IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

On August 5, 2010, the Second Circuit issued an important decision affecting a brand owner’s ability to establish personal jurisdiction against out-of-state defendants involved in the online sale of counterfeit goods. In Chloe v. Queen Bee of Beverly Hills, LLC, the Second Circuit vacated a Southern District of New York (“SDNY”) decision dismissing an anti-counterfeiting case for lack of personal jurisdiction. See Chloe v. Queen Bee of Beverly Hills, LLC, 571 F. Supp. 2d 518 (S.D.N.Y. 2008) (hereafter “District Court op.”), vacated and remanded, 2010 U.S. App. LEXIS 16192 (2d Cir. 2010) (hereafter “Second Circuit op.”).

In Queen Bee, Chloe sued several defendants including Queen Bee of Beverly Hills, LLC and its partners Rebecca Rushing and Simone Ubaldelli for trademark infringement and counterfeiting arising out of the defendants’ sales of counterfeit Chloe® handbags. District Court Op. at 521. Individual defendant Ubaldelli moved to dismiss for lack of personal jurisdiction, arguing that one sale to an employee of the plaintiff’s attorneys’ law firm—a so-called “manufactured contact”—was insufficient to confer personal jurisdiction on him See id. at 524. The district court dismissed the claims against Ubaldelli, reasoning that, among other grounds, “it would violate due process to permit a plaintiff to manufacture personal jurisdiction by purchasing an allegedly infringing product in a plaintiff’s forum of choice.” Id. at 526 & 530. In its decision, the district court acknowledged the existence of conflicting precedent within the SDNY on that jurisdictional issue. While some SDNY decisions have held that personal jurisdiction in a trademark infringement case can not derive solely from Internet sales “manufactured” by the plaintiff or its representatives, see District Court Op. at 524-525; citing Mattel v. Anderson, No. 04 Civ. 5275, 2005 U.S. Dist. LEXIS 14404 (S.D.N.Y. July 18, 2005), others have found personal jurisdiction based solely on the solicitation of Internet sales and a shipment into New York initiated by a plaintiff representative. See District Court Op. at 524-525, citing Mattel v. Procount Bus. Svcs., No. 03 Civ. 7234, 2004 U.S. Dist. LEXIS 3895 (S.D.N.Y. Mar. 10, 2004); Mattel v. Adventure Apparel, No. 00 Civ. 4085, 2001 U.S. Dist. LEXIS 3179 (S.D.N.Y. Mar. 22, 2001).

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On July 26, 2010, the Library of Congress ruled that “jailbreaking” of smartphones is a fair use under the Copyright Act. Under the Copyright Act, the Librarian of Congress is required to review classes of works every three years for exemptions to the ban against circumventing technological measures that control access to copyrighted materials. The purpose for the triennial review is to determine whether users of copyrighted works are adversely affected by the anti circumventing ban in their ability to make noninfringing uses of copyrighted work. As part of its decision making process, the Copyright Office provides notice of its rulemaking, solicits input from the public and makes a final recommendation to the Library of Congress.

This year, the Library of Congress granted exemptions to six of the 19 submitted classes of works. One of the interesting exemptions is the ability to “jailbreak” or circumvent the technological measures contained on smartphones and in particular Apple’s iPhone, to prevent unapproved software from being installed and run on such phones. In other words, it is now permissible as fair use to “jailbreak” Apple’s iPhone in order to make the operating system on that phone interoperable with a third-party’s software that has not been approved by Apple.

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