The opinion of the court was delivered by: CHARLES KOCORAS, District Judge
This matter comes before the court on Defendants AirClic, Inc.'s
("AirClic") and Scanbuy, Inc.'s ("Scanbuy") motions to dismiss pursuant
to Federal Rules of Civil Procedure 12(b)(2) and (3), or in the
alternative to transfer the action. For the reasons set forth below, the
motions to dismiss are granted.
Because this is a motion to dismiss, we initially accept all well
pleaded facts and allegations in the complaint as true and construe all
inferences in favor of the Plaintiff. Thompson v. Illinois Dep't of
Prof l Regulation. 300 F.3d 750, 753 (7th Cir. 2002). However, since personal jurisdiction is a ground for dismissal, we may
consider affidavits from the parties. Turnock v. Cope, 816 F.3d 332, 333
(7th Cir. 1987). We will resolve factual disputes in the pleadings in
favor of the Plaintiff, but take as true those facts propounded by the
Defendants' affidavits that are unrefuted by the Plaintiff. RAR, Inc. v.
Turner Diesel Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997).
Plaintiff NeoMedia Technologies, Inc. ("NeoMedia") is a Delaware
corporation with a place of business in Lisle, Illinois. NeoMedia is in
the business of providing electronic services that, inter alia, allow
information concerning physical objects and documents to be accessed over
the Internet by scanning bar-codes affixed to the particular document or
object. NeoMedia owns four patents relating to this bar-code scanning
process. AirClic is a Delaware corporation with its principal place of
business in Newtown, Pennsylvania. Scanbuy is a Delaware corporation with
its principal place of business in New York City. Both AirClic and
Scanbuy offer services and products that allow information to be accessed
over the Internet through the scanning of bar-codes. On January 26,
2004, NeoMedia filed a complaint in this court contending that AirClic,
Scanbuy, and a third defendant*fn1 infringed on its patents.
In its complaint, NeoMedia bases its jurisdictional claims on
allegations that AirClic and Scanbuy are registered to transact business
in Illinois, do transact business in Illinois and this district, and have committed patent infringement
within this district. After reviewing affidavits submitted by AirClic and
Scanbuy, it appears that their connections to Illinois are significantly
less robust than as asserted in NeoMedia's complaint. Neither corporation
is licensed or registered in, nor has any offices, customers,
facilities, or assets in Illinois. AirClic and Scanbuy have not sold
products to Illinois customers, solicited business here, or conducted
commercial activities in the state. NeoMedia cannot point to a specific
act of infringement within Illinois by either defendant.
This does not mean that the connections between AirClic, Scanbuy and
Illinois are nonexistent. Both corporations have websites that allow
Illinois users to electronically submit contact information and later
receive information about their products and services. Scanbuy's website
contains a hyperlink to a firm that allegedly sold an infringing product
to an Illinois resident. At the time the lawsuit was filed, Scanbuy's
website listed that its Vice President for Business Development was based
in Illinois. AirClic has strategic partnerships with Illinois
corporations, has attended trade shows in Chicago, and had an employee
living in Illinois.
AirClic and Scanbuy now move to dismiss NeoMedia's complaint on for
lack of personal jurisdiction and improper venue. In the alternative,
they request that we transfer the case to other venues. LEGAL STANDARD
"The purpose of a motion to dismiss is to test the sufficiency of the
complaint, not to decide the merits." Gibson v. City of Chicago,
910 F.2d 1510, 1520 (7th Cir. 1990) (quoting Triad Assocs., Inc. v.
Chicago Hous. Auth., 892 F.2d 583, 586 (7th Cir. 1989)). A complaint need
only specify "the bare minimum facts necessary to put the defendant on
notice of the claim so that he can file an answer." Higgs v. Carver.
286 F.3d 437, 439 (7th Cir. 2002) (citing Beanstalk Group. Inc. v. AM
General Corp., 283 F.3d 856, 863 (7th Cir. 2002)). Dismissal is proper
only when "it appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief." Conley
v. Gibson. 355 U.S. 41, 45-46 (1957). With these principles in mind, we
now address the motion before us.
Because this is a patent infringement case, we apply Federal Circuit
law to determine whether personal jurisdiction may be exercised over a
defendant. Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1354 (Fed.
Cir. 2002). To survive a motion to dismiss, a plaintiff need only make a
prima facie showing that the defendants are subject to personal
jurisdiction. Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349
(Fed. Cir. 2003). Determining if a court can exercise personal jurisdiction over a
nonresident defendant entails two inquiries: whether the forum state's
"long-arm" statute permits service of process and whether the assertion
of jurisdiction would be inconsistent with due process. Electronics. 340
F.3d at 349. The Illinois "long-arm" statute, 735 ILCS 5/2-209(c),
permits Illinois courts to exercise personal jurisdiction over a defendant
on any basis allowed under the due process clauses of the federal and
Illinois Constitutions. Central States. Southeast and Southwest Areas
Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 939 (7th Cir.
2000). While the two constitutions do not necessarily contain the same
guarantees of due process, Rollins v. Ellwood, 141 Ill.2d 244 (Ill.
1990), the Seventh Circuit has repeatedly suggested that "there is no
operative difference between the limits imposed by the Illinois
Constitution and the federal limitations on personal jurisdiction." Hyatt
Int'l Corp. v. Coco, 302 F.3d 707, 715 (7th Cir. 2002).
The federal test for determining personal jurisdiction begins with the
now familiar requirement that the defendant must have "purposefully
established minimum contacts within the forum state," Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 476 (1985), "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 (1946)
(citation omitted). Under this "minimum contacts" test, a defendant may be subject to either specific or general jurisdiction. LSI Indus.,
Inc. v. Hubbell Lighting. Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000).
General jurisdiction arises when a defendant maintains "continuous and
systematic" contacts with the forum state even when the cause of action
has no relation to those contacts. Id. (citing Helicopteros Nacionales de
Columbia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984)).*fn2 Specific
jurisdiction "arises out of ` or "relates to" the cause of action even if
those contacts are "isolated and sporadic." LSI Indus. at 1375 (citing
Burger King at 472-473). Establishing specific jurisdiction requires the
plaintiff to demonstrate that the defendant "should reasonably anticipate
being haled into court [in the forum State]," Burger King at 474 (quoting
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)),
because through "some act" the defendant has "purposefully availed itself
of the privilege of conducting activities" there. Burger King at 475
(quoting Hanson v. Denekia, 357 U.S. 235, 253 (1958)). In addition, the
assertion of specific jurisdiction over the defendant must be "reasonable
and fair". HollyAnne Corp. v. TFT, Inc., 199 F.3d 1304, 1307 (Fed. Cir.
1999). Because NeoMedia's primary arguments for jurisdiction are based on
AirClic's and Scanbuy's websites, we will first examine the relationship
between a defendant's Internet activity and personal jurisdiction. Courts
in this district have espoused a "sliding scale" approach, first
formulated in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119,
1123-24 (W.D.Pa. 1997), that classifies particular Internet activity into
one of three categories. See Infosys Inc. v. Billingnetwork.com, Inc.,
2003 WL 22012687 (N.D. Ill. 2003); Berthold Types Limited v. European
Mikrograf Corp., 102 F. Supp.2d 928 (N.D. Ill. 2000); Ty Inc. v. Clark,
2000 WL 51816 (N.D. Ill. 2000). On one end of the Zippo spectrum is the
"active" website, where the defendant clearly transacts business over the
Internet through its website, such as entering contracts with the user
for the sale of goods (Amazon.com is a well known example). Courts "can
appropriately exercise personal jurisdiction over those defendants who
fall into [this] category by actively conducting business on the
Internet." Berthold at 932. At the opposite end of the Zippo scale is the
"passive" website, one in which a defendant has posted information on the
Internet, but does not facilitate further online communication or
interaction. Courts cannot exercise personal jurisdiction over defendants
in this category "who simply operate passive web sites that merely
provide information or advertisements without more," Id. at 933. There
exists the potential for jurisdiction in the "middle ground" or "hybrid"
category, which is occupied by interactive websites where the user can exchange information with the defendant operator.
Zippo at 1124. "In these cases, the exercise of jurisdiction is
determined by examining the interactivity and commercial nature of the
exchange of information that occurs on the [website.]" Id. The parties
are in agreement that AirClic's and Scanbuy's websites belong in this
middle category. However, because the defendants' websites contain
different features, their impact (as well as each defendant's other
relevant contact with Illinois) on personal jurisdiction will be analyzed
Before examining each defendant's website and susceptibility to
jurisdiction in Illinois, it should be noted that courts in this district
have used the Zippo framework for determining general jurisdiction
(Infosys), specific jurisdiction (Berthold), or both (Ty). However, in
reviewing Northern District cases involving "middle ground" websites,
Judge Zagel has remarked that he found "no case where general
jurisdiction was conferred on the basis of an interactive website in the
absence of non-website factors evidencing intent for a particular product
or website to reach a particular state." Infosys at *4.*fn3 Because all
websites could be said to continuously and systematically contact every
state-or for that matter any country-by their natural accessability over the Internet, Judge Zagel's observation suggests that in the context ...