Three of the web sites formerly listed on the Zap site under
the heading "OUR SITES" were "Starting Point," "Daily Stocks,"
and "Stocksheet." "Starting Point" provides access to information
about stocks, commodities, and related investments, among other
things. "Daily Stocks" and "Stocksheet" offer stock and commodity
quotes, charts, news, and research. At least three of plaintiff
Zap Futures' competitors advertised their services on one of
these three web sites.
Zap Futures brought this action in August 1998, alleging that
defendants had violated Sections 43(a) and 43(c) of the Lanham
Act, 15 U.S.C. § 1125(a), (c), in connection with their Zap site
activities. Plaintiff also alleges common law unfair competition
and violations of the Illinois Deceptive Trade Practices Act, the
Illinois Consumer Fraud and Deceptive Business Practices Act, and
the Illinois Anti-Dilution Act. The gist of Zap Futures' claim
involves defendants' use of the name "Zap" and the domain name
"zap.com" in connection with stocks and commodities trading.
Plaintiff alleges that defendants' activities will likely cause
trade and public confusion and dilution of the quality of Zap
Futures' "ZAP" mark. Zap Futures seeks to enjoin defendants'
alleged trademark infringement, trademark dilution, and unfair
competition, and also seeks damages. Defendants have moved to
dismiss this suit for lack of personal jurisdiction pursuant to
Rule 12(b)(2) of the Federal Rules of Civil Procedure.
The standards by which the court must evaluate a 12(b)(2)
motion to dismiss are straightforward. The plaintiff bears the
burden of providing sufficient evidence to establish a prima
facie case for personal jurisdiction. RAR, Inc. v. Turner
Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997); Michael J.
Neuman & Assocs. v. Florabelle Flowers, Inc., 15 F.3d 721, 724
(7th Cir. 1994); Arena Football League, Inc. v. Roemer,
947 F. Supp. 337, 339 (N.D.Ill. 1996). The jurisdictional allegations
in the complaint are taken as true unless controverted by the
defendant's affidavits. Any conflicts among affidavits must be
resolved in the plaintiff's favor. Turnock v. Cope,
816 F.2d 332, 333 (7th Cir. 1987); Cherry Communications, Inc. v. Coastal
Tel. Co., 906 F. Supp. 452, 454 (N.D.Ill. 1995); Czarobski v.
St. Kieran's Church, 851 F. Supp. 1219, 1220 (N.D.Ill. 1994).
In federal question cases, a prima facie case for personal
jurisdiction has two elements. First, the plaintiff must
demonstrate that bringing the defendant into court comports with
Fifth Amendment Due Process. Second, the plaintiff must show that
the defendant is amenable to service of process. See United
States v. De Ortiz, 910 F.2d 376, 381-82 (7th Cir. 1990). As we
discuss below, Zap Futures has met both requirements.
A. Due Process
A court's assertion of personal jurisdiction must comport with
"`traditional notions of fair play and substantial justice'" to
satisfy the Due Process Clause. International Shoe Co. v.
Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)
(quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85
L.Ed. 278 (1940)). The touchstone of the due process analysis is
whether the defendant purposefully established "minimum contacts"
with the political unit encompassing the forum. Asahi Metal
Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 108-09, 107
S.Ct. 1026, 94 L.Ed.2d 92 (1987). Even defendants not physically
present in the jurisdiction have sufficient "minimum contacts" if
they do some act by which they purposefully avail themselves of
the privilege of conducting activities in the forum state,
Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d
1283 (1958), and if they "should reasonably anticipate being
haled into court there." World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490
(1980). Due process also requires that the action arise from or
relate to the defendant's contacts with the forum state. Burger
King Corp. v. Rudzewicz,
471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985);
Heritage House Restaurants, Inc. v. Continental Funding Group,
Inc., 906 F.2d 276, 281 (7th Cir. 1990). Finally, the court
should consider whether it is reasonable to require the
nonresident defendant to litigate in the forum state, considering
factors such as the relative interests of the litigants, the
forum's interest in litigating the dispute, and "`the interstate
judicial system's interest in obtaining the most efficient
resolution of controversies.'" Burger King, 471 U.S. at 477,
105 S.Ct. 2174.
Our threshold inquiry into "minimum contacts" is not
complicated. Indeed, most challenges to personal jurisdiction in
federal question cases revolve around the defendant's amenability
to service because the due process requirement is easily
satisfied. See Vlasak v. Rapid Collection Sys., Inc.,
962 F. Supp. 1096, 1099 (N.D.Ill. 1997) (Grady, J.); Merrill Lynch
Business Financial Services, Inc. v. Marais, No. 94 C 3316, 1995
WL 608573, at *4 (N.D.Ill. Oct.12, 1995). In federal question
cases, the defendant must only have sufficient contacts "with the
United States as a whole rather than any particular state or
other geographic area." De Ortiz, 910 F.2d at 382; see also
United Rope Distribs., Inc. v. Seatriumph Marine Corp.,
930 F.2d 532, 534 (7th Cir. 1991) ("When a national court applies national
law, the due process clause requires only that the defendant
possess sufficient contacts with the United States."). A
defendant "has sufficient contacts with the United States to
support the fairness of the exercise of jurisdiction over him by
a United States court" if he resides or conducts business on
American soil. See Fitzsimmons v. Barton, 589 F.2d 330, 333
(7th Cir. 1979). Here, defendants were incorporated and do
business in the continental United States. Thus, their contacts
with the United States satisfy due process.
B. Amenability to Service
Minimum contacts with the United States are necessary, but not
sufficient, to authorize a district court's assertion of personal
jurisdiction. A defendant must also be amenable to service of
process. See Omni Capital Intern., Ltd. v. Rudolf Wolff & Co.,
Ltd., 484 U.S. 97, 104, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987)
(holding that personal jurisdiction requires both "a
constitutionally sufficient relationship between the defendant
and the forum" and "a basis for the defendant's amenability to
service of summons"). Rule 4(k) of the Federal Rules of Civil
Procedure provides that service of a summons is effective to
establish jurisdiction over the person of a defendant (1) who
could be subjected to the jurisdiction of a court in the state in
which the district court is located, or (2) when authorized by a
statute of the United States.
This case involves the Lanham Act, which does not authorize
nationwide service of process. Therefore, defendants' amenability
to service is governed by the Illinois long-arm statute, 735
Ill.Comp. Stat.Ann. 5/2-209(a). The Illinois long-arm statute
provides that a person is subject to the jurisdiction of Illinois
courts as to any cause of action arising from certain specified
acts. And as of September 7, 1989, an Illinois state court also
may exercise jurisdiction "on any other basis now or hereafter
permitted" by the state and federal constitutions. 735
Ill.Comp.Stat.Ann. 5/2-209(c). This lawsuit was filed after that
date, so the court may analyze this jurisdictional issue under §
2-209(c). See FMC Corp. v. Varonos, 892 F.2d 1308, 1311 n. 5
(7th Cir. 1990). Because § 2-209(c) authorizes personal
jurisdiction to the constitutional limit, the statutory analysis
collapses into a due process inquiry, and we need not consider
whether defendants engaged in any of the acts enumerated in the
long-arm statute. See Dehmlow v. Austin Fireworks,
963 F.2d 941, 945 (7th Cir. 1992).
Thus, we return to the "minimum contacts" analysis of
International Shoe and its progeny. Defendants contend that
they should not be haled into court in Illinois because they did
not "purposefully enter" Illinois in any "substantial way."
They argue that their web site provides no basis for a finding of
"purposeful entry" into Illinois, especially because they never
completed the purchase of the investment-related web sites to
which the Zap site formerly provided hyperlinks. Defendants
emphasize that neither Zapata nor Zap Corp. is registered to do
business in Illinois as a foreign corporation, maintains an
office in Illinois or has any employees in the state, sells a
product or service here, owns or leases Illinois property, or
maintains a bank account here.
This case involves defendants' internet site. Because internet
communications technology has developed rapidly over the last
several years, internet-based claims of personal jurisdiction are
fairly new. Cases that have dealt with the issue can be grouped
into three categories:
The first category includes cases where defendants
actively do business on the Internet. In those
instances, personal jurisdiction is found because
defendants "enter into contracts with residents of
a foreign jurisdiction that involve the knowing and
repeated transmission of computer files over the
Internet." The second category deals with situations
"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
of information that occurs on the Web site." The
third category involves passive Web sites; i.e.,
sites that merely provide information or
advertisements to users. Districts [sic] courts do
not exercise jurisdiction in the latter cases because
"a finding of jurisdiction . . . based on an Internet
web site would mean that there would be nationwide
(indeed, worldwide) personal jurisdiction over anyone
and everyone who establishes an Internet web site. .
Weber v. Jolly Hotels, 977 F. Supp. 327, 333 (D.N.J. 1997)
(quoting Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119,
1124 (W.D.Pa. 1997); Hearst Corp. v. Goldberger, No. 96
Civ. 3620, 1997 WL 97097, at *1 (S.D.N.Y. Feb.26, 1997)).
Defendants attempt to place the Zap site in category three by
repeatedly describing it as essentially "passive," but we
disagree with this characterization.
A full explanation requires a brief summary of internet portals
and their unique function. Portals are "super" web sites that
provide a wide variety of services, aiming to be "one-stop shops"
for internet needs. Portals typically offer access to internet
search engines, e-mail accounts, discussion groups, web sites
categorized by topic, and directories, among other things — all
free to the user. Portals provide the services at no cost to
internet users, and they generate their income by selling online
advertising space. See Kim Komando, Internet Portals Open
Sites for 1-Stop Surfing, Ariz. Republic, July 27, 1998, at E2.
Given the nature and function of internet portals, it is not
accurate to label them as "passive."*fn7 We cannot say that
portals fit well within the existing internet/personal
jurisdiction framework. As far as we can tell, no court has dealt
with the issue of personal jurisdiction in relation to an
internet "portal" like the Zap site.*fn8 But
the Zap site is somewhat analogous to a category two site — it is
designed for user interaction; more importantly, its success
hinges on the number of users interacting with it.
We move on to examine defendants' contacts with Illinois,
through the Zap site and otherwise. For two reasons, we find that
an Illinois court would exercise personal jurisdiction over
defendants within constitutional bounds.
First, plaintiff points out that the Zap site included a
"Contact" page on which users could send e-mail to Zapata and
also join Zapata's mailing list. This page also provided Zapata's
address, phone number, and fax number. Twenty-five Illinois
residents requested to be placed on Zapata's mailing list. This
contact with Illinois residents favors the exercise of personal
jurisdiction over defendants. Defendants created the mailing list
for the purpose of developing contacts with internet users,
seeking to provide further information about themselves. Portal
sites intend to create the feeling of community, a kind of
"internet neighborhood," to ensure repeated and long visits by
users — which makes user contacts extremely important to their
Although it is unclear whether defendants actually communicated
with those who had requested to be on the mailing list, it is
clear that they intended eventually to do so. The availability of
defendants' mailing list was entirely within their control. By
failing to prevent Illinois residents from being put on their
mailing list, defendants made the choice to establish contacts
with and "enter" Illinois. See Zippo Mfg. Co. v. Zippo Dot Com,
Inc., 952 F. Supp. 1119, 1126 (W.D.Pa. 1997) ("If a corporation
determines that the risk of being subject to personal
jurisdiction in a particular forum is too great, it can choose to
sever its connection to the state.").*fn9
A second reason for exercising personal jurisdiction is
defendants' non-internet contact with Illinois.*fn10 Zap Corp.
entered into a letter of intent to buy Starting Point, L.L.C., an
Illinois resident that operated the "Starting Point" web site.
During negotiations, Zap Corp. sent correspondence to Starting
Point, L.L.C. in Illinois.
Defendants argue that they never completed the purchase of
Starting Point, L.L.C. and consequently never owned or operated
the "Starting Point" web site (or the other two trading sites).
But the ownership of these linked sites is not relevant to our
analysis. Defendants purposefully reached out to an Illinois
created a business relationship with it, expecting to buy the
company. The object of the transaction was to enhance defendants'
reputation and presence among internet users. Moreover, on the
Zap site, defendants referred to "Starting Point" as "their"
site. Thus, the business relationship established with Starting
Point, L.L.C. is sufficient to justify exercising personal
jurisdiction. See Resuscitation Techs., Inc. v. Continental
Health Care Corp., No. IP 96-1457-C-M/S, 1997 WL 148567
(S.D.Ind. Mar.24, 1997) (holding that electronic mail, telephone,
standard mail, and fax contacts, in the context of negotiations
and a non-binding letter of intent, were sufficient to confer
personal jurisdiction); Medline Industries, Inc. v. United
Western Medical Centers, No. 96 C 4390, 1996 WL 672257, at *2
(N.D.Ill. Nov.14, 1996) ("Even a relationship based solely on
mail and telephone communications can justify jurisdiction of a
Defendants contend that their contacts with Illinois are not
substantial enough to confer personal jurisdiction. However, the
minimum contacts test does not focus on the quantity of contacts
with a forum. The main factor in the minimum contacts inquiry is
"foreseeability." Heritage House Restaurants, Inc. v.
Continental Funding Group, Inc., 906 F.2d 276, 283 (7th Cir.
1990). Simply put, are the defendant's contacts with the forum
state such that it can reasonably anticipate being required to
defend itself there? See World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490
(1980). Here, defendants purposefully reached out to Illinois
through the mailing list on the Zap site and their relationship
with Starting Point, L.L.C., an Illinois resident. Based on these
deliberate connections with Illinois, defendants had fair warning
that they might be called before an Illinois court.
Defendants assert that, even if their activities were directed
toward Illinois, plaintiff cannot show that its claims arise out
of these forum-related activities. But in fact, the correct
standard is "arise out of or relate to." Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528
(1985) (emphasis added)*fn11. Defendants' argument is
unpersuasive. Zap Futures' trademark infringement, dilution, and
unfair competition claims are based on the affiliation between
the use of the term "Zap" on defendants' web site and the content
of the "Starting Point" (as well as the "Daily Stocks" and
"Stocksheet") web site. Plaintiff alleges that defendants'
infringing activity includes the Zap site's hyperlinks to
financial web sites such as "Starting Point." Defendants'
relationship and letter of intent with Starting Point, L.L.C.
clearly relate to this claim; in fact, this very relationship and
the resulting representation to the public that "Starting Point"
belonged to defendants are central to plaintiff's claim.*fn12
Plaintiff also alleges that defendants' use of plaintiff's mark
confuses the public, which includes internet users who have
established contacts with defendants through the Zap site mailing
list. Thus, the contacts with Illinois residents established
through the Zap site mailing list also relate to plaintiff's
Finally, although the parties did not address this issue, we
consider whether it is reasonable to require defendants to
litigate in Illinois. One consideration is the defendant's
interest in avoiding burdensome and
gravely inconvenient litigation. While Zapata and Zap Corp's
principal places of business are in, respectively, Texas and New
York, defendants have not shown (or even argued) that they are
burdened by litigating in this forum. Furthermore, the burden
placed on the defendant must be considered in light of the
plaintiff's interest in obtaining convenient and effective
relief. See World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct.
559; see also Burger King, 471 U.S. at 477, 105 S.Ct. 2174
(observing that considerations such as the plaintiff's interest
in obtaining relief "sometimes serve to establish the
reasonableness of jurisdiction upon a lesser showing of minimum
contacts than would otherwise be required"). Because Zap Futures
is based in Illinois, much of its injury from the alleged
infringement and dilution is likely to occur in Illinois. Zap
Futures therefore has a strong interest in adjudicating its
claims in Illinois. In addition, Illinois has a strong interest
in adjudicating disputes that involve the alleged infringement of
an Illinois limited liability company's trademark. The court
concludes that these factors weigh in favor of exercising
personal jurisdiction over defendants in Illinois.
For the reasons outlined in this opinion, defendants' motion to
dismiss plaintiff's complaint for lack of personal jurisdiction