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Dental Arts Laboratory, Inc. v. Studio 360 the Dental Lab

November 23, 2010

DENTAL ARTS LABORATORY, INC., PLAINTIFF,
v.
STUDIO 360 THE DENTAL LAB, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

This matter is before the Court on the motion to dismiss of Defendant Studio 360 The Dental Lab, LLC ("Studio 360" or "Defendant") [18]. Defendant seeks to dismiss Plaintiff's complaint for lack of personal jurisdiction, inappropriate venue, and failure to plead jurisdictional facts sufficient to state a cause of action pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6), respectively. Having carefully reviewed the complaint and the briefs and their associated materials, the Court respectfully denies Defendant's motion.

I. Background*fn1

Plaintiff Dental Arts Laboratory, Inc. ("Dental Arts" or "Plaintiff"), a resident and citizen of Peoria, Illinois, initiated this action under the Lanham Act, 15 U.S.C. § 1051 et seq., and under Illinois and Nevada state law, against Defendant, a Nevada citizen and resident. The complaint lays out four causes of action against Defendant: (i) service mark infringement, pursuant to 15 U.S.C. § 1114; (ii) federal unfair competition, pursuant to 15 U.S.C. § 1125(a); (iii) unfair business practices, pursuant to the relevant codes in Illinois and Nevada (the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., and the Nevada Deceptive Trade Practices Act, NRS 598.0903 et seq., respectively); and (iv) deceptive trade practices, pursuant to the relevant Illinois and Nevada codes (the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et seq., and the Nevada Deceptive Trade Practices Act, NRS 598.0903 et seq.).*fn2

Plaintiff began using the name "360 Dental Laboratories" for its dental laboratory services in June 2005 and has continually used the mark since. Plaintiff registered the mark "360 Dental Laboratories" as a service mark in commerce for dental laboratory services on July 24, 2007 with the United States Patent and Trademark Office.

Defendant Studio 360, a limited liability company founded in 2009, is "engaged in the business of selling products such as crowns, bridges, dentures and partials to dentists across the country." (Def. Mem. [19] at 8). Defendant maintains a website, www.studio360dentallab.com, which displays the "Studio 360 The Dental Lab" mark. The website also contains order forms for its products, which also display the "Studio 360 The Dental Lab" mark. See Exhibit B to complaint. In an affidavit filed along with its motion to dismiss, Scott Braverman, Defendant's vice president, avers that at the time Plaintiff filed the complaint, Defendant was actively selling products to four dentists in Illinois and that it has served 16 Illinois dentists since the company's inception. (Braverman Aff. [19] at 2). Over the entire existence of he company, only 1.2% of Defendant's gross revenue has been from Illinois customers. Id.

In its complaint, Plaintiff alleges that on June 9, 2010, counsel for Plaintiff sent a cease and desist letter to Defendant, giving Defendant notice of Plaintiff's federal service mark rights and informing Defendant that its use of the "Studio 360" name constituted service mark infringement and unfair competition. Having received no response, counsel for Plaintiff sent a follow-up letter on June 25, 2010. Since then, Defendant's owner has spoken with Plaintiff's president about Defendant's use of the "Studio 360 The Dental Lab" name; Defendant's owner indicated that Defendant would not stop using its name, and that "Plaintiff should be prepared to spend a lot of money because [Defendant's owner] was putting up '100 grand right now,'" presumably in anticipation of litigation costs. (Cmplt. at ¶ 14). Plaintiff alleges that Defendant's activities "are detrimental to the good will and business reputation symbolized by [Plaintiff's registered service mark]." (Id. at ¶ 16).

On September 2, 2010, Defendant filed the instant motion to dismiss. Defendant argues that "[t]his court lacks personal jurisdiction over this defendant as this defendant is not subject to the general jurisdiction of the Illinois courts under the state's long arm statute," that "[t]his court further lacks personal jurisdiction over this defendant as requiring this defendant to defend itself in an Illinois federal district court would violate this defendant's Constitutional rights to due process of law," and, finally, that "the plaintiff's complaint fails to state a cause of action as it does not plead facts sufficient to support a finding of personal jurisdiction over this defendant." (Def. Mot. at ¶¶ 7-9).

II. Legal Standard

An action against a party over whom the Court lacks personal jurisdiction must be dismissed. See Fed. R. Civ. P. 12(b)(2). At this early stage of the litigation, and without the benefit of an evidentiary hearing, Plaintiff has the burden of establishing only a prima facie case of personal jurisdiction. See uBID, Inc. v. GoDaddy Group, Inc., 2010 WL 3768075, *1 (7th Cir. Sept. 29, 2010). When determining whether a plaintiff has met his burden, jurisdictional allegations pleaded in the complaint are accepted as true unless proved otherwise by defendants' affidavits or exhibits. See Purdue Research Foundation v. Sanofi-Sythelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003); Travelers Cas. & Sur. Co. v. Interclaim (Bermuda) Ltd., 304 F. Supp. 2d 1018, 1021 (N.D. Ill. 2004).

In federal question cases, personal jurisdiction analysis has both a constitutional and statutory element. The Court must determine that (1) haling the defendant into court accords with the Due Process Clause of the Fifth Amendment; and (2) the defendant is amenable to service of process from the court. Lifeway Foods, Inc. v. Fresh Made, Inc.,940 F. Supp. 1316, 1318 (N.D. Ill. 1996) (citing United States v. De Ortiz, 910 F.2d 376, 381-382 (7th Cir. 1990); Omni Capital Int'l v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987)). Due process in federal question cases requires that each party have sufficient contacts with the United States as a whole rather than any particular state. See ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 551 (7th Cir. 2001).

If the defendant is exposed to the jurisdiction of the United States, as Studio 360 clearly is in this case, the question becomes whether the federal court has been authorized to exert the full power of the nation. ISI Int'l, Inc, 256 F.3d at 552. To answer this question, the court looks to the applicable federal statute -- in this case, the Lanham Act. See Omni Capital Int'l, 484 U.S. at 104. The Lanham Act does not provide for nationwide service of process. See, e.g., ISI Int'l, Inc., 256 F.3d at 550. When the federal statute at issue does not provide for nationwide service, the statutory basis for jurisdiction generally is provided by Rule 4(k)(1)(A) which ties jurisdiction to the forum state's long-arm statute. See Janmark v. Reidy, 132 F.3d 1200, 1201 (7th Cir. 1997); see also Digisound-WIE, Inc. v. Bestar Techs., Inc., 2008 WL 2096505, *2 (N.D. Ill. May 16, 2008).

Under Illinois law, a court may exercise personal jurisdiction over a non-resident through operation of its long-arm statute. See 735 ILCS § 5/2-209. That statute extends personal jurisdiction over claims that arise out of a number of enumerated actions and activities, including transacting any business or committing a tort in Illinois. See 735 ILCS § 5/2-209(a)(1-2). In addition, personal jurisdiction is proper over any corporation "doing business" within Illinois. 735 ILCS § 5/2-209(b). Finally, the long-arm statute's "catch-all" provision authorizes courts to exercise jurisdiction on any basis permitted by the Illinois or federal Constitutions. 735 ILCS § 5/2-209(c). Because the Illinois long-arm statute authorizes personal jurisdiction to the fullest constitutional limits, the three inquiries above "collapse into two constitutional inquiries - one state and one federal." RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). Moreover, the Seventh Circuit has opined 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. 2003).*fn3

The federal test for personal jurisdiction under the Due Process Clause of the Fourteenth Amendment authorizes a court to exercise jurisdiction over a non-resident defendant only if the defendant has "certain minimum contacts with [the state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1940) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). "[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958). This "purposeful availment" requirement of the minimum contacts standard ensures that a ...


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