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Telemedicine Solutions LLC v. WoundRight Techs., LLC

United States District Court, N.D. Illinois, Eastern Division

March 14, 2014

TELEMEDICINE SOLUTIONS LLC, Plaintiff,
v.
WOUNDRIGHT TECHNOLOGIES, LLC, Defendant

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[Copyrighted Material Omitted]

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For Telemedicine Solutions LLC, Plaintiff: Thomas More Leinenweber, Leinenweber Baroni & Daffada, LLC, Chicago, IL; Charles Thomas Riggs, Jr., River Forest, IL.

For WoundRight Technologies, LLC, Defendant: Drew George Peel, LEAD ATTORNEY, John Edward Murray, Kevin Buckley Duff, Rachlis Duff Adler & Peel, LLC, Chicago, IL; Antoinette M Tease, PRO HAC VICE, Antoinette M. Tease, P.l.l.c., Billings, MT.

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MEMORANDUM OPINION AND ORDER

Robert M. Dow, Jr., United States District Judge.

Plaintiff Telemedicine Solutions LLC and Defendant WoundRight Technologies, LLC are purveyors of electronic systems and products aimed at medical practitioners in the wound care field. Plaintiff's system is called WoundRounds; Defendant's, WoundRight. In its twelve-count amended complaint against Defendant [27], Plaintiff alleges that Defendant has infringed and diluted Plaintiff's trademark; engaged in unfair competition, cyberpiracy, and deceptive trade practices; disparaged and defamed Plaintiff; and tortiously interfered with Plaintiff's prospective economic advantage. Defendant has moved to dismiss Plaintiff's amended complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or for improper venue pursuant to Rule 12(b)(3). [28]. In the alternative, Defendant seeks to transfer venue to Wyoming pursuant to 28 U.S.C. § § 1404(a) & 1406(a), and dismiss Counts X, XI, and XII of Plaintiff's complaint pursuant to Rule 12(b)(6). [28]. Plaintiff opposes the motion and requests leave to engage in " jurisdictional discovery to refute" affidavit testimony submitted by Defendant, to " determine how much WoundRight knew about WoundRounds (or Telemedicine), and [to ascertain] whether WoundRight has other minimum contacts with Illinois, in addition to its electronic entry into Illinois and its intentional tortious conduct[ ] directed at Illinois and Illinois consumers." [33] at 3, 11, 15; [40] at 2, 8.

For the reasons stated below, the Court concludes that it lacks personal jurisdiction over Defendant and accordingly grants Defendant's motion [28] and dismisses the amended complaint for lack of personal jurisdiction. The Court respectfully denies Plaintiff's requests for jurisdictional discovery.

I. Background

For the purposes of the instant motion, the Court accepts as true the factual allegations relevant to jurisdiction made in Plaintiff's amended complaint, and draws all reasonable inferences in its favor. Cent. States, Se. & Sw. Area Pension Fund v. Phencorp Reinsurance Co., Inc., 440 F.3d 870, 878 (7th Cir. 2006) The Court also resolves any disputes concerning relevant facts in Plaintiff's favor. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). To the extent that Defendant has submitted affidavits opposing jurisdiction or contradicting Plaintiff's allegations, however, Plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction. Id. at 783.

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Plaintiff is a limited liability company that was organized under the laws of Illinois in July 2005. [27] ¶ ¶ 3, 17. Its principal place of business is Schaumburg, Illinois. Id. ¶ 3. Soon after its organization, Plaintiff entered the wound care industry, promoting, marketing, selling, and providing services related to its " Wound Rounds" system, an electronic documentation and wound care management system that enables medical providers to identify and manage patients at risk for pressure ulcers. Id. ¶ 17. Plaintiff obtained and registered the domain name " woundrounds.com" in February 2006, and thereafter augmented its online presence by using social media sites such as YouTube, Facebook, Linked In, and Twitter. Id. ¶ 18. Plaintiff made its " WoundRounds" software and hardware, as well as Internet-based health care information services, available " [a]t least as early as November 1, 2006." Id. ¶ ¶ 19-20. Beginning in March 2007, Plaintiff added educational services such as webinars, seminars, teleconferences, and social media presentations to its " WoundRounds" offerings, id. ¶ 21, and has provided downloadable webinars since early 2010. Id. ¶ 22. Plaintiff recently secured federal trademark registrations for its " WOUND ROUNDS" system and stylized logo, and has applied for a federal trademark for another stylized version of its " WoundRounds" mark. Id. ¶ 23; id. Ex. 1.

Plaintiff's substantial investments into its product and marketing have paid off. Its " WoundRounds" marks have become well-known throughout the wound care industry as emanating from Plaintiff alone, id. ¶ 24, and have provided Plaintiff with a strong national reputation and considerable goodwill with an estimated worth in the millions. Id. ¶ ¶ 25-26.

Defendant is a limited liability company organized under the laws of Wyoming with its principal place of business in Laramie, Wyoming. Id. ¶ 2. Defendant uses the term " WoundRight" to denote its goods and services, which according to Plaintiff are " the same or nearly identical" to Plaintiff's " WoundRounds" goods and services. Id. ¶ 27. Defendant's affidavit describes its " WoundRight" products as " a complete mobile wound care solution that automate[s] assessment documentation for wounds, ostomies, and incontinence management." [29-1] ¶ 8. Defendant's " WoundRight" electronic application (" app" ) is intended for use on mobile devices, id. ¶ 7, and it is available for download from third-party websites that can be accessed from Defendant's website, " woundrightapp.com." [27] ¶ 33; [29-1] ¶ ¶ 20, 25-26, [29-2] ¶ ¶ 7-8. Defendant's website, which was registered on May 15, 2012, [27] ¶ 32, can be accessed by customers anywhere in the United States, see [27] ¶ 33, but customers cannot actually download the WoundRight app directly from the website. See [27] ¶ 33; [29-1] ¶ ¶ 20, 25-26, [29-2] ¶ ¶ 7-8. Customers likewise cannot purchase supplemental " census credits" to expand the utility of the app without placing a telephone call to Defendant's Wyoming office. [29-1] ¶ ¶ 25-27; [29-2] ¶ ¶ 7-15. Defendant does not have (and never has had) any physical presence in Illinois. [29-1] ¶ ¶ 31-36. Defendant never has sold any products or services to customers in Illinois. [29-1] ¶ 28. It has sent employees to demonstrate and sell its products at industry conferences around the country, but none of those conferences was in Illinois. See [27] ¶ 36; [29-1] ¶ ¶ 40-41. Plaintiff alleges that Defendant's actions nonetheless specifically targeted the Illinois market for an electronic wound care and management software system. [27] ¶ 12.

Defendant, like Plaintiff, maintains a presence on the Internet beyond its website. Defendant uses social media, including

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Facebook and Twitter, to communicate with potential customers throughout the United States. [27] ¶ 35; id. Ex. 7-8; [29-2] ¶ ¶ 19, 21. Through these social media channels, Defendant promotes its product and calls attention to the wound care field generally. For instance, in December 2012, Defendant tweeted, " Close the gap between research and clinical practice with WoundRight." [27] ¶ 45; id. Ex. 10. This tweet included a link to an article authored by several individuals associated with Plaintiff (and expressly identified as such). [27] ¶ 45; id. Ex. 10. Defendant also uses social media channels to interact with individuals in a number of states, [27] ¶ 37, though it has not specifically targeted either its Facebook postings or Twitter tweets to consumers in Illinois. [29-2] ¶ 19. For instance, on June 23, 2013 Defendant tweeted, " It was along day that was highlighted by a nurse from Johnston, IA. She uses W.R. daily and could not stop telling us how much she loves it. Made our day!!!" [27] ¶ 46; id. Ex. 11. And in February 2013, Defendant mentioned on its Facebook page that the sister of its CEO uses Defendant's product in her " 1,000 square mile" nursing practice based in Thurston, Nebraska. [27] ¶ 38; id. Ex. 9. Although Illinois theoretically could be within an area of this size, see [27] ¶ 38, Defendant has submitted affidavit testimony averring that the sister of its CEO " is not licensed as a nurse in any state other than Nebraska, [and] she does not work outside of the state of Nebraska." [29-2] ¶ 5.

Defendant at some point purchased a Google Ad Words ad that appeared as the tip result when a user searched Google for the term " woundrounds." [27] ¶ 28; id. Ex. 3. The text-only ad included a link to Defendant's website and read, " Considering WoundRounds? -- Don't waste your time[.] Try the latest wound care app for free!" [27] Ex. 3. Plaintiff alleges that the Google ad " falsely indicates that Telemedicine's products and/or services are a 'waste of time' and otherwise disparagingly suggests that Telemedicine's products and/or services are poor, inferior in some unknown manner, should not be used, and/or would be a waste of time to use, when in fact they are not." [27] ¶ 30. Similarly, Plaintiff alleges, the Google ad " misrepresents the nature, characteristics, and/or qualities of Telemedicine and its goods and/or services." Id. Defendant's CEO contends in his affidavit that Defendant " has never placed any internet advertisements or sent any email advertisements that are specifically directed at or targeted to individuals or businesses located in Illinois." [29-1] ¶ 38. As to the Google ad, he avers that " the advertisement was not targeted at Illinois individuals and/or businesses, the advertisement ran for only five days, and the advertisement will not be run again by WoundRight." [29-1] ¶ 39. The CEO further asserts that " [p]rior to the filing of this lawsuit, WoundRight was unaware of Telemedicine's existence, was unaware that Wound Round [TM] products and services were affiliated with Telemedicine, and was unaware that Telemedicine resided in Illinois and operated its business in Illinois." [29-2] ¶ 17. Additionally, he avers that " WoundRight has not purposely exploited the Illinois market for its business, either by advertising its products and services on its web-site or otherwise." [29-1] ¶ 46.

Plaintiff alleges that Defendant has transacted business in Illinois via its advertising, marketing, and solicitation activities; its website; and its placement of its product into the stream of commerce in Illinois. [27] ¶ ¶ 7-8. Plaintiff also alleges that Defendant specifically targeted Plaintiff and its business in Illinois by using a confusingly similar trademark, intentionally attempting to cause confusion or create

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a false association between its product and Plaintiff, misappropriating Plaintiff's Illinois clients and consumers, and willfully attempting to damage Plaintiff and its business. [27] ¶ 9. Plaintiff alleges that Defendant's Google ad specifically attacked Plaintiff, its reputation, and its goodwill in Illinois; targeted Plaintiff's customers or potential customers searching for Plaintiff or its product in Illinois; tortiously defamed Plaintiff; tortiously interfered with Plaintiff's prospective business advantage; and was directed at Illinois with the full knowledge that Plaintiff would be injured in Illinois. [27] ¶ 10. Plaintiff further alleges that Defendant committed acts of unfair competition by " intentionally creating a false association Telemedicine in Illinois * * *, deceptively creating the false and/or mistaken consumer belief that that Defendant's products and services emanate[ ] from Telemedicine in Illinois * * *, by attempting to misappropriate consumers in Illinois * * * searching the internet for Telemedicine in Illinois * * *, and otherwise damaging the business interests of Telemedicine in Illinois * * * *" [27] ¶ 11.

II. Discussion

A. Personal Jurisdiction

Notwithstanding the parties' apparent preference that the Court address the merits of Defendant's Rule 12(b)(6) arguments, see [29] at 8, [33] at 3-6; [35] at 1-4; [40] at 2-5, the Court resolves the question of personal jurisdiction first because " failure to address jurisdiction before addressing the merits of constitute[s] error." Yassan v. J.P. Morgan Chase & Co., 708 F.3d 963, 967 n.1 (7th Cir. 2013) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 93, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)). Indeed, because " [p]ersonal jurisdiction refers to a court's 'power to bring a person into its adjudicative process," N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 2014 WL 595767, at *3 (7th Cir. Feb. 18, 2014) (quoting Black's Law Dictionary 930 (9th ed. 2009)), and " principally protects the liberty of the nonresident defendant," Walden v. Fiore, 134 S.Ct. 1115, 188 L.Ed.2d 12, 2014 WL 700098, at *7 n.9 (2014), it must be the " first and fundamental question" resolved, " even when not ...


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