United States District Court, N.D. Illinois
June 14, 2004.
HEALTH VENTURES PARTNERS.
The opinion of the court was delivered by: PHILIP REINHARD, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Meta/Balance, Inc. ("Metabalance") filed a Complaint
for Declaratory Judgment of Non-infringement to determine whether
Metabalance's use of the mark "NATURE'S LABEL" infringes on
Health Ventures Partners' ("Health Ventures") trademark,
"NATURE'S CODE." Health Ventures does not manufacture or sell
products with the "NATURE'S CODE" mark affixed to them; rather,
it licenses use of the mark to QVC, Inc. ("QVC") which in turn
sells products with the mark affixed to them nationwide. Health
Ventures is a partnership duly organized and existing under the
laws of the Commonwealth of Pennsylvania. The Health Ventures
partnership is composed of Taub-Oliphant Life, L.L.C., a Delaware
limited liability company, and QHealth, a Delaware corporation;
the percentages of composition are 49% and 51%, respectively,
giving QHealth a majority/controlling share of Health Ventures.
Health Ventures' predecessor-in-interest, QVC, which is also the
parent entity of QHealth, filed the mark "NATURE'S CODE" for
registration under The Lanham Act. The United States Patent and
Trademark Office granted the federal trademark registration to
QVC for vitamins and nutritional supplements as Certificate of
Registration 2,177,582. This court has subject matter
jurisdiction under 28 U.S.C. § 1331. Dispute arises, however, as
to whether this court has personal jurisdiction over Health
Ventures. Health Ventures denies the existence of personal
jurisdiction, moving to dismiss pursuant to Federal Rule of Civil
Plaintiffs have the burden of establishing personal
jurisdiction. Smith v. Gottlieb, No. 02-C-50192, 2002 WL
1919171 (N.D.Ill.Aug. 19, 2002) (Reinhard, J.) To be found
subject to personal jurisdiction by a court, due process requires
that "the maintenance of the suit not offend traditional notions
of fair play and substantial justice." International Shoe Co. v.
State of Washington, et al., 326 U.S. 310, 316 (1945). Personal
jurisdiction exists in Illinois when it is "fair, just and
reasonable to require a nonresident defendant to defend in
Illinois considering the quality and nature of defendant's
actions occurring in Illinois or affecting interests in
Illinois." Smith, 2002 WL 1919171 at *1. (Citing RAR, Inc. v.
Turner Diesel, Ltd., 107 F.3d 1272, 1277 (7th Cir. 1997)).
The standard may be met if the court finds general jurisdiction
to exist, stringently requiring a defendant to have "continuous
and systematic" general business contacts with the forum state.
RAR, Inc., 107 F.3d at 1277. When a finding of general
jurisdiction cannot be sustained, the defendant may still be
subject to personal jurisdiction if specific jurisdiction is
found to exist. Id. at 1276. Specific jurisdiction is said to
exist when a defendant has "purposefully established minimum
contacts within the forum state." Id. Criteria for determining
whether a court's jurisdiction over an out-of-state defendant
meets the minimum contacts requirement of specific jurisdiction
includes whether "the defendant purposefully avail[ed] itself of
the privilege of conducting activities within the forum state,"
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985),
giving the forum state a significant interest in adjudicating the
suit in this forum. Worldtronics Int'l, Inc. v. Ever Splendor
Enterprise Co., 969 F. Supp. 1136, 1142 (E.D.Ill. 1997). The
purposeful availment requirement "ensures that a defendant will
not be haled into a jurisdiction solely as a result of `random,'
`fortuitous,' or `attenuated' contacts . . . or of the
`unilateral activity of another party or a third person.'"
Burger King Corp., 471 U.S. at 475. Metabalance has not
asserted that the court has personal jurisdiction over Health
Ventures by way of general jurisdiction, resting its argument on
specific jurisdiction instead.
It is uncontroverted that Health Ventures did not sell or
create a product in the state of Illinois, it instead licensed
its trademark to QVC which in turn engaged in Illinois commerce
via its sales and distribution mechanisms. Health Ventures'
reliance on Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.,
148 F.3d 1355 (Fed. Cir. 1998), is persuasive. In Red Wing Shoe
Co. a patent owner licensed its intellectual property to
licensees, retaining little or no control over their use of the
patent, making it impractical and unfair to hold the patent owner
subject to the jurisdiction of a court located in a state it had
no contacts in besides unsupervised commercial use by a licensee.
Health Ventures, which is similarly situated to the patent owner
in Red Wing Shoe Co., also licensed its intellectual property
while retaining little or no control over how it was used by QVC.
This point is particularly noteworthy because Health Ventures is
in no position to regulate QVC's use as Health Ventures stands in
a corporate position that is subordinate to QVC's in the
Metabalance's reliance on Akeva L.L.C. v. Mizuno Corp.,
199 F. Supp.2d 336 (M.D.N.C. 2002), is misplaced. Metabalance uses the
case to distinguish Red Wing Shoe Co. by arguing that Health
Ventures issued its licence with exclusivity to QVC and is
therefore bound to the jurisdiction of a state the licensee
operates in. However, this distinction is not significant. In
Akeva a foreign corporation created a subsidiary in the United
States as a method of entering the U.S. market, granting the
subsidiary an exclusive license to manufacture and sell products
using the licensor's intellectual property. Akeva, L.L.C.,
199 F. Supp.2d at 338. Health Ventures, on the other hand, did not
create QVC; QVC is not a subsidiary of Health Ventures. Health
Ventures has no control over the operations of QVC. Health
Ventures' lack of control over QVC makes it more like the patent
owner in Red Wing Shoe Co. than the parent corporation in
Akeva. Consequently, Health Ventures is not subject to suit in
every jurisdiction that QVC operates in simply because it
licensed its trademark to QVC. See also Purdue Research Found.
v. Sanofi-Synthelabo, S.A., 206 F. Supp.2d 958 (N.D.Ind. 2002)
aff'd 338 F.3d 773 (7th Cir. 2003).
Furthermore, requiring Health Ventures to submit to this
court's jurisdiction is not in line with the notion of fairness
articulated in RAR, Inc., "jurisdiction is to be asserted only
when it is fair, just, and reasonable to require a nonresident
defendant to defend an action in Illinois considering the quality
and nature of the defendant's acts which occur in Illinois or
which affect interests located in Illinois." RAR, Inc., 107
F.3d at 1276. Applying this to the facts at hand, since Health
Ventures' acts did not occur in Illinois, nor did its licensing
agreement with QVC, when taken by itself, affect interests in
Illinois, it is not fair, just, or reasonable to require it to
defend against an action in Illinois. Because Health Ventures has
not acted in Illinois or affected Illinois interests, it has not
purposefully availed itself of the privilege of conducting
activities within Illinois. Burger King Corp., 471 U.S. at 475.
As a result, Illinois does not have a significant interest in
adjudicating the suit in this forum. Worldtronics Int'l, Inc.,
969 F. Supp. at 1142.
A finding of no personal jurisdiction is further in line with
the intent of the "purposeful availment" provision in Burger
King Corp., "that a defendant not be haled into a jurisdiction
solely as a result of `random,' . . . contacts . . . or of the
`unilateral activity of another party or a third person.'"
Burger King Corp., 471 U.S. at 475. The activity that took
Health Ventures' trademark to Illinois via the vehicle of
commerce was the unilateral act of a third party, QVC.
With regard to the letter(s) Health Ventures sent to
Metabalance, demanding that it stop from allegedly infringing on
its trademark, letters alleging infringement generally do not
satisfy the due process requirements that would permit a finding
of personal jurisdiction against the sender of the letters. See
Boston Chicken v. Market Bar-B-Que, 922 F. Supp. 96, 99
(E.D.Ill. 1996). Consequently, Metabalance cannot rely on cease
and desist letters from Health Ventures to assert this court's
jurisdiction over Health Ventures.
For the foregoing reasons, Health Ventures' motion to dismiss
for lack of personal jurisdiction pursuant to Federal Rule of
Civil Procedure 12(b)(2) is granted.
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