Opinion
Case No. 2:03-CV-00977.
July 15, 2004
Defendant Web Tracking Services, L.L.C (hereinafter "Web Tracking") filed a motion to dismiss, asserting four separate grounds for dismissal. The court finds that it has subject matter jurisdiction and personal jurisdiction and that venue is proper. The court withholds judgment on the 12(b)(6) motion to dismiss for failure to state a claim. Pursuant to Rule 12(b), the court hereby notifies the parties that it intends to treat the motion to dismiss for failure to state a claim as a motion for summary judgment and directs the parties to conduct limited discovery into the issues raised by the 12(b)(6) motion. The hearing set for July 19, 2004, is stricken. The parties shall have until September 15, 2004 to conduct limited discovery into the remaining matters.
STATEMENT OF FACTS
There is substantial dispute over the facts of this case. The court will set forth the relevant facts below, noting where the parties differ.
Plaintiff Webstat.com (hereinafter "Webstat") operates a website at www.webstat.com. Defendant Web Tracking operates the website www.web-stat.com. Both sites offer services to other websites whereby they can keep track of the number of "hits" to their website.
The dispute in this case involves the trademark WEBSTAT. The trademark WEBSTAT was originally registered with the United States Patent and Trademark Office on October 19, 1995, registration number 2,058,787. The registrant was Huntana, a Montana limited liability company owned by Matt Hunter. The Goods and Services description accompanying the registration stated that the trademark was to be used in connection with "computer software for analyzing and monitoring electronic traffic at specific sites on computer systems." The rights to the trademark WEBSTAT were transferred to Plaintiff Webstat from Huntana LLC by Matt Hunter on February 26, 2003.
Webstat alleges that it now holds the rights to the federal registration of the trademark WEBSTAT, that the trademark has become inherently distinctive, and that Web Tracking has used the trademark WEBSTAT without authorization in connection with its website www.web-stat.com. Webstat further alleges that Web Tracking has also used the marks WEB-STAT, and WEB STAT in connection with its website. Webstat alleges that Web Tracking's use of these marks has and will continue to cause consumer confusion. As a result, Webstat claims that Web Tracking has violated WEBSTAT.COM's federally registered trademark WEBSTAT in violation of 15 U.S.C. § 1141(c). Webstat also alleges that Web Tracking's use of the trademark WEBSTAT constitutes federal unfair competition in violation of 15 U.S.C. § 1125(a).
The parties disagree on several key points which bear on the resolution of the motion to dismiss. Webstat alleges that the www.web-stat.com domain name was registered by Web Tracking on September 14, 2003. Web Tracking argues that it does not own the www.web-stat.com domain name, but that the domain name is owned by Green-Acres Services (hereinafter "Green-Acres") and was registered as a domain name by Green-Acres on February 9, 1998. Green-Acres and Web Tracking are both owned by Olivier Galy. Green-Acres has not been named as a party to this litigation. Thus, there is a dispute over who owns the allegedly infringing domain name and when the domain name was registered.
Another underlying dispute between the parties involves the rights Webstat has to the federally registered trademark in WEBSTAT. Webstat obtained the rights to the trademark from Huntana, L.L.C., a Montana company which no longer exists. Huntana was apparently involuntarily dissolved in 1997 for failure to file an annual report and pay annual fees in accordance with Montana law. Webstat alleges that when it purchased the trademark from Huntana it did so as part of Huntana's "winding up" of its business under Montana corporate law. Web Tracking alleges that Huntana had lost its rights to the trademark through non-use and that the transfer to Webstat occurred so long after Huntana was dissolved that it could not have been a valid part of "winding up" its business.
There is also a dispute over the scope of the rights conferred by the federally registered trademark in WEBSTAT. Web Tracking alleges that the mark pertains only to software products in international class 9, and not to internet tracking services of the type provided by Web Tracking. Webstat argues that the scope of the federal registration does not necessarily determine the scope of the rights in a particular mark and asserts a common law claim in connection with its federal registration claim.
DISCUSSION
Web Tracking asserts four separate bases for dismissal: (1) lack of subject matter jurisdiction; (2) lack of personal jurisdiction; (3) improper venue; and (4) failure to state a claim. The court will review each in turn.
Subject Matter Jurisdiction
Defendant Web Tracking argues that this court lacks subject matter jurisdiction because the dispute between the parties is subject to a mandatory administrative proceeding. Like all registrants of domain names, the parties in this case incorporated into their registration agreements the terms of the Uniform Domain Name Dispute Resolution Policy (UDRP). Paragraph 4 of the UDRP, entitled Mandatory Administrative Proceeding, "sets forth the types of disputes for which you [the domain name registrant] are required to submit to a mandatory administrative proceeding." Paragraph 4(a) states that claims subject to the administrative proceeding are those in which "a third party . . . asserts to the applicable Provider . . . that (i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and (ii) you have no rights or legitimate interests in respect of the domain name; and (iii) your domain name has been registered and is being used in bad faith." Web Tracking alleges that this provision covers the matter before the court. A plain reading of the provision demonstrates otherwise.
Available at http://www.icann.org/dndr/udrp/policy.htm. See, Sallen v. Corinthians Licenciamentos LTDA, 273 F.3d 14, 20 (2001) ("[R]egistrars have agreed, or have been required by ICANN [Internet Corporation for Assigned Names and Numbers], to incorporate the UDRP into registration agreements . . . and registrants must accept the UDRP's terms in order to register a domain name.").
Id.
Id.
Importantly, the domain name at issue in this case is www.web-stat.com, and the registrant of that domain name is Web Tracking. The "third party" in this case is Webstat. As paragraph 4(a) of the UDRP makes clear, when a "third party . . . asserts to the applicable Provider" that a registered domain name violates a federal trademark right and is being used in bad faith then "you" — in this case Web Tracking — "must submit to a mandatory administrative proceeding." Thus, the restrictions are on the registrant, not the complainant. The fact that Webstat happens also to own a domain name which required signing the UDRP is irrelevant since that domain name is not in dispute. Thus, "it would not be appropriate to `compel' participation in UDRP proceedings under § 4 as a prerequisite to litigation because UDRP complainants, as strangers to the registration agreement, are under no obligation to avail themselves of the UDRP." The same is true of the jurisdictional limitations in Paragraph 4(k). As the Second Circuit has noted, "The jurisdictional restrictions in UDRP Paragraph 4(k) thus address the limitations on the registrar's obligations that arise in response to a lawsuit; they do not affect jurisdictions in which the complainant may seek an `independent resolution' from the courts."
Parisi v. Netlearning, Inc., 139 F. Supp.2d 745, 751 (E.D.Va. 2001).
Storey v. Cello Holdings, L.L.C., 347 F.3d 370, 380 (2d Cir. 2003).
Webstat is a stranger to the contract governing registration of www.web-stat.com. As such, Webstat was not required to submit a dispute over that domain name to the mandatory administrative proceedings. As a "third party" complainant, Webstat had the option of submitting the case to the UDRP proceedings. Thus, Paragraph 4(k) of the UDRP states:
The mandatory administrative proceeding requirements set forth in Paragraph 4 shall not prevent either you or the complainant from submitting the dispute to a court of competent jurisdiction for independent resolution before such mandatory administrative proceeding is commenced or after such proceeding is concluded.
Id.
The Third Circuit agrees. "[T]he trademark holder . . . is not required to avail itself of the dispute resolution policy before moving ahead in the district court . . . Only the domain-name registrant is contractually obligated to participate in the proceeding if a complaint is filed." The choice is with the third party complainant, not with the Defendant in such actions. Webstat has chosen not to submit its claim "to the applicable Provider" but instead has submitted it to a court of competent jurisdiction. Thus, the UDRP does not deprive this court of its subject matter jurisdiction in this action.
Dluhos v. Strasberg, 321 F.3d 365, 372 (3d Cir. 2003).
See BroadBridge Media, L.L.C. v. Hypercd.com, 106 F. Supp.2d 505, 509 (S.D.N.Y. 2000) (trademark holder not required to pursue UDRP proceedings before filing complaint in federal district court).
Personal Jurisdiction
Plaintiff Webstat alleges only specific personal jurisdiction over Defendant Web Tracking. "Specific personal jurisdiction exists when a non-resident defendant purposefully establishes minimum contacts with the forum state, the cause of action arises out of these contacts, and jurisdiction is constitutionally reasonable." This in turn "requires a three-part inquiry: 1) the defendant's acts or contacts must implicate Utah under the Utah long-arm statute; 2) a nexus must exist between the plaintiff's claims and the defendant's acts or contacts; and 3) the application of the Utah long-arm statute must satisfy the requirements of federal due process." Utah's long-arm statute is interpreted broadly so that "any set of circumstances that satisfies due process will also satisfy the long-arm statute." Thus, the more relevant question involves the federal due process analysis.A. Minimum Contacts
The federal due process analysis involves two steps. First, the defendant must have sufficient minimum contacts with the forum state. Second, the court must determine "whether the exercise of personal jurisdiction offends traditional notions of fair play and substantial justice." Plaintiff Webstat asserts that this court has personal jurisdiction over Web Tracking for three reasons: (1) Web Tracking's alleged intentional trademark infringement directed at this forum; (2) Web Tracking's contacts with this forum through its website; and (3) Web Tracking's alleged attempt to evade jurisdiction in this forum. Importantly, Webstat need only make a prima facie showing of personal jurisdiction at this point in the proceedings.
System Designs, 248 F. Supp.2d at 1097.
Id. at 1104.
System Designs, 248 F. Supp.2d at 1096.
1. Trademark Infringement
In System Designs, Inc., v. New Customware Company, Inc, this court followed the example of other courts in analyzing personal jurisdiction in a trademark infringement case under the effects test of Calder v. Jones. The Calder effects test holds that in a tort case, such as trademark infringement, jurisdiction turns on whether the defendant's conduct is targeted at, or has an effect in, the forum state. In Calder, for example, the Supreme Court found personal jurisdiction was appropriate in California where the defendant published an allegedly libelous article aimed at a resident of California. California was an appropriate forum because it was "the focal point both of the story and of the harm suffered." Because the defendant's conduct was "aimed at" California, he could have "reasonably anticipate[d] being haled into court there."
Calder, 465 U.S. at 789.
Id.
Courts applying the Calder "effects test" to claims of trademark infringement have generally held that mere registration of a domain name, without more, is insufficient to create personal jurisdiction. Thus, in Cybersell Inc. v. Cybersell Inc., the Ninth Circuit held that alleged trademark infringement by use of the registered name "Cybersell" on a passive website was not sufficient to create jurisdiction under the effects test. The mere registration of a domain name was not conduct sufficiently targeted at the owner of the trademark in the forum state.
130 F.3d 414 (9th Cir. 1997).
Id. at 420.
In Panavision Intern., L.P. v. Toeppen, the Ninth Circuit distinguished Cybersell and found that personal jurisdiction in California was appropriate where the defendant had intentionally registered Panavision's trade names to force Panavision to pay him money. The court agreed with Cybersell that "simply registering someone else's trademark as a domain name and posting a web site on the Internet is not sufficient to subject a party domiciled in one state to jurisdiction in another." There must be "`something more' to demonstrate that the defendant directed his activity toward the forum state." In Panavision, that "something more" was the defendant's knowledge that his actions would have the effect of injuring Panavision in California. In essence, the "cybersquatting" activities of the defendant were intentionally targeted at a California plaintiff.
141 F.3d 1316 (9th Cir. 1998).
Id. at 1322.
Id.
In Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club, Ltd., the Seventh Circuit addressed this issue. In that case the defendant had allegedly infringed on the trademark of the Colts, an Indiana plaintiff. The court found that personal jurisdiction was appropriate in Indiana partly because "[b]y choosing a name that might be found to be confusingly similar to that of the Indianapolis Colts, the defendants assumed the risk of injuring valuable property located in Indiana." However, the Seventh Circuit noted that "[i]n Calder as in all the other cases that have come to our attention in which jurisdiction over a suit involving intellectual property . . . was upheld, the defendant had done more than brought about an injury to an interest located in a particular state. The defendant had also `entered' the state in some fashion." In the Colts case, the fact that a good deal of the potential consumer confusion would likely occur in Indiana provided the additional facts needed to satisfy the Calder "effects test."
34 F.3d 410 (7th Cir. 1994).
Id. at 411.
Id. at 412.
In System Designs this court followed the lead of the Seventh and Ninth Circuits and refused to adopt a per se rule that trademark infringement alone is sufficient to create jurisdiction in the home state of the owner of the trademark. In that case, System Designs, a Utah company, owned and used the registered trademark "Custom Ware," for use with its computer software. System alleged that New Custom Ware had infringed the trademark and filed suit in this court. This court reviewed Cybersell, Panavision, and Indianapolis Colts, and concluded that while a strong argument could be made for personal jurisdiction based on alleged trademark infringement alone, there was no need to adopt a per se rule. This court stated:
Trademarks are registered in a national database, accessible to anyone. By registering a trademark with this database, an owner of a mark puts the world on notice — literally — that they have the rights to that mark. Not only does this establish a constructive notice as to the right to use the mark, it also establishes a constructive notice as to where the mark is registered. Therefore, to avoid suit in Utah, New Customware needed only to look up the Custom Ware mark before it chose to adopt it for its company name. A search would have quickly revealed that Custom Ware was a registered Utah trademark, thereby warning New Custom Ware it might be subject to suit in Utah if it chose to use that mark.
System Designs, 248 F. Supp.2d at 1098-99.
This court also noted that in Cybersell it seemed important to the Ninth Circuit that "the `Cybersell' Arizona mark was not registered at the time the infringing use of `Cybersell' began in Florida. This strongly suggests that the Ninth Circuit might have viewed the case differently had the mark in fact been registered. In such a situation, the person registering the trademark could reasonably have expected to defend the mark in their own jurisdiction." A party who intentionally infringes upon a trademark and knows, or reasonably should know, that the effects of the infringement will be felt by the owner of the trademark in a particular state is not much unlike the cybersquatter of Panavision whose conduct was clearly directed at the resident of the forum state. After all, "[u]nder Calder, the `effects' of the infringement are easy to determine: there is a national listing indicating exactly which state will feel the `effects' of the infringement. No other tort (except possibly patent infringement) provides this kind of advance notice regarding location."
Id. at 1099.
System Designs, 248 F. Supp.2d at 1098-99.
Thus, the sine qua non of personal jurisdiction under the Calder effects test is the intentional targeting of a forum. Personal jurisdiction based on the effects test is therefore inappropriate in this case. Had Web Tracking searched the national trademark database for the WEBSTAT trademark when its alleged infringement began it would have found that the trademark WEBSTAT was registered in Montana. A search of Montana corporate records would have further revealed that the company owning the trademark had been involuntarily dissolved. This would hardly have put Web Tracking on notice that the effects of its alleged infringement were being felt in Utah or that it might be haled into court in Utah. Not until February of 2003 was the trademark transferred to Webstat in Utah. As this court noted in System Designs, "a unilateral act by a plaintiff without notice to an infringer — such as moving to a different state or selling the trademark to a company in another location — would not be sufficient to establish jurisdiction."
Id. at 1099. See also, World-Wide Volkswagen, Corp. v. Woodson, 444 U.S. 286, 298 (1980).
To be sure, if Web Tracking were aware of the transfer of the trademark to a Utah company and thus aware that its allegedly infringing activity was now directed towards Utah, the court might be inclined to continue the analysis. However, there is no evidence that Web Tracking was aware that the trademark had been transferred to Webstat until Webstat notified Web Tracking of its alleged infringement on November 6, 2003. The Complaint in this matter was filed with this court on the same day. Thus, from the evidence now before the court, Web Tracking was likely not aware that the WEBSTAT trademark had been transferred to a Utah company until the same day the Complaint was filed with this court alleging that this court had jurisdiction over the matter. Nevertheless, Webstat alleges that Web Tracking "should have known" about the transfer because, "[a]s alleged in the Complaint," Web Tracking was causing consumer confusion. "It is not unreasonable to assume," Webstat argues, that based on this allegation "a responsible actor would also have reviewed the federal registration for the WEBSTAT mark and observed that the mark was by then owned by a company in Utah." However, it should be obvious that when the unilateral acts of a plaintiff have changed the location of the owner of a trademark, notifying the alleged infringer of that fact on the same day a Complaint is filed does not give the alleged infringer enough notice that the effects of its actions are being felt in a new forum. Nor, under the circumstances, was there any duty for Web Tracking to continue to check the database. Accordingly, because Web Tracking had no notice that the affects of its alleged infringement were being felt in Utah until the very day the Complaint was filed with this court, the court concludes that the alleged trademark infringement has no bearing on the personal jurisdiction analysis in this case. It simply was not conduct targeted at Utah.
Memorandum in Opposition to Motion to Dismiss at 7.
Id. at 8.
2. The Website
While the alleged trademark infringement may have little bearing on the personal jurisdiction analysis, Web Tracking may have "purposefully avail[ed] itself of the privilege of conducting activities in [Utah], thus invoking the privileges and benefits of [Utah's] laws" in other ways. Webstat alleges that the "highly interactive nature" of Web Tracking's website provides sufficient minimum contacts with this forum. If Web Tracking has not purposefully availed itself of the privilege of conducting business in Utah, it may not be "haled into [court here] as a result of random, fortuitous, or attenuated contacts."
System Designs, 248 F. Supp.2d at 1097.
"A website can form a basis for personal jurisdiction, depending on the level and type of activity conducted on it." Determining whether jurisdiction is appropriate based on contacts with a forum through a website "ultimately comes down to a `particularized inquiry' of the facts surrounding the website and the actions that [Web Tracking] took related to the trademark infringement."
Id. at 1100.
Id. at 1100 (quoting Far West Capital, Inc. v. Towne, 46 F.3d 1071 (10th Cir. 1995).
Three general categories of websites have been identified under the "sliding scale" test set forth in Zippo Mfg. Co. v. Zippo Dot Com, Inc.
First, personal jurisdiction is established when "a defendant clearly does business over the Internet," such as entering into contracts which require the "knowing and repeated transmission of computer files over the Internet." Second, exercising personal jurisdiction is not appropriate when the Internet use involves "[a] passive Web site that does little more than make information available to those who are interested in it." Under these circumstances, "a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions." Third, a middle category encompasses "interactive Web sites where a user can exchange information with the host computer." Whether the exercise of jurisdiction is appropriate depends upon "the level of interactivity and commercial nature of the exchange of information that occurs on the Web site."
952 F. Supp. 1119 (W.D.Pa. 1997).
Patriot Systems, Inc. v. C-Cubed Corp., 21 F. Supp.2d 1318, 1323-24 (D.Utah 1998) (quoting Zippo Mfg., 952 F. Supp. at 1123-24); see also System Designs, 248 F. Supp.2d at 1100.
Web Tracking's website clearly does more than merely make information available. Thus, personal jurisdiction in this case will turn on whether Web Tracking is doing business over the internet in Utah or whether its website is sufficiently interactive for personal jurisdiction in Utah to be appropriate.
"Personal jurisdiction can easily be found where a defendant clearly does business over the Internet such as entering into contracts which require the knowing and repeated transfer of files over the Internet." Web Tracking concedes that it has 36 customers in Utah but contends that this does not rise to the level of "doing business" in Utah. Web Tracking describes their contact with these customers as follows:
Web Tracking's customers, wherever located, register for Web Tracking's service by submitting an online account form containing contact and payment information and the customer's preferences for the format of Web Tracking's statistical data. In response, Web Tracking acknowledges receipt of the online account form and sends the customer a few lines of HTML and JavaScript code. Thereafter, the customer may request web traffic statistics from Web Tracking's database, which Web Tracking displays on the customer's browser.
However, the "hit counter" image is never sent to the customer. Although it appears to be displayed on a customer's website, the "hit counter" is actually displayed on the browser of the person who has accessed Web Tracking's customer's website. Third-parties viewing the "hit counter" on Web Tracking's customer's website may be located anywhere in the world. This activity does not constitute the knowing and repeated transfer of files to Utah residents over the internet. . . .
Because of the pervasive nature of the internet, Web Tracking has acquired a few customers who reside in Utah. These customers have found Web Tracking through their own unilateral acts. Web Tracking has made absolutely no effort to promote its service in Utah or to reach out to potential customers in Utah in any targeted way. Web Tracking's contacts with these thirty-six customers are, therefore, random, fortuitous, and attenuated.
System Designs, 248 F. Supp.2d at 1100 (citing iAccess, 182 F. Supp.2d at 1187).
Web Tracking also notes that while it has 36 customers in Utah, this is a minute fraction of their more than 7,000 customers. Further, Web Tracking alleges that a subscription to Web Tracking's services gives customers access to statistical information located in South Carolina and Texas.
It seems clear to the court that Web Tracking is conducting business in Utah, at least with respect to these 36 customers. Much of Web Tracking's argument is based on its assertion that, other than the normal file transfer associated with the basic functioning of the Internet, Web Tracking does not engage in the repeated transfer of files to customers in Utah. However, doing business with a forum over the Internet is not limited to transferring files. The cases clearly speak of doing business "such as" transferring files. Thus, Web Tracking argues that it "does not even `send' the hit counter image to its customers, but only to visitors to its customers' web sites." However, this is still obviously a part of doing business with customers in Utah. The language of Web Tracking's brief speaks of "customers" who "subscribe" to a "service" and receive an "account" and "payment information." The fact that these transactions occur over the Internet does not relegate what are obviously business transactions to some other status. Further, the fact that only 36 of some 7,000 customers are located in Utah is irrelevant. The minimum contacts analysis is not concerned with the number of contacts a defendant may have with other forums, but only with the forum in question. The minimum contacts analysis would be the same even if Web Tracking had only 36 customers, all of which were located in Utah. The extent of its contacts with this forum do not change either way. Additionally, the fact that the services provided by Web Tracking are routed through the browsers of third-parties is also irrelevant. Web Tracking has clearly entered into contracts with Utah customers and is providing a service to those customers in Utah.
Patriot Systems, Inc., 21 F. Supp.2d at 1323.
Reply Memorandum in Support of Motion to Dismiss at 17.
Web Tracking also contends that it does not "target" Utah and that it has "made absolutely no effort to promote its service in Utah or to reach out to potential customers in Utah in any targeted way." Of course, Web Tracking could probably say the same thing about any particular state. The fact that its services are offered everywhere does not mean that Web Tracking targets nowhere. It simply means that Web Tracking has a broad target for its services. Web Tracking could exclude Utah customers from its broad target, but has not chosen to do so. Thus, Utah is targeted just as much as any other state. Web Tracking is certainly just as happy to service Utah customers as it is customers from anywhere else. Thus, the court concludes that Web Tracking is doing business in Utah and has sufficient minimum contacts with this state for jurisdiction to be appropriate. Importantly, the website in this case is directly related to the alleged trademark infringement, thus creating the "nexus" that some courts have required between the website and the forum state.
System Designs, 248 F. Supp.2d at 1100.
Even were the court to conclude that Web Tracking is not "conducting business" in Utah, jurisdiction would still be appropriate under Zippo's middle category of interactive websites. "[C]ourts that have evaluated the middle-ground cases typically look for `something more' than a website's existence to find specific personal jurisdiction. The inquiry revolves around a determination of whether or not the defendant purposefully directs its activities in a substantial way toward the forum state . . ." Additionally, "most courts also require a finding of a nexus between the Internet business and the forum state," Finally, "[t]he critical inquiry in determining whether or not there was a purposeful availment of the forum jurisdiction is not merely the quantity, but the quality of the contacts. The quantity of contacts with the forum jurisdiction, however, remains an appropriate consideration."
Id.
Id.
Id.
In System Designs this court found that jurisdiction in Utah was appropriate based on the defendant's interactive website. While noting that the defendant in that case, New CustomWare, "did not have deliberate or repeated contacts with Utah," this court concluded that New CustomWare's "own creation — its website — demonstrates an intentional targeting of Utah." Like this case, "New CustomWare's `product' . . . was in fact a service." The court concluded that New CustomWare's website intended to reach potential clients in Utah.
Id. at 1102.
Id.
New CustomWare offered on-line registration for its classes and an ability to set up a `personalized' training program. Customers could design training programs without picking up a phone, even paying for services by credit card on-line. Clients of New CustomWare could sign up for updates on their class materials accessible by a special password. More important, New CustomWare listed its large clients on their website, including Wells Fargo, Qwest, U.S. West, ATT, Sprint, and Dell — all companies with substantial connections to Utah. By listing them as clients, New CustomWare was suggesting to Utah companies the desirability of doing business with it.
Id.
The court admitted that the degree of targeting in System Designs was not high and that "the targeting was unsuccessful in the sense that no clients in Utah actually chose to contract over the website" but saw even this minor targeting, when taken in combination with the alleged trademark infringement, as being a legitimate basis for jurisdiction.
In this case, unlike System Designs, we have the additional fact that Web Tracking's targeting of Utah was successful in that it acquired 36 customers here in Utah. Additionally, the website involved here is much like the website at issue in System Designs. Customers sign up online, pay a monthly fee on-line, access their account on-line through a member ID and password, and keep track of their statistics by continually returning to Web Tracking's website. Thus, the court concludes that the success of Web Tracking in obtaining customers in Utah, and the highly interactive nature of its website, especially with respect to these customers, provide sufficient minimum contacts with this forum for jurisdiction to be appropriate. These actions also satisfy Utah's long-arm statute which covers any person who conducts "the transaction of any business within the state."
Utah Code Ann. § 78-27-23.
B. Traditional Notions of Fair Play and Substantial Justice
Due process also requires that a courts assertion of jurisdiction comport with traditional notions of fair play and substantial justice. There are five relevant factors in making this determination: (1) the burden on the defendant; (2) the forum state's interest in resolving the dispute; (3) the plaintiff's interest in obtaining the most efficient resolution of the controversies; and (5) the shared interest of the several states in furthering fundamental substantive social policies. Web Tracking does not put forth any reasons why defending this suit in Utah would cause burdens "so great as to constitute a deprivation of due process." Additionally, Utah has a clear interest in resolving a trademark dispute surrounding a Utah company, and Webstat clearly has an interest in having the case adjudicated here. In sum, there is no reason to believe that this court's exercise of jurisdiction in this case would offend traditional notions of fair play and substantial justice.
International Shoe Co. v. Washington, 326 U.S. 310, 320 (1945).
System Designs, 248 F. Supp.2d at 1104 (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)).
System Designs, 248 F. Supp. at 1104.
Improper Venue
Web Tracking also contends that Utah is not a proper venue for this action under 28 U.S.C. § 1391(b) and (c). However, subsection (b) of section 1391 states that venue is proper "only in (1) a judicial district where any defendant resides, if all defendants reside in the same state . . ." Subsection (c) states that "[f]or purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." Thus, this court's resolution of the personal jurisdiction issue also resolves Web Tracking's improper venue claim.
MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM
Rule 12(b) states that on a motion to dismiss for failure to state a claim, if "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." The Tenth Circuit has stated that "[t]he term `reasonable opportunity' includes some indication by the court . . . that it is treating the 12(b)(6) motion as a motion for summary judgment, with the consequent right in the opposing party to file counter affidavits or to pursue reasonable discovery."
Franklin v. Oklahoma City Abstract Title Co., 584 F.2d 964, 967 (10th Cir. 1978) (internal quotations omitted).
Were the present motion a motion for summary judgment, the court would be inclined to find that Web Tracking has a valid defense of abandonment. However, doing so without the parties having had the opportunity for discovery into this issue would be inappropriate at this juncture. As such, the court hereby informs the parties of its intention to treat the motion to dismiss for failure to state a claim as a motion for summary judgment and gives the parties two months to conduct discovery into the issues raised therein.
For the convenience of the parties in conducting the limited discovery authorized today by the court, the court will briefly put forth what it considers to be the most troubling issue raised by the motion to dismiss for failure to state a claim. Web Tracking appears to have a valid defense of abandonment. Under federal law, a presumption of abandonment arises after three years of nonuse. Webstat has put forth no evidence that Huntana L.L.C. made any use of the trademark WEBSTAT during the more than five years after Huntana was involuntarily dissolved. Further, it appears that under Montana law Huntana was forbidden from making any use of the trademark other than liquidating it as a part of the business. As such, the court is inclined to find a presumption of abandonment has attached. However, the court recognizes that given the opportunity for discovery, Webstat may be able set forth valid evidence that no abandonment occurred. The court therefore withholds judgment as to this matter to give the parties time to conduct discovery.
15 U.S.C. § 1127.
CONCLUSION
IT IS HEREBY ORDERED that Defendant Web Tracking's Motion to Dismiss for lack of personal jurisdiction, subject matter jurisdiction, and improper venue is denied. It is further ordered that the motion to dismiss for failure to state a claim shall be treated as a motion for summary judgment pursuant to Rule 12(b). As such, the parties are given until September 15, 2004 to conduct discovery into the issues raised by the 12(b)(6) motion. The parties are directed to file any relevant material that is discovered with the court by said date. At that time, the court will reevaluate the pleadings, treating them as a motion for summary judgment.