UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
v. Civil Action No. 97-10065DPW
CLUE COMPUTING, INC.
DEFENDANT'S MEMORANDUM OF LAW
IN SUPPORT OF
MOTION TO DISMISS OR IN THE ALTERNATIVE. TO TRANSFER ACTION
The defendant Clue Computing, Inc. ("Clue") respectfully submits this Memorandum of Law in support of the Defendant's Motion to Dismiss or, in the Alternative, to Transfer Action. In brief, Clue seeks to dismiss this action because Clue does no business in and has no contacts with Massachusetts. Its sole connection with the Commonwealth lies in its Internet web site, which can be accessed anywhere on earth, including Massachusetts. Having no other contact with the forum state, Clue is not subject to the personal jurisdiction of this Court. It follows also that venue is improper and that service of process should not have been made under G.L. c. 181, § 15 authorizing service on the Secretary of State of Massachusetts for unregistered foreign corporations doing business in the Commonwealth.
Alternatively Clue moves to transfer this action to the U.S. District Court for the District of Colorado where an action involving Clue and the plaintiff Hasbro, Inc. ("Hasbro") and concerning the same subject matter was recently dismissed on grounds that would not bar this action from proceeding there. The site of a pending state court action between Clue and another party on the same underlying issues, Colorado would be a far more convenient forum for the parties and witnesses. Unlike Massachusetts, Colorado is a state with an actual connection to the case.
On June 1, 1994 Eric Robison and one other individual registered the name "Clue Computing" with the Secretary of State of Colorado as the business name of their partnership. (Robison Aff.,¶1). Mr. Robison, a Colorado resident, assumed sole ownership of the business in October 1995 and incorporated it as "Clue Computing, Inc." under the laws of the State of Colorado on May 22, 1996. (Id.). He has served ever since as the president, treasurer, secretary, sole stockholder and sole director of Clue Computing, Inc. (Id.). Both the corporation ("Clue") and the predecessor entity ("Clue Computing") have had their sole offices in Longmont, Colorado and have engaged exclusively in the business of computer consulting and providing Internet access to other persons and businesses. (Id. & ¶2).
Both Clue Computing and Clue have conducted much of their business through the Internet, a worldwide network of computers through which computer users exchange electronic mail and access information located at various "web sites." (Robison Aff., ¶¶6 & 7). In order to receive electronic mail on the Internet one must have an Internet address which typically takes the form "firstname.lastname@example.org." (Id., ¶5). Thus, for example, Mr. Robison's Internet address is email@example.com. (Id.). The first part of such an address identifies the particular computer user (in this example, Mr. Robison, or "Eric R."). (Id.). The segment immediately following the "@" symbol is called the "domain name" and refers to the location of the computer or network through which the user reaches the Internet(in Mr. Robison's case, "clue"). (Id.). The suffix following the period identifies the nature of the entity possessing the domain name ("com" for commercial, as in Mr. Robison's case; "edu" for educational institutions; "gov" for government; "mil" for military, etc.). A.). A "web site" is an Internet address at which a user posts information that he wants to make generally available. (Id. ¶6). Other users may contact the web site owner by directing messages to his web site. (Id.). Clue's web site, located at "http://www.clue.com," contains information about Clue's computer consulting services. (Id.).
Mr. Robison applied to register the domain name "clue.com" in early June 1994, upon commencing business as Clue Computing. (Robison Aff., ¶3) The application was approved on June 13, 1994 by Network Solutions, Inc. ("NSI"), a District of Columbia corporation under contract with the National Science Foundation to provide domain name registration services. (Id. & ¶9.a). The web site that first Clue Computing and now Clue have used with the "clue.com" domain name resides on a computer server that is physically located in Colorado. (Id., ¶3).
Sometime prior to February 1, 1996, Hasbro, a Rhode Island corporation with its principal place of business in Pawtucket, Rhode Island, complained to NSI that Clue Computing's domain name infringed Hasbro's trademark for the "Clue" boardgame. (Robison Aff. ¶9.a & complaint, ¶ 1). NSI informed Mr. Robison that it would bar him from continuing to use the domain name. (Robison Aff., ¶ 9.a). Had this occurred Clue Computing would have lost its web site and its e-mail communication. (Id.). Mr. Robison sought unsuccessfully to negotiate a resolution with Hasbro and NSI. (Id. ¶ 9.b). On June 13, 1996, facing the imminent loss of the domain name which was Clue's chief means of advertising and communication and in which Clue and its predecessor had established considerable good will, Clue filed suit in state court in Colorado to enjoin NSI from interfering with Clue's use of its domain name. (Id.). On June 28,1996 the court issued a preliminary injunction forbidding NSI from making "any change to the registration and use of the 'clue.com' domain name until permitted to do so by further order of this Court." (Id., ¶9.c & Exh. A). That injunction remains in effect and the action is pending as Clue Computing. Inc. v. Network Solutions. Inc., Case No. 96-CV-694, Division 5, District Court, Boulder County, Colorado. (Id.).
On June 21,1996 NSI brought an interpleader action against both Clue and Hasbro in the U.S. District Court for the District of Colorado docketed as Civil Action No. 96-D-1530. (Robison Aff., ¶ 9.c). Both defendants moved to dismiss, and the court granted dismissal on the ground that NSI had not "deposited ... into the registry of the court" the domain name in question, as it would have to do under 28 U.S.C. § 1335 in order to invoke the court's interpleader jurisdiction. Network Solutions. Inc. v. Clue Computing, Inc. and Hasbro, Inc., 41 U.S.P.Q.2d 1062 (D. Colo. 1996).
On or about January 10, 1997 Hasbro commenced this action against Clue, alleging infringement and dilution under federal and Massachusetts trademark statutes. (Robison Aff., ¶ 9.f). The complaint alleges that Clue "continuously broadcasts information regarding the company and advertises its services to thousands of Internet users in Massachusetts and elsewhere" and that Clue "has obtained at least one Massachusetts company as a client." (Complaint, ¶10). Hasbro purported to serve process on Clue by serving the Secretary of State of Massachusetts under G.L. c. 181, § 15 and by mailing a copy of the summons and complaint by certified mail to Clue's post office box. (Robison Aff., ¶ 9.f).
Clue has never done business with anyone in Massachusetts. (Robison Aff.,¶ 8.b). Hasbro's allegation to the contrary, to the extent it is based on anything other than conjecture, may relate to computer training services provided by Clue Computing (Clue's predecessor) to employees of Digital Equipment Corporation ("Digital"). (Id., ¶¶ 8 & 8.a) However, all such services were rendered outside Massachusetts pursuant to a contract between Clue Computing and Professional Training Services, a New Hampshire company. (Id.). Clue Computing did not provide any services in Massachusetts and never had a contract with Digital directly. (Id.).
Clue does not take any steps to advertise its web site in Massachusetts or otherwise to call it to the attention of people in Massachusetts. (Robison Aff., ¶ 8.c). Like any web site, Clue's can only be accessed by computer users who search the Internet. (Id., ¶ 8.d). Users can find Clue's web site if they (a) seek it by reference to its precise Internet address or (b) employ any of various search engines that identify web sites corresponding to users' selection parameters. (Id.). Clue thus does not "broadcast" advertising in the obtrusive way that a television or radio advertiser does. Rather it posts its information in a way that is accessible to anyone who wants to look for it, just as a Colorado business that advertises in its local yellow pages can be found by Massachusetts consumers who care to go to the library to search out-of-town phone books.
Defending this action in Massachusetts would be extraordinarily burdensome and inconvenient for Clue. (Robison Aff., ¶ 12). Mr. Robison is Clue's sole full-time employee. (Id. ¶ 1). His personal attention to Clue's business, located in Longmont, Colorado, is crucial to the generation of substantially all of Clue's income. (Id., ¶ 12). Clue's books and records are entirely located in Colorado. (Id., ¶11). Clue intends to call Mr. Robison as a witness at trial and is not aware of any person it may call as a witness for whom Massachusetts would be a convenient forum. (Id.). Hasbro is in a better position to bear whatever inconvenience it may suffer in litigating in Colorado than Clue is to endure the inconvenience of litigating in Massachusetts. According to Hasbro's annual report, in 1995 the plaintiff enjoyed gross revenues of almost $3 billion and employed 13,000 persons; Clue's 1996 revenues, mostly generated by its sole full-time employee, were under $100,000. (Id., ¶ 10).
This Court's inquiry into personal jurisdiction "is essentially twofold: (1) whether authorized by the forum state's long-arm statute; and (2) whether the exercise of personal jurisdiction is consistent with the Due Process Clause of the Fourteenth Amendment." Landmark Bank v. Machera, 736 F. Supp. 375, 383 (D. Mass. 1990). The first issue therefore involves analysis of G.L. c. 223A, § 3, the Massachusetts Long-Arm statute. With respect to the second issue, Due Process:
As the Supreme Court set out in the seminal case of International Shoe Co. v. State of Washington and its progeny, the Due Process Clause requires that before a defendant can be subjected to the jurisdiction of a forum's courts, the defendant must purposefully establish such "minimum contacts" with the forum state that asserting personal jurisdiction does not offend "notions of fair play and substantial justice." [Citation omitted]
In performing the minimum contacts analysis, one of the factors a court should consider is whether "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). Due process requires that individuals have "fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign." Shaffer v. Heitner, 433 U.S. 186, 218, 97 S.Ct. 2569, 2587, 53 L.Ed.2d 683 (1977) (Stevens, J., concurring in judgment). Cf. Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958) ("it is essential ... [that] the defendant purposefully avails itself of the privilege of conducting activities within the forum State...."). Foreseeability alone, however, is not enough for a forum state to assert personal jurisdiction. Hugel v. McNeil, 886 F.2d at 4 (citing World-Wide Volkswagen Corp., 444 U.S. at 295-96, 100 S.Ct. at 566.)
Landmark Bank, supra, at 384-85.
In relevant part the Massachusetts Long-Arm statute provides as follows:
A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity arising from the person's
(a) transacting any business in this commonwealth;
(c) causing tortious injury by an act or omission in this commonwealth; [or]
(d) causing tortious injury in this commonwealth by an act or omission
outside this commonwealth if he regularly does or solicits business, or
engages in any other persistent course of conduct, or derives substantial
revenue from goods used or consumed or services rendered, in this
G.L. c. 223A, § 3.
Clue's mere maintenance of a web site that is accessible to residents of Massachusetts cannot constitute '`transacting any business in this Commonwealth" within the meaning of G.L. c. 223A, § 3 (a). In Droukas v. Divers Training Academv. Inc., 376 N.E.2d 548 (Mass. 1978), the Supreme Judicial Court held that a Florida corporation had not transacted business when it placed an ad in a publication distributed in Massachusetts, received a telephone call from the Massachusetts plaintiff, corresponded with the plaintiff in Massachusetts regarding a sale, and shipped goods into the Commonwealth. It necessarily follows that Clue, which has not corresponded or exchanged telephone calls with Massachusetts customers or sent goods into the Commonwealth, cannot be said to have transacted any business here. Clue's situation is analogous to that of out-of-state defendants whose only contact with the Commonwealth consists of their advertising in national publications that have some Massachusetts readers. In such cases the defendants are uniformly held not to be transacting business in the Commonwealth for purposes of G.L. c. 223A, § 3 (a). See. e.g.. Rye v. Atlas Hotels. Inc., 566 N.E.2d 617 (Mass. App. Ct.. 1991) (placing ad in publication in Massachusetts and receiving telephone call from Massachusetts plaintiff on toll-free line for room reservation failed to constitute transacting business in Massachusetts for California hotel); Rhodes v. Tallarico, 751 F. Supp. 277, 278 (D. Mass. 1990) (out-of-state organization that advertised in national publications having Massachusetts subscribers held not "transacting business"). It is only when the defendant makes some special effort to reach Massachusetts consumers that multistate advertising can result in personal jurisdiction under c. 223A, § 3 (a). Thus while "[a]dvertisements in general trade magazines which happen to circulate in the forum State, but which are not aimed at customers in a particular area, do not effect the requisite minimum contact," Gunner v. Elmwood Dodge. Inc., 506 N.E.2d 175, 176 (Mass. App. Ct. 1987), "the dissemination, on a persistent basis, of advertising, print and electronic aimed at cultivating a market area in Massachusetts," can constitute "transacting business." Id. at 175. Clue has made no attempt, "persistent" or otherwise, to cultivate a market in Massachusetts, so its mere maintenance of a web site cannot qualify as "transacting business" here.
Having no contacts with the forum state other than that its web site may be accessed there, Clue cannot be said to "regularly do or solicit business, or engage in any other persistent course of conduct, or derive substantial revenue from goods used or consumed or services rendered, in this commonwealth," and so cannot be held subject to Massachusetts jurisdiction under G.L. c. 223A, § 3 (d). Even assuming that Clue's use of its domain name on its web site constitutes an infringement of Hasbro's trademark, it would be a great stretch of § 3 (c) of the Long-Arm statute to hold that the mere maintenance of such a web site constitutes "causing tortious injury by an act or omission in this commonwealth" when that web site has not led to the acquisition of any Massachusetts customers for Clue and the owner of the allegedly infringed trademark is a Rhode Island corporation having its principal place of business in Rhode Island. In Lanham Act cases, it is generally the "rule that venue lies where the 'passing off' occurred." Woodke v. Dahm, 873 F. Supp. 179, 198 (N.D. Iowa 1995). Since Clue has not sold any products or services in Massachusetts, it cannot be said to have "passed off" any products or services under Hasbro's trademark in Massachusetts. The bare accessibility of the web site in Massachusetts cannot constitute the "passing off." "It is well settled that the mere fact that the infringer has sent goods or sales literature bearing the infringing mark into the district cannot be the basis for venue." Chicago Reader. Inc. v. Metro College Pub.. Inc., 495 F. Supp. 441, 443 (D.C. Ill. 1980).
Turning to the Due Process analysis, Clue's mere maintenance of a web site that is accessible to anyone who cares to find it, without any effort on Clue's part to direct Massachusetts computer users to the site and without having generated even one Massachusetts customer through the site, cannot provide a basis for personal jurisdiction over Clue in this judicial district. Even if Clue had produced a physical product (which it does not) that had made its way into Massachusetts through the stream of commerce, the plaintiff would have to show some additional conduct to bring Clue within this Court's personal jurisdiction.
Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the stream of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream of commerce into an act purposefully directed toward the forum State.
Asahi Metal Industrv. Inc. v. Superior Court of California. Solano County, 480 U.S. 102, 112 (1987) (plurality decision). The required showing of additional conduct should be even greater in a case such as this where no physical product penetrated the geographical bounds of the Commonwealth. Here the item that Clue placed into the stream of commerce was not a physical thing that can exist, or a service that can be performed, in only one place at a time, but a web site that exists simultaneously everywhere.
Hasbro urges this Court to rule that each person who maintains a web site thereby subjects himself to the personal jurisdiction of every state (and, for that matter, every country) because it is foreseeable that his web site may be accessed there. Such mere foreseeability, by itself, has never sufficed as a source of personal jurisdiction. "[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1979). Having no connection with Massachusetts and having engaged in no conduct related to Massachusetts, Clue could not reasonably anticipate being haled into court here simply because it is as foreseeable that a Massachusetts resident might access Clue's web site as that anyone else may do so.
The sweeping expansion of personal jurisdiction championed by Hasbro here was rejected in a recent case remarkably like this one. In BensusanRestaurant Corp. v. Richard B. King, 937 F. Supp. 295 (S.D.N.Y. September 9, 1996), the defendant owned a jazz club in Missouri named "The Blue Note" and used a web site located on a computer server in Missouri to advertise it. The plaintiff ran a jazz club in New York that was also called "The Blue Note" and had a federal trademark on the name. When the plaintiff commenced an infringement action in New York, it based its assertion of personal jurisdiction on the fact that the web site could be accessed in New York: "because defendant's Web site is accessible in New York, [the plaintiff argued,] defendant could have foreseen that the site was able to be viewed in New York and taken steps to restrict access to his site only to users in a certain geographic region, presumably Missouri." Id. at 300. Spurning this argument, the court ruled that "regardless of the technical feasibility of such a procedure ..., mere foreseeability of an in-state consequence and a failure to avert that consequence is not sufficient to establish personal jurisdiction." Id. The court gave weight to the fact that "[i]t takes several affirmative steps by the New York resident ... to obtain access to the Web site and utilize the information there," id. at 299, just as in this case a Massachusetts computer user would have to actively search to find Clue's web site. "Here, there is simply no allegation or proof that any infringing goods were shipped into New York or that any other infringing activity was directed at New York or caused by [the defendant] to occur here." Id.
The Bensusan court determined that New York's long-arm statute did not reach the defendant, but went on to rule that in any event the due process requirements that the defendant have established minimum contacts with the forum state and that maintenance of the action not offend "traditional notions of fair play and substantial justice" would compel dismissal for want of personal jurisdiction. In language that could be applied to this case by merely substituting the names of the parties and the forum state, the Bensusan court concluded that the defendant King had
done nothing to purposefully avail himself of the benefits of New York. King, like numerous others, simply created a Web site and permitted anyone who could find it to access it. Creating a site, like placing a product into the stream of commerce, may be felt nationwide -- or even worldwide -- but, without more, it is not an act purposefully directed toward the forum state. See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112, 107 S.Ct. 1026, 1032, 94 L.Ed.2d 92 (1991) (plurality opinion). There are no allegations that King actively sought to encourage New Yorkers to access his site, or that he conducted any business -- let alone a continuous and systematic part of its business -in New York. There is in fact no suggestion that King has any presence of any kind in New York other than the Web site that can be accessed worldwide. Bensusan's argument that King should have foreseen that users could access the site in New York and be confused as to the relationship of the two Blue Note clubs is insufficient to satisfy due process.
Bensusan Restaurant Corp., supra, at 301. The logic of Bensusan has spared other defendants from having to litigate in jurisdictions where their only contact -- like Clue's contact with Massachusetts -- exists through the ubiquitous Internet. Thus in Pres-Kap, Inc. v. System One, Direct Access. Inc., 636 So.2d 1351 (Flat Ct. App. 1994), the Florida court held that it lacked personal jurisdiction over a New York defendant whose only contacts with the forum state consisted of its contracting with the Florida plaintiff to use the latter's computerized airline reservation system, making payments to the plaintiff at its Florida address and accessing the plaintiff's data base which was physically located in Florida. To hold that the cyberspace link between the parties gave rise to personal jurisdiction over the defendant in the plaintiff's home state would be "wildly beyond the reasonable expectations of computer-information users, and, accordingly, the result offends traditional notions of fair play and substantial justice." Id. at 1353. Similarly in Beverage Management Solutions. v. Yankee Spirits. Inc., 460 S.E.2d 564 (1995), where the Massachusetts defendant had negotiated to buy a computer system from the plaintiff Georgia corporation, it was held that the defendant's "sending computer data to Georgia" did not rise to the level of "'purposeful acts' sufficient to tie it to Georgia." Id. at 566.
Where personal jurisdiction has been upheld for out-of-state Internet users, it is virtually always the case that some significant part of the defendant's conduct -- going beyond the mere maintenance of a web site, which is all that Clue has done to warrant suit in Massachusetts -should reasonably have led the defendant to expect that he would become subject to the forum state's jurisdiction. Thus in CompuServe. Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), where the Court of Appeals held that a shareware author from Texas who sold his software through CompuServe's shareware registration system was subject to personal jurisdiction in Ohio, CompuServe's home state, the defendant had entered into an agreement with CompuServe providing that Ohio law would govern, the defendant made 12 sales to Ohio residents, and all payments to the plaintiff passed through Ohio. The CompuServe court doubted that the mere transmission of data into the state would, alone, suffice to confer jurisdiction: "Patterson's injection of his software product into the stream of commerce, without more, would be at best a dubious ground for jurisdiction." Id. at 1265. Taken together with the other factors listed above, however, the court held that "Patterson consciously reached out from Texas to Ohio." Id. at 1266. By contrast in this case Clue has not entered into any contracts with Hasbro or anyone else calling for the application of Massachusetts law or suggesting that Massachusetts would be an available forum, and Clue has not made any sales to Massachusetts customers or enjoyed any flow of payments through Massachusetts.
Only one court has come close to stating that a defendant who posts a web site becomes amenable to jurisdiction wherever the web site can be accessed. In Inset Systems. Inc. v. Instruction Set. Inc., 937 F. Supp. 161 (D. Conn. 1996) a Massachusetts corporation having its principal place of business in Massachusetts posted a web site using a domain name which the plaintiff, a Connecticut corporation with its principal place of business in Connecticut, claimed to infringe the plaintiff's trademark. The court found personal jurisdiction in Connecticut over the Massachusetts defendant, holding that the latter "has directed its advertising activities via the Internet and its toll-free number toward not only the state of Connecticut, but to all states." Id. at 165. Inset Systems is distinguishable from this case in at least three respects. First, the court relied upon both the web site and the toll-free number to find minimum contacts with the forum state, and Clue has no toll-free number. Second, application of personal jurisdiction was said not to offend "fair play and substantial justice" because "the distance between Connecticut and Massachusetts is minimal," meaning that the "relative burdens on the plaintiff and defendant of litigating the suit in this or another forum" did not militate in the defendant's favor. Id. Here, by contrast, the burden on Clue of litigating in Massachusetts would be severe, as discussed at length below in connection with Clue's alternative motion to transfer. Finally, the court took into account in assessing "fair play and substantial justice" that the case involved issues of Connecticut statutory and common law. Id. In this case, where the plaintiff is a Rhode Island corporation with its principal place of business in Rhode Island, the only basis for Hasbro's including a count under the Massachusetts trademark statute is that Hasbro has chosen to sue here.
In cases where the plaintiff alleges infringement or tortious interference with contractual relations, courts have sometimes found personal jurisdiction in the state where the injured plaintiff was incorporated or had its principal place of business, reasoning that the defendant should have known that the consequences of his actions would come to rest there. See Panavision International. L.P. v. Toeppen, 938 F. Supp. 616 (C.D. Cal. 1996) (domain name owner who allegedly acquired name solely to interfere with Panavision's business held subject to personal jurisdiction in California, Panavision's principal place of business); Maritz Inc. v. CyberGold, Inc., 40 U.S.P.Q.2d 1729 (E.D. Mo. 1996) (alleged infringer subject to personal jurisdiction in state where plaintiff trademark owner is incorporated and has its principal place of business). Although Clue does not concede that the allegations in this case suffice to subject it to the jurisdiction of the state where Hasbro is incorporated and has its principal place of business, even if that were the case this action would have to be dismissed because that state is Rhode Island, not Massachusetts.
Thus Clue's contacts with Massachusetts, which amount to maintaining a web site that is no more accessible in Massachusetts that it is anywhere else on earth, cannot constitute a basis for personal jurisdiction under the Massachusetts Long-Arm statute or under the Due Process Clause of the Fourteenth Amendment.
B. The Complaint Should Be Dismissed For Improper Venue
Venue in this action is improper because Clue does not "reside" in Massachusetts and the Commonwealth is not a place where "a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated." 28 U.S.C. § 1391 (b). As discussed above, Massachusetts has never purported to extend its long-arm jurisdictional statute so far as to catch every web site owner whose postings can be accessed in the Commonwealth, and any attempt to do so would violate due process limits. Hasbro bears the burden to show that venue is appropriate in this district. "When an objection to venue has been raised, the burden is on the plaintiff to establish that venue is proper in the judicial district in which the action has been brought. 15 Wright, Miller & Cooper, Federal Practice and Procedure § 3826 at 259 (1986); Stanley Works v. Globemaster. Inc., 400 F. Supp. 1325, 1330 (D. Mass. 1975)." Transamerica Corp. v. Trans-American Leasing Corp., 670 F. Supp. 1089, 1090 (D. Mass. 1987). On the facts of this case Hasbro cannot bear that burden.
Since the Lanham Act does not contain any special venue provisions, venue in trademark cases is determined under the general venue provisions set forth in 28 U.S.C. 1391. Woodke v. Dahm, 873 F. Supp. 179, 197 (N.D. Iowa 1995). That statute provides that
A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.
28 U.S.C. 1391 (b). Since in this case there is a "district in which the action may otherwise be brought," to wit, the District of Colorado, where Hasbro has already retained counsel and litigated related issues, the third prong of this statute is unavailable to Hasbro as a basis of venue.
Under the first prong, the Court must look to the Massachusetts Long-Arm statute. "For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28U.S.C. 1391 (c). As set forth in the analysis above, addressing personal jurisdiction, there is no basis in either the text of or the case law construing G.L. c. 223A, § 3 to support extending Massachusetts' jurisdiction over Clue.
Hasbro's only basis for venue lies in 28 U.S.C. § 1391 (b) (2), which provides for venue in any "judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated." All of Clue's activities in registering its domain name, sending and receiving electronic mail using that name, setting up its web site and dealing with customers under the name "Clue" have occurred outside Massachusetts. As a corporation, Hasbro has presumably suffered any damage from the alleged infringement and dilution in the state where it is incorporated and where it maintains its principal place of business: Rhode Island. The property at issue, Clue's domain name, exists ubiquitously in cyberspace. The only toeholds for Hasbro's claim that Massachusetts plays the "substantial" role in this matter that § 1391 (b) (2) plainly contemplates are that (1) the web site is accessible in the Commonwealth and (2) the division of Hasbro that produces the "Clue" boardgame is headquartered in Massachusetts (see complaint, ¶ 1). These minor points cannot provide a "substantial" basis for venue; Clue's web site is no more accessible in Massachusetts than it is anywhere else, and even Hasbro concedes that it is the Rhode Island corporation and not the "division" of the company that happens to be located in Massachusetts that owns the trademark (see complaint, ¶ 5).
C. The Complaint Should Be Dismissed For Insufficient Service of Process
A foreign corporation may only be served by means of substituted service on the Secretary of State of the Commonwealth, as Clue was, if the foreign corporation is "doing business in the commonwealth." G.L. c. 181, § 15. The discussion above establishes not only that jurisdiction and venue are lacking here but also that service of process was insufficient.
II. Alternatively This Action Should Be Transferred To The U.S. District Court For The
District Of Colorado Under 28 U.S.C. § 1404 (a)
If the Court determines that Clue is subject to personal jurisdiction in Massachusetts and that venue is appropriate, it should nonetheless exercise its discretion to transfer this action to the District of Colorado. "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404 (a). There is no doubt that this action could have been brought in the District of Colorado, as that is the district where the sole defendant resides. See 28 U.S.C. § 1391 (b) (1)
The decision to transfer a case to a more convenient forum pursuant to § 1404 (a) is a matter within the discretion of the district court. Codex Corp. v. Milgo Electronic Corp., 553 F.2d 735, 737 (1st Cir. 1977) .... Such a decision requires a balancing of several factors, including plaintiff’s choice of forum.... Other relevant factors include the convenience of the parties and the witnesses, the availability of documents, the possibilities of consolidation and coordination, and the interests of justice. Norman v. Brown, Todd & Heyburn, 693 F. supp. 1259, 1261 (D. Mass. 1988).
Princess House. Inc. v. Lindsey, 136 F.R.D. 16, 18 (D. Mass. 1991).
While the plaintiff's choice of forum is one factor to consider on a motion to transfer, it deserves very little weight in cases, such as this, where there is little or no connection between the forum state and the facts of the case.
[T]he weight to be accorded plaintiff's choice of forum varies with the circumstances of the case. See 15 Wright, Miller & Cooper, Federal Practice and Procedure § 3848 at 389-92 (1986). "Where [as here] the operative facts of the case have no material connection with this district, plaintiff s choice of forum carries less weight," [citations omitted] and is "given an equal consideration along with the other factors which must be considered under § 1404."
Brant Point Corp. v. Poetzsch, 671 F. Supp. 2, 5 (D. Mass. 1987), quoting Hotel Constructors, Inc. v. Seagrave Corp., 543 F. Supp. 1048, 1051 (N.D. Ill. 1982). See National Mortgage Network. Inc. v. Home Equity Centers. Inc., 683 F. Supp. 116, 119 (E.D. Pa. 1988) (plaintiff's choice of forum is entitled to less weight than is ordinarily the case where none of the operative facts have occurred in the forum district), Leinberger v. Webster, 66 F.R.D. 28 (E.D.N.Y. 1975) (same). In this case, where the only link between Massachusetts and the facts of the case appears to consist in Clue's maintaining a web site that is as accessible from the Commonwealth as it is from anywhere else, Hasbro's choice of forum should not be given any weight by the court.
The plaintiff's choice deserves still less deference because Massachusetts is not its home state. The Commonwealth is neither the state in which Hasbro is incorporated nor the state which it has its principal offices. "[W]here the plaintiff is not bringing suit on its 'home turf,' plaintiff's choice of forum carries less weight. Clopay v. Newell Companies, Inc., 527 F. Supp. 733, 736 (D. Del. 1981); Lee v. Ohio Cas. Ins. Co., 445 F. Supp. 189, 192 (D. Del. 1978)." Transamerica Corp. v. Trans-American Leasing Corp., 670 F. Supp. 1089, 1093 (D. Mass. 1987). See Aeroquip Corp. v. Deutsch Co., 887 F. Supp. 293, 294 (S.D. Ga. 1995) ("The significance of plaintiff’s choice is diminished if the forum selected is not the home district of any parties involved in the action."); So-Comm Inc. v. Reynolds, 697 F. Supp. 663, 666 (N.D. Ill. 1985) ("the plaintiff’s choice of forum is entitled to less consideration when he is not a resident of the forum district."); New Image, Inc. v. Travelers Indemnity Co., 536 F. Supp. 58, 59 (E.D. Pa. 1981) ("the force of the rule [that the plaintiff’s choice of forum is entitled to considerable weight] is substantially attenuated where the chosen forum is not the plaintiff's place of residence.").
By far the most important factor in most transfer analyses -- greatly outweighing the plaintiff's choice of forum even in cases unlike this where the claim arose and the plaintiff resides in the forum state -- is the statutorily prescribed consideration of "convenience of … witnesses." 28 U.S.C. § 1404 (a).
The convenience of the witnesses is "[p]robably the most important factor, and the factor most frequently mentioned, in passing on a motion to transfer under 28 U.S.C. § 1404 (a)." 15 Wright, Miller & Cooper, Federal Practice and Procedure 2d § 3851 at 415 (1986). See also, e.g., Saminskv v. Occidental Petroleum Corp., 373 F. Supp. 257, 259 (S.D.N.Y. 1974) ("The most significant factor to be considered is the convenience of the party and non-party witnesses.") Houk v. Kimberly-Clark Corp., 613 F. Supp. 923, 929 (W.D.Mo. 1985) ("The convenience of witnesses is said to be a primary, if not the most important, factor in passing on a motion to transfer under § 1404 (a).")
Brant Point Corp. v. Poetzsch, 671 F. Supp. 2, 3 (D. Mass. 1987). See Princess House. Inc. v. Lindsey, 136 F.R.D. 16, 18 (D. Mass. 1991); New Medico Associates Inc. v. Kleinhenz, 750 F. Supp. 1145, 1146 (D. Mass. 1990). The only witness whom Clue can now identify -- and a witness whose testimony would be crucial to Clue -- is Mr. Robison. He alone can testify as to the nature of Clue's business, to show that there is no room for market confusion with Hasbro's trademark; the reasons for his choice of the name "Clue" and for his registering the domain name "clue.com," which involved no attempt to dilute Hasbro's trademark or to pass off his services as Hasbro's; the reaction of customers and potential customers to his trade name and his domain name, a reaction that has not included any tendency to confuse Clue's trade name and domain name with Hasbro's trademark; Clue's need to retain its domain name; and the harm that would result to Clue from being deprived of its domain name. As the sole full-time employee of Clue and the man whose personal efforts are necessary for the generation of most of Clue's revenues, Mr. Robison would be greatly inconvenienced by having to litigate this matter in Massachusetts.
Perhaps the most important factor in this case, a mismatch between a Fortune 500 behemoth and a one-man business, is that it would be tremendously more difficult for Clue to defend this action in Massachusetts than it would be for Hasbro to prosecute it in Colorado. In weighing the convenience of the parties and the interests of justice, "courts have found the parties' relative ability to undertake a trial in any particular forum to be a proper and important consideration." Bates v. J.C. Penney Co.. Inc., 624 F. Supp. 226, 229 (W.D.N.C. 1985). In that case, as in many others, the court assigned great significance to the fact that one party was "a corporation doing business in many states," and was "in a much better position to litigate [the] suit in a distant forum" than was the other, less affluent party. Id. at 228-29 (denying transfer from North Carolina to Florida because "[t]he additional expense and physical burden of having to litigate in Florida might result in the Plaintiffs having to terminate their lawsuit, whereas the Defendant would not be precluded by economic considerations from proceeding in North Carolina.") (emphasis in original). See Houk v. Kimberly-Clark Corp., 613 F. Supp. 923, 932 (D.C. Mo. 1985) (denying transfer in part because of "the parties' relative financial positions").
In Actmedia. Inc. v. Ferrante, 623 F. Supp. 42 (D.C.N.Y. 1985), where the plaintiff was "an established organization, operating nationwide" and the defendant was a humble new business in Oregon with 6 employees, the court observed that "[w]hile the necessity of defending this litigation in New York could bring ruin to defendant, no such consequence would occur to plaintiff if required to litigate in Oregon." Id. at 44. In a decision that (with some minor adjustments for geography) could have been written for this case, the court granted transfer because the inconvenience that the plaintiff would thereby suffer would be dwarfed by the harm to the defendant from having to litigate thousands of miles from its home:
It would be both unfair and unjust to require the corporate defendant, a small start up operation, to defend a suit here concerning acts which took place some 3,000 miles away. Indeed, in such circumstances, even if plaintiff's case had no merit, it would succeed if through the expense and disruption of litigating in this district [the defendant] were eliminated as a viable [company].
Id. at 44. Similarly in Wen Products. Inc. v. Master Leather. Inc., 899 F. Supp. 384 (N.D. Ill.
1995) the court transferred the action in part because the defendant was "a relatively small company employing only two employees compared to [the plaintiff], a 225 employee firm with sales territories all over the United States." Id. at 386. So, too, in Koos. Inc. v. Performance Industries. Inc., 747 F. Supp. 487 (N.D. Ill. 1990) the court characterized the plaintiff as "a multi-million dollar company" and the defendant as a business with "gross sales figures for last year total[ling] approximately $500,000" and transferred the action because the defendant "undoubtedly would suffer greater financial or economic hardship if forced to defend this action here" than would the plaintiff in prosecuting its action in the transferee district. Id. at 490. See generally 15 Wright, Miller & Cooper, Federal Practice and Procedure § 3849 at 408 (1986) ("In weighing the convenience of the parties, the court may take into account the ... financial strength of each of them."). If one party or the other in this action must suffer the inconvenience and expense of litigating in a place not of its or his choosing, in the interest of justice let it be the billion dollar enterprise with nationwide sales and thousands of employees, and not the lone entrepreneur.
Hasbro can hardly claim to be inconvenienced by litigating in Colorado, since it has already done so in connection with the very subject matter of this action. Having retained the largest law firm in Colorado and recently defeated the federal interpleader action brought against both Clue and Hasbro by NSI, Hasbro has proven that it can make its case as effectively in the U.S. District Court for the District of Colorado as it could hope to do here. Hasbro's Colorado lawyers are fully versed in the facts and eminently qualified to argue the law of the case. The plaintiff must be following closely the proceedings in the state court action between NSI and Clue, where Clue has won an injunction preventing the very domain name transfer that Hasbro asks this Court to effect. In short, the facts underlying this case have already been the subject of two separate actions in Colorado, and Hasbro's active involvement in one and close attention to the other belie any suggestion that litigating in that state would be unduly burdensome for it.
The pendency of the state court action and the recent federal court activity in Colorado constitute significant factors militating in favor of transfer, since one element of the "interest of justice" standard of 28 U.S.C. § 1404 (a) is the desirability of avoiding a multiplicity of litigation growing from a single set of facts. Harley-Davidson Motor Co. v. Strada, 78 F.R.D. 521 (E.D. Wis. 1978). See Levitt v. Maryland Deposit Insurance Fund Corp., 643 F. Supp. 1485, 1493 (E.D.N.Y. 1986) (pendency of state court proceedings between parties in transferee state cited as one reason for transfer). In Smith Industries Medical Systems Inc. v. Ballard Medical Products Inc., 728 F. Supp. 6 (D.D.C. 1989), the District Court for the District of Columbia transferred a trademark infringement action on its own motion to the District of New Hampshire because of the pendency of a similar action there. With the exception of the state names, the court's decision there applies almost word for word to this case:
Given the New Hampshire court's greater experience with the parties' disputes, the interrelatedness of the two actions, the fact that at least half of the witnesses reside in New Hampshire, and our reluctance to encourage plaintiffs forum shopping, we conclude that the evidence overwhelmingly points to the District of New Hampshire as the forum where the action filed in our Court can be most conveniently and justly tried.
Id. at 7.
The "interest of justice" standard has also been held to favor transfer where "the events underlying [the] lawsuit bear little connection with [the] forum." Koos. Inc. v. Performance Industries Inc., 747 F. Supp. 487, 491 (N.D. Ill. 1990). In Koos the plaintiff sought to restrain the defendant from distributing allegedly misleading advertisements throughout the country, just as Hasbro seeks to prevent Clue from using its domain name anywhere, and the forum state bore no greater connection to the facts of the case than did any of several other states where the advertisements were distributed, just as Massachusetts is simply one of the fifty states in which anyone with a computer and a modem can access Clue's web site. Construing the "interest of justice" clause, the court held that
[g]iven these facts, this litigation undoubtedly has the most significant contacts with [the transferee district], where [the defendant] is incorporated and has its headquarters, where the allegedly misleading advertising was authored and issued, where the studies which formed the basis for [the plaintiff's] advertisement were commissioned, and where the ad copy was generated.
Id. So, too, in this action the interest of justice militates in favor of transfer to the district with the greatest stake in the controversy, which is Colorado, where Clue is incorporated and headquartered and has taken all the actions that have led to this law suit.
Courts ordering the transfer of intellectual property actions such as this frequently note that such cases are particularly apt candidates for transfer. One court, allowing transfer to the defendant's home district, observed that "[i]ntellectual property infringement suits often focus on the activities of the alleged infringer, its employees, and its documents." Wen Products Inc. v. Master Leather Inc., 899 F. Supp. 384, 386 (N.D. Ill. 1995). See Transamerica Corp. v. TransAmerican Leasing Corp., 670 F. supp. 1089, 1092 (D. Mass. 1987) (noting desirability of transfer to district where discussions leading to choice of allegedly infringing corporate name were conducted). Since the relief sought in intellectual property cases usually includes, as it does here, the issuance of an injunction, it makes sense that such cases should be heard in the district that will be in the best position to enforce any resulting injunction. See Habitat Wallpaper & Blinds v. K.T. Scott Ltd., 807 F. Supp. 470, 475 (N.D. Ill. 1992); Peach Tree Bancard Corp. v. Peachtree Bancard Network Inc., 706 F. Supp. 639 (N.D. Ill. 1989).
In sum, Massachusetts is not the home state of either party, while Colorado is the state in which Clue is incorporated and has its sole office; none of the operative facts of the case occurred in Massachusetts, while most if not all of them took place in Colorado; Clue's main and perhaps only witness lives and works in Colorado and would be greatly inconvenienced by having to travel to Massachusetts; the cost of litigating in Colorado could be -- and indeed already has been -- easily borne by Hasbro, while the cost of litigating in Massachusetts would disrupt and possibly destroy tiny Clue; Colorado is the site of a recently completed federal district court action involving Hasbro and Clue concerning the subject matter of this action, and remains the host of a state court action in which there is an outstanding injunction concerning that subject matter; and any injunction issued in this action would likely have to be enforced in Colorado. "Many factors weigh in favor of transfer, while the only significant factor weighing against it appears to be the fact that [the plaintiff] happened to file suit here, instead of somewhere else." Aeroquip Corp. v. Deutsch Co., 887 F. Supp. 293, 295 (S.D. Ga. 1995).
For the reasons set forth above Clue respectfully requests that this Court dismiss the complaint or, alternatively, transfer the action to the U.S. District Court for the District of Colorado.
CLUE COMPUTING, INC.
By its attorney,
Thomas A. Mullen, P.C.
4 Avon Street
Wakefield, Massachusetts 01880
BBO No. 360315
Date: February 21, 1997
Certificate of Service
I hereby certify that a true copy of the above document was served upon the attorney of record for each other party by hand on February 21, 1997.
Thomas A. Mullen, P.C.