Offering Accused Product for Sale Over the Internet Creates Personal Jurisdiction in Virginia

When a small company is sued for patent infringement in a distant forum, a common strategy is to move to dismiss for lack of personal jurisdiction. A recent decision in a Western District of Virginia case holds, however, that offering the accused product for sale to forum residents over the Internet, standing alone, can be enough to create personal jurisdiction, even for a small company with few sales to forum residents. Robinson v. Bartlow, Case No. 3:12CV00024, 2012 U.S. Dist. LEXIS 143323 (E.D. Va. Oct. 3, 2012), found here.

In Robinson, the defendant, JoeyBra LLC, was a small brassiere company formed by two classmates at the University of Washington, who developed the concept for their product in a business plan competition held in Washington. JoeyBra sold its product through its website, and as of the date of the motion to dismiss, JoeyBra had received only 719 internet orders from anywhere in the country. Twenty-seven of those orders were from Virginia, and JoeyBra had sent shipments to 8 Virginia customers, 6 of whom had returned the product. JoeyBra had also shipped its product to 3 Virginia residents who had contributed to JoeyBra’s Kickstarter fundraising website.

Shipments to Virginia Residents

Despite the small number of shipments of infringing products to Virginia, Judge Moon found that personal jurisdiction could be asserted over JoeyBra. Applying Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998), Judge Moon held that the shipment of accused products into Virginia – no matter how small – indicated that JoeyBra had purposefully availed itself of the privilege of conducting business in Virginia and so was subject to jurisdiction.

Interactive Nature of Website

In addition, Judge Moon went on to hold that the active nature of JoeyBra’s website, was a separate basis for the exercise of jurisdiction because the website “can be fairly said to have offered to sell the allegedly infringing JoeyBras to Virginians.” The import of Judge Moon’s holding is that the offering of accused products for sale over the Internet, standing alone, creates nationwide jurisdiction over a defendant regardless of the lack of any other contact with the forum state.

Judge Moon offers little analysis for his expansive view of jurisdiction based on Internet activity. He cites no Federal Circuit or Fourth Circuit law. In fact, this portion of his ruling is directly contrary to the Fourth Circuit standard for jurisdiction based on internet activity. Under Fourth Circuit law, discussed in a recent Eastern District of Virginia case we wrote about here, mere website interactivity is not enough for jurisdiction, and a small number of one-time business transactions over the Internet may not be enough. Judge Moon’s broad reading of the law on jurisdiction based on website activity, though, is sure to be cited by future plaintiffs seeking to hale patent infringement defendants into Virginia courts.

Jurisdiction Over the Individual Defendants

A separate issue in Robinson was jurisdiction over the two college students who owned JoeyBra. Jurisdiction over those defendants, Judge Moon held, would have to be based on their personal contacts with Virginia on behalf of JoeyBra, not on the company’s contacts with Virginia.

In particular, Judge Moon held that the individual defendants’ participation in a Kickstarter advertising message soliciting contributions for JoeyBra did not establish jurisdiction. The defendants’ personal efforts for the online Kickstarter campaign, the Court held, were most analogous to national advertising, which does not give rise to state-specific jurisdiction in the absence of a showing that the advertising targeted the forum state.

Judge Moon, however, did permit the plaintiff to conduct jurisdictional discovery “to determine the nature of communications the individual Defendants may have had with potential and actual customers and donors from Virginia, as well as information, regarding the targeting of Defendants’ advertising efforts.” Again, this is somewhat contrary to a recent ruling in the Eastern District of Virginia on the availability of jurisdictional discovery, which we discussed here.