IP Law Daily, TRADEMARK—E.D. Tenn.: Motion to dismiss denied in Invisible Fence infringement suit; personal jurisdiction established, (Oct 3, 2024)

By Patricia K. Ruiz, J.D.

The court noted that merely having a website accessible to Tennessee residents is insufficient to establish personal jurisdiction; however, the resulting sales to residents can establish jurisdiction.

The U.S. District Court for the Eastern District of Tennessee denied a motion to dismiss a trademark infringement lawsuit, finding it has specific personal jurisdiction over a Delaware Corporation alleged to have in included the marks of Invisible Fence, Inc., in its advertisements for a competing product. The court determined that Invisible Fence established purposeful availment, causation, and reasonableness sufficient to establish specific jurisdiction in its allegations that the defendants used web advertising to reach Tennessee residents, allegedly confusing consumers and resulting in sales in Tennessee (Invisible Fence, Inc. v. Protect Animals With Satellites, LLC, No. 3:23-cv-00403-JRG-JEM (E.D. Tenn. Oct. 2, 2024)).

Allegations. Invisible Fence filed suit against Protect Animals with Satellites, LLC, (PAWS) and two individual defendants alleging PAWS used Invisible Fence trademarks in advertising materials related to the sale of GPS-based pet containment systems. It brought federal claims of trademark infringement, false advertising, false designation of origin, and dilution, as well as Tennessee common law claims of trademark infringement and dilution. PAWS, a Delaware corporation, makes, markets, sells, and offers to sell a pet containment product using a GPS-based wireless dog collar (Halo Collar) and owns, operates, and maintains the website Halo Collar.com, though which the products can be purchased throughout the U.S. The company offers the Halo Collar to Tennessee customers through its website; interacts with Tennessee consumers through its Zoom-powered Halo Dog Park service; allows Tennessee customers to register with its website and access personalized customer accounts; advertises products to and soliciting business from Tennessee residents through its website, as well as through search engines and social media sites; and ships Halo Collars into the Eastern District of Tennessee. More specifically, Invisible Fence alleged that the company advertised and sold a Halo Collar product through its website to a resident of Tennessee located in the district on or about September 1, 2023. Further, the Invisible Fence alleged the PAWS defendants knowingly infringed and continue to knowingly infringe the trademark rights of Invisible Fence within the state and within the district.

The individual defendants are alleged to be the founding partners, shareholders, officers, and managers of PAWS; one is a citizen of New Jersey, and the other is a citizen of California. The complaint alleges the court has jurisdiction over the individual defendants because they direct, control, participate in, and/or manage and are the moving force behind PAWS’s sale, advertisement, and distribution of the Halo Collar and because they derive profits directly from PAWS’s revenue, including revenues made from the sale of Halo Collar products in the state of Tennessee. The PAWS defendants moved to dismiss, arguing the Invisible Fence failed to allege sufficient facts to support the court’s exercise of jurisdiction over all three defendants.

General jurisdiction. The court first found it cannot exercise general jurisdiction over the defendants, as the Invisible Fence failed to allege sufficient conduct from which it can infer that PAWS continuously or systematically targeted Tennessee as a forum state through advertising and sale of its products. Similarly, the individual defendants are domiciled outside of Tennessee.

Specific jurisdiction. The court has specific jurisdiction if Invisible Fence can show the PAWS defendants (1) purposefully availed themselves to Tennessee or caused a consequence in the state; (2) the causes of action arise from the defendants’ own activities; and (3) the defendants’ actions in Tennessee or the consequences caused by their actions directed toward Tennessee are substantial enough to make jurisdiction reasonable.

Purposeful availment. Viewing the complaint’s allegations in a light most favorable to Invisible Fence, the court first found that the plaintiff alleged that PAWS infringed their marks in allegedly false and deceptive advertisements marketing the Halo Collar to Tennessee residents through its interactive website, that the advertisements are both confusing and deceptive to consumers and material to the purchasing decisions of Tennessee consumers, and that PAWS have in fact sold and shipped Halo Collars regularly to Tennessee consumers through its websites and allowed Tennessee consumers to create customer accounts on its website. These allegations are sufficient to establish a prima facie showing of purposeful availment, the court held. Additionally, PAWS could have reasonably foreseen that its allegedly infringing and false advertising would lead to customers in Tennessee choosing to purchase products provided by PAWS, which PAWS then shipped to consumers in Tennessee.

Causation. Next, the court found it is possible that the PAWS’s infringement and false advertising referencing the Invisible Fence marks, hosted on PAWS’s website and other online platforms, was material to Tennesseans’ decisions to purchase the Halo Collar from PAWS, create accounts on its website, and utilize its “Dog Park” service, which caused economic injury to Invisible Fence in Tennessee by diverting sales from Invisible Fence and damaging its reputation and goodwill as a provider of GPS-based dog collar products and services. Invisible Fence alleged PAWS targets Tennesseans, including those in the district, with deceptive advertisements, and the advertisements have resulted in sales in Tennessee as a natural consequence; thus, Invisible Fence succeeded in demonstrating causation.

Reasonableness. Finally, the court held that, based on the allegations, PAWS cannot reasonably object to the burden of defendant against a suit in Tennessee, given their allegedly regular display of advertising on their website and other online sources, the advertising being material to Tennesseans’ decisions to purchase the Halo Collar, and leading to regular sales of the Halo Collar to consumers in Tennessee. Thus, the court held the exercise of personal jurisdiction over the PAWS defendants is reasonable.

The Case is No. 3:23-cv-00403-JRG-JEM.

Judge: Greer, J.

Attorneys: Elizabeth Harwood (Merchant & Gould P.C.) for Invisible Fence, Inc. Eric M. Pettis (Troutman Pepper Hamilton Sanders LLP) for Protect Animals with Satellites, LLC.

Companies: Invisible Fence, Inc.; Protect Animals with Satellites, LLC

Cases: Trademark TennesseeNews