The Second Circuit has confirmed that trademark owners need not chase infringers to their home jurisdictions to get relief. In Chloé v. Queen Bee of Beverly Hills, LLC et al., a trademark infringement lawsuit involving counterfeit Chloé handbags, the court held that “the single act of an out-of-state defendant employee shipping an item into New York, combined with his employer’s extensive business activity involving New York, gives rise to personal jurisdiction over the employee.” 2010 WL 3035495 (2d. Cir. Aug. 5, 2010). The decision, which the court described as “an update to our jurisprudence on personal jurisdiction in the age of internet commerce,” should make it easier for brand owners to file suit in their home forum against out-of-state infringers and their employees.
Chloé, which sells leather handbags and owns the word mark CHLOÉ for handbags, filed suit in its home forum in New York against Queen Bee of Beverly Hills (“Queen Bee”), and its principals Rebecca Rushing (“Rushing”) and Simone Ubaldelli (“Ubaldelli”). Chloé alleged that Defendants’ sales of counterfeit Chloé handbags constituted trademark infringement and violated New York General Business Law § 349. After limited discovery about Ubaldelli’s contacts with New York, Ubaldelli, who is a California resident, moved to dismiss for lack of personal jurisdiction. The district court granted the motion, which the Second Circuit’s decision overturned.
Queen Bee, an Alabama LLC with show rooms in Beverly Hills, California and Huntsville, Alabama made only one sale of a counterfeit Chloé bag in New York State. And this sale was made to an administrative assistant in Chloé’s New York based law firm in an online transaction. The court noted, however, that Queen Bee “engaged in substantial sales of counterfeit CHLOÉ brand products” including sending sixty eight Chloé bags to customers in states other than New York as well as “at least fifty-two sales of non-Chloé merchandise into the State of New York.” Id. at *2 (emphasis added).
Relying on Ubaldelli’s role at Queen Bee as the primary purchaser of infringing handbags and the fact that his Beverly Hills address was on the FedEx package containing the bag shipped to New York, the court first determined that “the evidence supports the conclusion that Ubaldelli either physically shipped or was responsible for the shipment of the counterfeit handbag from California to New York.” Id. at *5. The court next determined that Queen Bee’s other business activities in New York (52 non-infringing transactions) could be imputed to Ubaldelli because of his role as a principal in the company, and that these sales, along with Queen Bee’s interactive website, were sufficient minimum contacts to satisfy Due Process. Persuaded that Ubaldelli had sufficient contacts with New York, the court also concluded that exercising jurisdiction would not “offend traditional notions of fair play and substantial justice” under the Due Process Clause. Id. at *12. The court summarized as follows: “Ubaldelli’s generalized complaints of inconvenience arising from having to defend himself from suit in New York do not add up to a compelling case. . . .” Id.
The Court may well have had limited sympathy for a counterfeiter, but its analysis is not limited to flagrant infringements. Where infringing products – even if not counterfeits – are sold online into a jurisdiction, at least where the defendant’s aggregate commerce conducted in the forum is non-trivial, Chloé provides a reasonable basis for exercising jurisdiction over the infringer in a forum that is convenient for the trademark owner.