Wednesday, January 30, 2008

Personal Jurisdiction and eBay

The Tenth Circuit has issued an interesting opinion on personal jurisdiction, Dudnikov v. Chalk & Vermillion Fine Arts, Inc. (No. 06-1458).

Plaintiffs were Power Sellers on eBay. Among the things they sold were two prints that were a parody of images by the (I think kitschy) artist Erte. Using eBay's verified rights owner program, licensees of Erte got the plaintiffs' auction for the goods terminated. Plaintiffs sent a notice trying to get the action reversed, but defendants refused. Plaintiffs filed a DJ action in Colorado where they live, claiming that not only did defendant's termination cause them economic loss, but that it took its actions well aware that plaintiffs' use was a fair use. Defendant is a Delaware corporation with its principal place of business in my home state of Connecticut.

Defendant moved to dismiss for lack of personal jurisdiction. The district court granted the motion, the 10th circuit reversed in the attached 36 page opinion. The court of appeals held that by sending eBay a letter invoking the verified rights owner provision, defendant was intentionally took action to cause them harm in Colorado under the Supreme Court's Calder decision. The court held that defendant's sending the termination notice to eBay in California could fairly be considered the proximate cause of plaintiff's claim, distinguishing cases involving cease and desist letters. Defendants' letter as deemed to have been "expressly aimed" at Colorado even though it was sent to California, the court writing that defendants "'express aim' ... can be said to have reached into Colorado in much the same way that a basketball player's express aim in shooting off of the backboard is not simply to hit the backboard, but to make a basket." The court must have been thinking of the Denver Nuggets rather than the NY Knicks.


Andrew Oh-Willeke said...

Normally, of course, one expects that a party asking for a cease and desist to bring suit, rather than the party on the receiving end, and normally venue would be proper and personal jurisdiction where the Defendants reside, so on the merits, the isn't an unreasonable forum.

I can't help but worry, however, that the bank shot doctrine could, in some other circumstance do considerably mischief -- making it too easy to obtain a home state forum of a Plaintiffs' choosing. Overall, there has been considerable reluctance to find personal jurisdiction based upon the use of instrumentalities of commerce without any physical contact, a doctrine that when applied has supplied certainty to the law. Is this the right result, as a consequence of a rather quirky procedural posture of the case, for the wrong reason?

Unknown said...

omAndrew - you are making the same error that Judge Walker D. Miller made, remember he got overturned.

Sevenarts through their agents Chalk & Vermillion did not send a cease and desist.

They did actual harm by sending an NOCI. An NOCI sent to eBay caused the listings to be terminated and a strike to be placed on the sellers account. eBay keeps score, multiple takedowns result in suspension of the sellers account.

An NOCI and a Cease and Desist are two different animals.

Additionally Sevenarts and Chalk & Vermillion have been shutting down eBay auctions for 5+ years and have never brought suit. Nor did they sue the manufacturer of the fabric, Shamash and Sons.

Also when the seller filed the counternotice Sevenarts threatened litigation.

Copyright Law and Copyright Litigation Blog said...

This shows the U.S. court system is stuck in the old age of near independent states and the new age of an integrated nation connected with internet -- more than anything else. In a lot of case, goods and money and transacted even without the knowledge of the physical location of the other end. The eBayer may well reside in Africa and the harm of the take-off notice may be felt in Africa.