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Appjigger Gmbh v. Blu Products, Inc.

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

May 29, 2015

APPJIGGER GMBH, Plaintiff,
v.
BLU PRODUCTS, INC., CT MIAMI LLC, and SAMUEL OHEV-ZION, Defendants.

MEMORANDUM OPINION AND ORDER

JOAN B. GOTTSCHALL, District Judge.

Plaintiff Appjigger GmbH develops, advertises, distributes, and licenses software applications ("apps") for use on smart phones and other mobile devices. In this copyright and unfair competition action based on federal and Illinois law, Appjigger asserts that defendants BLU Products, Inc. (a designer of mobile devices), CT Miami LLC (a manufacturer and distributor of cellular telephones), and Samuel Ohev-Zion (the President and CEO of both companies) are liable for displaying unauthorized screenshots and making unauthorized sales of Appjigger's WP Clock app.

The defendants have moved to dismiss for lack of personal jurisdiction and improper venue pursuant to Fed.R.Civ.P. 12(b)(2) and (3), respectively. Alternatively, the defendants ask the court to transfer this action to the United States District Court for the Southern District of Florida pursuant to 28 U.S.C. § 1404(a). For the following reasons, the motion to dismiss for lack of personal jurisdiction is granted so the court need not reach the remaining relief requested by the defendants. Appjigger may file a motion to transfer pursuant to 28 U.S.C. § 1406(a) within one week of the date of this order.

I. BACKGROUND[1]

Plaintiff Appjigger GmbH is a German limited liability company with its principal place of business in Germany. Appjigger develops, advertisers, markets, distributes, and licenses apps - including the WP Clock app - for smart phones and other mobile devices. Appjigger offers both free and paid versions of the WP Clock app, which it describes on its website as "typographic live wallpaper" that displays customizable information, including the date, time, battery status, and weather.

Defendants BLU Products is a Florida corporation with its principal place of business in Miami, Florida. Defendant CT Miami is an LLC that is owned and operated by the same individuals who are associated with BLU Products.[2] Defendant Samuel Ohev-Zion resides near Miami, Florida. He is the President and CEO of BLU Products and CT Miami, and "directs and has directed substantially all of the activities of BLU Products and CT Miami" that form the basis of Appjigger's complaint. (Compl. ¶ 7, Dkt. 1.)

In March 2012, a CT Miami employee emailed Appjigger to inquire about preloading the "light" version of the WP Clock app onto approximately 50, 000 CT Miami phones.[3] Appjigger provided licensing costs via email but because it did not hear back from CT Miami, it assumed that CT Miami was not interested in licensing the app.

In May 2013, Appjigger became aware of a YouTube video depicting a person opening a new mobile device from BLU Products that showed that the device was shipped with Appjigger's WP Clock application pre-installed. This caused an Appjigger employee to investigate by purchasing a BLU Products phone. The paid version of the WP Clock app was pre-installed on that phone. The app included a link to one of Appjigger's websites and the name of Appjigger's software developer. Appjigger concluded, based on a review of BLU Products' website, that BLU Products had pre-installed the WP Clock app on at least 6 models of BLU Products phones and had been doing so since September 2012, potentially resulting in over ten million unauthorized uses of the app. In addition, according to Appjigger, BLU Products has advertised its phones by displaying, without authority to do so, pictures of phones with screens that are indistinguishable from pictures of phones that have Appjigger's WP Clock app installed.

Thomas Anyz (Appjigger's President) wrote to Ohev-Zion (BLU Products' President). Anyz described Appjigger's findings and asked Ohev-Zion to contact him to discuss the use of the WP Clock app. Ohev-Zion did not respond. Anyz sent a reminder email about the letter. After he did not receive a response, Appjigger sent a cease-and-desist letter to BLU Products, which also did not respond.

In support of their motion to dismiss, the defendants submitted two affidavits from Ohev-Zion. Ohev-Zion asserts that sales to Illinois residents are "an insignificant portion" of the revenues of BLU Products and CT Miami. (1st Ohev-Zion Aff. ¶¶ 12-13, Dkt. 18-1.) Ohev-Zion also generally asserts that it would be burdensome to defend this action in Illinois and that all of the witnesses are located in Florida or Germany. Finally, he denies that BLU Products or CT Miami caused BLU Products phones to be sold at brick and mortar stores in Illinois or online. According to Ohev-Zion, "the only way a BLU Products phone could end up in Illinois is through a third-party distributor over which neither BLU Products nor CT [Miami] have any control." (2d Ohev-Zion Aff. ¶ 16, Dkt. 35-1.)

In opposition to the motion to dismiss, Edward Chalfie (Appjigger's counsel in Chicago) submitted two declarations. As of the date of Chalfie's first and supplemental declarations (March 16, 2015, and May 15, 2015, respectively), the homepages for BLU Products and CT Miami contained pictures of BLU Products phones displaying the WP Clock app. In Chalfie's first declaration, he states that BLU Products' website states that BLU Products has sold "[o]ver 25 million BLU devices... in over 40 countries" and that the website also inconsistently represents that BLU Products has sold "10 million BLU devices." (1st Chalfie Decl., Ex. G, Dkt. 28-2 at Page ID# 141.)

Micro Center is a retailer that sells computers and electronics online and in brick-and-mortar stores located in sixteen states. See http://www.microcenter.com/site/stores/default.aspx. Chalfie represents that in October 2014, he viewed twelve BLU Products phones at the Micro Center store in Chicago, Illinois, and that in February 2015, he viewed six BLU Products phones at the Micro Center store in Westmont, Illinois. In addition, Chalfie's declaration attaches a screenshot of BLU Products' website (www.bluproducts.com) showing that as of March 2015, BLU Products represented that its Studio G and Studio X phones were available "exclusively at Best Buy." (1st Chalfie Dec., Ex. D, Dkt. 28-2.) Chalfie's declaration also attaches a screenshot of BLU Products' on-line Amazon.com store. As of May 15, 2015, if a visitor to CT Miami's site clicks on a shopping link, she is taken to BLU Products' website, which has a "BLU SHOP" button with a picture of a shopping cart. If a visitor clicks on that button directly from the BLU Products site or after she is transferred from CT Miami's site to the BLU Products site, the user is directed to BLU Products' Amazon.com store.

In its four-count complaint, Appjigger asserts violations of federal copyright law (Count I) and unfair competition under the Lanham Act (Count III). It also asserts a state law claim of unjust enrichment arising under Illinois law(Count II) and alleges that the defendants ...


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