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Whatru Holding, LLC v. Bouncing Angels, Inc.

United States District Court, D. Minnesota

February 19, 2014

WhatRU Holding, LLC, Plaintiff,
v.
Bouncing Angels, Inc. and EZ Inflatables, Inc., Defendants.

Michael T. Berger, Hinshaw & Culbertson LLP, appeared for Plaintiff WhatRU Holding, LLC.

Jonathan D. Wilson, Best & Flanagan LLP, appeared for Defendants Bouncing Angels, Inc. and EZ Inflatables, Inc.

ORDER

JOAN N. ERICKSEN, District Judge.

Plaintiff WhatRU Holding, LLC filed this action against Defendants Bouncing Angels, Inc. and EZ Inflatables, Inc. ("EZI"), alleging multiple federal and state causes of action. For federal causes of action, the complaint lists patent infringement, copyright infringement, and violations of the Lanham Act. The Lanham Act counts assert trade dress infringement and false advertising. The complaint also alleges deceptive trade practices under Minnesota Statute § 325D.44 and unfair competition under Minnesota common law. The case is presently before the Court on Defendants' joint motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). For the reasons stated below, the motion is granted as to EZI, but denied as to Bouncing Angels.

BACKGROUND

Plaintiff WhatRU Holding is a Minnesota company with its principal place of business in Minnesota. Compl. ¶ 5. Its business includes manufacturing and distributing inflatable tents and party accessories. Id. at ¶ 38. Plaintiff owns U.S. Patent No. 7, 108, 608 ("'608 patent") that relates to an inflatable bouncer. Id. at ¶¶ 8-9. Plaintiff also owns a copyright, with Registration No. VA-1-201-471 ("'471 copyright"), in an inflatable sculpture entitled "Carousel Bouncer." Id. at ¶¶ 10-13. The "Carousel Bouncer" consists of an inflatable sculpture that is shaped to resemble a circus carousel. Id. at ¶ 11.

Defendant Bouncing Angels is a California company with 24 employees and a principal place of business in California. Id. at ¶ 6; Docket No. 17, ¶ 2. According to the complaint, Bouncing Angels "holds itself out as a manufacturer of inflatable party supplies, including a bounce house, covered" by the '608 patent and '471 copyright. Compl., ¶ 6. Bouncing Angels lists the accused product, Carousel Jumper Model No. B101, on its website at www.bouncingangels.com. Id. at ¶ 17. The claims of the complaint focus on Bouncing Angels' advertising, sale, and other activities involving the Carousel Jumper and do not specifically complain of any other actions by Bouncing Angels.

According to an affidavit of John Haytaian, the owner and founder of Bouncing Angels, the company has only sold a few dozen of the accused products nationwide. Docket No. 17, ¶ 3. One of these sales was to a Minnesota customer for $1, 775. Id. Bouncing Angels contends that its website is its only connection to Minnesota and it has never engaged in any marketing campaigns, sales initiatives, or targeted communications to Minnesota customers. Neither does Bouncing Angels partner with any Minnesota businesses, employ Minnesota residents, or utilize the services of any Minnesota-based company or individual. Id. at ¶ 6. Other than the sale of the single accused product, Bouncing Angels has sold two other products to Minnesota customers over the last thirteen years. See id. at ¶ 4.

The first affidavit of Mr. Haytaian stated about the accused product sold to a Minnesota customer that "the customer placed this order through our Internet web site." Id. at ¶ 3. On reply, Mr. Haytaian submitted a second affidavit to clarify that the product was not purchased through the website, but the customer "contacted us through our website to inquire about purchasing the Carousel Jumper." Docket No. 32, ¶ 2. He explained that purchases must occur "offline" via email and phone communications. Id.

Defendant EZI is another California company, has 20 employees, and maintains a physical presence in California in the same building as Bouncing Angels. Compl. ¶ 7; Docket No. 16, ¶ 2. EZI lists the Carousel Jumper Model No. B101 on its website www.ezinflatables.com and Plaintiff's allegations against EZI relate to its activities involving that product. Id. at ¶ 17. EZI submitted an affidavit from its owner, Eddie Abraamyan, explaining that, other than the website, it lacks any connection to Minnesota. Docket No. 16. EZI has not made any sales of any products to Minnesota customers. Id. at ¶ 3. A Minnesota business once made an inquiry on Facebook about general pricing information of EZI's products and an EZI representative responded indicating that a price list would be emailed. Docket No. 29 at 3.

The Defendants' websites factor prominently in the parties' briefing because Plaintiff refers to them as creating a basis for an exercise of personal jurisdiction over the Defendants. The overall setup of the two websites is similar and each site provides information, including images and product descriptions, for the products available from the company. A product catalog is available on each site, which appears to contain much of the same content that can be accessed directly on the site. Docket Nos. 20-23, 25-27. The sites have a "contact us" page that has a form through which a visitor can submit a message. Docket Nos. 24 at 5, 30 at 10. The form requires that a name, phone number, and email address be provided. A product cannot be selected and purchased directly on the site. The header on all the pages also has a "call us today, toll free" note with the number. Both sites have a link to "like" the company on Facebook and EZI has a link to "follow it" on Twitter.

DISCUSSION

Each Defendant seeks dismissal of the complaint against it for lack of personal jurisdiction. Although the parties rely exclusively on Eighth Circuit law in their briefing, Federal Circuit law applies to the jurisdictional analysis for a claim of patent infringement. 3D Sys. v. Aarotech Labs., Inc., 160 F.3d 1373, 1377 (Fed. Cir. 1998). When the action includes nonpatent claims that go "hand-in-hand" with the patent infringement claim, Federal Circuit law also applies to the non-patent claims. Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 856-857 (Fed. Cir. 1999). But Eighth Circuit law applies to the jurisdiction question for claims that "do not present questions that are intimately involved with the substance of the patent laws." See Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1348 (Fed. Cir. 2003).

Under both Federal Circuit and Eighth Circuit law, determining whether jurisdiction exists over an out-of-state defendant involves inquiring whether (1) Minnesota's long-arm statute has been satisfied and (2) whether exercising jurisdiction comports with constitutional due process requirements. Guinness Import Co. v. Mark VII Distribs., Inc., 153 F.3d 607, 613-14 (8th Cir. 1998); Graphic Controls Corp. v. Utah Med Prods., Inc., 149 F.3d 1382, 1385 (Fed. Cir. 1998). Because Minnesota's long-arm statute, Minn. Stat. § 543.19, has the "maximum extraterritorial effect allowed under the due process clause of the federal constitution, " these inquiries collapse into one. Rostad v. On-Deck, Inc., 372 N.W.2d 717, 719 (Minn. 1985); accord Johnson v. Woodcock, 444 F.3d 953, 955 (8th Cir. 2006); Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998). In International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), the Supreme Court explained that due process requires that the defendant have "minimum contacts" with the forum state such ...


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