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Ticketreserve, Inc. v. Viagogo

August 11, 2009

THE TICKETRESERVE, INC. D/B/A FIRSTDIBZ, PLAINTIFF,
v.
VIAGOGO, INC., VIAGOGO, LTD., AND YOONEW, INC., DEFENDANTS.



The opinion of the court was delivered by: Virginia M. Kendall, United States District Judge Northern District of Illinois

Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff The Ticketreserve, Inc. d/b/a FirstDIBZ ("FirstDIBZ") brought suit against Defendants viagogo, Inc. ("viagogo Inc.") and viagogo, Ltd. ("viagogo Ltd.") for patent infringement. viagogo Inc. and viagogo Ltd. now move this Court to dismiss FirstDIBZ's Complaint pursuant to Fed. R. Civ. P. 12(b)(3) for improper venue. viagogo Inc. also moves this Court to dismiss it as a defendant pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction. For the reasons stated below, viagogo Ltd. and viagogo Inc.'s Motion to Dismiss for Improper Venue is denied and viagogo Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction is granted.

STATEMENT OF FACTS/PROCEDURAL HISTORY

Viagogo Ltd. is a company formed and based in the United Kingdom that offers tickets for concerts and sporting events via its website, www.viagogo.com. Eric Baker 12(b)(3) Dec. at ¶ 2.*fn1

Viagogo Inc. is a company incorporated in the state of Delaware that does no business in the state of Illinois and has no relation to the operation of www.viagogo.com. Eric Baker 12(b)(2) Dec. at ¶¶ 3-13, 19. FirstDIBZ is a company formed and based in Illinois that operates a website at www.firstdibz.com for selling and trading ticket options for future sporting events. Amend. Compl. at ¶ 9.

In June 1999, FirstDIBZ applied for a U.S. Patent ("'267 Patent") for its technology entitled, "Contingency-Based Options and Futures for Contingent Travel Accommodations." Amend. Compl. at ¶ 13. Shortly thereafter, FirstDIBZ applied for an international patent for the same technology. Amend. Compl. at ¶ 13. FirstDIBZ received the international patent on December 14, 2000 and the U.S. patent on April 22, 2008. Amend. Compl. at ¶ 13. In May 2007, FirstDIBZ engaged in discussions regarding a joint venture with viagogo Ltd. Amend. Compl. at ¶ 15. In order to protect the confidential information being disclosed, the parties signed a nondisclosure agreement and further agreed to arbitrate any dispute related to the nondisclosure agreement in the United Kingdom. Amend. Compl. at ¶ 15. Ultimately, viagogo Ltd. and FirstDIBZ did not pursue a joint venture. Amend. Compl. at ¶ 15. A year later, viagogo Ltd. launched its "Victory Pass" program on www.viagogo.com. The "Victory Pass" program provides future ticket options to sporting events and uses similar technology to FirstDIBZ's "Contingency-Based Options and Futures for Contingent Travel Accommodations." Amend. Compl. at ¶ 16.

FirstDIBZ filed a Complaint against viagogo Inc. on September 11, 2008 and an Amended Complaint against viagogo Inc. and viagogo Ltd. on November 19, 2008. FirstDIBZ alleges that viagogo.com's "Victory Pass" program infringes claims of its '267 Patent. On December 19, 2008, viagogo Inc. and viagogo Ltd. filed a Motion to Dismiss for Improper Venue. viagogo Inc. also filed a Motion to Dismiss for Lack of Personal Jurisdiction.

I. Motion to Dismiss for Improper Venue

Federal Rule of Civil Procedure 12(b)(3) provides for the dismissal of an action for improper venue. See Fed. R. Civ. P. 12(b)(3). Dismissal of a case under Rule 12(b)(3) due to a valid arbitration clause is appropriate. See Cont'l Cas. Co. v. Am. Nat'l Ins. Co., 417 F.3d 727, 733 (7th Cir. 2005). When ruling on a motion to dismiss for improper venue, the Court is not "obligated to limit its considerations to the pleadings nor convert the motion to one for summary judgment." Id.

As a preliminary matter, viagogo Inc. and viagogo Ltd. assert that the Court, in ruling on their motion to dismiss, should only consider FirstDIBZ's original Complaint and not its Amended Complaint. They point out that in its original Complaint, FirstDIBZ alleged that viagogo Inc. took information disclosed pursuant to the nondisclosure agreement in order to launch its copycat website. Compl. at ¶ 13. Yet in its Amended Complaint, FirstDIBZ no longer makes this assertion. Amend. Compl. at ¶ 15. viagogo Inc. and viagogo Ltd. claim that FirstDIBZ changed its allegations in order to avoid a 12(b)(3) motion to dismiss and therefore the Court should only consider the original Complaint. Rule 15(a) gives a plaintiff the right to amend his or her complaint before a responsive pleading is served. See Fed. R. Civ. P. 15(a). Once an amended complaint is filed it supersedes the original complaint and controls the case from that point forward. See 188 LLC v. Trinity Indus., 300 F.3d 730, 736 (7th Cir. 2002); Massey v. Helman, 196 F.3d 727, 735 (7th Cir. 1999). The amended complaint controls even though it may contradict allegations set forth in the original complaint. See Moriarty v. Larry G. Lewis Funeral Directors Ltd., 150 F.3d 773, 777 (7th Cir. 1998) ("inconsistent pleading is permitted"). The original complaint is in effect withdrawn as to all matters not restated in the amended complaint. See Massey, 196 F.3d at 735. Here, FirstDIBZ had the right to file its Amended Complaint because viagogo Inc. and viagogo Ltd. had not yet filed a responsive pleading. The allegations in its Amended Complaint supersede its prior complaint and now control the case. Therefore, in assessing viagogo Inc. and viagogo Ltd.'s motions, this Court will only consider FirstDIBZ's Amended Complaint.

Next, viagogo Inc. and viagogo Ltd. claim that irrespective of which complaint the Court considers, this case should be dismissed because FirstDIBZ agreed to arbitrate all disputes relating to the nondisclosure agreement. The Federal Arbitration Act governs the enforceability of arbitration clauses in contracts. See 9 U.S.C. § 1 et seq.; see also Jain v. de Mere, 51 F.3d 686, 688 (7th Cir. 1995). The Act embodies a strong federal policy in favor of enforcing arbitration clauses in contracts, including those requiring arbitration in foreign countries. See Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 554-55 (1995). An order to arbitrate should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible to an interpretation that covers the asserted dispute. See United Steelworkers v. Gulf Navigation Co., 363 U.S. 574, 582-83 (1960). Despite this strong presumption in favor of their enforcement, arbitration agreements ultimately remain a matter of the parties' intent. See American United Logistics, Inc. v. Catellus, Development Corp., 319 F.3d 921, 929 (7th Cir. 2003). No court may force a party to arbitrate a claim that it has not previously agreed to arbitrate, nor may a court expand the application of an arbitration clause beyond its intended scope. See AT&T Tech., Inc. v. Comm. Workers, 475 U.S. 643, 648-49 (1986). Whether parties agreed to submit their claims to arbitration is an issue to be determined by the Court. See id. at 649. In deciding whether a dispute is arbitrable, the Court must focus on the arbitration agreement itself and determine whether there is an agreement to arbitrate and if so, whether the underlying dispute is within its scope. See Flender Corp. v. Techna-Quip Co., 953 F.2d 273, 277 (7th Cir. 1992); Wilson Sporting Goods Co. v. Head Sports Inc., No. 94 C 4966, 1994 WL 702611, at *2(N.D. Ill. Dec. 12, 1994) (Plunkett, J.).

Here, both parties agree that they signed a nondisclosure agreement protecting the disclosure of confidential information and requiring that all disputes relating to the agreement be submitted to arbitration. Amend. Compl. at ¶ 15; Eric Baker 12(b)(3) Dec. at ¶ 3. The critical issue before this Court is whether FirstDIBZ's patent infringement claim is within the scope of the parties' arbitration agreement. viagogo Inc. and viagogo Ltd. point to the broad language of the arbitration clause in the nondisclosure agreement. The arbitration clause states that, "any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration." Eric Baker 12(b)(3) Dec. Ex. 1 at ¶ 10. The nondisclosure agreement, however, also explicitly provides that it covers only "Confidential Information" and states: "[T]he term 'Confidential Information' shall not include any of the following types of information: information which is or which becomes generally available to the public." Eric Baker 12(b)(3) Dec. Ex. 1 at § 1.

First, it is important to note that FirstDIBZ's claim is for patent infringement, not breach of the parties' nondisclosure agreement, and information regarding the technology disclosed in the patent at issue is not covered by the parties' nondisclosure agreement. The patented technology is explicitly excluded from the scope of the parties' nondisclosure agreement because it is public information and therefore falls within the agreement's exception to "Confidential Information." See Eric Baker 12(b)(3) Dec. Ex. 1 at ยง 1. Although FirstDIBZ did not receive a U.S. Patent for its technology until 2008, a year after it entered into the nondisclosure agreement with viagogo Ltd., it received an international patent for the exact same technology on December 14, 2000. Amend. Compl. Ex. A and Ex. B. The technology in dispute could not have been confidentially disclosed to viagogo Inc. and viagogo Ltd. in 2007 because it was made public seven years earlier when FirstDIBZ's international patent was granted and published. See Baxter Int'l, Inc. v. McGaw, Inc., 149 F.3d 1321, 1326 (Fed. Cir. 1998) (stating that when plaintiff's international patent was granted and published, it became public). Because the parties' nondisclosure agreement explicitly excludes ...


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