Topsteptrader, LLC v. OneUp Trader, LLC
Filing
80
OPINION: For the reasons stated in the attached memorandum opinion and order, Alsabah's Motion to Dismiss for lack of personal jurisdiction is denied and Defendants' Motions to Dismiss [ECF Nos. 35, 48] are granted in part and denied i n part.. Count II is dismissed without prejudice. Count IV is dismissed with prejudice. Count I and Count III remain. TopstepTrader is granted leave to file an amended complaint on the breach of contract claim (Count II) and shall file the amended complaint on or before 5/15/18. Responsive pleadings shall be filed by 6/12/18. Status hearing set for 6/19/18 at 9:00 a.m. Signed by the Honorable Harry D. Leinenweber on 4/18/18:Mailed notice(maf)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
TOPSTEPTRADER, LLC,
Plaintiff,
Case No.
17 C 4412
v.
Judge Harry D. Leinenweber
ONEUP TRADER, LLC and SATTAM
ALSABAH,
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court are OneUp Trader’s Motion to Dismiss the
Second
Amended
Complaint
for
failure
to
state
a
claim
[ECF
No. 35] and Alsabah’s Motion to Dismiss for lack of personal
jurisdiction and failure to state a claim [ECF No. 48].
For the
reasons stated herein, both Motions to Dismiss are granted in
part and denied in part.
I.
BACKGROUND
The following facts are taken from TopstepTrader’s Second
Amended Complaint (“Complaint”) and are presumed true for the
purpose of this Motion.
(7th Cir. 2012).
See, Munson v. Gaetz, 673 F.3d 630, 632
TopstepTrader is an Illinois-based company
that operates a website platform that trains its users to trade
via simulations and then (if they are successful in training)
allows
them
to
trade
in
the
market
using
TopstepTrader’s
capital. (Compl. ¶¶ 9-14.)
users
are
split
with
The eventual profits made by the
TopstepTrader.
(Id.)
Saddam
Alsabah
(“Alsabah”) is a resident of Kuwait who signed up for an account
with TopstepTrader in the fall of 2015 with the alleged purpose
of
copying
its
intellectual
property
and
business
model
and
creating his own copycat business using the copied material.
(Id.
¶¶
3,
35-51.)
Alsabah
created
Defendant
(“OneUp”) as the copycat business. (Id.)
OneUp
Trader
TopstepTrader alleges
that by copying its materials, Alsabah and OneUp breached its
Terms of Use (“Terms”) and infringed its copyrighted material.
The Complaint brings four counts against Defendants: copyright
infringement (Count I), breach of contract (Count II), unjust
enrichment (Count III), and fraud (Count IV).
Both Defendants
move to dismiss the Complaint under Rule 12(b)(6) for failure to
state a claim and Alsabah individually moves to dismiss under
Rule 12(b)(2) for lack of personal jurisdiction.
II.
A.
ANALYSIS
Alsabah’s 12(B)(2) Motion to Dismiss
1.
Personal Jurisdiction
a.
12(b)(2) Standard
A motion to dismiss for lack of personal jurisdiction under
Federal Rule of Civil Procedure 12(b)(2) tests whether a federal
court has personal jurisdiction over a defendant.
- 2 -
A complaint
need not include facts alleging personal jurisdiction.
However,
once the defendant moves to dismiss under Rule 12(b)(2) for lack
of
personal
jurisdiction,
the
plaintiff
bears
demonstrating the existence of jurisdiction.
the
burden
of
Purdue Research
Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.
2003)
(citations
and
quotations
omitted).
Where
personal
jurisdiction is decided on the papers as opposed to after an
evidentiary hearing, the plaintiff “need only make out a prima
facie
case
of
personal
jurisdiction.”
Hyatt
Coco, 302 F.3d 707, 713 (7th Cir. 2002).
Int’l
Corp.
v.
Although the Court
must accept the plaintiff’s uncontroverted allegations as true,
if “the defendant has submitted affidavits or other evidence in
opposition to the exercise of jurisdiction, the plaintiff must
[then] go beyond the pleadings and submit affirmative evidence
supporting the exercise of jurisdiction.”
Purdue Research, 338
F.3d
relevant
at
783.
All
disputes
concerning
resolved in the plaintiff’s favor.
TopstepTrader
independent
asserts
theories:
are
under
two
Id. at 782-83.
personal
first,
facts
that
jurisdiction
Alsabah
consented
to
jurisdiction by agreeing to the Terms, which contained a forum
selection clause, and second, that Alsabah’s minimum contacts
with
Illinois
are
sufficient
for
personal
address each contention in that order.
- 3 -
jurisdiction.
We
b.
Forum Selection Clause
A valid forum selection clause is sufficient to establish
personal jurisdiction.
F.3d
584,
589
TopstepTrader’s
them)
are
(7th
Terms
Cir.
(and
2005).
the
unenforceable
consideration.
exchanged
See, TruServ Corp. v. Flegles, Inc., 419
was
Alsabah
forum
selection
because
the
to
the
website.
clause
that
within
agreement
This argument is meritless.
access
argues
lacks
The consideration
See,
LKQ
Corp.
v.
Thrasher, 785 F. Supp. 2d 737, 742 (N.D. Ill. 2011) (“Under the
traditional rule, consideration is relatively easy to show.
As
long as the person receives something of value in exchange for
her own promise or detriment, the courts will not inquire into
the adequacy of the consideration.”)
Alsabah rebuts by pointing
out that the website was publicly available via YouTube, but the
import of this is an enigma.
user
to
actually
website’s
full
use
the
content.
A YouTube video does not allow a
website,
(Compl.
¶
nor
19.)
does
it
include
TopstepTrader
the
gave
Alsabah the ability to use TopstepTrader’s website and access
its full content, which is sufficient for consideration.
Id.;
see, Reger Dev., LLC v. Nat’l City Bank, 592 F.3d 759, 766 (7th
Cir.
2010)
(quoting
Mid–Town
Petroleum,
Inc.
v.
Gowen,
611
N.E.2d 1221, 1227 (Ill. App. Ct. 1993)) (“A peppercorn can be
- 4 -
considered sufficient consideration to support a contract in a
court of law.”) (as amended (Dec. 16, 2010)).
Alsabah’s next argument carries more weight.
He contends
that he never accepted the Terms by creating an account because:
(1) he never agreed to a clickwrap agreement, and (2) under a
browsewrap
agreement,
TopstepTrader
concluding
attempts
that
he
lacked
to
evade
“Alsabah
accepted
notice
this
the
of
the
argument
Terms
and
Terms.
by
merely
its
forum
selection clause when he created an account on TopstepTrader’s
website.
In doing so, he consented to this Court’s jurisdiction
over him.”
(Mem. in Opp’n to Alsabah’s Mot. to Dismiss at 2,
Dkt. 72.)
This argument does not address Alsabah’s argument
that he never agreed to the Terms in the first instance.
The
only case TopstepTrader cites involving a website agreement is
Productive People, LLC v. Ives Design, No. CV 09 1080, 2009 WL
1749751, at *1 (D. Ariz. June 18, 2009), but in that case, it
was undisputed that defendants agreed to plaintiff’s terms of
service agreement.
must
determine
That is not the case here.
whether
Alsabah
agreed
to
Thus, the Court
the
Terms
when
he
created an account on TopstepTrader’s website.
Although
contracts
formed
by
creating
an
account
on
a
website are a “newer form[] of contracting,” the same common law
contract principles apply:
- 5 -
In Illinois, as in many states, the law governing the
formation of contracts on the Internet is still in the
early stages of development.
But there is no reason
to think that Illinois’s general contract principles
do not apply. Formation of a contract requires mutual
assent in virtually all jurisdictions; Illinois courts
use an objective approach to that question.
Sgouros
v.
TransUnion
Corp.,
817
F.3d
1029,
1034
(7th
Cir.
2016); see also, Register.com, Inc. v. Verio, Inc., 356 F.3d
393, 403 (2d Cir. 2004) (“While new commerce on the Internet has
exposed courts to many new situations, it has not fundamentally
changed
the
principles
of
contract.”).
In
translating
the
principles of contract formation to the internet, the relevant
inquiry is (1) “whether the web pages presented to the consumer
adequately
communicate
agreement,”
all
the
terms
and
and
“whether
the
that
assumption
(2)
the
purchaser
receives
those terms.”
conditions
circumstances
of
the
support
the
reasonable
Sgouros, 817 F.3d at 1034.
notice
of
Such an inquiry is
“fact-intensive.” Id.
Given
layout
of
the
fact-intensive
the
TopstepTrader
relevant here.
inquiry,
website
in
of
TRO,
exact
the
fall
wording
of
2015
and
is
In September 2015, Alsabah was presented with a
webpage that stated “Join Now for Free.”
Supp.
the
Dkt.
8-5;
Testimony
of
(See, Ex. D to Mem. in
Rudman
at
TRO
Hearing
(July 13, 2018) Dkt. 18 at 73:14-24, 80:21-81:7, 90:23-91:18.)
The
webpage
had
boxes
to
fill
in
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personal
information.
Id.
Right
below
this
form
for
personal
information
was
a
fairly
large button with large, white print labeled “Sign Up.” Id.
The
phrase “I agree to the terms and conditions” appeared directly
under the “Sign Up” button in small print. Id.
This phrase was
hyperlinked, meaning that clicking on the phrase produced a copy
of the Terms. Id.
An image of the layout is replicated below,
id.:
The
parties
dispute
whether
the
alleged
contract
court is a “clickwrap” or “browsewrap” agreement.
before
the
A “clickwrap”
agreement is formed when website users click a button or check a
box that explicitly affirms that the user has accepted the terms
after having the opportunity to view or scroll through the terms
posted on the website and this type of agreement is generally
enforced.
Sgouros v. TransUnion Corp., No. 14 C 1850, 2015 WL
- 7 -
507584, at *4 (N.D. Ill. Feb. 5, 2015), aff’d, 817 F.3d 1029
(7th Cir. 2016) (citing Nguyen v. Barnes & Noble, 763 F.3d 1171,
1175-76 (9th Cir. 2014)); see also, Van Tassell v. United Mktg.
Grp., LLC, 795 F. Supp. 2d 770, 790 (N.D. Ill. 2011) (courts
“regularly
uphold”
clickwrap
agreements
when
structured
properly). A “browsewrap” agreement, on the other hand, is an
agreement where users are bound to the website’s terms by merely
navigating or using the website; the user is not required to
sign an electronic document or explicitly click an “accept” or
“I agree” button.
Sgouros, 2015 WL 507584, at *6 (citations and
quotations omitted).
“Courts enforce browsewrap agreements only
when there is actual or constructive knowledge of terms.” Id.
Of
course,
human
ingenuity
and
the
constant
development
of
technology means that not all interfaces fit neatly into one of
these two categories.
Meyer v. Uber Techs., Inc., 868 F.3d 66,
75-76 (2d Cir. 2017).
Such is the case here.
The type of agreement that Alsabah
encountered in September 2015 appears to fall in-between these
two forms—a middle ground that has been termed a “hybrid” or a
“sign-in-wrap.”
Id.; Nicosia v. Amazon.com, Inc., 834 F.3d 220,
235-36 (2d Cir. 2016).
“Sign-in-wrap” agreements never have the
user take an affirmative action to explicitly agree to the terms
of the site, but it does require some form of affirmative action
- 8 -
by requiring the user to sign up for an account.
Usually during
the sign up process, the webpage states something to the effect
of: “By signing up for an account with [website provider], you
are
accepting
the
[website]’s
terms
of
service.”
While
a
hyperlink to the Terms is provided, the user is not required to
scroll
through
explicitly
pressing
the
indicate
the
“Sign
terms,
that
Up”
read
he
the
agrees
button.
terms,
to
In
those
this
or
otherwise
terms
scenario,
before
the
user
“agrees” to the terms by signing up or creating an account.
Selden v. Airbnb, Inc., No. 16 CV 933, 2016 WL 6476934, at *4
(D.D.C. Nov. 1, 2016), appeal dismissed, 681 F. App’x 1 (D.C.
Cir. 2017), cert. denied, 138 S.Ct. 222 (2017).
TopstepTrader’s
Alsabah.
The
agreement:
website
agreement
Alsabah
did
presented
required
not
click
a
sign-up
less
an
“I
than
agreement
a
Agree”
to
clickwrap
box
after
scrolling through the Terms, nor did he check a box indicating
that he agreed to or even read the Terms.
But TopstepTrader’s
website
agreement:
required
more
than
a
browsewrap
Alsabah
affirmatively signed up for an account to access the website and
a link to the Terms appeared immediately below the “Sign up”
button with the phrase “I agree to the terms and conditions.”
Thus,
it
did
not
allow
him
to
passively
website as with a browsewrap agreement.
- 9 -
browse
through
the
Sign-in-wraps are regularly upheld where a hyperlink to the
terms and conditions appears next to the only button that will
allow the user to continue use of the website.”
Berkson v. Gogo
LLC, 97 F. Supp. 3d 359, 401 (E.D.N.Y. 2015).
Courts applying
Illinois law have upheld sign-in-wrap agreements, although they
have not always characterized them as such.
See, Forby v. One
Techs., LP, No. 15 CV 0757, 2016 U.S. Dist. LEXIS 46141, at *2
(S.D. Ill. Apr. 5, 2016) (enforcing terms where the user clicked
the “Continue” button and the terms were hyperlinked right above
the button); Hubbert v. Dell Corp., 835 N.E.2d 113, 121-22 (Ill.
App. Ct. 2005) (enforcing terms that were linked to all five
pages of the online checkout process).
However, there is a notable (and dispositive) distinction
in these cases.
The websites in these cases explicitly tell the
user that by choosing to sign up for the service—or by choosing
to
click
the
operative
hyperlinked terms.
button—the
user
is
agreeing
to
the
See, Forby, 2016 U.S. Dist. LEXIS 46141, at
*2 (noting that directly above the large “Continue” button was
the
following
statement
with
a
hyperlink
to
the
terms:
“By
clicking on the ‘Continue’ button below, you agree to the Offer
Details,
N.E.2d
to
at
the
Terms
121-22
and
Conditions
(noting
that
.
.
.”);
defendant’s
Hubbert,
web
835
pages
conspicuously stated: “All sales are subject to Dell’s Term[s]
- 10 -
and Conditions of Sale.”).
Here, TopstepTrader’s website gave
the user no explicit warning that by clicking the “Sign Up”
button, the user agreed to the Terms.
The
Seventh
Circuit
has
warned
district
courts
not
to
“presume that a person who clicks on a box that appears on a
computer screen has notice of all contents not only of that page
but of other content that requires further action (scrolling,
following a link, etc.)
Indeed, a person using the Internet may
not realize that she is agreeing to a contract at all, whereas a
reasonable person signing a physical contract will rarely be
unaware
of
that
fact.”
Sgouros,
817
F.3d
at
1034-35.
In
Sgouros, the Seventh Circuit held that a website contract was
unenforceable
where:
(1)
the
website
contained
no
clear
statement that the user’s purchase was subject to any terms and
conditions of sale, (2) a scroll box that contained the visible
words “Service Agreement” said nothing about what the agreement
regulated, (3) the hyperlinked version of the Service Agreement
was not clearly labeled, and, most importantly, (4) the text
immediately before the “authorization” button did not refer to
accepting
the
terms
and
conditions,
but
rather
referred
authorizing the sharing of personal information. Id. at 1035.
- 11 -
to
Similarly, in Nicosia v. Amazon.com, Inc., 834 F.3d 220,
236–37
(2d
Cir.
2016),
the
Second
Circuit
held
a
similar
internet-based agreement unenforceable, noting that:
unlike typical “clickwrap” agreements, clicking “Place
your order” does not specifically manifest assent to
the additional terms, for the purchaser is not
specifically asked whether she agrees . . . Nothing
about the “Place your order” button alone suggests
that additional terms apply, and the presentation of
terms is not directly adjacent to the “Place your
order” button so as to indicate that a user should
construe clicking as acceptance.
Id.
In the same fashion, this Court recently held website terms
unenforceable where the plaintiff clicked a “Submit” button, but
the terms were located at the bottom of the webpage in fine
print
below.
and
nothing
alerted
users
that
further
terms
appeared
Sullivan v. All Web Leads, Inc., No. 17 C 1307, 2017 WL
2378079, at *8 (N.D. Ill. June 1, 2017).
The Court found it was
a reasonable assumption that the “click” authorized exactly what
it seemed to—only the giving and using of personal information
to get an insurance quote and not also consent to other terms.
Id.; see also, Barrera v. Guaranteed Rate, Inc., No. 17 CV 5668,
2017 WL 4837597, at *3 (N.D. Ill. Oct. 23, 2017) (noting the
placement
of
terms
and
the
tiny
font
made
it
unlikely
that
plaintiff was aware what he was agreeing to when he clicked the
“Quote” button).
- 12 -
This case is more like Sgouros, Nicosia and Sullivan than
Hubert and Forby.
See, Sgouros, 817 F.3d at 1034-35; Nicosia,
834 F.3d at 236–37; Sullivan, 2017 WL 2378079, at *8.
Alsabah
does not deny that he clicked the “Sign Up” button next to the
hyperlinked Terms, because, without doing so, he would have been
unable to proceed with the activation process and would never
have
received
access
to
TopstepTrader’s
website
(furthermore,
facts are construed in favor of TopstepTrader at this stage).
But, unlike Hubert and Forby, nowhere does the website tell a
user that clicking the “Sign Up” button indicates acceptance of
the hyperlinked Terms.
See, Forby, 2016 U.S. Dist. LEXIS 46141,
at *2; Hubbert, 835 N.E.2d at 121-22.
“[A] consumer’s clicking
on a . . . button does not communicate assent to contractual
terms if the offer did not make clear to the consumer that
clicking on the . . . button would signify assent to those
terms.”
Specht v. Netscape Communications Corp., 306 F.3d 17,
29-30 (2d Cir. 2002) (emphasis added).
Here, the meaning of
clicking the “Sign Up” button is unclear.
Just as in Nicosia,
nothing about word “Sign Up” indicates that the user is agreeing
to additional Terms.
Nicosia,
because
hyperlinked
Terms
the
True, this is a closer question than in
presentation
directly
under
of
the
the
“Sign
(albeit
Up”
small)
button
may
indicate to a reasonable user that clicking “Sign Up” is also an
- 13 -
acceptance of those Terms.
Yet “even close proximity of the
hyperlink [of terms] to relevant buttons users must click on—
without
notice.”
more—is
insufficient
to
give
See, Nguyen, 763 F.3d at 1179.
show “more” here.
rise
to
constructive
TopstepTrader fails to
Thus, as in Sullivan, the “Sign Up” button
signaled that the user wanted to sign up for an account; it did
not signal acceptance to additional Terms.
Though this case
presents a closer question than Sgouros, Nicosia, or Sullivan
discussed above, the principles from those cases counsel against
finding
the
Terms
enforceable.
And
if
the
Terms
are
not
enforceable, neither is the forum selection clause they contain.
Accordingly,
over
Alsabah
the
cannot
Court
be
finds
based
on
that
the
personal
forum
jurisdiction
selection
clause.
However, even if Alsabah has not explicitly consented to this
jurisdiction, he may still be subject to this jurisdiction based
on his contacts.
c.
Illinois
“permits
Minimum Contacts
its
courts
to
exercise
personal
jurisdiction on any basis permitted by the constitutions of both
Illinois and the United States.”
be2 LLC v. Ivanov, 642 F.3d
555, 558 (7th Cir. 2011); 735 ILCS 5/2–209.
To the extent the
federal constitutional and Illinois statutory inquiries diverge,
“the Illinois constitutional standard is likely more restrictive
- 14 -
than its federal counterpart,” but both essentially focus on
whether exercising jurisdiction over a defendant is fair and
reasonable, and thus a single inquiry suffices.
KM Enters, Inc.
v. Global Traffic Techs., Inc., 725 F.3d 718, 732 (7th Cir.
2013).
The Court, therefore, asks one constitutional question:
does Alsabah have “certain minimum contacts with [Illinois] such
that the maintenance of the suit does not offend traditional
notions of fair play and substantial justice[?]”
Daimler AG v.
Bauman, 571 U.S. 117, 126 (2014) (quoting Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 923 (2011)).
contacts
with
the
exist
where
forum
“the
State
defendant’s
are
such
conduct
that
he
anticipate being haled into court there.”
Corp. v. Woodson, 444 U.S. 286, 297 (1984).
Minimum
and
connection
should
reasonably
World-Wide Volkswagen
There are two forms
of personal jurisdiction: general and specific.
Here, the Court
need only address specific jurisdiction. (See, Pl.’s Mem. in
Opp’n at 3 n.2 (noting that plaintiff does not assert general
personal jurisdiction).)
To find specific jurisdiction, (1) the defendant must have
purposefully
availed
business
the
in
himself
forum
of
state
the
or
privilege
purposefully
of
conducting
directed
his
activities at the state, (2) the alleged injury must have arisen
from
the
defendant’s
forum-related
- 15 -
activities,
and
(3)
the
exercise of jurisdiction must comport with traditional notions
of fair play and substantial justice.
See, Felland v. Clifton,
682 F.3d 665, 674 (7th Cir. 2012) (citations omitted).
Physical contact with the forum state is not required for
personal
jurisdiction.
defendant’s
efforts
“If,
are
for
directed
example,
a
commercial
toward
a
particular
jurisdiction, the fact that the actor did not actually enter the
jurisdiction is not of crucial importance.”
Purdue Research
Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 781 (7th Cir.
2003) (citing Calder v. Jones, 465 U.S. 783, 788-89 (1984)).
Alsabah argues that OneUp’s conduct cannot be attributed to
him to establish personal jurisdiction.
Alsabah then goes on to
discuss the ins and outs of Delaware’s law on the corporate
form.
Yet there is no need here to pierce the corporate veil.
The Complaint alleges that Alsabah individually took multiple
actions
that
establish
personal
jurisdiction.
(See,
infra,
Discussion II.B.2.)
TopstepTrader
alleges
that
Alsabah
sought
out
TopstepTrader’s website and services and used his access to copy
its intellectual property.
is
located
in
communications
Illinois
with
TopstepTrader also alleges that it
and
Alsabah
submits
made
evidence
that
TopstepTrader’s
multiple
home
state
clear, thus allowing the reasonable inference that Alsabah knew
- 16 -
TopstepTrader’s location.
Specifically, TopstepTrader alleges
that “Defendant Alsabah intended to and did create a competing
entity to [TopstepTrader] by masquerading as a potential trader
purportedly interested in becoming a subscribing [TopstepTrader]
Website user.
All along his purpose was to gather protected and
proprietary information . . .” (Compl. ¶ 35.)
Further, “Alsabah
individually . . . implanted [himself] into [TopstepTrader]’s
training
program
to
gather
business
intelligence
to
study
[TopstepTrader]’s business platform and intellectual property,
and then . . . [made] wholesale copies [of] [TopstepTrader]’s
business platform and its copyrighted website content to use on
[his] own website.” (Compl. ¶¶ 1, 49.)
TopstepTrader relies heavily on MG Design Assocs., Corp. v.
Costar Realty Info., Inc., 224 F. Supp. 3d 621, 632 (N.D. Ill.
2016), aff’d in part on reconsideration, 267 F. Supp. 3d 1000
(N.D. Ill. 2017), for the proposition that personal jurisdiction
is
proper
where
“the
defendant
reaches
into
Illinois
by
infringing the intellectual property rights of a plaintiff ‘at
home’ in the state.”
Id. (citing IPOX Schuster, LLC v. Nikko
Asset Mgmt. Co., 191 F. Supp. 3d 790, 800-01 (N.D. Ill. 2016).
However, as Alsabah points out, MG Design’s reasoning has been
undermined
by
the
Seventh
Circuit’s
decision
in
Ariel
Investments, LLC v. Ariel Capital Advisors LLC, 881 F.3d 520,
- 17 -
522 (7th Cir. 2018).
MG Design quotes and extensively relies on
the reasoning of the district court that was reversed in Ariel.
Yet Ariel’s holding that infringement of intellectual property
is enough for personal jurisdiction is supported by specific
facts that are not true for the case at bar: the defendant in
Ariel
was
completely
unaware
of
the
plaintiff
company’s
existence before getting a cease-and-desist letter and at no
point
“directed”
his
activities
(or
harm)
to
Illinois.
In
Ariel, the defendant named his company after his daughter with
no knowledge that the name arguably infringed the trademark of
the plaintiff’s Illinois-based company.
Thus, the only hook for
personal jurisdiction was where the harm was felt, which Walden
expressly held was insufficient for personal jurisdiction.
See,
Walden v. Fiore, 134 S.Ct. 1115, 1122 (2014).
That said, although Ariel Investments casts a considerable
pallor over TopstepTrader’s authority, it does not get Alsabah
over
the
finish
line.
Certainly,
just
the
fact
that
TopstepTrader is an Illinois corporation and the harm was felt
in Illinois is insufficient to establish personal jurisdiction.
See, Ariel Investments, LLC v. Ariel Capital Advisors LLC, 881
F.3d
520,
522
connection
must
plaintiff’s.”).
(7th
be
of
Cir.
the
2018)
(citation
defendant’s
omitted)
creation,
not
(“The
of
the
Yet in sharp contrast to Ariel, the location of
- 18 -
the harm is not the only hook for personal jurisdiction over
Alsabah.
As
alleged
by
Plaintiff,
TopstepTrader’s
website,
intentionally
TopstepTrader’s
website,
and
Alsabah
intellectual
¶¶ 35-45.)
located:
after
property
and
then
created
used
proprietary
his
sought
an
out
account
access
to
information.
on
copy
(Compl.
Importantly, Alsabah knew where TopstepTrader was
Alsabah
setting
received
up
his
numerous
account,
emails
all
from
of
TopstepTrader
which
identified
TopstepTrader as a Chicago-based company (see, Ex. B to Pl.’s
Mem. in Opp’n, Dkt. 72-2.) and TopstepTrader’s website, which
Alsabah visited repeatedly, does the same (see, Ex. A to Compl.,
Dkt. 33-1).
Cf. Felland v. Clifton, 682 F.3d 665, 676 n.3 (7th
Cir. 2012) (noting that email communication is relevant to a
modern personal jurisdiction analysis).
TopstepTrader
subscription
services
did
fee
from
not
to
the
argue
as
much,
TopstepTrader
fall
of
2015
Additionally, although
Alsabah
in
through
paid
Illinois
the
to
Spring
a
monthly
use
of
its
2017.
(Compl. ¶ 45.)
Comparing Ariel with the case at bar, if the Florida-based
defendant in Ariel had created an account with the Illinoisbased plaintiff, the personal jurisdiction analysis would have
been different.
Here, Alsabah did just that.
How that account
was created—whether by walking into a brick-and-mortar store,
- 19 -
making a call to the business, or via their website—is not
outcome determinative.
and-mortar
store
in
While certainly walking into a brickIllinois
would
be
stronger
evidence
of
personal jurisdiction, creating an account by calling or via a
website is also evidence of directing activities to the forum
state as long as there are sufficient indicators that defendant
knew
the
account
he
was
affirmatively
creating
was
with
an
Illinois-based company and that all activities related to that
account would likely occur in Illinois.
See, Bell v. Brownie,
No. 3:15 CV 70, 2016 U.S. Dist. LEXIS 13622, at *11 (W.D.N.C.
Feb.
4,
2016)
jurisdiction
(denying
where:
(1)
motion
to
defendant
dismiss
created
based
an
on
personal
account
with
ZeekRewards.com; (2) the top of the ZeekRewards homepage through
which defendant logged in had a conspicuous “About Us” link,
which
disclosed
that
that
the
company
was
headquartered
in
Lexington, North Carolina; and (3) from the day he signed up,
defendant “actively directed efforts” to the ZeekRewards program
online).
Given Alsabah’s contacts with Illinois establish he
could anticipate being haled into court here, the Court denies
Alsabah’s Motion to Dismiss under Rule 12(b)(2).
King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985).
- 20 -
See, Burger
B.
Defendants’ 12(b)(6) Motions to Dismiss
At the dismissal stage, the Court accepts all well-pleaded
facts as true but not legal conclusions.
F.3d
630,
632
(7th
Cir.
2012).
The
Munson v. Gaetz, 673
parties
both
cite
to
Illinois law regarding the state law claims in this diversity
suit
and,
accordingly
there
being
apply
no
Illinois
apparent
law
to
dispute,
the
the
state
Court
will
claims.
See,
Speakers of Sport, Inc. v. ProServ, Inc., 178 F.3d 862, 864 (7th
Cir. 1999).
1.
OneUp Trader’s Motion to Dismiss
a.
Copyright Infringement (Count I)
To state a claim for copyright infringement, a plaintiff
must
“plausibly
allege
that
(1)
the
plaintiff
owns
a
valid
copyright; and (2) the defendant copied constituent elements of
the work that are original.”
Joint Commn. on Accreditation of
Healthcare Orgs. v. Greeley Co., 14 CV 10225, 2016 WL 1450051,
at *3 (N.D. Ill. Apr. 13, 2016).
The second element—that the
defendant copied the plaintiff’s work—can be shown by direct
evidence, such as an admission of copying, or may be inferred
“by showing that the defendant had the opportunity to copy the
original
(often
called
‘access’)
and
that
the
two
works
are
‘substantially similar,’ thus permitting an inference that the
defendant actually did copy the original.”
- 21 -
Peters v. West, 692
F.3d 629, 633 (7th Cir. 2012).
OneUp does not challenge that
TopstepTrader owns a valid copyright.
TopstepTrader
cannot
meet
the
Rather, OneUp complains
second
element
because
TopstepTrader fails to allege plausibly substantial similarity
between the websites.
When determining substantial similarity, the key question
is whether “the two works share enough unique features to give
rise
to
a
breach
of
the
Peters, 692 F.3d at 633-34.
duty
not
to
copy
another’s
work.”
The test for substantial similarity
is an objective one based on what an ordinary reasonable person
would conclude.
JCW Investments, Inc. v. Novelty, Inc., 482
F.3d 910, 916 (7th Cir. 2007).
“In assessing whether two works
are substantially similar, the court ‘must first identify which
aspects
of
copyright.’
the
plaintiff’s
The
court
work,
then
if
analyzes
any,
are
‘whether
protectable
the
by
allegedly
infringing work is so similar to the plaintiff’s work that an
ordinary
reasonable
person
would
conclude
that
the
defendant
unlawfully appropriated the protectable elements of the work.’”
Culver Franchising Sys., Inc. v. Steak N Shake Inc., No. 16 CV
72, 2016 WL 4158957, at *4 (N.D. Ill. Aug. 5, 2016) (quoting
Nova Design Build, Inc. v. Grace Hotels LLC, 652 F.3d 814, 817
(7th Cir. 2011)) (alteration marks omitted).
- 22 -
The
Complaint
TopstepTrader’s
alleges
copyrighted
that
“OneUp
content,”
wrongfully
“website
copied
material
and
other proprietary information” to set up a “copycat platform”
and “service.” (Compl. ¶¶ 46-47, 49.)
TopstepTrader further
alleges that “OneUp copied [TopstepTrader]’s content wholesale,
and
then
tried
to
hide
its
direct
content once it was uncovered. . . .
copying
by
modifying
its
Indeed, OneUp even copied
many portions of [TopstepTrader]’s website verbatim, and only
changed some of the content after the copying was discovered by
[TopstepTrader].” (Compl. ¶ 50.)
The Complaint gives several
examples, including the “exact copying and use of TST’s FUNDED
ACCOUNTTM trademark,” copies of “numerous graphs and tables with
either no change or de minimus changes,” and “verbatim” copying
from
TopstepTrader’s
Furthermore,
“help
TopstepTrader
section.”
provides
(Id.
exhibits
¶¶
52,
showing
54.)
what
it
contends are representative samples of copying from its website.
(See, Compl. ¶ 52, 54; Exs. E, F, I to Compl.)
OneUp
argues
that
some
of
TopstepTrader’s
short,
common
phrases that appear on both sites are not protectable because
they are not protectable.
Although OneUp is right as a general
matter, OneUp fails to address TopstepTrader’s point that it is
the collective expression of text, graphic size, text box size,
screen layout, colors, charts, tables, unique phrases and terms
- 23 -
that creates the overall look and feel that TopstepTrader seeks
to protect.
to
make
Here, the allegations and exhibits are sufficient
the
plausible.
Plaintiff’s
claim
of
substantial
similarity
See, Live Face on Web, LLC v. Kam Dev., L.L.C.,
No. 16 C 8604, 2016 WL 7374279, at *3 (N.D. Ill. Dec. 20, 2016)
(denying motion to dismiss and finding sufficient allegations of
substantial
similarity);
QSRSoft,
Inc.
v.
Rest.
Tech.,
Inc.,
No. 06 C 2734, 2006 WL 2990432, at *5 (N.D. Ill. Oct. 19, 2006)
(citation omitted) (holding that the plaintiff showed a strong
likelihood that defendant copied the original elements of the
copyrighted website based on the “ordinary observer test”).
“At
this stage of the litigation, [the plaintiff] is not required to
prove
copying;
rather,
the
Complaint
sufficient allegations of copying.”
need
only
contain
Live Face on Web, 2016 WL
7374279, at *3.
Based on this Court’s review of TopstepTrader’s
website
to
(Ex.
A
Compl.),
the
selected
portions
of
OneUp’s
website (Ex. F to Compl.), and the comparisons provided (Ex. I
to Compl.), the Complaint’s allegations and exhibits indicate
plausible substantial similarity.
But OneUp contends that even if the examples demonstrate
plausible substantial similarity, the specific examples provided
by TopstepTrader only constitute a small portion of the website
and
therefore
fail
to
establish
- 24 -
substantial
similarity.
However, “[t]he plaintiffs need not, in their complaint, catalog
every instance of duplication between the defendants’ work and
[plaintiff’s work]; rather, they must plead facts sufficient to
make their claim of substantial similarity plausible.
Sampling
may permit such an inference, if the methodology supports an
inference
that
the
sample
results
are
representative
correlation between the works as a whole.”
of
the
Greeley, 2016 WL
1450051, at *8.
OneUp relies on Greeley, arguing that it is analogous to
the case at bar.
defendant.
Yet Greeley’s facts were much stronger for the
There, the Court concluded that “one page out of 742
pages that contains two paragraphs of identical text and one
page that contains mainly paraphrased text” was insufficient to
allege
plausibly
1450051, at *7.
plausibly
portion
shows
in
substantial
similarity.
Greeley,
2016
WL
Here, a review of the exhibits and allegations
substantially
Greeley.
more
OneUp’s
copying
other
case
than
law
the
is
small
similarly
distinguishable based on either the facts or the later stage of
litigation.
See, e.g., Culver Franchising, 2016 WL 4158957, at
*6 (holding that the commercials were not substantially similar
as
a
matter
protected
of
law
expression
because
and
the
lacked
common
the
elements
modicum
of
were
not
creativity);
Francescatti v. Germanotta, No. 11 CV 5270, 2014 WL 2767231, at
- 25 -
*20 (N.D. Ill. June 17, 2014) (finding no substantial similarity
on
summary
judgment).
fact-intensive
Thus,
nature
of
the
the
evidence
inquiry
presented
bars
this
and
Court
the
from
finding, as a matter of law, that substantial similarity does
not, and could not, exist.
TopstepTrader may proceed on its
copyright claim.
b.
Breach of Contract (Count II)
Based on the discussion above, Alsabah’s initial account
creation
was
insufficient
to
create
an
enforceable
contract.
(See, supra, Part II.A.1.b (finding the Terms unenforceable).)
However, even though the initial sign up process did not create
an enforceable contract, Alsabah’s subsequent interactions with
TopstepTrader’s
“TST’s
website
Website’s
users
might.
agree
The
to
be
Complaint
bound
by
alleges
the
that
terms
and
conditions contained in the current version of TST’s TOU each
time
they
access
Furthermore,
by
and
2016,
use
the
TST
Website.”
TopstepTrader
altered
(Compl.
its
¶
23.)
registration
page to require a user to check a box stating, “Please accept
Terms of Use.”
Right under the box was a large button labeled
“Join TopstepTrader.” (Ex. D to 2d Am. Compl.)
user
interface
regularly
notice
of
falls
enforced
terms
by
and
neatly
the
into
courts
requires
an
- 26 -
the
This revised
clickwrap
because
objective
it
agreements
provides
clear
manifestation
of
consent to those terms—aka clicking the box.
See, Treiber &
Straub, Inc. v. U.P.S., Inc., 474 F.3d 379, 382 (7th Cir. 2007)
(“As is common in Internet commerce, one signifies agreement by
clicking on a box on the screen.”); F.T.C. v. Cleverlink Trading
Ltd., No. 05 C 2889, 2006 WL 3106448, at *6 (N.D. Ill. Oct. 26,
2006)
(“The
click-the-box
transactions
is
method
ubiquitous.
It
of
acceptance
exists
in
in
internet
connection
with
software licenses and every imaginable form of online commercial
transaction.”)
TopstepTrader’s
The
Complaint
website
alleges
after
the
new
that
OneUp
sign-in
accessed
procedures
described above were in effect. (Compl. ¶ 39.)
However, by 2016
Alsabah
therefore
had
already
created
an
account
and
would
presumably have clicked the phrase, “Already have an account?
Login!”
This
may
have
(or
may
not
have)
bypassed
TopstepTrader’s new and improved clickwrap agreement.
Neither
party
revised
has
explained
whether
a
user
logging
into
the
webpage with an already-existing account would have to reaffirm
the Terms or would be given clear notice that use of the website
was subject to Terms.
Although the burden lies on the non-
movant, the plaintiff must plausibly plead the existence of an
enforceable contract for a breach of contract claim.
Thus, the
Court grants OneUp’s Motion to Dismiss the breach of contract
claim without prejudice.
TopstepTrader is given leave to amend
- 27 -
its Complaint to plead facts, if they exist, that support the
formation of a contract between the parties based on Defendants’
subsequent actions and sign-ins on TopstepTrader’s website and
the notice the site provides to its users in regards to the
Terms.
c.
Unjust Enrichment (Count III)
OneUp argues that TopstepTrader fails to allege that it
received
any
benefit.
“To
state
an
unjust
enrichment
claim
under Illinois law, ‘a plaintiff must allege that the defendant
has unjustly retained a benefit to the plaintiff’s detriment,
and
that
defendant’s
fundamental
retention
principles
conscience.’”
of
of
the
benefit
justice,
violates
equity,
and
the
good
Song v. PIL, L.L.C., 640 F. Supp. 2d 1011, 1015-
16 (N.D. Ill. 2009) (quoting HPI Health Care Servs., Inc. v. Mt.
Vernon
Hosp.,
TopstepTrader
Inc.,
545
alleges:
N.E.2d
672,
“OneUp
679
has
(Ill.
1989)).
benefitted
from
[TopstepTrader] by accessing and using [TopstepTrader]’s Website
content,
software,
information
Further,
OneUp
without
services,
paying
TopstepTrader
was
able
“to
business
for
alleges
short-cut
the
that
same.”
by
product
and
proprietary
(Compl.
copying
its
development”
¶
94.)
website,
and
avoid
“invest[ing] its own time and resources into developing [the
product],”
thereby
allowing
it
to
- 28 -
“undercut
[TopstepTrader]’s
subscription prices and profit splits” and “to directly compete
with [TopstepTrader]” much more quickly.
(Compl. ¶¶ 46-47, 51.)
Basically, the price to license TopstepTrader’s technology and
use it in the manner OneUp did would have been much higher than
the monthly subscription fee it actually paid.
Whether these
allegations are true or not remains for another stage.
For now,
they suffice.
d.
Fraud (Count IV)
OneUp moves to dismiss the fraud claim on the basis that
the only misrepresentation at issue was a promise to perform in
the future (i.e., to use TopstepTrader’s website in accordance
with its Terms).
Misrepresenting an intention to perform future
conduct does not constitute fraud under Illinois law.
Haught v.
Motorola Mobility, Inc., No. 12 CV 2515, 2012 WL 3643831, at *7
(N.D. Ill. Aug. 23, 2012) (citations omitted).
The Complaint
alleges OneUp misrepresented its intent in using the website:
“OneUp expressed its false intention to abide by the [Terms]
when
OneUp
accepted
[them]
and
set
up
[TopstepTrader]’s Website.” (Compl. ¶ 98.)
a
User
Account
on
“While it is true
that misrepresentations of intention to perform future conduct,
even if made without a present intention to perform, do not
generally
constitute
fraud,
[the
Illinois
recognized an exception to this rule.
- 29 -
Supreme
Court]
has
Under this exception,
such
promises
are
actionable
if
the
false
promise
or
representation of future conduct is alleged to be the scheme
employed to accomplish the fraud.”
v.
Mt.
Vernon
Hosp.,
Inc.,
545
HPI Health Care Servs., Inc.
N.E.2d
(citations and quotations omitted).
672,
682
(Ill.
1989)
“In order to survive the
pleading stage, a claimant must be able to point to specific,
objective
manifestations
device.”
Bower v. Jones, 978 F.2d 1004, 1012 (7th Cir. 1992)
(quotation
omitted).
of
The
fraudulent
distinction
intent—a
between
scheme
a
scheme
or
to
defraud and a single fraudulent promise is “elusive” and has
caused “considerable uncertainty.”
Desnick v. Am. Broad. Cos.,
Inc., 44 F.3d 1345, 1354 (7th Cir. 1995) (collecting cases).
The animating force behind the distinction is the risk that it
is all too easy to “turn[] every breach of contract suit into a
fraud
suit.”
Id.
at
1354.
In
order
to
state
claim,
the
defendant’s actions must be “particularly egregious,” see, e.g.,
Pulphus v. Sullivan, No. 02 C 5794, 2003 WL 1964333, at *19
(N.D.
Ill.
Apr.
28,
2003)
(finding
allegations
sufficiently
egregious where defendant induced elderly woman to take out two
mortgages to remodel her home and did minimal work but pocketed
$75,000), or “embedded in a larger pattern of deceptions.”
OneUp contends that TopstepTrader falls short of this mark.
The Complaint alleges that OneUp’s agreement to the Terms was
- 30 -
part
of
a
scheme
to
defraud:
OneUp
promised
to
use
TopstepTrader’s website in accordance with its Terms knowing all
the while that its intention was to “masquerade[] as a potential
trader,”
“learn[]
business,
methodologies
collect[]
[TopstepTrader]’s
and
the
copy[]
of
business
proprietary
intelligence
business
[TopstepTrader]’s
[TopstepTrader]’s
Website
structure
content
about
and
and
methods,
copyrighted
materials” to create a copycat service. (Compl. ¶¶ 35, 48.)
But
at core, these allegations amount to a breach of the Terms.
The
harm
in
this
case
misrepresentation,
TopstepTrader
breach
of
egregious”
but
points
its
does
to
Terms.
and
does
the
no
not
actual
other
Thus,
not
come
the
breach.
And,
misrepresentation
this
involve
from
case
a
is
not
future
alleged
in
fact,
than
the
“particularly
misrepresentation
“embedded in a larger pattern of deceptions.”
See, Jada Toys,
Inc. v. Chicago Imp., Inc., No. 07C699, 2008 WL 1722140, at *3
(N.D.
Ill.
Apr.
10,
2008)
(granting
motion
to
dismiss
where
plaintiff failed to plead a scheme to defraud); Huthwaite, Inc.
v. Randstad Gen. Partner (US), No. 06 C 1548, 2006 WL 3065470,
at *4 (N.D. Ill. Oct. 24, 2006) (same).
Accordingly, OneUp’s Motion to Dismiss the fraud claim is
granted
with
prejudice.
The
Court
need
not
other arguments for dismissing the fraud claim.
- 31 -
address
OneUp’s
2.
Alsabah’s 12(b)(6) Motion to Dismiss
Alsabah repeats the same arguments made by OneUp in its
12(b)(6) Motion.
The Court discussed these arguments above and
will not repeat them here.
However, the Court must address one
argument that is distinct to Alsabah.
Alsabah argues that the Complaint fails to state a claim
against him because it mentions him by name only “a handful of
times” and thus fails to allege Alsabah’s participation in the
allegedly wrongful conduct.
Yet the Complaint defines “OneUp”
as “Defendants Sattam Alsabah, individually, and on behalf of,
OneUp Trader . . .” (Compl. at 1.)
Although this definition may
be unartful, this Court will not grant a motion to dismiss on
this
basis.
Alsabah
and
Further,
the
originally
Read
in
OneUp
full,
committed
Complaint
signed
the
up
the
alleges
for
an
Complaint
wrongful
that
account
it
and
pleads
actions
was
thus
Alsabah
points
to
are
both
alleged.
Alsabah
got
TopstepTrader’s services for an improper purpose.
deficiencies
that
reiterations
who
access
to
The other
of
the
same
arguments that OneUp raised and which were rejected above.
For
the
same
reasons
described
above,
the
Court
denies
Alsabah’s Motion to Dismiss the copyright and unjust enrichment
claims, but grants his Motion to Dismiss the breach of contract
and fraud claims.
- 32 -
III.
CONCLUSION
From Plaintiff’s perspective, the Defendants have engaged
in
unlawful
copying
competition
intellectual
by
breaching
property.
From
they merely engaged in competition.
Complaint,
claims.
the
Plaintiff
has
agreed-upon
Defendants’
terms
and
perspective,
Based on the Second Amended
sufficiently
alleged
several
Whether the Plaintiff can prove those claims we leave
for a later stage informed by discovery.
Accordingly,
for
the
reasons
stated
herein,
the
Court
grants in part and denies in part Defendants’ Motion to Dismiss
for failure to state a claim [ECF Nos. 35, 48].
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated:
4/18/2018
- 33 -
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