IP Law Daily, TRADEMARK—N.D. Cal: Foreign defendants subject to personal jurisdiction in trademark case, (Oct 2, 2023)

By Jonathan Anderson

The defendants’ U.S. trademark registration supported jurisdiction under the federal long-arm statute.

The federal district court in San Francisco has held that foreign defendants involved in a trademark dispute with an American company are subject to the court’s personal jurisdiction under the federal long-arm statute. In denying defendants’ motion to dismiss, the court held that defendants obtained property interests from a federal agency and availed themselves of the laws of the United States; plaintiff’s claims arise out of and relate to defendants’ forum-related activities of registering their trademark; and it is not unreasonable to require defendants to defend a lawsuit about their registered trademark in the U.S. forum where they registered it (Expensify, Inc. v. Swappoint AG, September 28, 2023, Beeler, L.).

Background. Plaintiff, Expensify, is a U.S. provider of expense-reporting services, while defendants, Swappoint and Karmapoint, are jointly owned Swiss providers of a mobile application and associated website. Expensify uses the “Karma Points” mark in connection with its corporate credit card to allow customers to direct the money value of their credit-card reward points to charitable causes. It alleges that it has common-law rights to the mark. Defendants have the U.S.-registered mark “Karmapoint” that they use in connection with their app, which allows users to accumulate points for good deeds. Expensify makes three claims: (1) defendants registered their mark in the United States and around the world to cover “an ocean of goods of services” that defendants never intended to provide; (2) the parties’ uses of their marks are not confusingly similar; and (3) Expensify’s mark does not infringe the U.S. trademark registration owned by defendants. Expensify seeks a declaratory judgment of non-infringement, cancellation of defendants’ U.S. trademark, and liability for a false or fraudulent trademark registration.

Defendants sought to dismiss the lawsuit for lack of personal jurisdiction, asserting that they do not have minimum contacts with the United States forum. Expensify countered that defendants’ U.S. trademark registration is enough for U.S. courts to have personal jurisdiction, and in any event, their actions distributing their mobile app in the U.S. also establish jurisdiction.

Personal jurisdiction. Expensify asserted personal jurisdiction under the federal long-arm statute, Fed. R. Civ. P. 4(k), which has three requirements: (1) the claim against defendants arises under federal law; (2) defendants are not subject to the personal jurisdiction of any state court of general jurisdiction; and (3) exercising jurisdiction comports with due process. Defendants did not dispute that the first two requirements were satisfied: the claims are federal trademark claims, and the defendants are not subject to the personal jurisdiction of any state court of general jurisdiction.

The third requirement—whether exercising jurisdiction comports with due process—requires that defendants have “certain minimum contacts with the State such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice,” according to the court, citing Daimler AG v. Bauman, 571 U.S. 117, 125–26 (2014).

Analysis. The court held that defendants’ U.S. trademark registration supports personal jurisdiction under a three-prong test adopted by the Ninth Circuit: (1) the non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof, or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable. Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015); Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1068 (9th Cir. 2017).

First, the court concluded that defendants obtained property interests from a U.S. agency and availed themselves of the laws of the United States. Moreover, defendants’ acts were effectively directed to Expensify, which would feel the effects of restrictions on its trademark use. Defendants admit that their app and website have been accessed in the U.S. and thus that their trademark has been used in commerce in the U.S.

Second, the court said Expensify’s claims arise out of and relate to defendants’ forum-related activities of registering their trademark. Defendants’ alleged broad assertion of their trademark rights is uncontested, which forms the basis for the contested trademark rights.

Third, the court found that it is not unreasonable to require defendants to defend a lawsuit about their registered trademark in the U.S. forum where they registered it. Defendants interjected themselves into the forum and should defend their property rights in it.

The Case is No. 3:22-cv-05720-LB.

Attorneys: Navin Ramalingam (Robins Kaplan LLP) for Expensify, Inc. Jonathan Charles Balfus (Wilson Elser) for Swappoint AG and Karmapoint AG.

Companies: Expensify, Inc.; Swappoint AG; Karmapoint AG

Cases: TechnologyInternet Trademark CaliforniaNews