Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LFG, LLC v. ZAPATA CORP.

January 19, 1999

LFG, LLC, D/B/A ZAP FUTURES, PLAINTIFF,
v.
ZAPATA CORPORATION AND ZAP CORP., DEFENDANTS.



The opinion of the court was delivered by: Grady, District Judge.

MEMORANDUM OPINION

Before the court is the defendants' motion to dismiss the complaint pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. For the reasons stated in this opinion, the motion is denied.

BACKGROUND

Viewed in the plaintiff's favor, the relevant facts are as follows. Plaintiff LFG, LLC, doing business as Zap Futures, is an Illinois limited liability company with its principal place of business in Chicago. It is an electronic brokerage firm involved in the trading of commodity futures and options over the internet.*fn1 Zap Futures provides on-line trading, on-line stock and commodity futures and options research, quotes, and financial news. It uses the trademark "ZAP" in connection with its goods and services and has maintained a web site with the internet domain address "zapfutures.com" since 1996.*fn2

Defendant Zapata Corporation ("Zapata") is a Delaware corporation with its principal place of business in Houston, Texas. In early 1998, Zapata developed a plan to create an internet "portal" through which users could access the internet. Accordingly, Zapata formed defendant Zap Corp. in April 1998 as a wholly-owned subsidiary to conduct Zapata's internet business.*fn3 Zap Corp. is a Nevada corporation with its principal place of business in Rochester, New York. Its computer server is in New York as well.

In June 1998, defendants launched their web site (the "Zap site"), which uses the domain address "zap.com." Internet users in the United States and most of the world can access the Zap site. At the time this action was brought, the site was structured as a "portal," offering a list of connections to other web sites by way of "hyperlinks."*fn4 Some of the linked sites merely provided information; others were interactive — for example, allowing users to purchase music or make travel reservations. The Zap site connected users to the linked sites at no charge; in addition, it offered users the opportunity to sign up for Zapata's mailing list and the ability to make the Zap site a user's "starting page" at no charge.*fn5

In early summer 1998, Zap Corp. entered into non-binding letters of intent to acquire the web sites hyperlinked to the Zap site. Thereafter, and until some point after this suit was commenced, the Zap site described that list of hyperlinks as "OUR SITES." In mid-October 1998, however, Zap Corp. announced that it would not be proceeding with the acquisitions contemplated by the letters of intent and withdrew the letters. The Zap site as it currently appears provides links to only two sites, "Word" and "Charged," the only other web sites Zap Corp. owns.*fn6

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.

DISCUSSION

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 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.