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CLIPP DESIGNS, INC. v. TAG BAGS

January 6, 1998

CLIPP DESIGNS, INC., Plaintiff,
v.
TAG BAGS, INC.; and DAVID J. WHELAN, individually, Defendants.



The opinion of the court was delivered by: ANDERSEN

 This matter is before the Court on the motion of defendant David J. Whelan ("Whelan") to dismiss plaintiff's complaint for lack of personal jurisdiction due to inadequate contacts with Illinois. Alternatively, Whelan moves to transfer venue to the District of Minnesota.

 During the briefing of this motion, plaintiff, Clipp Designs, Inc. ("Clipp"), filed an amended complaint naming Tag Bags, Inc. as an additional defendant. Tag Bags, Inc. has been served with the amended complaint and its attorneys have filed their appearances. Tag Bags, Inc. now joins in Whelan's motion. For the following reasons, the motion is granted in part and denied in part.

 BACKGROUND

 Clipp alleges that defendants' violated state and federal law by selling and advertising a product which purportedly infringes the distinctive trade dress of Clipp's product. Clipp also alleges that "Defendants placed a picture of Clipp Designs' Product in Defendants' advertising for Defendants' "LOCK-ITS" product, identifying Clipp Designs' Product as their own." (Amended Compl., P 18). Tag Bags, Inc. subsequently filed suit against Clipp in the United States District Court for the District of Minnesota requesting a declaration that it has not infringed Clipp's trade dress or trademarks and that it has made neither false representations nor engaged in false advertising.

 Clipp is an Illinois corporation with its principal place of business in Hinsdale, Illinois. Clipp manufacturers and sells a heart shaped plastic locket, the COLLECTORS CLIPP TM or THE CLIPP TM, which attaches to the hang tag used on stuffed toys such as BEANIE BABIES(R). Clipp has been adverting and selling its product since July 1997.

 Whelan is a Minnesota resident. In Spring 1997, under the name Tag Bags, Whelan began selling plastic bags that protect the hang tag used on BEANIE BABIES(R). On October 6, 1997, Whelan incorporated Tag Bags, Inc., a Minnesota corporation having its principal place of business in Plymouth, Minnesota. Whelan is the president and sole officer of Tag Bags, Inc. In October 1997, Tag Bags, Inc. began advertising a heart shaped plastic locket tag protector, the LOCK-ITS TM.

 DISCUSSION

 The Lanham Act does not specifically authorize this Court's exercise of jurisdiction. Thus, this Court has personal jurisdiction over defendants only if an Illinois court has jurisdiction. FMC Corp. v. Varonos, 892 F.2d 1308, 1310 (7th Cir. 1990). Clipp, the party asserting jurisdiction, has the burden of providing facts sufficient to establish personal jurisdiction. Vandeveld v. Christoph, 877 F. Supp. 1160, 1163 (N.D. Ill. 1995). First, Clipp must establish jurisdiction under Illinois law. Second, Clipp must establish that the exercise of jurisdiction will not offend due process. Jacobs/Kahan & Co. v. Marsh, 740 F.2d 587, 589 (7th Cir. 1984); IDS Life Ins. Co. v. SunAmerica, Inc., 958 F. Supp. 1258, 1264 (N.D. Ill. 1997).

 Under the Illinois long arm statute, a defendant submits to jurisdiction in Illinois if it commits a tortious act within the state and the "cause of action arises from the doing of such act[]." 735 ILCS 5/2-209(a)(2). The Illinois Constitution and federal due process require that a defendant have minimum contacts with the forum state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945); see also Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995), cert. denied, 518 U.S. 1004, 135 L. Ed. 2d 1047, 116 S. Ct. 2523 (1996). Minimum contacts arise if a defendant has purposefully availed itself of the privilege of conducting activities in the forum state such that the defendant invokes the benefits and protections of the law. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 85 L. Ed. 2d 528, 105 S. Ct. 2174 (1985). Accordingly, a defendant can reasonably anticipate being hauled in to court in the state in which the "focal point of the injuries resulting from their intentional conduct" occurs. Calder v. Jones, 465 U.S. 783, 790, 79 L. Ed. 2d 804, 104 S. Ct. 1482 (1984).

 The infringement of intellectual property rights, such as trade dress, is a tort. If Clipp's intellectual property rights are impaired, as the suit alleges, the injury will be felt in Illinois, the state in which Clipp is located. See Janmark, Inc. v. Reidy and Dreamkeeper, Inc., 132 F.3d 1200, 1997 U.S. App. LEXIS 36161, 1997 WL 786935, *1-2 (7th Cir. 1997); Indianapolis Colts, Inc. v. Metro. Baltimore Football Club Ltd. Partnership, 34 F.3d 410, 411 (7th Cir. 1994). Indeed, "the state in which the injury (and therefore the tort) occurs may require the wrongdoer to answer for its deeds even if events were put in train outside its borders." Janmark, Inc., 1997 WL 786935 at *2.

 Because Clipp's alleged injury occurred in Illinois, the critical issue is whether defendants "entered" Illinois in some fashion. Clipp claims that defendants solicited orders in Illinois, advertised LOCK-ITS TM on its Internet web site, and advertised its product in Mary Jane's Beanie World magazine, a magazine circulated in Illinois and nationally.

 First, Whelan claims that his contacts with Illinois were made solely on behalf of Tag Bags, Inc. in his capacity as president. He argues that the fiduciary shield doctrine prevents this Court from exercising personal jurisdiction over him as an individual. We agree.

 The fiduciary shield doctrine "denies personal jurisdiction over an individual whose presence and activity in the state in which the suit is brought were solely on behalf of his employer or other principal." Rice v. Nova Biomedical Corp., 38 F.3d 909, 912 (7th Cir. 1995), cert. denied, 514 U.S. 1111, 131 L. Ed. 2d 855, 115 S. Ct. 1964 (1995). Accord Rollins v. Ellwood, 141 Ill. 2d 244, 565 N.E.2d 1302, 1313-1318, 152 Ill. Dec. 384 (1990). The doctrine serves to prevent the "perceived unfairness" of forcing an individual to defend a lawsuit brought against him personally in a forum in which he performed the only relevant contacts for the benefit of his employer and not for his own benefit. Vandeveld, 877 F. Supp. at 1163; Brujis v. Shaw, 876 F. Supp. 975, 977 (N.D. Ill. 1995). Nonetheless, the doctrine will not apply if the defendant is the alter ego of the entity for which he is a fiduciary. Brujis, 876 F. ...


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