Telemedicine Solutions LLC v. WoundRight Technologies, LLC
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Full Opinion
MEMORANDUM OPINION AND ORDER
Plaintiff Telemedicine Solutions LLC and Defendant WoundRight Technologies, LLC are purveyors of electronic systems and products aimed at medical practitioners in the wound care field. Plaintiffs system is called WoundRounds; Defendantâs, WoundRight. In its twelve-count amended complaint against Defendant [27], Plaintiff alleges that Defendant has infringed and diluted Plaintiffs trademark; engaged in unfair competition, cyberpira-cy, and deceptive trade practices; disparaged and defamed Plaintiff; and tortiously interfered with Plaintiffs prospective economic advantage. Defendant has moved to dismiss Plaintiffs amended complaint for lack of personal jurisdiction pursuant to Federal Rule -of Civil Procedure 12(b)(2), or for improper venue pursuant to Rule 12(b)(3). [28]. In the alternative, Defendant seeks to transfer venue to Wyoming pursuant to 28 U.S.C. §§ 1404(a) & 1406(a), and dismiss Counts X, XI, and XII of Plaintiffs complaint pursuant to Rule 12(b)(6). [28]. Plaintiff opposes the motion and requests leave to engage in âjurisdictional discovery to refuteâ affidavit testimony submitted by Defendant, to âdetermine how much WoundRight knew about WoundRounds (or Telemedicine), and [to ascertain] whether WoundRight has other minimum contacts with Illinois, in addition to its electronic entry into Illinois and its intentional tortious conduct! ] directed at Illinois and Illinois consumers.â [33] at 3, 11, 15; [40] at 2, 8.
For the reasons stated below, the Court concludes that it lacks personal jurisdiction over Defendant and accordingly grants Defendantâs motion [28] and dismisses the amended complaint for lack of personal jurisdiction. The Court respectfully denies Plaintiffs requests for jurisdictional discovery.
I. Background
For the purposes of the instant motion, the Court accepts as true the factual allegations relevant to jurisdiction made in Plaintiffs amended complaint, and draws all reasonable inferences in its favor. Cent. States, Se. & Sw. Area Pension Fund v. Phencorp Reinsurance Co., Inc., 440 F.3d 870, 878 (7th Cir.2006) The Court also resolves any disputes concerning relevant facts in Plaintiffs favor. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.2003). To the extent that Defendant has submitted affidavits opposing jurisdiction or contradicting Plaintiffs allegations, however, Plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction. Id. at 783.
Plaintiffs substantial investments into its product and marketing have paid off. Its âWoundRoundsâ marks have become well-known throughout the wound care industry as emanating from Plaintiff alone, id. ¶ 24, and have provided Plaintiff with a strong national reputation and considerable goodwill with an estimated worth in the millions. Id. ¶¶ 25-26.
Defendant is a limited liability company organized under the laws of Wyoming with its principal place of business in Laramie, Wyoming. Id. ¶2. Defendant uses the term âWoundRightâ to denote its goods and services, which according to Plaintiff are âthe same or nearly identicalâ to Plaintiffs âWoundRoundsâ goods and services. Id. ¶ 27. (Defendant!s affidavit describes its âWoundRightâ products as âa complete mobile wound care solution that automate[s] assessment documentation for wounds, ostomies, and incontinence management.â [29-1] ¶ 8. Defendantâs âWoundRightâ electronic application (âappâ) is intended for use on mobile devices, id. ¶ 7, and it is available for download from third-party websites that can be accessed from Defendantâs website, âwoun-drightapp.com.â [27] ¶ 33; [29-1] ¶¶20, 25-26, [29-2] ¶¶ 7-8. Defendantâs website, which was registered on May 15, 2012, [27] ¶ 32, can be accessed by customers anywhere in the United States, see [27] ¶ 33, but customers cannot actually download the WoundRight app directly from the website. See [27] ¶ 33; [29-1] ¶¶20, 25-26, [29-2] ¶¶ 7-8. Customers likewise cannot purchase supplemental âcensus creditsâ to expand the utility of the app without placing a telephone call to Defendantâs Wyoming office. [29-1] ¶¶ 25-27; [29-2] ¶¶7-15. Defendant does not have (and never has had) any physical presence in Illinois. [29-1] ¶¶ 31-36. Defendant never has sold any products or services to customers in Illinois. [29-1] ¶ 28. It has sent employees to demonstrate and sell its products at industry conferences around the country, but none of those conferences was in Illinois. See [27] ¶ 36; [29-1] ¶¶ 40-41. Plaintiff alleges that Defendantâs actions nonetheless specifically targeted the Illinois market for an electronic wound care and management software system. [27] ¶ 12.
Defendant, like Plaintiff, maintains a presence on the Internet beyond its website. Defendant uses social media, includ
Defendant at some point purchased a Google AdWords ad that appeared as the top result when a user searched Google for the term âwoundrounds.â [27] ¶28; id. Ex. 3. The text-only ad included a link to Defendantâs website and read, âConsidering WoundRounds? â Donât waste your time[.] Try the latest wound care app for free!â [27] Ex. 3. Plaintiff alleges that the Google ad âfalsely indicates that Tel-emedicineâs products and/or services are a âwaste of timeâ and otherwise disparagingly suggests that Telemedicineâs products and/or services are poor, inferior in some unknown manner, should not be used, and/or would be a waste of time to use, when in fact they are not.â [27] ¶ 30.' Similarly, Plaintiff alleges, the Google ad âmisrepresents the nature, characteristics, and/or qualities of Telemedicine and its goods and/or services.â Id. Defendantâs CEO contends in his affidavit that Defendant âhas never placed any internet advertisements or sent any email advertisements that are specifically directed at or targeted to individuals or businesses located in Illinois.â [29-1] ¶ 38. As to the Google ad, he avers that âthe advertisement was not targeted at Illinois individuals and/or businesses, the advertisement ran for only five days, and the advertisement will not be run again by Wound-Right.â [29-1] ¶ 39. The CEO further asserts that â[p]rior to the filing of this lawsuit, WoundRight was unaware of Tel-emedicineâs existence, was unaware that WoundRoundTM products and services were affiliated with Telemedicine, and was unaware that Telemedicine resided in Illinois and operated its business in Illinois.â [29-2] ¶ 17. Additionally, he avers that âWoundRight has not purposely exploited the Illinois market for its business, either by advertising its products and services on its web-site or otherwise.â [29-1] ¶ 46.
Plaintiff alleges that Defendant has transacted business in Illinois via its advertising, marketing, and solicitation activities; its website; and its placement of its product into the stream of commerce in Illinois. [27] ¶¶ 7-8. Plaintiff also alleges that Defendant specifically targeted Plaintiff and its business in Illinois by using a confusingly similarâtrademark, intentionally attempting to cause confusion or create
II. Discussion
A. Personal Jurisdiction
Notwithstanding the partiesâ apparent preference that the Court address the merits of'Defendantâs Rule 12(b)(6) arguments, see [29] at 8, [33] at 3-6; [35] at 1-4; [40] at 2-5, the Court resolves the question of personal jurisdiction first because âfailure to address jurisdiction before addressing the merits of constitute^] error.â Yassan v. J.P. Morgan Chase & Co., 708 F.3d 963, 967 n. 1 (7th Cir.2013) (citing Steel Co. v. Citizens for a Better Envât, 523 U.S. 83, 93, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)). Indeed, because â[p]ersonal jurisdiction refers to a courtâs âpower to bring a person into its adjudicative process,â N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491, 2014 WL 595767, at *3 (7th Cir.2014) (quoting BlacKâs Law Dictionary 930 (9th ed.2009)), and âprincipally protects the liberty of the nonresident defendant,â Walden v. Fiore, â U.S.-, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014), it must be the âfirst and fundamental questionâ resolved, âeven when not otherwise suggested, and without respect to the relation of the parties to it.â Steel Co., 523 U.S. at 94, 118 S.Ct. 1003 (quoting Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 453, 20 S.Ct. 690, 44 L.Ed. 842 (1900)).
1. Legal Standard
Plaintiff asserts claims arising under the Lanham Act, Illinois statutory law, and the common law. The Lanham Act does not authorize nationwide service of process, so this Court sitting in Illinois may exercise jurisdiction over Defendant only if authorized both by the United States Constitution and Illinois law. be2 LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir.2011) (citing Fed. R. Civ. P. 4(k)(1)(A); Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir.2010)). The Illinois long-arm statute âpermits its courts to exercise personal jurisdiction on any basis permitted by the constitutions of both Illinois and the United States.â Id.; see 735 ILCS 5/2-209(c). Thus âthe state statutory and federal constitutional inquiries merge.â Tamburo, 601 F.3d 693, 700 (7th Cir.2010).
The federal test for personal jurisdiction under the Due Process Clause of Fourteenth Amendment authorizes a court to exercise jurisdiction over a non-resident defendant only if the defendant has âcertain minimum contacts with [the state] such that the maintenance of the suit does not offend âtraditional notions of fair play and substantial justice.â â Intâl Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct.
The purposeful availment inquiry âcan appear in different guises,â Tamburo, 601 F.3d at 702 (quoting Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1071 (10th Cir.2008)), and this case presents two variations on the standard theme. First, Plaintiff alleges that Defendant committed several intentional torts (in addition to statutory and common law violations). The Seventh Circuit and the Supreme Court have held that âconstitutionally sufficient contacts can be imputed to a defendant if the defendant is accused of committing an intentional tort by actions that are âexpressly aimedâ at the forum state.â Mobile Anesthesiologists Chi., LLC v. Anesthesia Assocs. of Houston Metroplex, P.A., 623 F.3d 440, 444 (7th Cir.2010) (citing Calder v. Jones, 465 U.S. 783, 789-90, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984)); see Walden v. Fiore, â U.S. -, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (âA forum Stateâs exercise of jurisdiction over an out-of-state intentional tortfeasor must be based on intentional conduct by the defendant that creates the necessary contacts with the forum.â). The Seventh Circuit has characterized this inquiry as an âexpress aimingâ test, Tamburo, 601 F.3d at 697, and explained that it requires â(1) intentional conduct (or âintentional and allegedly tortiousâ conduct; (2) expressly aimed at the forum state; (3) with the defendantâs knowledge that the effects would be felt â that is, plaintiff would be injured â in the forum state.â Id. at 703 (citing Calder v. Jones, 465 U.S. 783, 789-90, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984)); see also Mobile Anesthesiologists, 623 F.3d at 445. The âexpress aimingâ test âfocuses attention on whether the defendant intentionally aimed its conduct at the forum state, rather than on the possibly incidental and constitutionally irrelevant effects of that conduct on the plaintiff.â Mobile Anesthesiologists, 623 F.3d at 445 n. 1. Indeed, the Supreme Court has emphasized that â[t]he proper question is not where the plaintiff experienced a particular injury or effect but whether the defendantâs conduct connects him to the forum in a meaningful way.â Walden, 134 S.Ct. 1115.
The Supreme Court also has emphasized that the âexpress aimingâ test is not an alternative to the minimum contacts
The second wrinkle in this case is that Defendantâs alleged contacts with the forum state occurred almost exclusively via the Internet. The Seventh Circuit long has been âhesit[ant] to fashion a special jurisdictional test for Internet-based based cases,â Tamburo, 601 F.3d at 703 n. 7, and indeed has concluded that â[u]sing a separate test for Internet-based contacts would be inappropriateâ because the traditional minimum contacts analysis âremains up to this more modern task.â uBid, Inc. v. The GoDaddy Group, Inc., 623 F.3d 421, 431 n. 1 (7th Cir.2010). Nonetheless, in cases in which the defendantâs alleged contacts with the forum state occurred online, the Seventh Circuit has noted that the relevant inquiry typically âboils downâ to whether the defendant has purposely exploited or in some way targeted the forum stateâs market. be2 LLC, 642 F.3d at 558-59. âIf the defendant merely operates a website, even a âhighly interactiveâ website, that is accessible from, but does not target, the forum state, then the defendant may not be haled into court in that state without offending the Constitution.â Id. at 559; see also Illinois v. Hemi Grp., LLC, 622 F.3d 754, 760 (7th Cir.2010) (âCourts should be careful in resolving questions of personal jurisdiction involving online contacts to ensure that a defendant is not haled into court simply because the defendant owns or operates a website that is accessible in the forum state, even if that site is âinteractive.â â). Thus, â[a] plaintiff cannot satisfy the Calder standard [i.e., the âexpress aimingâ test] simply by showing that the defendant maintained a website accessible to residents of the forum state and alleging that the defendant caused harm through that website.â Mobile Anesthesiologists, 623 F.3d at 446. That is true even where the defendant maintains its website after being placed on notice of the allegedly harmed entityâs identity, location, and ownership of a similar trademark. See id. at 444; cf. Walden, 134 S.Ct. 1115 (âPetitionerâs actions in Georgia did not create sufficient contacts with Nevada simply because he allegedly directed his conduct at plaintiffs whom he knew had Nevada connections.â).
If minimum contacts related to the suit are present, before exercising jurisdiction the Court also must consider whether the exercise of personal jurisdiction comports with âtraditional notions of fair play and substantial justice.â Burger King, 471 U.S. at 476, 105 S.Ct. 2174 (quoting Intâl Shoe, 326 U.S. at 320). âThus, courts in âappropriate casesâ may evaluate âthe burden on the defendant,â âthe forum Stateâs interest in adjudicating the dispute,â âthe interstate judicial systemâs interest in obtaining convenient and effective relief,â âthe interstate judicial systemâs interest in obtaining the most efficient resolution of controversies,â and âthe shared interest of the several States in furthering fundamental substantive social policies.â â Burger
Where, as here, the issue of personal jurisdiction is raised by a motion to dismiss and is. decided on the basis of written materials, Plaintiff has the burden of making a prima facie case of jurisdictional facts. Tamburo, 601 F.3d at 700. Jurisdictional allegations pleaded in the complaint are accepted as true unless proved otherwise by affidavits or exhibits. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.2003). Plaintiff is entitled to the resolution in its favor of all disputes concerning relevant facts presented in the record. Id. That said, Plaintiff may not merely rest on the allegations in its amended complaint; âonce the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.â Id. at 783.
2. Analysis
Here, Defendant maintains a website, uses social media, attends industry conferences, and ran a Google ad. Plaintiff contends that these activities subject Defendant to personal jurisdiction in Illinois because it intentionally has:
(1)used Plaintiffs trade name and trademark as a search keyword in the Google ad with the intention of diverting Plaintiffs customers and potential customers to its own website;
(2) defamed Plaintiff and its product in the Google ad by suggesting that Plaintiffs product is a waste of time;
(3) disparaged Plaintiffs goods and/or services in the Google ad by indicating that they are a waste of time;
(4) adopted and used a confusingly similar name to Plaintiffs trade name and trademark and misappropriated the goodwill associated with them; and
(5) attempted to create actual confusion to deceive customers, consumers, industry personnel, and the general public as to the source of Defendantâs goods and/or services and their affiliation or connection with Plaintiffsâ. .
at 7. These five alleged acts essentially collapse into two actions on Defendantâs part: running the Google ad and using the name and mark âWoundRightâ across several platforms. Plaintiff contends that these contacts are sufficient.to support the exercise of personal jurisdiction in Illinois under Tamburo v. Dworkin, 601 F.3d 693 (7th Cir.2010), and its articulation of the âexpress aimingâ test originally established in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). See [33] at 9 (âJurisdiction is proper because WoundRightâs express aim was to tortiously interfere with an Illinois companyâs sales and because the injury occurred in Illinois.â). Plaintiff relies almost exclusively on Tamburo to support its jurisdictional argument. See [33] at 7-11; [40] at 5-7. (It cites a portion of Tamburoâs discussion of Janmark, Inc. v. Reidy, 132 F.3d 1200 (7th Cir.1997), see [33] at 9, and independently cites Janmark in its sur-reply. See [40] at 6.). However, Tambu-ro is but one of several Seventh Circuit cases clarifying and applying Calderâs âexpress aimingâ test. A close examination of some of those cases leads the Court to conclude that Defendantâs contacts with Illinois do not surpass the requisite thresh
As explained in Tamburo (and several other Seventh Circuit cases), the Supreme Courtâs decision in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), âprovides some contours for the âpurposeful directionâ requirement in the context of a suit alleging intentional torts.â Tamburo, 601 F.3d at 702; see also Walden, 134 S.Ct. 1115 (âCalder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804, illustrates the application of these principles.â). In Calder, plaintiff Shirley Jones of Partridge Family fame sued defendants National Enquirer, Inc., its local distributing company, and a National Enquirer reporter and editor after they wrote, edited, published, and distributed an allegedly libelous article about her. See Calder, 465 U.S. at 784-86, 104 S.Ct. 1482. The National Enquirer is based in Florida, and the article was written and published
there. Plaintiff sued in California, however, which is where she lived, and where 600,000 copies of the issue containing the article were distributed. National Enquirer, Inc., and the local distributing company acceded to the exercise of personal jurisdiction over them, but the writer and editor of the story argued that they were not subject to personal jurisdiction in California because they were not responsible for the magazineâs distribution in California, they had no economic stake in its sales there, and the foreseeability of the articleâs effect on Jones was not sufficient to confer jurisdiction. See id. at 785-87, 104 S.Ct. 1482; see also Tamburo, 601 F.3d at 702. The Supreme Court rejected the writerâs and editorâs arguments, explaining,
Petitioner South wrote and Petitioner Calder edited an article that they knew would, have a potentially devastating impact upon [Jones]. And they knew that the brunt of that injury would be felt by [Jones] in the state in the State in which she lives and works and in which the National Enquirer has its largest circulation. Under the circumstances, petitioners must âreasonably anticipate being haled into court thereâ to answer for the truth of the statements made in their article. An individual injured in California need not go to Florida to seek redress from persons who, though remaining in Florida, knowingly cause the injury in California.
Calder, 465 U.S. at 789-90, 104 S.Ct. 1482 (citations omitted). The Supreme Court recently reiterated that â[t]he crux of Calder was that the reputation-based âeffectsâ of the alleged libel connected the defendants to California, not just to the plaintiff.â Walden, 134 S.Ct. 1115.
The Seventh Circuit has distilled from the Supreme Courtâs analysis in Calder a three-pronged âexpress aimingâ test for personal jurisdiction in the context of intentional torts: â(1) intentional conduct (or âintentional and allegedly tortious conductâ); (2) expressly aimed at the forum state; (3) with the defendantâs knowledge that the effects would be felt â that is, the plaintiff would be injured â in the forum state.â Tamburo, 601 F.3d at 703. The court has recognized that although these requirements are fairly straightforward, applying them in specific cases, particularly those alleging tortious acts committed over the Internet, can be challenging. Id.; see also uBid, Inc. v. The GoDaddy Grp., Inc., 623 F.3d 421, 433 (7th Cir.2010) (âWe recognize that our analysis here does not provide crisp, bright lines for district courts and litigants, but this is a field of law where the Supreme Court has repeatedly refused opportunities to draw 'such bright lines.â). Indeed, the Seventh Circuit has acknowledged that its own application of the test has evolved over time. See Mobile Anesthesiologists, Additional Information