IP Law Daily, COPYRIGHT—E.D. Va.: Infringement suit against online food marketplace dismissed for lack of jurisdiction, (Dec 15, 2021)

By Ursula Furi-Perry, J.D.

There was no evidence that the California-based online retailer purposefully availed itself of the privilege of conducting activities in Virginia, nor did the claims arise out of activities directed at that state.

The owner of a digital food marketplace, based in Virginia, sued a similar, California-based online retailer of bulk food products in the U.S. District Court for the Eastern District of Virginia, alleging violations of copyright law. The California company filed a motion to dismiss based on lack of personal jurisdiction. The federal district court in Norfolk dismissed the lawsuit, finding that the California company did not purposefully avail itself of the privilege of conducting activities in Virginia, nor did the claims arise out of activities directed at that state (Conopco Inc. v. Rebel Smuggling LLC, December 14, 2021, Jackson, R.).

Background. The owner of a digital marketplace, foodservicedirect.com, sells and ships bulk food products, specializing in items that are hard to find. It has developed and owns a copyrighted categorization system with multilevel product categorization and product descriptions which are carefully tailored to its website.

Foodservicedirect.com sued a similar online marketplace, rebelsmuggling.com, alleging that it engaged in the unauthorized copying and public display of the copyrighted categorization system. Foodservicedirect.com sued for federal copyright infringement, common law copyright infringement, and breach of contract in the U.S. District Court for the Eastern District of Virginia.

Foodservicedirect.com is a Delaware corporation with its principal place of business in New Jersey, and it also has an office in Virginia. Rebelsmuggling.com is a California corporation, with its offices situated in that state. Rebelsmuggling.com filed a motion to dismiss the lawsuit based on lack of personal jurisdiction, and alternatively, for failure to state a claim upon which relief can be granted.

Analysis. The court addressed the procedural issue of a motion to dismiss the claims under Rule 12(b)(2) of the Federal Rules of Civil Procedure.

The court first considered whether rebelsmuggling.com purposefully availed itself of the privilege of conducting activities in Virginia, addressing numerous factors in the context of online activities and websites. The court concluded that the company’s activity was, at most, passive: there was no evidence indicating that it ever solicited, initiated, or deliberately engaged in any business in Virginia. The company’s only sales in Virginia totaled 0.389% of its sales overall, and there was no information offered about it targeting any advertising to Virginia residents.

The court also held that foodservicedirect.com’s claims did not arise out of activities directed at the forum state of Virginia. The genesis of the dispute was not located in that state, and there was no evidence of an affiliation between the underlying controversy and Virginia. Lastly, the court concluded that it would be constitutionally unreasonable to exercise personal jurisdiction in this case.

Because the court held that it did not have personal jurisdiction, it did not address the issue of failure to state a claim upon which relief can be granted.

Conclusion. The motion to dismiss for lack of personal jurisdiction was granted.

The Case is No: 2:21-cv-00347-RAJ-LRL.

Attorneys: Clinton Howard Brannon (Williams Mullen PC) for Conopco, Inc. d/b/a Food Service Direct. Lance G. Johnson (Johnson Legal PLLC) for Rebel Smuggling, LLC.

Companies: Conopco, Inc. d/b/a Food Service Direct; Rebel Smuggling, LLC

Cases: Copyright TechnologyInternet VirginiaNews GCNNews