Trademark Law | Expert Legal Commentary

May 30, 2007

Pebble Beach Court Examines Purposeful Direction of a Passive Website

Pebble Beach Company, A California General Partnership v. Michael Caddy, an individual

By Tom Zuber of Zuber Lawler & Del Duca

Pebble Beach Court Examines Purposeful Direction of a Passive Website

Plaintiff Pebble Beach Company owned and operated a golf course resort in California. Defendant operated a small-business in southern England and ran a passive website located at www.pebblebeach-uk.com. Plaintiff sued for trademark dilution in the district court in California. The defendant moved for dismissal based on a lack of personal jurisdiction. The district granted the dismissal and denied Plaintiff's request to conduct jurisdictional discovery. The Ninth Circuit affirmed the district court's ruling, holding that mere ownership of a passive website that does not purposefully direct its activity at the forum cannot be subjected to personal jurisdiction there.

BACKGROUND

Plaintiff Pebble Beach (“Pebble Beach”) operates a popular golf course and resort in Monterey County, California. The resort has used the name “Pebble Beach” for 50 years and asserted that the trade name had acquired secondary meaning in the United States and the United Kingdom. Plaintiff also operates a website located at www.pebblebeach.com.

Defendant Michael Caddy (“Caddy”) operates a 3-room bed and breakfast, restaurant, and bar in southern England. Caddy does not own a golf course. Caddy is a dual citizen of the United States and the United Kingdom and is domiciled in the United Kingdom. Caddy named his operation “Pebble Beach” because the facilities are located in a town named Barton-on-Sea which overlooks pebbly beaches.

Caddy advertises his services, through his website www.pebblebeach-uk.com. Caddy’s website is not interactive. It contains general information about the accommodations provided, including lodging rates, a menu, and a wine list. Visitors can submit questions about services via an on-line inquiry form. The website does not allow visitors to book reservations.

In October of 2003, Pebble Beach sued Caddy under the federal Lanham Act and the California Business and Professions Code for intentional infringement and dilution of its trademark “PebbleBeach.” Caddy moved to dismiss the complaint for lack of personal jurisdiction and the district court granted the motion. In doing so, the district court also denied Plaintiff’s request for additional discovery to bolster their argument in favor of personal jurisdiction. Plaintiff appealed to California’s Ninth Circuit. The appellate court affirmed.

On appeal, Pebble Beach contended that the court erred in dismissing the case for lack of jurisdiction and denied its request to conduct additional discovery. Pebble Beach contended that personal jurisdiction was properly established under either California state law or federal law. The court disagreed.

NO PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA

A court may generally assert personal jurisdiction over a defendant so long as the local “long-arm statute” and federal due process are satisfied. California’s long-arm statute is “transparent” in that it simply requires that jurisdiction does not offend federal due process. Therefore, the court’s inquiry turned on whether the assertion of personal jurisdiction offended the requirement imposed by due process.

Assuming, as in this case, the the defendant does not reside in the forum, a plaintiff may satisfy due process by demonstrating that the defendant has continuous or substantial contact with the forum (“general jurisdiction”) or by demonstrating that the defendant has “minimum contacts” with the forum state such that the assertion of jurisdiction “does not offend traditional notions of fair play and substantial justice,” generally called “specific jurisdiction.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 315 (1945). Since Caddy did not reside in the forum state or have continuous or substantial contact with the forum state, the Ninth Circuit conducted a minimum-contacts analysis.

No Minimum Contacts Between Defendant and the Forum State

California law requires that a plaintiff demonstrate that (1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant’s forum-related activities, and (3) the exercise of jurisdiction is reasonable. Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir.2000). If any requirement is not met, jurisdiction is improper.

According to the Ninth Circuit, Pebble Beach’s arguments failed under the first prong. California law has interpreted the first prong to require the plaintiff to establish that the defendant has either (1) purposefully availed himself of the privilege of conducting activities in the forum, or (2) purposefully directed his activities toward the forum.

No Purposeful Availment Without Activity in the Forum State:

The court stated that purposeful availment is generally established through evidence of action in the forum that invokes the benefits and protections of the laws in the forum. Since the evidence presented by Pebble Beach failed to identify any conduct by Caddy that took place in California, the court determined that Caddy did not purposefully avail himself to the benefits and protections of California.

A Passive Website Without “Anything More” Fails to Establish Purposeful Direction:

The Supreme Court of California has established a three-prong test known as the “Calder effects test” to assess purposeful direction. Under Calder v. Jones, the court held that a defendant “must have (1) committed an intentional act, which was (2) expressly aimed at the forum state, and (3) caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.” Calder v. Jones, 465 U.S. 783 (1984) (citations omitted). Plaintiff must establish “something more” than a mere foreseeable effect in the forum state flowing from Defendant’s acts. According to the Ninth Circuit, this “something more” turns on whether the defendant’s conduct was expressly aimed at the forum state.

The court held that Caddy’s actions were not expressly aimed at California. The only acts identified by Pebble Beach as being directed at California were the website and the use of the name “Pebble Beach,” neither of which were expressly aimed at California regardless of their foreseeable effect. Held the court, an internet domain name and passive website alone do not qualify as “something more” sufficient to subject a party to personal jurisdiction.

Pebble Beach’s main argument, ultimately rejected by the court, was that Caddy’s website and domain name, coupled with his knowledge of the golf resort as a result of his brief residence in California, were sufficient to establish purposeful direction under a series of California cases. The court, however, distinguished each case on the basis that each contained “something more,” i.e., activity targeted at the forum state. In Panavision, the defendant registered web domain names as part of a scheme to obtain money from the plaintiff. Unlike Caddy’s action, the defendant in Panavision expressly aimed his acts at the plaintiff in California, and caused it to suffer injury there. Panavision Int’l v. Toeppen, 141 F.3d 1316 (9th Cir. 1998). Similarly in Metropolitan Life Insurance Co. v. Neaves, the defendant’s plan to defraud the insurance company involved direct interaction with the forum state. 912 F.2d 1062 (1990). In Bancroft & Masters, Inc. v. Augusta National Inc., a dispute over the domain name was triggered by a letter sent by the defendant that required the plaintiff to sue or lose the domain name. 223 F.3d 1082 (9th Cir.2000). In that case, the defendant’s “individualized targeting,” absent in the Caddy’s conduct, was “something more” that satisfied the Calder effects test. Absent express aiming, jurisdiction was held improper.

NO PERSONAL JURISDICTION IN UNITED STATES FEDERAL COURTS

In order to establish personal jurisdiction in a United States federal court, a plaintiff must similarly satisfy the federal long-arm statute – Rule 4(k)(2) – as well as the demands of federal due process. In order to satisfy the long-arm statute, a plaintiff must prove that: (1) the claim arises under federal law, (2) the defendant is not subject to the personal jurisdiction of any state court, and (3) the federal court’s exercise of personal jurisdiction comports with due process.

Since Pebble Beach’s trademark infringement claim arose under the Lanham Act, the first prong was satisfied. Because California did not have personal jurisdiction, the second prong was satisfied. Therefore, the question before the appellate court was whether jurisdiction complied with federal due process. Using the same due process/minimum contacts framework as above except substituting “United States” for “California,” the court asked whether Caddy purposefully directed his activities at the United States in satisfaction of the Calder effects test.

No Purposeful Direction

Pebble Beach argued that the Calder effects test was satisfied because Caddy’s operation was expressly aimed at the United States. According to Pebble Beach, Caddy’s selection of a “.com” domain name showed that the United States was his primary market. Second, the defendant seized the familiarity of the “Pebble Beach” name in the United States in hopes of reaching his alleged target market, Americans. Third, Pebble Beach asserted that Caddy’s intent to advertise to the United States is evidenced by the fact that his facilities are located in a town that caters especially to American travelers. Finally, Pebble Beach pointed out that a majority of Caddy’s customers are Americans.

The Ninth Circuit rejected all of Pebble Beach’s arguments. According to the court, the selection of a particular domain name is insufficient by itself to confer jurisdiction over a non-resident defendant, and the fact that “Pebble Beach” is a famous mark is “of little practical consequence” in determining whether Caddy’s actions were directed at the United States via the world wide web. Caddy’s selection of a “.com” domain name instead of a United Kingdom domain name was similarly irrelevant. Both facts failed to establish to whom the website was directed.

As to Pebble Beach’s third and fourth argument concerning Caddy’s customer base, the court stated that both facts fell short of establishing the requisite “express aiming,” i.e., something more in addition to foreseeable effects in the forum. Stated the court: “Here, although Caddy may serve vacationing Americans, there is not a scintilla of evidence indicating that this patronage is related to either Caddy’s choice of a domain name or the posting of a passive website.” Absent an element of express aiming, or “something more,” the court held that personal jurisdiction in a United States federal court ran afoul of federal due process and Rule 4(k)(2).

REQUEST FOR JURISDICTIONAL DISCOVERY DENIED

A court may deny limited discovery when a plaintiff’s claim of personal jurisdiction appears to be both attenuated and based on bare allegations. Terracom v. Valley Nat. Bank, 49 F.3d 555 (9th Cir.1995) (citation omitted). Since Caddy’s passive website was not sufficient to establish the requisite minimum contacts, the court stated that additional discovery on this issue would be fruitless.

COURT AFFIRMED THE DISTRICT COURT’S DISMISSAL ON THE BASIS OF PERSONAL JURISDICTION

Since Caddy’s actions did not expressly target the State of California or the United States, the Ninth Circuit affirmed the district court’s dismissal and refusal to permit additional jurisdictional discovery.

About the Author

Tom Zuber is a Partner of Zuber Lawler & Del Duca, specializing in transactions relating to patents, trademarks, and copyrights.

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