United States District Court, N.D. Illinois, Eastern Division
Der-Yeghiayan United States District Court Judge
matter is before the court on Defendants' motion to
dismiss for lack of personal jurisdiction and motion for
sanctions. For the following reasons stated below,
Defendants' motion to dismiss is granted and motion for
sanctions is denied.
Kroto Inc., d/b/a iCanvas Art (Kroto) alleges that its
business involves selling a combination of licensed works of
third party artists, its own original works, and public
domain works. Kroto also alleges that on January 4, 2017,
legal counsel for Defendants emailed Kroto complaining of
brazen copyright infringement and also requesting immediate
cessation of sales of "Unregistered Work." On
February 15, 2017, Kroto filed its complaint for declaratory
judgment in this cause of action. Defendants move to dismiss
all claims pursuant to Federal Rule of Civil Procedure
12(b)(2) (Rule 12(b)(2)) and Federal Rule of Civil Procedure
Rule 11 (Rule 11).
to Federal Rule of Civil Procedure 12(b)(2), a party can move
to dismiss claims for lack of personal jurisdiction.
Fed.R.Civ.P. 12(b)(2). The plaintiff bears the burden of
demonstrating the existence of personal jurisdiction.
Steel Warehouse of Wisconsin, Inc. v. Leach, 154 F.3d
712, 715 (7th Cir. 1998); RAR, Inc. v. Turner Diesel,
Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). When the
court adjudicates a motion to dismiss brought pursuant to
Rule 12(b)(2) based on written materials submitted to the
court, “the plaintiff need only make out a prima facie
case of personal jurisdiction.” Purdue Research
Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782
(7th Cir. 2003). In determining whether the plaintiff has met
his burden, the “court accepts all well-pleaded
allegations in the complaint as true.” Hyatt
Int'l. Corp. v. Coco, 302 F.3d 707, 712-13 (7th Cir.
2002). In addition, “the plaintiff is entitled to the
resolution in its favor of all disputes concerning relevant
facts presented in the record.” Purdue Research
Found., 338 F.3d at 782; see also Leong v. SAP
America, Inc., 901 F.Supp.2d 1058, 1061-62 (N.D. Ill.
2012)(explaining that “when the defendant challenges by
declaration a fact alleged in the plaintiff's complaint,
the plaintiff has an obligation to go beyond the pleadings
and submit affirmative evidence supporting the exercise of
contend that their contact with the forum does not qualify as
sufficient minimum contacts to establish personal
jurisdiction in the Northern District of Illinois. Under
federal law, “[t]he federal constitutional limits of a
court's personal jurisdiction in a diversity case are
found in the Fourteenth Amendment's due-process
clause.” Northern Grain Marketing v. Greving,
LLC, 743 F.3d 487, 492 (7th Cir. 2010). The Fourteenth
Amendment's due process clause “protects an
individual's liberty interest in not being subject to the
binding judgments of a forum with which he has established no
meaningful contacts, ties, or relations.” Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). Due
process requires that the defendant “have certain
minimum contacts with it such that the maintenance of the
suit does not offend ‘traditional notions of fair play
and substantial justice.'” Int'l Shoe Co.
v. Wash., Office of Unemployment Comp. & Placement,
326 U.S. 310, 316 (1945). Also, “[t]he nature of the
defendant's contacts with the forum state determines the
propriety of personal jurisdiction and also its scope.”
Tamburo v. Dworkin, 601 F.3d 693, 701 (7th Cir.
2010). If the defendant has “‘continuous and
systematic' contacts with a state, the defendant is
subject to general jurisdiction there in any action, even if
the action is unrelated to those contacts.”
Id. Conversely, to “support an exercise of
specific personal jurisdiction, the defendant's contacts
with the forum state must directly relate to the challenged
conduct or transaction.” Northern Grain
Marketing, 743 F.3d at 492.
instant action, Kroto alleges that on several occasions,
Defendants' attorney corresponded with Kroto and
Kroto's counsel regarding the cease of sales and
distribution of the Defendants' art work. Kroto alleges
that it directed its third-party retailers to remove the art
work from Kroto's sales channels with the retailers.
Kroto alleges that the Defendants engaged in copyright
enforcement activity in Illinois, and that it “expects
this harassing behavior to continue and thus. . . brought
this suit for declaratory judgment.” (Compl. P. 4). In
essence, Kroto claims that the enforcement activity and cease
and desist letters establish a basis for personal
jurisdiction. Under federal law, “[t]he sending of
infringement letters has been uniformly held insufficiently
by itself to satisfy the minimum contacts requirement.”
Classic Golf Co. v. Karsten Manufacturing Co., ,
1986 WL 8953, at *1 (N.D. Ill. 1986). Also, Kroto is the only
link between the Defendants and the forum state, which does
not establish a basis for personal jurisdiction. See
Walden v. Fiore, 134 S.Ct. 1115, 1122 (2014)(stating
that “the plaintiff cannot be the only link between the
defendant and the forum”). More specifically, several
courts in the Northern District of Illinois have held that
the “mailing of the letters claiming infringement are
below the threshold established by the due process
clause.” Id. In this action, Defendants sent
cease and desist letters and engaged in copyright enforcement
activity to protect their rights under the law. Defendants
only contact with the forum was through Kroto. Kroto's
allegations fail to meet its prima facie burden demonstrating
the existence of personal jurisdiction. In addition,
subjecting Defendants to litigation in this forum, under
these circumstances, would offend traditional notions of fair
play and substantial justice and would be inconsistent with
the 14th Amendment Due Process Clause. Therefore,
Defendants' motion to dismiss is granted.
contend that the Kroto should be sanctioned for filing this
lawsuit because Kroto's suit is based on legal
propositions that Kroto knows, or should know, are wrong. The
Seventh Circuit has explained that parties and/or attorneys
may be subject to Federal Rule of Civil Procedure 11 (Rule
11) sanctions “when parties or their attorneys bring
legal action for any improper purpose, such as to harass or
needlessly increase the cost of litigation.”
National Wrecking Co. v. International Broth. of
Teamsters, Local 731, 990 F.2d 957, 963 (7th Cir. 1993).
A court can impose Rule 11 sanctions “if a lawsuit is
not well grounded in fact and is not warranted by existing
law or a good faith argument for the extension, modification,
or reversal of existing law.” Cuna Mut. Ins. Soc.
v. Office and Professional Employees Intern. Union, Local
39, 443 F.3d 556, 560-61 (7th Cir. 2006). In making its
Rule 11 inquiry, the court “must undertake an objective
inquiry into whether the party or his counsel should have
known that his position is groundless.” Id.
The Seventh Circuit has recognized that “[w]hile the
Rule 11 sanction serves an important purpose, it is a tool
that must be used with utmost care and caution.”
Federal Deposit Ins. Corp. v. Tekfen Const. and
Installation Co., Inc., 847 F.2d 440, 444 (7th Cir.
1988). While Kroto could have discovered through adequate
investigation of the facts that it could not establish
personal jurisdiction, there is insufficient evidence
presented to warrant the severe penalty of sanctions.
Therefore, Defendants' motion for sanctions is denied.
on the foregoing analysis, Defendants' motion to dismiss
is granted and motion for sanctions is ...