases, meanwhile, we sometimes ask whether the

defendant “purposefully availed” itself of the privilege of conducting activities or

consummating a transaction in the forum state. See Bell Helicopter Textron, Inc.

v. Heliquest Int’l, Ltd., 385 F.3d 1291, 1296 (10th Cir. 2004); Pro Axess, Inc. v.

Orlux Distrib., Inc., 428 F.3d 1270, 1277 (10th Cir. 2005); OM I Holdings, Inc. v.

Royal Ins. Co. of Canada, 149 F.3d 1086, 1092 (10th Cir. 1998). In all events,

the shared aim of “purposeful direction” doctrine has been said by the Supreme

Court to ensure that an out-of-state defendant is not bound to appear to account

for merely “random, fortuitous, or attenuated contacts” with the forum state.

Burger King, 471 U.S. at 475 (internal quotations omitted).

Because this rule of law is more aspirational than self-defining, courts have

often retreated to analogizing individual cases to discrete Supreme Court personal

jurisdiction precedents. Indeed, this feature of due process personal jurisdiction

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litigation has led many commentators to complain of the lack of predictability and

certainty in this area of law. See Int’l Shoe, 326 U.S. at 322-26 (Black, J.

concurring in the judgment) (referring to the majority’s approach to jurisdiction

as consisting of “elastic standards” and “vague Constitutional criteria”); see also

C. Douglas Floyd and Shima Baradaran-Robinson, Toward a Unified Test of

Personal Jurisdiction in an Era of Widely Diffused Wrongs: The Relevance of

Purpose and Effects, 81 Ind. L. J. 601, 638 (2006). Happily, at least in this case,

plaintiffs have fixed their focus on a single precedential analogy that, they argue,

controls the outcome of the “purposeful direction” inquiry in this case: the

Supreme Court’s disposition in Calder v. Jones, 465 U.S. 783 (1984). W hile we

do not imagine that Calder necessarily describes the only way to satisfy the

purposeful direction test, because plaintiffs assert it provides the key to unlocking

the courthouse door for them, we are able to limit our attention in this case to

Calder’s demands.

In Calder, Shirley Jones, of Partridge Family fame, brought suit in

California against the National Enquirer, the Enquirer’s local distributor, and the

writer and editor of an allegedly libelous article published in the Enquirer. Id. at

785-86. W hile the Enquirer and its distributor chose not to contest jurisdiction,

both the writer, John South, and the editor, Iain Calder, challenged the authority

of the California courts to hear M s. Jones’s suit, stressing that the article was

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written and edited in Florida and, though the Enquirer was distributed nationally,

the individual defendants had few contacts with California. Id. at 785-86, 789.

The Court found specific jurisdiction in California was nonetheless appropriate

because the defendants had not engaged in “mere untargeted negligence. Rather,

their intentional, and allegedly tortious, actions, were expressly aimed at

California.” Id. at 789. The Court added that “Petitioner South wrote and

petitioner Calder edited an article that they knew would have a potentially

devastating impact upon respondent. And they knew that the brunt of that injury

would be felt by respondent in the State in which she lives and works [California]

. . . .” Id. at 789-90. (emphases added).

Distilling Calder to its essence, we thus understand the Court to have

found purposeful direction there because of the presence of (a) an intentional

action (writing, editing, and publishing the article), that was (b) expressly aimed

at the forum state (the article was about a California resident and her activities in

California; likewise it was drawn from California sources and widely distributed

in that state), with (c) knowledge that the brunt of the injury would be felt in the

forum state (defendants knew M s. Jones was in California and her career revolved

around the entertainment industry there). At plaintiffs’ invitation, we turn our

attention to examining the presence or absence of these same factors in their case.

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A

In Calder, the Court emphasized in the first instance that the defendants

undertook “intentional, and allegedly tortious, actions . . . .” Id. at 789.

Plaintiffs argue, and defendants do not dispute, that the sending of the NOCI was

an intentional act. However, the parties disagree over whether under Calder

plaintiffs must also allege that the act itself was wrongful or tortious in some

sense, and whether in this case plaintiffs have done so successfully.

In favor of the view that any intentional act, wrongful or not, suffices under

Calder, plaintiffs point to the Ninth Circuit’s decision in Yahoo! Inc. v. La Ligue

Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199 (9th Cir. 2006) (en banc).

In Yahoo!, a majority of a Ninth Circuit en banc panel effectively overruled that

court’s earlier holding in Bancroft & M asters, Inc. v. Augusta Nat’l Inc., 223 F.3d

1082 (9th Cir. 2000), and held that “we do not read Calder necessarily to require

in purposeful direction cases that all (or even any) jurisdictionally relevant effects

have been caused by wrongful acts.” 433 F.3d at 1208; see also id. at 1230 n.2

(O’Scannlain, J. concurring only in the judgment). Such a requirement, the court

suggested, would improperly conflate the jurisdictional analysis with the merits.

Id. at 1208. And indeed, this view has support in Calder itself. There, the Court

“reject[ed] the suggestion that First Amendment concerns enter into the

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jurisdictional analysis” in a situation in which the First Amendment was available

as a defense on the merits of M s. Jones’s defamation claim. Calder, 465 U.S. at

790.

Defendants, unsurprisingly, disagree (as did the district court), arguing that

jurisdiction should be denied because their conduct in terminating plaintiffs’

auction – and thereby vindicating their putative intellectual property rights –

cannot be fairly described as “wrongful” conduct. On this score, defendants

could point to a considerable dissent in Yahoo! arguing that in non-contract cases

allegations of wrongful behavior are necessary, see 433 F.3d at 1228-32

(O’Scannlain, J., concurring only in the judgment), 6 as well as the prior panel

decision of the Ninth Circuit in Bancroft, 223 F.3d at 1089 (Sneed, J.,

concurring), and decisions by other circuits holding that under Calder the

intentional act must be tortious, see, e.g., M arten v. Godwin, 499 F.3d 290, 297

(3d Cir. 2007).

As it happens, we are able to avoid entering this thicket. Even if Calder

can be properly read as requiring some form of “wrongful” intentional conduct,

we agree with plaintiffs that their complaint complies. Plaintiffs allege that

6
Yet, as a wrongful or tortious act concededly is not necessary in contract
cases, one might (as plaintiffs do) ask why such an act would be required in a
declaratory judgment action (like this one) that is not itself premised on a
question of tort.

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defendants intentionally sent a letter to eBay invoking the VeRO procedures.

Compl. ¶¶ 14, 22-23, 33, Ex. 2, 4; Plaintiffs’ Response to M otion to Dismiss ¶ 9.

They allege that defendants took this action with the intent of terminating

plaintiffs’ auction – thereby causing them lost business and a damaged business

reputation. They further allege that defendants took this action on the basis of an

erroneous copyright claim, asserting that the fabric in question was perfectly

lawful in light of the fair use doctrine, and that defendants were well aware of

this fact. 17 U.S.C. § 107; Compl. ¶ 45 et seq. Finally, plaintiffs allege that, in

light of the foregoing, defendants’ claim that they were innocently seeking to

protect their copyright was “simply a smoke-screen attempt to justify unwarranted

interference in the lawful sale of an item.” Compl. ¶ 60. W hile conclusory

allegations, or a mere “formulaic recitation of the elements of a cause of action,”

will not suffice to defeat a Fed. R. Civ. P. 12(b) motion, Twombly, 127 S. Ct. at

1965, crediting the complaint as true as we must at this stage of the litigation, and

further giving it the solicitous construction due a pro se filing, see Van Deelen v.

Johnson, 497 F.3d 1151, 1153 n.1 (10th Cir. 2007), 7 the facts described above are

sufficient to permit an inference that defendants tortiously interfered with

plaintiffs’ business. Plaintiffs’ allegations go beyond “labels and conclusions,”

7
The fact that plaintiffs were represented by counsel during this appeal
does not affect the solicitous construction we must afford their earlier pro se
filings. See Van Deelen, 497 F.3d at 1153 n.1.

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Twombly, 127 S. Ct. at 1965, to include facts detailing what defendants did

(sending the NOCI), what they knew would happen when they sent the NOCI (the

cancellation of plaintiffs’ auction and its ramifications for plaintiffs’ business),

and the basis for that knowledge (the specifics of the VeRO program and

defendants’ participation in that program).

Defendants separately object that plaintiffs seek jurisdiction based not on

defendants’ intentional actions, as they must, but instead based on plaintiffs’ own,

unilateral conduct. In this vein, defendants emphasize it was plaintiffs who chose

to sell allegedly infringing material through eBay, and they remind us of our

legion case law holding that “the unilateral activity of another party ‘is not an

appropriate consideration when determining whether a defendant has sufficient

contacts with a forum State to justify an assertion of jurisdiction.’” Doe v. Nat’l

M ed. Servs., 974 F.2d 143, 146 (10th Cir. 1992) (quoting Helicopteros Nacionales

de Colombia, S.A. v. Hall, 466 U.S. 408, 417 (1984)); see also M elea, Ltd. v.

Jawer SA, ---F.3d---, 2007 W L 4510263 at *4 (10th Cir. 2007).

Unilateral acts, however, occur in at least two analytically distinct ways.

First, as in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), a

plaintiff might purchase a product in one forum and carry it into another forum.

Absent at least the seller’s foreknowledge that the buyer was going to take the

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product into a particular forum, the defendant cannot reasonably be said to have

purposefully directed its activities at the forum. The defendant’s only contact, the

presence of its product in the forum, is the result of the act of someone else and

not the defendant’s own intentional conduct. A second type of unilateral activity

appears where the defendant has purposefully directed its activities at the forum,

but the plaintiff’s injury nonetheless “arises out of” the plaintiff’s or a third

party’s unilateral acts, rather than the defendant’s. See, e.g., Kuenzle v. HTM

Sport-und Freizeitgeräte AG, 102 F.3d 453, 456-57 (10th Cir. 1996) (holding that

“[r]egardless of any contacts that exist between [the defendant] and the forum,”

the suit arose from the activities of the plaintiff). W e believe this second sort of

unilateral act, with something of a supervening causation flavor to it, is more

appropriately addressed at the second (“arising out of”) stage of the minimum

contacts inquiry, and so we defer discussion of it until then. See infra, Part IV.

W ith respect to the first type of unilateral act, we have no difficulty

determining that plaintiffs have alleged an intentional and wrongful act by

defendants on which jurisdiction may permissibly be founded. Plaintiffs do not

argue, and we do not remotely hold, that jurisdiction is proper simply based on

plaintiffs’ decision to hold an eBay auction of materials that allegedly infringe

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upon defendants’ copyrights. 8 Rather, it is essential to our analysis that it was

defendants who in this case took the intentional action of sending a NOCI

specifically designed to terminate plaintiffs’ auction, and defendants who

followed that act with an express threat to sue within 10 days in order to prevent

the revival of plaintiffs’ auction.

Calder, of course, required more than an intentional action. It also stressed

that the defendants’ conduct was “expressly aimed at California.” 465 U.S. at

789. In the sentences immediately following its introduction of this concept, the

Court emphasized that California was the “focal point” of the allegedly tortious

story. Id. 9 To be sure, there is some overlap between this test and Calder’s

additional requirement, discussed below (see infra Part III.C), that a defendant

8
In M arschke v. Wratislaw, __ N.W .2d__, 2007 W L 4277436 (S.D. 2007),
the South Dakota Supreme Court held that exercising personal jurisdiction in
South Dakota over a M ontana car dealer who had posted a car for sale on eBay
that was subsequently bought by the South Dakota plaintiff violated due process.
In Winfield Collection, Ltd. v. M cCauley, 105 F. Supp. 2d 746 (E.D. M ich. 2000),
the court held similarly in a case involving a defendant who sold crafts through
eBay that used patterns allegedly infringing the plaintiff’s copyrights.
9
Some courts have held that the “expressly aimed” portion of Calder is
satisfied when the defendant “individually target[s] a known forum resident.” See
Bancroft, 223 F.3d at 1087. W e have taken a somewhat more restrictive
approach, holding that the forum state itself must be the “focal point of the tort.”
See Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1080 (10th Cir. 1995)
(internal quotations omitted); see also Remnick v. M anfredy, 238 F.3d 248, 259-
60 (3d Cir. 2001). Any difference between these standards is immaterial to the
resolution of this case, however, as plaintiffs succeed under either.

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must know that the “harm . . . was suffered” in the forum state. But the overlap is

far from complete, as the “express aiming” test focuses more on a defendant’s

intentions – where was the “focal point” of its purposive efforts – while the latter

requirement concentrates on the consequences of the defendant’s actions – where

was the alleged harm actually felt by the plaintiff.

Defendants submit that plaintiffs have failed to meet the “expressly aiming”

standard, pointing to the uncontested fact that they sent their NOCI invoking

eBay’s VeRO procedures not to plaintiffs in Colorado but to eBay in California.

Such focus on the physical direction of defendants’ NOCI, however, does not tell

the whole story. It overlooks, for example, the fact that eBay’s VeRO procedures

allow a NOCI filer to terminate another party’s auction automatically, as well as

plaintiffs’ allegation that defendants intended to halt their auction. Compl. ¶¶ 14,

22-23, 33, Ex. 2, 4; Plaintiffs’ Response to M otion to Dismiss ¶ 9. It overlooks,

too, the fact that the NOCI at issue in this case itself attests to this alleged intent:

the NOCI explicitly requests eBay to “act expeditiously to remove or disable

access to the material or items claimed to be infringing.” Applt’s App. at 40.

Defendants’ affidavits themselves do not contest, but instead tend to confirm, that

they intended to halt plaintiffs’ auction. The presidents of both Chalk &

Vermilion and SevenArts state that “[t]he NOCI was submitted to protect

copyrights in the Erté design, and was not submitted with the knowledge or intent

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that eBay would impose any penalty upon Plaintiffs beyond the sale of the fabric

specifically referenced in the NOCI.” Applt’s App. at 138, 140 (emphasis added).

Further, in an e-mail responding to the possibility that the allegedly infringing

fabric would be relisted as a result of plaintiffs’ counter notice, SevenArts

instructed Chalk & Vermilion to “have E Bay remove the item again if that is

possible.” Id. at 43. And when plaintiffs did not acquiesce, defendants e-mailed

plaintiffs directly in Colorado threatening them with suit in federal court to

prevent the future sales of the fabric in question. Id. at 44.

Thus, while, as defendants emphasize, the NOCI formally traveled only to

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 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.

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Our view finds support in Burger King, as well as in a pair of cases from a

sister circuit. In Burger King, the Supreme Court found jurisdiction in Florida

appropriate over a M ichigan franchisee who breached an agreement with, and

infringed the trademark of, a Florida franchisor. Foreshadowing the Internet age,

the Court noted that “it is an inescapable fact of modern commercial life that a

substantial amount of business is transacted solely by mail and wire

communications. . . . So long as a commercial actor’s efforts are ‘purposefully

directed’ toward residents of another State, we have consistently rejected the

notion that an absence of physical contacts can defeat personal jurisdiction there.”

471 U.S. at 476. Such is the case before us. Defendants’ express aim in acting

was to halt a Colorado-based sale by a Colorado resident, and neither the lack of

defendants’ physical presence in Colorado nor the fact that they used a California-

based entity to effectuate this purpose diminish this fact.

In Bancroft, a case perhaps even more analogous to ours, a small California

company that sold computer and networking products and services, Bancroft &

M asters, registered the domain name masters.com with Network Solutions Inc.

(“NSI”), a company based in Virginia. Augusta National, which operates the

Augusta National Golf Club and sponsors the M asters golf tournament, sent a

letter from its headquarters in Georgia to NSI in Virginia, asserting that Bancroft

& M asters had violated its trademark. M uch as under the VeRO procedures at

- 21 -
issue here, Augusta National’s complaint had the effect, under NSI policy, of

prohibiting Bancroft & M asters from retaining its domain name unless it obtained

a declaratory judgment that it was not infringing on Augusta National’s marks.

Bancroft & M asters brought such a suit in California and our sister circuit held

that, because Augusta National’s purpose was specifically to target a known

California business, it satisfied Calder’s “express aiming” test despite the fact

that letter was formally sent to Virginia rather than California. 223 F.3d at 1087-

88. Precisely the same reasoning applies here.

Informative in its contrast, Schwarzenegger v. Fred M artin M otor Co., 374

F.3d 797 (9th Cir. 2004), dealt with a car dealer in Ohio whose local Akron

advertisements encouraged potential buyers to “terminate” their current car leases

in favor of a new M artin auto. The advertisement featured a photograph of

Arnold Schwarzenegger in The Terminator (1984), one of his most popular film

roles in which he appears as a murderous cyborg, “(a cybernetic organism; i.e., a

robot whose mechanical parts are encased in living tissue . . .).” Id. at 799.

W hen M r. Schwarzenegger sought to sue the car dealership in California for the

unauthorized use of his likeness, the Ninth Circuit refused jurisdiction, stressing

that, unlike the defendants in Calder, the car dealership’s advertisements were not

“expressly aimed” at M r. Schwarzenegger in the forum state (California). Id. at

807. W hile M r. M artin perhaps knew M r. Schwarzenegger lived in California,

- 22 -
this was insufficient to convey jurisdiction there because the intentions behind his

advertisement was solely to entice local market Ohioans, not Californians, “to buy

or lease cars from Fred M artin.” Id. By contrast, defendants in our case are

alleged to have intended their extra-forum conduct to reach and affect plaintiffs’

business operations in Colorado.

W hile defendants do not deny that they sought to terminate plaintiffs’

auction, they do deny that they knew plaintiffs’ business was located in Colorado,

and therefore that their conduct could have been expressly aimed at Colorado.

But, while defendants are of course free to pursue that defense in later stages of

this litigation, plaintiffs have alleged that defendants knew the location of their

business. Plaintiffs’ Response to M otion to Dismiss ¶ 10. Neither does this

allegation rest on conjecture or supposition, but on well-pled and record facts.

Compare id. and Compl. with Twombly, 127 S. Ct. at 1962-63. Plaintiffs’

location is clearly disclosed on their eBay auction page, as is the fact that

Colorado residents had to pay sales tax for any purchases from plaintiffs. Applt’s

App. at 88, 92-94. And for their part, defendants’ statements about what they saw

are very carefully drafted to avoid disputing that they viewed plaintiffs’ eBay

auction page – indeed, it was presumably seeing this page that induced defendants

to contact eBay about halting plaintiffs’ auction.

- 23 -
C

In assessing the question of “purposeful direction,” Calder stressed the fact

that the Enquirer defendants “knew that the brunt of th[e] injury would be felt” in

the forum state. Calder, 465 U.S. at 789-90. M eanwhile, in Keeton v. Hustler

M agazine, 465 U.S. 770 (1984), issued the same day as Calder and also written

by then-Justice Rehnquist, the Court found jurisdiction proper in a libel action

brought in New Hampshire even though “the bulk of the harm done to petitioner

occurred outside” the forum state. Id. at 780; see also Yahoo!, 433 F.3d at 1207

(discussing this tension). In our case, the question where the brunt or bulk of

harm need take place makes little difference, as there is no meaningful dispute

that plaintiffs’ injury was suffered entirely in the forum state, Colorado. Also, for

reasons we have just discussed, see supra Part III.B, plaintiffs have satisfied their

burden of establishing, at this stage, that defendants knew plaintiffs’ business and

auction were based in Colorado, and therefore knew the effects of the NOCI

would be felt there.

Defendants do, however, contend, just as the unsuccessful defendants in

Calder did, 465 U.S. at 789, that the “mere foreseeability” that the NOCI would

have effects in Colorado is insufficient to support jurisdiction, and that plaintiffs

have failed to allege the “something more” than foreseeability required to

establish personal jurisdiction, see, e.g., Asahi M etal Indus. Co., Ltd. v. Superior

- 24 -
Court, 480 U.S. 102, 111 (1987) (O’Connor, J.) (plurality op.); Trierweiler v.

Croxton & Trench Holding Corp., 90 F.3d 1523, 1534 (10th Cir. 1996). W e

surely agree that under Calder the mere foreseeability of causing an injury in the

forum state is, standing alone, insufficient to warrant a state exercising its

sovereignty over an out-of-state defendant. But under the Calder test plaintiffs

have invoked, they must establish, and have established for purposes of a motion

to dismiss decided on the pleadings and affidavits, not only that defendants

foresaw (or knew) that the effects of their conduct would be felt in the forum

state, but also that defendants undertook intentional actions that were expressly

aimed at that forum state. That is, in satisfying Calder’s first two prongs,

plaintiffs have established that defendants acted with more than foresight (or

knowledge) that effects would be felt in Colorado.

Indeed, at the end of the day our case is an easier one than Calder itself.

There, the defendants intended to write an article, the “focal point” of which was

California, for the Enquirer to publish and distribute in California. 465 U.S. at

789. Yet, the effects of which the plaintiff complained likely were not bound up

in the defendants’ intentions. The defendant writer and editor were professionals

presumably interested chiefly in the sale of newspapers, not in doing intentional

harm to M s. Jones; that is, while they knew their article would have adverse

effects on her in California, those effects were to them perhaps no more than

- 25 -
foreseeable side-effects. By contrast, defendants here more than foresaw or knew

the harm alleged to have befallen forum residents; indeed, they do not dispute that

they intended to cause the cancellation of plaintiffs’ auction, and it is that precise

alleged harm that plaintiffs seek to have redressed through this suit. As our sister

circuit has said, actions that “are performed for the very purpose of having their

consequences felt in the forum state” are more than sufficient to support a finding

of purposeful direction under Calder. Finley v. River North Records, Inc., 148

F.3d 913, 916 (8th Cir. 1998) (quotation omitted) (holding jurisdiction proper

where an out-of-state defendant sent fraudulent material into the forum state with

the purpose of inducing plaintiff’s reliance, and such reliance was the harmful

effect for which plaintiff sought redress).

Having determined that defendants “purposefully directed” their activities

at the forum state, due process requires us next to ask whether plaintiffs’ injuries

“arise out of” defendants’ contacts with the forum jurisdiction. M any courts have

interpreted this language to require some sort of causal connection between a

defendant’s contacts and the suit at issue. Of course, as Prosser and Keeton have

noted, “[t]here is perhaps nothing in the entire field of law which has called forth

more disagreement, or upon which the opinions are in such a welter of

confusion,” as causation doctrine, Prosser and Keeton on the Law of Torts 263

- 26 -
(5th ed., 1984), and this arena is no exception. Some courts have interpreted the

phrase “arise out of” as endorsing a theory of “but-for” causation, see, e.g.,

M attel, Inc. v. Greiner and Hausser GmbH., 354 F.3d 857, 864 (9th Cir. 2003),

while other courts have required proximate cause to support the exercise of

specific jurisdiction, see, e.g., M ass. Sch. of Law at Andover, Inc. v. Am. Bar

Ass’n, 142 F.3d 26, 35 (1st Cir. 1998). Under the former approach, any event in

the causal chain leading to the plaintiff’s injury is sufficiently related to the claim

to support the exercise of specific jurisdiction. The latter approach, by contrast,

is considerably more restrictive and calls for courts to “examine[s] whether any of

the defendant’s contacts with the forum are relevant to the merits of the plaintiff’s

claim.” O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 319 (3d Cir. 2007).

Yet a third approach, departing somewhat from these causation-based principles,

instead asks whether there is a “substantial connection” or “discernible

relationship” between the contacts and the suit. See id. at 319-20 (collecting

cases). Under this theory, the relationship between the contacts and the suit can

be weaker when the contacts themselves are more extensive. See Shoppers Food

Warehouse v. M oreno, 746 A.2d 320, 335-36 (D.C. 2000).

The parties point us to no case in which we have had occasion to announce

a test as to when a contact is sufficiently related to a claim to support the exercise

of jurisdiction, but we agree with our sister circuit that the “substantial

- 27 -
connection” test inappropriately blurs the distinction between specific and general

personal jurisdiction. See Sandy Lane Hotel Co., 496 F.3d at 321. General

jurisdiction is based on an out-of-state defendant’s “continuous and systematic”

contacts with the forum state, Trujillo, 465 F.3d at 1218 n.7 (quoting

Helicopteros, 466 U.S. 408), and does not require that the claim be related to

those contacts. Specific jurisdiction, on the other hand, is premised on something

of a quid pro quo: in exchange for “benefitting” from some purposive conduct

directed at the forum state, a party is deemed to consent to the exercise of

jurisdiction for claims related to those contacts. A relatedness inquiry that varies

the required connection between the contacts and the claims asserted based on the

number of the contacts improperly conflates these two analytically distinct

approaches to jurisdiction. By eliminating the distinction between contacts that

are sufficient to support any suit and those that require the suit be related to the

contact, it also undermines the rationale for the relatedness inquiry: to allow a

defendant to anticipate his jurisdictional exposure based on his own actions. See

Linda Sandstrom Simard, M eeting Expectations: Two Profiles For Specific

Jurisdiction, 38 Ind. L. Rev. 343, 366 (2005).

As between the remaining but-for and proximate causation tests, we have

no need to pick sides today. On the facts of this case, we are satisfied that either

theory adopted by our sister circuits would support a determination that plaintiffs’

- 28 -
cause of action arises from the defendants’ contact with Colorado. That

defendants’ contact with Colorado, the sending of the NOCI to eBay and the

ensuing e-mail exchange in which defendants threatened plaintiffs with suit, is a

but-for cause of this action is clear. After all, if defendants had not claimed that

plaintiffs were infringing their copyright, plaintiffs would have had no reason to

seek a declaratory judgment that their actions did not run afoul of defendants’

rights. The NOCI was also the cause in fact of the real world harm that plaintiffs

seek to have remedied: the cancellation of their auction and the black mark on

their eBay record. In the absence of the NOCI, plaintiffs would not have had to

contend with either of those effects, and thus would have had no reason to attempt

to hale defendants into court.

W e believe that the NOCI can also fairly be considered the proximate cause

of plaintiffs’ claim. In the NOCI, defendants swore under penalty of perjury that

they had a good faith belief that plaintiffs’ auction infringed their rights. The

merits of plaintiffs’ declaratory judgment action addresses the exact same

question, and their claim for injunctive relief seeks to prevent future interference

with plaintiffs’ business, interference which defendants have threatened. M ore

specifically, plaintiffs argue that defendants’ infringement claim contained in the

NOCI is incorrect, and that therefore their auction was improperly cancelled and

- 29 -
their sales record erroneously smeared. The NOCI is thus at the very core of

plaintiffs’ suit.

Defendants’ chief argument against finding plaintiffs’ suit sufficiently

related to the NOCI is (once again) that plaintiffs’ suit is based on plaintiffs’

unilateral conduct. Even if the NOCI was purposefully directed at Colorado,

defendants argue that because plaintiffs are seeking a judgment that their own

actions are legal, their claim does not arise out of any activity of defendants. This

argument, however, neglects the fact that plaintiffs filed suit in direct response to

defendants’ suppression of their auction and threat to bring a suit in less than two

weeks. W hile plaintiffs’ actions are admittedly also a but-for cause of this suit,

that does not change the fact that what plaintiffs seek is relief from defendants’

actions and the ensuing consequences following directly from those actions.

Our case is, in this respect, akin to Red Wing Shoe Co. v. Hockerson-

Halberstadt, Inc., 148 F.3d 1355, 1360 (Fed. Cir. 1998), and CompuServe v.

Patterson, 89 F.3d 1257 (6th Cir. 1996). In Red Wing Shoe, the Federal Circuit

held the threat of an infringement suit carried by a cease-and-desist letter acts as a

restraint on the free flow of goods, and a declaratory judgment action by the

purveyor of allegedly non-infringing goods arises from (and is an attempt to

- 30 -
eliminate) that restraint. 148 F.3d at 1360. 1 0 Neither is the restraint here based

on threats alone, although defendants did indeed threaten litigation; rather,

defendants affirmatively interfered with plaintiffs’ business, and this suit arises

directly from that interference. See also Silent Drive, Inc. v. Strong Industries,

Inc., 326 F.3d 1194, 1202 (Fed. Cir. 2003).

Similarly, in CompuServe, a Texas defendant had threatened to sue an Ohio

corporation for trademark infringement if it did not pay him $100,000 to settle his

claim. The Ohio corporation thereafter filed a preemptive declaratory judgment

suit in Ohio. After holding that the defendant’s threat constituted a contact with

Ohio, the court applied a proximate cause standard to determine whether the

plaintiff’s claim arose from that contact. 89 F.3d at 1267. The court noted that

there, as here, the defendant’s actions threatened harm to the economic livelihood

of the plaintiff, and it was that threat the plaintiff sought to eliminate through its

suit. Id. Indeed, the instant case is an even clearer case for jurisdiction than

CompuServe because M s. Dudnikov and M r. M eadors seek relief not merely from

10
To be sure, Red Wing Shoe ultimately held that jurisdiction was
inappropriate on the reasonableness prong of our due process analysis because of
policy concerns unique to the intellectual property context, a question we take up
in Part V, infra. But for purposes of the relatedness prong of our analysis,
plaintiffs’ suit attacks the very type of restraint that Red Wing Shoe held gives
rise to a suit seeking a declaration of non-infringement.

- 31 -
threats, but from actual restraints on their business resulting from defendants’

NOCI.

Having determined that plaintiffs met their burden, at this stage of the

litigation, of establishing “minimum contacts” – that defendants’ conduct was

“purposefully directed” at Colorado and that this lawsuit arose out of defendants’

contacts with Colorado – we must still inquire whether the exercise of personal

jurisdiction would “offend traditional notions of fair play and substantial justice.”

Int’l Shoe, 326 U.S. at 316 (internal quotation omitted). In doing so, we are

cognizant of the fact that, with minimum contacts established, it is incumbent on

defendants to “present a compelling case that the presence of some other

considerations would render jurisdiction unreasonable.” Pro Axess, 428 F.3d at

1280 (internal quotation omitted).

In making such an inquiry courts traditionally consider factors such as

these:

(1) the burden on the defendant, (2) the forum state’s interests in resolving
the dispute, (3) the plaintiff’s interest in receiving convenient and effectual
relief, (4) the interstate judicial system’s interest in obtaining the most
efficient resolution of controversies, and (5) the shared interest of the
several states [or foreign nations] in furthering fundamental social policies.

OM I, 149 F.3d at 1095; see also TH Agric. & Nutrition, LLC v. Ace European

Group Ltd., 488 F.3d 1282, 1292 (10th Cir. 2007). But see International Shoe

- 32 -
and the Legacy of Legal Realism, 2001 Sup. Ct. Rev. 347, 368 (2001) (arguing

that considering factors such as these “imposes all of the costs of case-by-case

adjudication without conferring any benefits in the form of predictable

outcomes”).

None of these factors, separately or in combination, seems to weigh

definitively in favor of defendants. W ith respect to the burden on them associated

with litigating in Colorado, defendants’ threat to litigate in federal court indicates

a willingness to litigate in some federal court in the United States. As far as we

can tell, there are a finite number of possible fora in this country in which this

case might be litigated, including perhaps Connecticut or Delaware, Chalk &

Vermilion’s home state and state of incorporation; Colorado, the plaintiffs’ home

state; or California, eBay’s home state.

California has virtually nothing to do with this litigation: eBay is not a

party to this suit, we have been pointed to no specific witnesses or evidence

located in California, and the merits of this dispute are wholly unrelated to

California substantive law. Thus, we are left to consider the burden on the parties

of litigating this suit in Colorado rather than, say, Connecticut or Delaware. As

in any case in which the parties reside in different fora, one side must bear the

inconvenience of litigating “on the road.” W hile admittedly a burden, defendants

have not indicated that their defense of this case would be hindered by the

- 33 -
territorial limits on the Colorado district court’s power to subpoena relevant

witnesses, or indeed hampered in any other significant way.

To be sure, on the other side of the coin, while “[s]tates have an important

interest in providing a forum in which their residents can seek redress for injuries

caused by out-of-state actors,” OM I, 149 F.3d at 1096, and while they surely

consider federal district court in Colorado a convenient and effective forum,

plaintiffs have suggested no reason to think that federal courts in Connecticut or

Delaware, for example, would be unable to adjudicate their claims under federal

law with equal fairness and effectiveness. Cf. id. at 1097 (noting that plaintiff’s

interest in convenient and effective relief “may weigh heavily in cases where a

Plaintiff’s chances of recovery will be greatly diminished by forcing him to

litigate in another forum because of that forum’s laws or because the burden may

be so overwhelming as to practically foreclose pursuit of the lawsuit”).

The only traditional factor that does loom large for either side in this case

is the potential policy interests of a foreign nation. See Pro Axess, Inc., 428 F.3d

at 1281 (considering this interest under the fifth factor concerning the substantive

social policy interests of states or nations). W hile Chalk & Vermilion is based in

Connecticut, SevenArts is a British corporation, and thus we would be remiss if

we did not consider whether British substantive social policies are implicated by

an exercise of jurisdiction over SevenArts. In this particular case, however, we

- 34 -
have little trouble concluding that they are not. Nowhere have defendants

disputed that this case will be decided solely under federal copyright law, and

indeed, the NOCI itself states that it is defendants’ rights under “state, federal, or

United States law,” not British law, that are being infringed. Applt’s App. at 40.

SevenArts has been exposed to jurisdiction in the United States by the actions of

its American agent, actions of which, the record is clear, SevenArts not only

approved but appears to have directed. See id. at 36 (“Please have E Bay remove

the item again . . .”); id. at 28 (“The fabric is a violation of our rights and we

insist on its withdrawal whenever it appears on E Bay.”). Furthermore, in its

correspondence with M s. Dudnikov, SevenArts itself threatened to file suit in

federal court in the United States to block plaintiffs’ counter notice from taking

effect. Id. at 44. Given these facts, there would seem to be no substantive British

interest in this litigation to be protected, and, apart from pointing to SevenArts’

British citizenship, defendants themselves identify none.

Defendants do submit, however, that an entirely different sort of policy

interest does weigh strongly in their favor – namely, the federal interest in

allowing federal copyright holders to alert potential infringers of their rights and

encouraging the settlement of such potential disputes. By way of support, they

point us to Red Wing Shoe. There, a Louisiana corporation sent a letter to a

M innesota corporation informing the latter that the former believed a shoe

- 35 -
manufactured by the M innesota corporation infringed the Louisiana corporation’s

patent, and offering to negotiate for a non-exclusive license. The Federal Circuit

held that this “cease-and-desist” letter constituted a contact purposefully directed

at M innesota, and that the case arose out of that contact. See supra Part IV. Yet,

the court held that a patent holder would not “subject itself to personal

jurisdiction in a forum solely by informing a party who happens to be located

there of suspected infringement.” Red Wing Shoe, 148 F.3d at 1361 (emphasis

added). The court reasoned that such cease-and-desist letters are essential to

promoting settlement of copyright disputes, and the promotion of settlement is a

strong federal policy interest. Id.; see also Silent Drive, 326 F.3d at 1206; Wise

v. Lindamood, 89 F. Supp. 2d 1187 (D. Colo. 1999).

Assuming without deciding that it would be unreasonable to found

jurisdiction solely on a cease-and-desist letter, this case is readily distinguishable.

Defendants’ NOCI went well beyond providing notice to plaintiffs of the claimed

infringement and seeking settlement; it purposefully caused the cancellation of

their auction and allegedly threatened their future access to eBay and the viability

of their business. Compl. ¶¶ 15, 30. Of course, plaintiffs’ contact information

was readily accessible from their eBay auction site and defendants thus had the

option of sending a mere cease-and-desist letter directly to plaintiffs. Instead,

however, they communicated their complaint to a third party with the intent that

- 36 -
the third party take action directly against plaintiffs’ business interests, something

that thereafter occurred. On these facts, we cannot say that the exercise of

jurisdiction would be either unfair or unjust, and again our inquiry profits by

analogy to Bancroft. The court there held that cases involving cease-and-desist

letters were inapposite because the plaintiff’s case arose “principally out of [the

defendant]’s letter to [the third party], and that letter did more than warn or

threaten [the plaintiff].” 223 F.3d at 1089. Instead, the letter initiated procedures

under which the plaintiff either had to give in to the defendant’s demands

(thereby losing use of its domain name), or take legal action. See supra Part

III.B. Such is the situation with which we are faced. Defendants did not merely

inform plaintiffs of their rights and invite settlement discussions prior to potential

litigation, but took affirmative steps with third parties that suspended plaintiffs’

ongoing business operations. And under eBay’s procedures, plaintiffs’ only

recourse, other than capitulation, was litigation. In such circumstances, we

cannot say that requiring defendants to answer for their actions in Colorado is

unfair.

* * *

Defendants sent a NOCI to eBay expressly intending (and effectually

acting) to suspend plaintiffs’ auction in Colorado. Plaintiffs’ suit arises from, and

is indeed an effort to reverse, the intended consequences of defendants’ NOCI

- 37 -
which they incurred in Colorado. For purposes of this motion, moreover, we must

assume defendants knew plaintiffs’ business was located in Colorado. And

defendants point us to no basis in traditional notions of fair play or substantial

justice that would preclude suit in that forum. Accordingly, the judgment of the

district court is reversed, and this case is remanded for further proceedings not

inconsistent with this opinion.

So ordered.

- 38 -

Dudnikov v. Chalk & Vermilion Fine Arts, Inc.

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