ICP Solar v . TAB 05-CV-111-SM 01/31/06 UNITED STATES DISTRICT COURT DISTRICT OF NEW HAMPSHIRE

ICP Solar Technologies, Inc., Plaintiff,

v. Civil N o . 05-cv-111-SM Opinion N o .

TAB Consulting, Inc. d/b/a TAB Distribution, Defendant

O R D E R

ICP Solar Technologies, Inc. (“Solar Tech”) brings this

action against TAB Consulting, Inc. (“TAB”), seeking injunctive

relief and damages for alleged acts of false advertising,

copyright infringement, unfair trade practices, and conversion.

This suit arises out of TAB’s allegedly unlawful use, in both

promotional materials and product packaging, of copyrighted

photographs owned by ICP Solar Technologies, Inc.

Before the court is TAB’s motion to dismiss, in which it

asserts that: (1) the court lacks personal jurisdiction over i t ;

and (2) New Hampshire is not the appropriate forum in which to

resolve this dispute. Solar Tech objects. For the reasons set

forth below, TAB’s motion to dismiss is granted. Standard of Review

When personal jurisdiction is contested, the plaintiff bears

the burden of establishing that the court has such jurisdiction.

See Sawtelle v . Farrell,

(1st Cir. 1995);

Kowalski v . Doherty, Wallace, Pillsbury & Murphy,

, 8

(1st Cir. 1986). Allegations of jurisdictional facts are

construed in the plaintiff’s favor, see Buckley v . Bourdon,

5 , 98 (D.N.H. 1988), and, if the court proceeds based

upon the written submissions of the parties without an

evidentiary hearing, the plaintiff need only make a prima facie

showing that jurisdiction exists. See Kowalski,

;

Boit v . Gar-Tec Products, Inc.,

7 1 , 674-75 (1st Cir.

1992).

Nevertheless, in order to defeat a defendant’s motion to

dismiss, the plaintiff’s demonstration of personal jurisdiction

must be based on specific facts set forth in the record. See

TicketMaster-New York, Inc. v . Alioto,

0 1 , 203 (1st Cir.

1994). And, when “reviewing the record before i t , a court ‘may

consider pleadings, affidavits, and other evidentiary materials

without converting the motion to dismiss to a motion for summary

2 judgment.’” VDI Technologies v . Price,

5 , 87

(D.N.H. 1991) (quoting Lex Computer & Management Corp. v .

Eslinger & Pelton, P.C.,

(D.N.H. 1987)).

Because at least some of Solar Tech’s claims arise under

federal law, the court’s inquiry into whether it may exercise

personal jurisdiction over TAB is necessarily distinct from the

inquiry applicable in diversity cases. See generally United

Elec. Workers v . 163 Pleasant S t . Corp.,

(1st Cir.

1992). In a federal question case, “the constitutional limits of

the court’s personal jurisdiction are fixed . . . not by the

Fourteenth Amendment but by the Due Process Clause of the Fifth

Amendment.” Id. at 1085. This distinction is important “because

under the Fifth Amendment, a plaintiff need only show that the

defendant has adequate contacts with the United States as a

whole, rather than with a particular state.” United States v .

Swiss Am. Bank, Ltd.,

1 0 , 618 (1st Cir. 2001).

Importantly, however, “the plaintiff must still ground its

service of process in a federal statute or civil rule.”

In

other words, Solar Tech must demonstrate either: (1) that a

federal statute invoked in its complaint authorizes nation-wide

3 service of process; or (2) that defendants were served with a

copy of its complaint in a way that comports with the

requirements of Rule 4 of the Federal Rules of Civil Procedure.

Here, neither of the federal statutes under which Solar Tech

brings its claims authorizes national service of process. Solar

Tech does not argue to the contrary. Consequently, the Federal

Rules of Civil Procedure provide that Solar Tech must demonstrate

that TAB was served in a manner consistent with New Hampshire’s

long-arm statute. See Fed. R. Civ. P. 4 ( e ) . New Hampshire’s

corporate long-arm statute, RSA 293-A:15.10, authorizes

jurisdiction over foreign corporations and unregistered

professional associations to the full extent permitted by federal

law. See Sawtelle,

. Stated another way, New

Hampshire’s corporate long-arm statute is coextensive with the

outer limits of due process protection under the federal

constitution. Accordingly, the court need only determine whether

the exercise of personal jurisdiction over a foreign defendant

would comport with federal constitutional guarantees.

Hence, our analysis comes full circle. When insufficient statutory authorization for extraterritorial service exists, Rule 4(e) allows such

4 service “only to the extent permitted by the law of the state in which the district court sits.” It follows that, absent a federal statute permitting service of process on [defendant] . . . , our threshold inquiry must focus on [state] law concerning personal jurisdiction, notwithstanding that this is a federal question case. And, because state law is subject to Fourteenth Amendment limitations, the minimum contacts doctrine, while imposing no direct state-by-state constraint on a federal court in a federal question case, acts indirectly as a governing mechanism for the exercise of personal jurisdiction.

United Elec. Workers, 960 F.2d at 1086 (citation omitted).

Ultimately, then, as in a diversity case, Solar Tech must

show that TAB has “certain minimum contacts with the forum such

that the maintenance of the suit does not offend traditional

notions of fair play and substantial justice,” Helicopteros

Nacionales de Colombia, S.A. v . Hall,

0 8 , 414 (1984)

(citation and internal punctuation omitted), and that the

defendant’s conduct bears such a “substantial connection with the

forum State” that it “should reasonably anticipate being haled

into court there.” Burger King Corp. v . Rudzewicz,

6 2 ,

473-75 (1985) (citing World-Wide Volkswagen Corp. v . Woodson,

(1980)). The court of appeals for this circuit has

summarized these jurisdictional requirements as follows:

5 To begin, the defendant must have purposeful “minimum contacts” with the state. Further, the exercise of jurisdiction must be “reasonable” under the circumstances. The third requirement . . . is that the plaintiff’s claims be related to the defendant’s contacts.

Cambridge Literary Props. v . W . Goebel Porzellanfabrik G.m.b.H &

Co.,

9 , 63 (1st Cir. 2002) (citation omitted).

Background

I. The Parties.

Neither Solar Tech nor TAB is a New Hampshire corporation,

nor does it appear that either has any offices, employees, or

agents in this forum. Solar Tech is a Canadian company that

maintains its principal place of business in Montreal, Quebec.

It manufactures and sells solar panels and accompanying battery

charger units, designed for use where access to electrical

service is difficult or impossible (e.g., on boats, in campers or

recreational vehicles in remote locations, e t c . ) . Solar Tech

sells its products throughout the United States, including New

Hampshire, through specialty stores, Internet retailers, and

regional and national distributors, such as West Marine, Inc.

Its products are sold under its own name, as well as that of some

6 of its distributors. S o , for example, Solar Tech says that some

of its products are sold under the “Coleman” brand label for the

outdoor recreation market.

Defendant, TAB, is a California company that maintains its

principal place of business in Lake Forest, California. It

recently entered the business of selling solar panels and battery

charger units, as one of Solar Tech’s competitors. Its products

are sold through retail store outlets, mail order catalog houses,

and Internet retailers. According to Solar Tech, TAB’s retail

distribution chain includes some of the same dealers that also

sell Solar Tech products, like West Marine (which operates two

retail stores in New Hampshire). TAB also briefly offered its

products for sale through its own Web site.

In general terms, Solar Tech claims that TAB has unlawfully

copied photographs of Solar Tech products, altered them slightly

to remove the Solar Tech label, and utilized them in printed

advertising materials. All of this was done, says Solar Tech, in

an attempt to pass TAB’s products off as Solar Tech products.

Solar Tech says TAB has utilized (and continues to utilize) those

7 photographs in violation of Solar Tech’s registered copyrights.

It also claims that TAB’s allegedly unlawful use of those

copyrighted photographs and related deceptive advertising amounts

to a violation of the Lanham Act, as well a common law conversion

and a violation of the New Hampshire Consumer Protection Act.

II. TAB’s New Hampshire Contacts.

As noted above, TAB is a California corporation, with a

principal place of business in Lake Forest, California. It does

not own property in New Hampshire, maintain an office in New

Hampshire, or have any agents or employees in New Hampshire. Nor

is it licensed to conduct business in New Hampshire. It’s

primary business is the sale of discounted computer software,

largely through its Internet Web site. It entered the business

of selling solar panels and solar-powered battery chargers in or

around 2004.

TAB sells its solar panels and battery chargers through

dealers, who then sell them to retail customers; TAB does not

sell directly to the consumer (except for a brief period of time

during which it offered solar products through its Web site -

8 during that time, however, no sales of solar panels or charging

units were made through the Web site). TAB has never shipped any

of its solar panels or solar-powered battery chargers to

facilities in New Hampshire. But, one of the dealers through

which TAB formerly sold its solar products - West Marine - does

have two stores that are located in New Hampshire. According to

TAB, it does not have any record of any of its solar products

having ever been sold by West Marine in New Hampshire.

Nevertheless, Solar Tech says that, on June 6, 2005 (after

it initiated this litigation), a paralegal at the offices of its

attorneys visited one of the two West Marine stores in New

Hampshire and: (a) observed a catalog containing the allegedly

infringing photographs; and (b) purchased a solar-powered battery

charger under the West Marine “Sea-Fit” brand name that was

packaged in a box prominently displaying the allegedly infringing

photographs. Solar Tech implies that TAB was the source of those

photographs and/or the battery charger that was sold under West

Marine’s house label. But, according to TAB, West Marine stopped

purchasing its products nearly two years earlier, in or about

September of 2004.

9 S o , construing the record in the light most favorable to

Solar Tech, TAB’s contacts with this forum can be summarized as

follows:

1. For a period of time in 2004, TAB displayed and offered its solar products for sale through its Web site, which could have been viewed by citizens of New Hampshire (though no sales were ever made over the Internet to New Hampshire citizens, nor is there any evidence that residents of New Hampshire actually visited TAB’s Web site);

2. TAB’s chain of distribution for its solar products includes retailers who have a physical presence in New Hampshire;

3. TAB allegedly provided some of the distributors of its solar products with copies of the infringing photographs, which were then used in advertising materials and on Web sites, all of which could have been seen by New Hampshire residents;

4. West Marine used copies of those allegedly infringing photographs in its catalog, which was available in at least one of its two New Hampshire stores; and, finally,

5. A paralegal at the offices of Solar Tech’s legal counsel purchased a West Marine “Sea- Fit” solar-powered battery charger from that same store, which was packaged in a box that prominently displayed the allegedly infringing photographs (which, as noted above, Solar Tech implicitly suggests were provided by T A B ) .

10 In response to Solar Tech’s assertions, in his uncontested

affidavit, Tony Berendes, the president of TAB, states that: (1)

TAB’s dealers (like West Marine) are responsible for “creating

their own packaging and sell the TAB Solar Products under their

own brand names”; and (2) “TAB does not exercise any control over

the content or design of the packaging utilized by [TAB’s]

dealers.” Exhibit 1 to defendant’s memorandum, Berendes

affidavit at paras. 18 and 1 9 . Unfortunately, however, that

affidavit stops short of providing the court with potentially

important information. Regardless of who may have “designed” the

West Marine packaging, it remains unclear whether TAB actually

provided West Marine with the allegedly infringing photographs

that were used in West Marine’s advertising and product

packaging. For purposes of resolving TAB’s pending motion, the

court will assume that TAB did, in fact, provide West Marine with

the allegedly infringing photographs.

Discussion

A court may exercise either general or specific personal

jurisdiction over a defendant. “General jurisdiction exists when

the litigation is not directly founded on the defendant’s forum-

11 based contacts, but the defendant has nevertheless engaged in

continuous and systematic activity, unrelated to the suit, in the

forum state.” United Elec. Workers, 960 F.2d at 1088. Here,

Solar Tech does not contend that TAB engaged in “continuous and

systematic activity” in New Hampshire, nor does it ask the court

to exercise general jurisdiction over TAB. Accordingly, if the

court may properly exercise personal jurisdiction over this

defendant, it must be specific jurisdiction.

A court may exercise specific jurisdiction when the cause of

action arises directly out o f , or relates t o , the defendant’s

forum-based contacts. United Elec. Workers, 960 F.2d at 1088-89.

In an effort to assist district courts in determining whether

they might properly exercise specific jurisdiction, the Court of

Appeals has formulated a three-part test:

First, the claim underlying the litigation must directly arise out o f , or relate t o , the defendant’s forum-state activities. Second, the defendant’s in- state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state’s laws and making the defendant’s involuntary presence before the state’s courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

12 Id. at 1089. An “affirmative finding on each of the three

elements of the test is required to support a finding of specific

jurisdiction.” Phillips Exeter Academy v . Howard Phillips Fund,

Inc.,

8 4 , 288 (1st Cir. 1999) (footnote omitted).

Here, the court will focus on the “purposeful availment” prong of

the applicable test.

In support of its assertion that TAB has purposefully

availed itself of the privilege of conducting business in New

Hampshire, Solar Tech says:

TAB voluntarily, willingly, and purposefully operated an Internet website which advertised and offered the infringing product for sale in New Hampshire and which transmitted infringing copie[s] of [Solar Tech’s] photographs to New Hampshire residents. TAB also voluntarily, willingly, and purposefully sold infringing products in New Hampshire through its dealers. These contacts are such that TAB should have reasonably anticipated being haled into court in New Hampshire.

Plaintiff’s memorandum at 9. The court disagrees.

13 I. TAB’s Web Site.

The mere fact that an entity operates a commercial,

interactive Web site does not, without more, subject that entity

to jurisdiction anywhere in the world. See Toys “R” U s , Inc. v .

Step Two, S.A.,

(3d Cir. 2003). In determining

whether the operation of a Web site is sufficient to warrant the

exercise of personal jurisdiction in a particular forum, a number

of courts have embraced the analysis set forth in Zippo Mfg. C o .

v . Zippo Dot Com, Inc.,

(W.D. P a . 1997). See,

e.g., Step Two,

(calling Zippo a “seminal

authority regarding personal jurisdiction based upon the

operation of an Internet web site.”). See also Dagesse v . Plant

Hotel N.V.,

1 1 , 221 (D.N.H. 2000) (Barbadoro,

J.).

In Zippo, the court concluded that, “the likelihood that

personal jurisdiction can be constitutionally exercised is

directly proportionate to the nature and quality of commercial

activity that an entity conducts over the Internet.” Id. at

1124. Accordingly, the court developed a “sliding scale,” by

which to assess whether the amount of commercial activity

14 conducted over the Internet by a defendant is sufficient to

warrant the conclusion that it has purposefully availed itself of

the privileges and benefits of conducting business in a

particular forum.

At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange that occurs on the Web site [with residents of the forum state].

Zippo,

. Here, plainly, TAB does not fall

into the first category; there is no suggestion that it entered

into any contracts with residents of New Hampshire through its

Web site or that it knowingly and intentionally transferred files

through its Web site to this forum. Nor, however, would it be

entirely fair or accurate to characterize TAB’s Web site as

15 strictly “passive.” Although TAB stopped selling its solar

panels and chargers through that Web site in 2004, the site did

(briefly) offer users the opportunity to purchase those items

from TAB and, therefore, acted as a means by which TAB could

enter into contracts with distant consumers and sell its products

in remote forums.

Because its Web site falls into the middle ground on the

Zippo court’s sliding scale, resolution of the personal

jurisdiction question must involve an inquiry into the level of

the interactivity between TAB and residents of New Hampshire and

an examination of the commercial nature of that interactivity.

It i s , however, undisputed that TAB never made any sales of the

allegedly infringing products to residents of New Hampshire

through its Web site - in fact, it appears that it has never made

any Internet sales of those products before it removed them from

its Web site. Nor is there any record evidence that TAB fielded

any product-related inquiries from New Hampshire residents or

that it used its Web site to specifically target the New

Hampshire retail market. See, e.g., Step Two,

(“[T]here must be evidence that the defendant ‘purposefully

16 availed’ itself of conducting activity in the forum state, by

directly targeting its web site to the state, knowingly

interacting with residents of the forum state via its web site,

or through sufficient other related contacts.”); Shamsuddin v .

Vitamin Research Prods.,

0 4 , 813 (D. Md. 2004)

(“Website interactivity is important only insofar as it reflects

commercial activity, and then only insofar as that commercial

activity demonstrates purposeful targeting of residents of the

forum state or purposeful availment of the benefits or privileges

of the forum state.”).

What is left, then, with regard to TAB’s Internet activities

is the fact that TAB advertised its products on its Web site -

advertisements that could have been viewed by New Hampshire

residents (though there is no evidence that any New Hampshire

resident ever visited TAB’s Web site). Such activity, however,

is of the sort described by the Zippo court as “passive” and an

insufficient basis upon which to ground the exercise of personal

jurisdiction. As several courts have noted, merely advertizing

products for sale on the Internet is not enough; “something more”

17 is required before a court may properly exercise personal

jurisdiction over a foreign defendant.

To put the principle broadly, the mere existence of a website that is visible in a forum and that gives information about a company and its products is not enough, by itself, to subject a defendant to personal jurisdiction in that forum.

Something more is necessary, such as interactive features which allow the successful online ordering of the defendant’s products. The mere existence of a website does not show that a defendant is directing its business activities towards every forum where the website is visible; as well, given the omnipresence of Internet websites today, allowing personal jurisdiction to be premised on such a contact alone would “eviscerate” the limits on a state’s jurisdiction over out-of-state or foreign defendants.

McBee v . Delica Co.,

0 7 , 124 (1st Cir. 2005) (citations

omitted). See also Cybersell, Inc. v . Cybersell, Inc.

(9th Cir. 1997); Young v . New Haven Advocate,

(4th Cir. 2002). Here, that “something more” is

lacking.

II. TAB’s Contacts with Retailers in New Hampshire.

In addition to pointing to TAB’s Internet activities as a

basis for the court to exercise personal jurisdiction over i t ,

18 Solar Tech also asserts that TAB purposefully availed itself of

the privilege of conducting business in this forum by selling its

products to national retailers, at least one of which has a

presence in this state. By employing those national resellers,

Solar Tech says TAB knew (or should have known) that at least

some of its solar panels and charging units would make their way

into New Hampshire - in fact, at least one of them ultimately did

make its way to one of West Marine’s New Hampshire stores. Thus,

says Solar Tech, TAB knowingly and purposefully availed itself of

the privileges and benefits of selling its products in this

forum.

The Court of Appeals for the First Circuit has, however,

rejected the “stream of commerce” theory as a basis for the

exercise of personal jurisdiction. Instead, it has embraced the

plurality opinion of Justice O’Connor in Asahi Metal Indust. C o .

v . Superior Court of California,

(1987), in which

the Court held:

[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 into an act purposefully directed toward the forum State.

19

. See also Boit,

.

Here, as in Boit, the only evidence of TAB’s “contact” with

New Hampshire is the act of selling the allegedly infringing

products to West Marine (and/or providing West Marine with the

allegedly infringing photographs), followed by West Marine’s sale

of one of those products at one if its New Hampshire retail

outlets to the paralegal employed by counsel for Solar Tech.

But, as in Boit, there is no evidence that TAB specifically

intended to serve the New Hampshire market. As the Boit court

observed:

For example, there is no evidence that [defendant] designed the product for Maine, advertised in Maine, established channels for providing regular advice to customers in Maine, or marketed the product through a distributor who had agreed to serve as a sales agent in Maine. Accordingly, because “mere awareness” that a product may end up in the forum state does not constitute “purposeful availment,” the district court could not have constitutionally exercised personal jurisdiction over [defendant].

Id. at 683. Solar Tech has not pointed to anything in the record

that persuades the court that the outcome in this case should be

any different.

20 Conclusion

This case presents a fairly close question of whether the

court may properly exercise personal jurisdiction over the

defendant, TAB. But, as the Court of Appeals for the First

Circuit has observed:

[D]etermining personal jurisdiction has always been more an art than a science. As Justice Marshall said, the jurisdictional determination is one in which few answers will be written in black and white. The greys are dominant and even among them the shades are innumerable.

Swiss American Bank, 274 F.3d at 617-18 (citations and internal

punctuation omitted). So it is in this case.

Nevertheless, on balance, the court is persuaded that Solar

Tech has failed to carry its burden of demonstrating that the

court may exercise personal jurisdiction over TAB. Specifically,

Solar Tech has not shown that, despite its limited commercial use

of the Internet and its sales through retailers with a presence

in New Hampshire, TAB purposefully availed itself of the

privilege of doing business in New Hampshire.

21 To be sure, TAB does have some contacts with this forum.

They are, however, quite limited and “isolated.” See Worldwide

Volkswagen,

. The record does not suggest that

those contacts are the product of any purposeful efforts to

target the New Hampshire retail market. Consequently, those

limited contacts are not sufficient to warrant the conclusion

that TAB purposefully availed itself of the privilege of

conducting business in this forum or that it should have

reasonably foreseen the possibility that it would be haled into

court here. See, e.g., Burger King, 471 U.S. at 475 (“[I]t is

essential in each case that there be some act by which the

defendant purposefully avails itself of the privilege of

conducting activities within the forum state, thus invoking the

benefits and protections of its laws.”) (citing Hanson v .

Denckla,

(1958)).

TAB’s motion to dismiss (document n o . 7 ) i s , therefore,

granted and Solar Tech’s complaint is dismissed without

prejudice.

22 SO ORDERED.

Steven J. McAuliffe 'Chief Judge

January 3 1 , 2006

cc: Thomas J. Donovan, Esq. Steven E . Grill, Esq. Donald L. Smith, Esq.

23