Publication

September 9, 2010Client Alert

Second Circuit Finds Personal Jurisdiction Over California Vendor Based on the Shipment of a Single Product Bearing Counterfeit Mark to Brand Owner’s Attorneys in New York

In a decision that will provide brand owners a significant weapon against counterfeiters, the Second Circuit recently held that the shipment of a single product bearing a counterfeit mark to plaintiff’s attorneys in New York by a California-based vendor, coupled with the defendants’ use of a website that sold items in New York bearing other counterfeit marks, was sufficient to establish personal jurisdiction over the defendants in New York, the brand owner’s home state.

Plaintiff Chloé, a handbag manufacturer located in New York, sued defendants Queen Bee of Beverly Hills and its principal Simone Ubaldelli when it discovered Queen Bee was selling counterfeit Chloé handbags through its Internet website. Queen Bee, located in Alabama, shipped goods from Alabama and California. As is customary upon discovery of counterfeit products, Chloé’s New York law firm arranged a “trap purchase” of one of Queen Bee’s handbags. The handbag, later determined to be counterfeit, was shipped to the law firm in New York. Through discovery, documents also showed that Queen Bee made at least 52 sales of non-Chloé merchandise into New York.

Defendants, arguing that a single “manufactured contact” to purchase a handbag made by a non-customer could not support personal jurisdiction in New York, moved to dismiss the case. The lower court agreed, holding that the sale to Chloé’s law firm in New York was a “one-off transaction, which could not sustain personal jurisdiction over the defendants.”

The Second Circuit reversed. In doing so, the Second Circuit noted that this case was an “update” to “jurisprudence on personal jurisdiction in the age of internet commerce.” The Second Circuit focused on the two series of contacts defendants had with New York: first, the single sale of the counterfeit bag to Chloé’s counsel; and second, the defendants’ 52 sales of non-Chloé products to other persons in New York.

The Second Circuit first noted that the defendants were responsible for the shipment of the counterfeit Chloé bag from California to New York. Next, the Court considered the defendants’ other contacts with New York: the defendants’ sales of 52 other counterfeit products to customers in New York. Here, the Court noted that purposefully availing oneself of a forum “merely requires the cause of action to ‘relate to’ defendants’ minimum contacts with the forum.” It disagreed with the lower court’s narrow holding that there was an insufficient relationship between the 52 sales and the cause of action because they were related to other brands’ counterfeit marks. The Court determined that these other sales were a “larger business plan purposefully directed at New York consumers,” and sufficient to establish minimum contacts for jurisdictional purposes.

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