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Eastern Division Ubid, Inc. v. Godaddy Group

November 5, 2009

EASTERN DIVISION UBID, INC., PLAINTIFF,
v.
THE GODADDY GROUP, INC. AND GODADDY.COM, INC., DEFENDANTS.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge

MEMORANDUM OPINION

Defendants The GoDaddy Group, Inc. and GoDaddy.com, Inc. ("GoDaddy") have filed a motion to dismiss for lack of personal jurisdiction or, in the alternative, to transfer the case. For the reasons stated below, we grant Defendants' motion to dismiss for lack of personal jurisdiction. The motion to transfer is denied as moot.

BACKGROUND

Plaintiff uBID, Inc. ("uBID") is located in Chicago but its business operations are largely internet-based. Manufacturers and retailers contract with uBID to sell their excess inventory at reduced prices through uBID's website. In order for uBID to generate revenue, customers must find their way to its website. To ensure that internet users are directed to its website, uBID has purchased and trademarked several internet domain names, including www.uBID.com. Internet users who type a uBID-owned domain name into their web browser are directed to its website to take advantage of uBID's services.

GoDaddy, an Arizona corporation, is one of the leading domain name registration and website hosting companies in the country. Customers access GoDaddy's website and pay a small fee to register a domain name for their business or other organization. Once a particular domain name is registered, anyone who types that name into an internet browser will be directed to the registrant's website. GoDaddy has no employees in Illinois, does not rent or own property in Illinois, and has no bank accounts in Illinois. GoDaddy requires all of its customers to submit any disputes against it to the power of Arizona courts. Though its website is accessible to customers all over the world, GoDaddy provides its web-based services using equipment located in Arizona.

Though GoDaddy is largely Arizona-based, it maintains some connections with Illinois. It receives 3.19% of its revenues from Illinois customers and GoDaddy sometimes communicates with its Illinois customers by email, regular mail, and telephone. In addition, GoDaddy has placed advertisements at Illinois sporting venues as part of a national advertising campaign. Professional drivers and athletes who are sponsored by GoDaddy, and display GoDaddy logos on their equipment, have participated in competitions within Illinois. Employees of the corporation have attended races in Illinois in which sponsored drivers competed.

For registrants who have yet to create a website to associate with their registered name, GoDaddy supplies a Parked Page to which visitors will be directed until the registrant creates an active website of their own. Parked Pages are essentially blank pages except for some content-specific advertisements. When a visitor to the Parked Page clicks on an advertisement, GoDaddy receives a share of the advertising revenue generated. GoDaddy also offers a CashParking program where registrants can share in any advertising revenue obtained from the Parked Pages associated with their domain names. In addition, GoDaddy performs an online auction service where individuals and companies can buy or sell previously registered domain names. These registration, Parked Page, CashParking, and auction processes are entirely automated.

The dispute between uBID and GoDaddy concerns GoDaddy's provision of services to certain third-party registrants of domain names that are similar to uBID's web addresses or that contain the letters "ubid" in the address. GoDaddy is aware that some of its customers register domain names that are similar to existing domains or trademarks; it recently submitted a patent application*fn1 for a system to filter online advertisements to prevent registrants of these types of domain names from profiting from others' trademarks. GoDaddy maintains, however, that it must rely on trademark holders to bring domain names containing their trademarks to GoDaddy's attention because of the inherent difficulty of monitoring the high volume of registrations GoDaddy conducts. Illinois residents have registered two domain names through GoDaddy that are similar to uBID's own trademarked names. GoDaddy receives advertising revenue from these web addresses through its Parked Page programs.

On April 6, 2009, uBID filed suit against GoDaddy under the Anticybersquatting Consumer Protection Act. 15 U.S.C. § 1125(d). The crux of uBID's argument is that GoDaddy's provision of services to the domain holders at issue constitutes the "traffi[cking] in, or use[]" of uBID's mark "with bad faith intent to profit from the mark" as prohibited by the statute. Id. GoDaddy now moves to dismiss for lack of personal jurisdiction, or, in the alternative, to transfer the case to the District of Arizona.

LEGAL STANDARD

A plaintiff bears the burden of establishing the existence of personal jurisdiction over a nonresident defendant. GCIU-Employer Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1023 (7th Cir. 2009). When a district court rules on a motion to dismiss based on the submission of written materials, the plaintiff need only make a prima facie case of personal jurisdiction. Purdue Research Found. v. Synofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). In assessing whether the plaintiff has satisfied this burden, the plaintiff is entitled to the resolution in its favor of any conflicts in the affidavits. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). However, we accept as true any facts in the defendant's affidavits that remain unrefuted by the plaintiff. Goldfarb, 565 F.3d at 1020 n.1.

For a district court's exercise of personal jurisdiction over a defendant to be proper in a federal question suit, the defendant must have "sufficient contacts with the United States as a whole" (i.e., either residency in or doing business in any U.S. state) and must also be amenable to process. See United States v. Martinez de Ortiz, 910 F.2d 376, 381 (7th Cir. 1990). Fed. R. Civ. P. 4(k)(1), which governs amenability to process, states that any defendant "who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located" is amenable to process.

The Illinois long-arm statute, 735 ILCS 5/2-209(c), grants the state's courts the power to exercise jurisdiction on any basis permitted by the due process clause of the Illinois or United States Constitutions. See Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 714 (7th Cir. 2002). For an exercise of jurisdiction over a nonresident defendant to satisfy federal due process, the defendant must have "certain minimum contacts with [the forum state] 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 (1945) (quotation marks omitted).

The extent of jurisdiction that can be exercised depends on the amount of contact a nonresident has with the forum state. A state may exercise general jurisdiction (jurisdiction over any suit involving the nonresident) over a nonresident defendant when it possesses "continuous and systematic general business contacts" with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 412 (1984). An exercise of specific jurisdiction is constitutionally permissible when the defendant has purposefully established ...


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