Facebook, Inc. v. Pedersen

Filing 49

REPORT AND RECOMMENDATION TO DENY MOTION FOR DEFAULT JUDGMENT 36 . Objections due by 3/16/2012. Signed by Judge Nathanael M. Cousins on 3/2/12. (nclc1, COURT STAFF) (Filed on 3/2/2012)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 SAN FRANCISCO DIVISION 9 10 FACEBOOK, INC., Plaintiff, 11 REPORT AND RECOMMENDATION TO DENY MOTION FOR DEFAULT JUDGMENT v. 12 13 Case Number 10-cv-04673 JSW THOMAS PEDERSEN and RETRO INVENT AS, Re: Docket Nos. 36, 46, 47 14 Defendants. 15 16 17 18 Plaintiff Facebook moves for the entry of default judgment under Federal Rule of Civil 19 Procedure 55(b)(2) against defendants Pedersen and Retro Invent for operating a website in 20 Norway that allegedly dilutes and infringes Facebook’s registered marks. Facebook also requests 21 an award of attorneys’ fees and costs, a permanent injunction barring defendants from using 22 Facebook’s registered marks, and the transfer of defendants’ internet domains to Facebook. 23 Because Facebook has failed to show that defendants, both residents of Norway, purposefully 24 directed their conduct at California, the Court recommends that the District Court deny 25 Facebook’s motion and that it dismiss this action for lack of personal jurisdiction. 26 I. BACKGROUND 27 Plaintiff Facebook provides online networking services to more than 500 million monthly 28 users; these services include allowing users to create profiles, upload photos and videos, and 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 1 connect with others. Dkt. No. 7, Am. Compl. ¶¶ 9, 22. Facebook owns ten trademark 2 registrations and has seventeen pending trademark applications in the United States for the 3 “Facebook” mark. Id., Ex. A, B. Additionally, Facebook owns one trademark registration in the 4 United States for the “Wall” mark. Id., Ex. D. 5 Defendant Retro Invent is a Norwegian company doing business as www.Faceporn.com 6 (“Faceporn”), a website featuring pornographic content that allows its users to create profiles, 7 join groups, upload photos and video, and conduct live chats. Id. ¶¶ 4, 20-21. Every page of the 8 Faceporn website contains the “Faceporn” mark. Id. ¶ 20. Defendant Thomas Pedersen, a 9 resident of Norway, is the principal of Retro Invent. Id. ¶ 4. 10 Facebook filed an initial complaint against Pedersen on October 15, 2010, alleging that 11 Pedersen’s use of the “Faceporn” mark on the Faceporn website dilutes and infringes Facebook’s 12 registered marks. Dkt. No. 1, Initial Compl. ¶ 1. After Facebook filed the complaint but before 13 it served Pedersen, Pedersen transferred ownership of the Faceporn.com domain to Retro Invent. 14 Dkt. No. 36, Facebook’s Mot. at 4. Facebook then amended its complaint to name both Pedersen 15 and Retro Invent as defendants. Id. at 4-5. The amended complaint asserts ten causes of action 16 against defendants: (1) trademark dilution under 15 U.S.C. § 1125; (2) trademark dilution under 17 CAL. BUS. & PROF. CODE § 14247; (3) false designation of origin under 15 U.S.C. § 1125; (4) 18 federal trademark infringement of the “Facebook” mark under 15 U.S.C. § 1114; (5) common 19 law trademark infringement of the “Facebook” mark; (6) a violation of the Anti-Cybersquatting 20 Consumer Protection Act, 15 U.S.C. § 1125(D); (7) federal trademark infringement of the 21 “Wall” mark under 15 U.S.C. § 1114; (8) common law trademark infringement of the “Wall” 22 mark; (9) common law unfair competition; and (10) unfair competition under CAL. BUS. & PROF. 23 CODE § 17200. 24 Facebook served Retro Invent with the summons and amended complaint in Norway on 25 April 4, 2011, in accordance with the Hague Convention on the Service Abroad of Judicial and 26 Extrajudicial Documents. Facebook’s Mot. at 2; Norberg Decl., Ex. D. Facebook also served 27 Pedersen with the summons and amended complaint in Norway in accordance with the Hague 28 Convention on April 29, 2011. Id. Defendants have not responded to the complaint. The clerk 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 2 1 entered default as to Retro Invent on May 26, 2011, and as to Pedersen on June 1, 2011. Dkt. 2 Nos. 23, 28, Clerk’s Entry of Default. 3 Facebook now moves for the entry of default judgment against defendants, an award of 4 $80,067.42 in attorneys’ fees and $13,294.49 in litigation costs, a permanent injunction barring 5 defendants from using Facebook’s registered “Facebook” and “Wall” marks, and the transfer of 6 www.faceporn.com, www.faceporn.net, and www.faceporn.org to Facebook. Id. at 1-2, 22. 7 Facebook served notice of its motion for default judgement on defendants. Id. at 2. 8 The Court ordered Facebook to show cause why it should not recommend to the District 9 Court that this action be dismissed for lack of personal jurisdiction. Dkt. No. 46, Order to Show 10 Cause (“OSC”). In its response to the order to show cause, Facebook argues that the exercise of 11 personal jurisdiction over defendants is proper because defendants “specifically targeted a forum 12 resident for competition.” Dkt. No. 47, Facebook’s Resp. to OSC at 1. 13 II. LEGAL STANDARD 14 “[D]efault judgments are generally disfavored. Whenever it is reasonably possible, cases 15 should be decided upon their merits.” Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 16 (9th Cir. 1985). After the clerk enters a defendant’s default, a court must take “the well-pleaded 17 factual allegations” in the complaint “as true.” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 18 (9th Cir. 2007). However, the “defendant is not held to admit facts that are not well-pleaded or 19 to admit conclusions of law.” Id. In determining whether to enter a default judgment, a court “may dismiss an action sua 20 21 sponte for lack of personal jurisdiction,” because a “judgment entered without personal 22 jurisdiction over the parties is void.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (citations 23 omitted). A court, however, must provide to a plaintiff the opportunity to assert facts to establish 24 that the exercise of personal jurisdiction over a nonresident defendant is proper before dismissing 25 an action for lack of personal jurisdiction. Id. 26 III. DISCUSSION 27 In determining whether the exercise of personal jurisdiction over a nonresident defendant 28 is proper, a district court must apply the law of the state in which it sits when there is no 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 3 1 applicable federal statute governing personal jurisdiction. Panavision Int’l, L.P. v. Toeppen, 141 2 F.3d 1316, 1320 (9th Cir. 1998). District courts in California may exercise personal jurisdiction 3 over a nonresident defendant to the extent permitted by the Due Process Clause of the 4 Constitution. CAL. CODE CIV . P. § 410.10. The Due Process Clause requires that the defendant 5 have “certain minimum contacts” with the forum “such that the maintenance of the suit does not 6 offend traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. State of 7 Washington, 326 U.S. 310, 316 (1945) (citations and internal quotation marks omitted). The 8 party seeking to invoke jurisdiction has the burden of establishing that jurisdiction exists. Flynt 9 Distrib. Co. v. Harvey, 734 F.2d 1389, 1392 (9th Cir. 1984). Personal jurisdiction may be 10 founded on either general jurisdiction or specific jurisdiction. 11 A. General Jurisdiction 12 General jurisdiction exists when a nonresident defendant is domiciled in the forum state 13 or his activities in the forum are “substantial” or “continuous and systematic.” Panavision, 141 14 F.3d at 1320. To determine whether a nonresident defendant’s contacts are sufficiently 15 substantial or continuous and systematic, a court must consider their “longevity, continuity, 16 volume, economic impact, physical presence, and integration into the state’s regulatory or 17 economic markets.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1224 (9th Cir. 18 2011) (citations and internal quotation marks omitted). 19 Here, Facebook does not argue that the Court has general personal jurisdiction over 20 defendants and alleges no facts to establish that defendants’ contacts with California are 21 substantial or continuous and systematic. Facebook alleges only that Pedersen is an individual 22 residing in Norway doing business as Faceporn.com, that Retro Invent is a private limited 23 company residing in Norway doing business as Faceporn.com, and that defendants aimed their 24 tortious conduct at Facebook by registering a “.com” domain name. Am. Compl. ¶¶ 3, 4; 25 Facebook’s Mot. at 18. These allegations alone are insufficient to establish that general personal 26 jurisdiction over defendants exists. 27 B. 28 Specific Jurisdiction When the nonresident defendant’s contacts with the forum are insufficiently pervasive to 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 4 1 subject him to general personal jurisdiction, the court must ask whether the “nature and quality” 2 of his contacts are sufficient to exercise specific personal jurisdiction over him. Data Disc, Inc. 3 v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). A court may exercise specific 4 personal jurisdiction over a nonresident defendant if (1) the nonresident defendant purposefully 5 directs his activities at the forum or performs some act by which he purposefully avails himself 6 of the privilege of conducting activities in the forum, thereby invoking the benefits and 7 protections of its laws; (2) the plaintiff’s claim arises out of the forum-related activities of the 8 nonresident defendant; and (3) the exercise of jurisdiction over the nonresident defendant is 9 reasonable. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). The 10 plaintiff bears the burden of satisfying the first two of these three elements; if the plaintiff fails to 11 establish either of them, specific personal jurisdiction over the nonresident defendant is 12 improper. Id. (citations omitted). If the plaintiff satisfies the first two elements, the burden then 13 shifts to the defendant to “present a compelling case” that the exercise of jurisdiction would not 14 be reasonable. Id. (citations and internal quotation marks omitted). 15 Here, Facebook alleges that personal jurisdiction over defendants is founded on specific 16 jurisdiction. Facebook’s Mot. at 16. As will be shown below, however, the exercise of specific 17 personal jurisdiction over defendants is unjustified, as Facebook has failed to satisfy the first 18 element of the Ninth Circuit’s test for specific personal jurisdiction. That is, Facebook has failed 19 to show that defendants purposefully directed their activities at California. 20 1. 21 To satisfy the purposeful-direction element in cases in which tortious conduct is alleged Purposeful Direction under Calder 22 by the plaintiff, the Ninth Circuit requires that the actions of the nonresident defendant be 23 purposefully directed at the forum based on an “effects test that focuses on the forum in which 24 the defendant’s actions were felt, whether or not the actions occurred within the forum.” Mavrix 25 Photo, 647 F.3d at 1228 (9th Cir. 2011) (citations and internal quotation marks omitted). This 26 “effects test,” which is based on the Supreme Court’s decision in Calder v. Jones, 465 U.S. 783 27 (1984), requires that the nonresident defendant (1) commit an intentional act, (2) that was 28 expressly aimed at the forum state, and (3) that caused harm that the nonresident defendant knew 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 5 1 would likely be suffered in the forum state. Id. Unless the plaintiff establishes all three of the 2 Calder elements, the purposeful-direction element is unsatisfied. Here, Facebook alleges purposeful direction under the Calder effects test. Facebook’s 3 4 Resp. to OSC at 2. The Court finds that the Calder effects test is the proper framework for 5 analyzing the exercise of specific personal jurisdiction over defendants, because Facebook 6 alleges trademark dilution and infringement, both of which are tort-like causes of action. See 7 Panavision, 141 F.3d at 1321 (finding that a case in which the plaintiff alleges trademark 8 infringement and dilution is “akin to a tort case”). Facebook, however, has failed to establish the 9 second of the Calder elements, and therefore, the purposeful-direction element is unsatisfied 10 here. 11 a. Intentional Act The Court finds that the first element of the Calder effects test is satisfied here, because 12 13 defendants acted intentionally in registering the internet domains www.faceporn.com, 14 www.faceporn.net, and www.faceporn.org and in operating the Faceporn website through those 15 domains, the contents of which allegedly infringe Facebook’s registered marks. Am. Compl. ¶ 16 64; Facebook’s Mot. at 22. 17 b. Express Aiming 18 The Court is unconvinced that defendants’ conduct meets the second element of the 19 Calder effects test, which requires a showing that defendants’ acts were expressly aimed at 20 California. 21 To find that a nonresident defendant expressly aimed his conduct at the forum, the Ninth 22 Circuit requires “something more” than “simply registering someone else’s trademark as a 23 domain name and posting a web site on the Internet.” Panavision, 141 F.3d at 1322. The 24 “something more” that the Ninth Circuit requires is “conduct directly targeting the forum,” such 25 as running a website that appeals to, and profits from, an audience in the forum. Mavrix Photo, 26 647 F.3d at 1229-30 (finding that when the nonresident defendant purposefully operated a 27 website whose content infringed the plaintiff’s copyrights, the “something more” requirement 28 was met because the website contained advertisements directed specifically at the forum and the 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 6 1 forum’s audience was an “integral component” of the defendant’s “business model” and 2 “profitability”); see also Panavision, 141 F.3d at 1322 (finding that when the nonresident 3 defendant purposefully registered the plaintiff’s trademarks as his domain names, the “something 4 more” requirement was met because the purpose of the defendant’s conduct was to extort money 5 from the plaintiff); Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1020 (9th Cir. 2002) 6 (finding that when the nonresident defendant purposefully operated a website whose content 7 infringed the plaintiff’s trademarks, the “something more” requirement was met because the 8 defendant ran a for-profit marketing campaign in the forum). 9 In the order to show cause the Court issued to Facebook, the Court noted that Facebook’s 10 factual allegations until that point did not meet the “something more” requirement because they 11 did not establish that Faceporn’s users in California were an integral component of Faceporn’s 12 business model and profitability. OSC at 3 (emphasis added). Facebook has failed to cure this 13 deficiency, because in its response to the order to show cause, Facebook does not provide any 14 additional factual allegations with respect to Faceporn’s users in California or Faceporn’s 15 business model. 16 Instead, Facebook argues that defendants’ conduct satisfies the express-aiming element of 17 the Calder effects test because defendants “intended to target Facebook” by “offering a 18 pornographic version of Facebook” and by “competing with Facebook.” Facebook’s Resp. to 19 OSC at 2-3. Specifically, Facebook claims that defendants “copied elements of the Facebook site 20 to make the Faceporn site both visually and functionally similar to Facebook,” used “a similar 21 layout and color scheme to that of Facebook,” and used “Facebook’s wall trademark in the same 22 manner it was used by Facebook.” Id. at 2. Facebook relies primarily on three cases to support 23 this argument: Brayton Purcell, Bear Mill, and Nissan. Id. at 2-3. Facebook claims that these 24 cases hold that a plaintiff can establish that a nonresident defendant expressly aimed his conduct 25 at the forum by illegally copying elements of the plaintiff’s website for the purpose of competing 26 with the plaintiff. The Court, however, finds that these cases are inapplicable to the facts here 27 and therefore do not lend support to the exercise of specific personal jurisdiction over 28 defendants. 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 7 1 The first case relied upon by Facebook is Brayton Purcell LLP v. Recordon & Recordon, 2 606 F.3d 1124 (9th Cir. 2010). Brayton Purcell, a law firm specializing in elder law in Northern 3 California, brought a suit for copyright infringement against Recordon, a law firm in Southern 4 California, for allegedly posting on its website content on elder abuse law that was posted on 5 Brayton Purcell’s website and was copyrighted by Brayton Purcell. 606 F.3d at 1126-27. The 6 Ninth Circuit found that Recordon’s conduct met the express-aiming element of the Calder 7 effects test because Recordon, the nonresident defendant, “individually targeted” Brayton Purcell 8 and “entered direct competition with Brayton Purcell” by making “commercial use of Brayton 9 Purcell’s copyrighted material for the purpose of competing with Brayton Purcell for elder abuse 10 clients.” Id. at 1130, 1132. Brayton Purcell is distinguishable from this case in one key respect. In Brayton Purcell, 11 12 the Ninth Circuit found that the defendant individually targeted the plaintiff, and therefore the 13 forum, because the parties were “in direct competition for elder abuse clients,” meaning that both 14 parties sought the business of the same set of potential customers. Id. at 1130. Here, it is 15 unlikely that a substantial overlap exists in terms of the users sought by Facebook and Faceporn. 16 Facebook admits that defendants present Faceporn “as a social networking site for those with a 17 specific interest in pornographic content,” but it adds that Faceporn also “offers social 18 networking services and functionality similar to that provided by Facebook.” Facebook’s Resp. 19 to OSC at 4 (emphasis added). Despite the alleged similarities between Facebook and Faceporn, 20 the Court finds as untenable the notion that Facebook, a “provider of online networking services” 21 to hundreds of millions of users around the world, competes for exactly the same users as 22 Faceporn, which, according to Facebook’s complaint, features “highly graphic and sexually 23 explicit images” and describes itself as “the number one socializing porn and sex network!” Am. 24 Compl. ¶¶ 9, 20, 22. This lack of direct competition for the same set of potential users is what 25 prevents Facebook from convincingly establishing that defendants individually targeted 26 Facebook’s business and thus expressly aimed their conduct at California under Brayton Purcell. The second case is Bear Mill, Inc. v. Teddy Mountain, Inc., No. 2:07-cv-492, 2008 WL 27 28 2323483 (D. Idaho May 7, 2008). The Bear Mill, a seller of stuffed animals in Idaho, brought an 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 8 1 action for trademark infringement against Teddy Mountain, a seller of stuffed animals in Canada, 2 for allegedly making unauthorized references on its website to various products and designs 3 trademarked by The Bear Mill. Id. at *1. The court found that Teddy Mountain, the nonresident 4 defendant, had expressly aimed its conduct at the forum because it was “undisputed that [the 5 parties] are competitors” and because Teddy Mountain had “actual knowledge” that The Bear 6 Mill’s principal place of business was in Idaho, the forum. Id. at *6. Bear Mill is inapposite to this case for the same reasons Brayton Purcell is inapposite to 7 8 this case. Here, it is not “undisputed” that Facebook and Faceporn are direct competitors, as 9 there is no record that their users are likely to overlap in the same way that the stuffed-animal- 10 seeking potential customers of Bear Mill and Teddy Mountain would overlap. Accordingly, the 11 Court is unconvinced that this case lends support to Facebook’s argument that defendants’ 12 conduct meets the express-aiming element of the Calder effects test, even when assuming that 13 defendants knew that Facebook’s principal place of business was in California. See Facebook’s 14 Resp. to OSC at 4 (“defendants knew Facebook was a U.S. and California company”). 15 The third case is Nissan Motor Co. v. Nissan Computer Corp., 89 F. Supp. 2d 1154 (C.D. 16 Cal. 2000). Nissan Motor, a Japanese automaker with a subsidiary located in California, brought 17 an action for trademark infringement against Nissan Computer, a seller of computers in North 18 Carolina, for allegedly registering nissan.com and nissan.net and posting car-related content on 19 those sites, including advertisements. Id. at 1157. The court found that Nissan Computer’s 20 conduct was expressly aimed at the forum because Nissan Computer, the nonresident defendant, 21 “intentionally” posted car-related advertisements on its website to “profit[] from consumer 22 confusion” at Nissan Motor’s expense by diverting Nissan Motor’s “potential customers.” Id. at 23 1160. Nissan also is distinguishable from this case, because here, Facebook has not alleged any 24 25 facts that support the notion that defendants have garnered any revenue from their operation of 26 Faceporn at Facebook’s expense or that Faceporn has diverted any of Facebook’s potential 27 customers. Instead, Facebook states conclusorily that defendants operate Faceporn “with a bad 28 faith intent to profit” from Facebook’s marks, but it alleges no facts to suggest that Faceporn has 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 9 1 profited at all at Facebook’s expense. Am. Compl. ¶ 67. Similarly, Facebook states conclusorily 2 that Faceporn’s operations are “likely” to cause consumer confusion and that elements on 3 Faceporn’s website are “confusingly similar” to those on Facebook’s website, but it does not put 4 forth factual allegations that suggest that confusion actually has occurred or that any of 5 Facebook’s potential customers have been sidetracked to Faceporn’s website as a result of 6 defendants’ conduct. Am. Compl. ¶¶ 42, 45. Accordingly, Nissan does not support Facebook’s 7 arguments in favor of exercising personal jurisdiction over defendants. 8 c. Harm 9 The Court finds that the third element of the Calder test is met here, because defendants 10 likely knew that any harm suffered by Facebook would be suffered in California, as Facebook’s 11 principal place of business is in California. Am. Compl. ¶ 2. 12 2. 13 Because Facebook has failed to establish the first element of the test for specific personal Forum-Related Activities and Reasonableness 14 jurisdiction, the Court need not inquire into whether Facebook has met the second or third 15 elements of that test, which require respectively that the plaintiff’s claim arise out of the 16 forum-related activities of the nonresident defendant, and that the exercise of jurisdiction over 17 the nonresident defendant be reasonable. 18 IV. CONCLUSION 19 Because Facebook has failed show that defendants’ conduct meets the express-aiming 20 element of the Calder effects test, which is required to establish the first element of the Ninth 21 Circuit’s test for the exercise of specific personal jurisdiction, the Court lacks personal 22 jurisdiction over defendants. Accordingly, this Court recommends that the District Court deny 23 Facebook’s motion for default judgment and that it dismiss this action for lack of personal 24 jurisdiction. Facebook may file objections to this report and recommendation under Federal Rule 25 of Civil Procedure 72(b) within fourteen days of the date this order is filed. 26 IT IS SO ORDERED. 27 DATED: March 2, 2012 ____________________________ NATHANAEL M. COUSINS United States Magistrate Judge 28 10-cv-04673 JSW (NC) REPORT AND RECOMMENDATION Case N o. 10

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