Be2 LLC v. Ivanov
2011 U.S. App. LEXIS 8510, 642 F.3d 555, 98 U.S.P.Q. 2d (BNA) 1499 (2011)
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Rule of Law:
A federal court can only exercise specific personal jurisdiction over a defendant based on internet activity if the defendant has 'minimum contacts' with the forum state by purposely targeting or exploiting its market, not merely by operating a website accessible there or through the unilateral activity of third parties.
Facts:
- be2 LLC, a Delaware company, and its German parent, be2 Holding, operate the online dating website be2.com, which has expanded its reach to 14 million users in 36 countries, including the United States.
- Nikolay Ivanov, a resident of New Jersey, is alleged to be the co-founder and CEO of be2.net, a competing online matchmaking service.
- In December 2006, Ivanov allegedly moved his matchmaking service to be2.net, deliberately choosing to use an existing domain address and design that were 'confusingly similar' to be2.com 'with the intention of misleading consumers.'
- Evidence submitted by be2 Holding included a printout from the 'American personals' directory of be2.net showing 10 men and 10 women with Chicago addresses registered for matchmaking services.
- Ivanov's LinkedIn profile listed him as the co-founder and CEO of 'be2.net,' boasting that the website offered free 'dating services with hundreds of thousands of online users.'
- Ivanov later submitted an affidavit claiming he was merely a volunteer for Sladur, a Bulgarian company that owned be2.net, primarily translating website content, responding to customer inquiries, and approving profiles, receiving no compensation and never setting foot in Illinois.
- Ivanov claimed his 'CEO' status on be2.net meant 'Centralized Expert Operator.'
- A printout from sladurana.com, headlined 'be2 Management Team' and emblazoned with the 'be2.net' logo, highlighted Nick Ivanov as CEO and co-founder and included a disclaimer that 'be2.NET is in NO WAY affiliated with be2.COM'.
Procedural Posture:
- be2 LLC and be2 Holding, A.G. (plaintiffs) sued Nikolay Ivanov (defendant) in the United States District Court for the Northern District of Illinois, alleging trademark infringement under the Lanham Act and Illinois law.
- Ivanov did not answer the complaint or attend a scheduled status hearing.
- The district court granted be2 Holding's oral motion for entry of default against Ivanov under Federal Rule of Civil Procedure 55(a).
- The district court subsequently entered a default judgment against Ivanov under Rule 55(b)(2).
- Ivanov, through counsel, filed a post-judgment motion under Rule 60(b)(4) (which the appellate court noted was technically a Rule 59(e) motion under the circumstances) to vacate the judgment, arguing it was void for lack of personal jurisdiction, and submitted an affidavit.
- The district court found Ivanov's affidavit not credible, relied on evidence of 'Chicago contacts,' and denied his motion to vacate the default judgment.
- Ivanov (appellant), appearing pro se, appealed the district court's denial of his motion to vacate to the United States Court of Appeals for the Seventh Circuit, arguing he was not subject to personal jurisdiction in Illinois, with be2 Holding as appellee.
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Issue:
Does operating an interactive dating website accessible in a state, with a small number of registrants from that state, constitute sufficient 'minimum contacts' to subject a defendant to specific personal jurisdiction in that state for claims arising from the website's operation?
Opinions:
Majority - Hamilton, Circuit Judge
No, Ivanov's internet activity did not create sufficient minimum contacts to subject him to specific personal jurisdiction in Illinois, as the evidence did not show he purposely targeted or exploited the Illinois market. The court reversed the district court's decision, finding that the Due Process Clause requires a defendant to have 'minimum contacts' with the forum state such that requiring them to defend there 'does not offend traditional notions of fair play and substantial justice,' as established in International Shoe Co. v. Washington. For specific jurisdiction related to internet activity, this means the defendant must have purposely exploited the forum state's market, not merely operated an interactive website accessible from the state. The evidence presented by be2 Holding, showing only 20 individuals with Illinois addresses having created free dating profiles on be2.net, constituted 'attenuated contacts' and did not demonstrate that Ivanov targeted or exploited the Illinois market. The court cited Burger King Corp. v. Rudzewicz for the purposeful availment requirement and Illinois v. Hemi Group, LLC and uBID, Inc. v. GoDaddy Grp., Inc. for the principle that mere website accessibility is insufficient; active targeting is needed. The court found no evidence of any interactions between Ivanov and the Illinois registrants, nor any advertising campaign aimed at Illinois, making the contacts appear unilateral and random.
Analysis:
This case clarifies and reinforces the standard for specific personal jurisdiction in the context of internet-based businesses, particularly for alleged torts like trademark infringement. It emphasizes that passive accessibility of a website, even an interactive one, is insufficient to establish minimum contacts without evidence of active 'targeting' or 'exploitation' of the forum state's market. Future cases will need to demonstrate deliberate efforts by online defendants to engage with the forum state's residents or economy, beyond merely allowing them to register on a globally accessible platform, to establish personal jurisdiction. This serves as a cautionary tale for plaintiffs seeking to establish jurisdiction over internet defendants based on limited user presence.
