Edgenet Inc v. GS1 AIBSL et al

Filing 100

ORDER signed by Judge J P Stadtmueller on 6/27/11: granting 87 defendant GS1 AISBL's Motion to Dismiss for Lack of Jurisdiction; DISMISSING for want of personal jurisdiction Counts Six and Seven of 43 the Second Amended Complaint as against defendant GS1 AISBL; and terminating defendant GS1 AISBL. (cc: all counsel)(nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
EDGENET, INC.,
Plaintiff,
v.

Case No. 09-CV-65

GS1 U.S., INC., 1SYNC, INC.,
AMERICAN HARDWARE MANUFACTURERS
ASSOCIATION, and GS1 AISBL,
Defendants.

ORDER
On April 22, 2011, defendant GS1 AISBL (“GS1 Global”) filed a Motion to
Dismiss for Lack of Jurisdiction (Docket #87) pursuant to Federal Rule of Civil
Procedure 12(b)(2). The motion follows the court’s recent decision dismissing a
number of plaintiff Edgenet, Inc.’s (“Edgenet”) claims in its Second Amended
Complaint. Because the court dismissed, inter alia, Edgenet’s conspiracy claim
under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), GS1 Global
is no longer subject to the nationwide service of process authorized under RICO.
As such, GS1 Global has renewed its earlier motion to dismiss for lack of personal
jurisdiction that it made prior to the inclusion of Edgenet’s RICO claim. GS1 Global
has incorporated its earlier briefing, as has Edgenet, in addition to further briefing
with regard to this motion. Because the court concludes that it lacks personal
jurisdiction over GS1 Global, it will grant the motion to dismiss.

BACKGROUND
The plaintiff bears the burden of establishing personal jurisdiction and need
only make a prima facie showing, thus the court must “take as true all well-pleaded
facts alleged in the complaint and resolve any factual disputes in the affidavits in
favor of the plaintiff.” Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). GS1
Global is an international non-profit organized under the laws of Belgium and with
its principal office in Brussels, Belgium. (Second Am. Compl. ¶ 8) (Docket #43);
(W alsh Decl. ¶ 1) (Docket #16). It maintains an office, alleged by Edgenet to be its
principal place of business, in Lawrenceville, New Jersey. (Second Am. Compl. ¶ 8).
GS1 Global develops and controls certain standards and products, such as bar
codes, used by suppliers and retailers to move products through the global supply
chain. (Second Am. Compl. ¶ 9). GS1 Global has no office or registered agent for
service of process in W isconsin. (W alsh Decl. ¶¶ 3-4). In this action, Edgenet has
alleged that GS1 Global improperly obtained Edgenet’s trade secrets and
copyrighted work and then improperly disseminated those materials, as well as
improperly made use of those materials.
I.

GS1 GLOBAL’S WEBSITE
GS1 Global has direct control over the website http://www.gs1.org. (W alsh

Decl. ¶ 10); (Rudolph Decl. ¶¶ 29-30) (Docket #20); (Second Am. Compl. ¶ 179).
That website contains an “on-line Community Room,” GS1 Global’s Global Data
Dictionary, and provides a means of accessing the Global Standards Management

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Process. (W alsh Decl. ¶ 10); (Rudolph Decl. ¶ 33-34, 36); (Shaw Decl. Ex. H)
(Docket #89).
A.

The On-Line Community Room

The Community Room is available to any user that registers an account with
GS1 Global and provides a place to participate in the Global Standards Management
Process, facilitating communication between users as well as with GS1 Global.
(Rudolph Decl. ¶¶ 36, 38-39); (W alsh Decl. ¶ 10). The Community Room provides
a location to view and comment on Global Data Synchronization Network (“GDSN”)
rules, amended rules, and proposed rules. (Rudolph Decl. ¶ 39). In 2008, Edgenet
alleges that portions of its trade secrets and copyrighted works were posted in the
Community Room in formats that could be viewed and downloaded by any
registered user. (Second Am. Compl. ¶¶ 77, 93).
B.

The Global Standards Management Process

The Global Standards Management Process (“GSMP”) is used by GS1 Global
to develop standard methods and rules for describing the product information
exchanged through the GDSN. (Rudolph Decl. ¶ 32). The GSMP is conducted
according to rules published in the GSMP Manual, published by GS1 Global and
also made available for download on its website. (Rudolph Decl. ¶ 33). GS1 Global
supervises the GSMP and is responsible for ratifying changes to both the GDSN
Rules as well as the GSMP rules. (Rudolph Decl. ¶ 33).

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C.

The Global Data Dictionary

The Global Data Dictionary is used to “store, reuse and share precise core
component and business definitions and their equivalent representations in targeted
standards.” (Shaw Decl. Ex. H). The Global Data Dictionary is made available to
all GDSN users by virtue of its availability through the website. (See Shaw Decl. Ex.
H).
D.

XML Data Encoding Rules

GS1 Global develops and administers XML 1 standards for electronic business
messages and the standards are part of the GDSN Rules. (Rudolph Decl. ¶ 47).
Edgenet uses these XML standards in W isconsin to encode data from W isconsin
GDSN users who belong to Edgenet’s data pool.2 (Rudolph Decl. ¶ 48). This
encoding is required before the data is transmitted to the Global Registry or other
data pools, including other data pools in W isconsin. (Rudolph Decl. ¶ 48). The
Global Registry is explained below.
II.

GS1 GLOBAL’S AFFILIATES, MEMBERS, AND THE GDSN
GS1 GDSN, Inc. (“GS1 GDSN”), not a party here, is effectively a wholly-

owned subsidiary of GS1 Global. (Second Am. Compl. ¶ 20); (Rudolph Decl. ¶ 14
1

XML stands for Extensible Markup Language and is a markup language similar to HTML,
the coding language used to craft and display websites. XML, however, is a language used to
transport and store data, unlike HTML which is only used to display data. Thus, XML depends on
other software or processes to send, receive, or display the data encoded by XML.
For further information, see XML Introduction - What is XML?, W3Schools.com,
http://www.w3schools.com/xml/xml_whatis.asp (last visited June 14, 2011).
2

A data pool is a central repository that aggregates, organizes and delivers data between
trading partners. For further description, see the court’s September 27, 2010 Order (Docket #67).

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& Ex. 7); (see also GS1 Global Reply Br. 6) (Docket #26) (admitting, at least for
purposes of motion, that GS1 Global is the sole member of GDSN, Inc., making it
equivalent to a wholly-owned subsidiary).

GS1 Global supervises the Global

Registry and provides instruction to GS1 GDSN. (Rudolph Decl. ¶ 17). GS1
Global’s CEO and President is also a member of GS1 GDSN’s board, and the
president of GS1 GDSN reports to GS1 Global’s CEO and President. (Rudolph
Decl. ¶ 17). Additionally, GS1 GDSN’s policies must be approved by GS1 Global.
(Rudolph Decl. ¶ 18). Recently, GS1 GDSN did not earn enough revenue to cover
expenses and thus had to secure a loan from GS1 Global. (Rudolph Decl. ¶ 19).
In order to bring in revenue, GDSN users pay fees to data pool providers, such as
Edgenet, who then pay subscription fees to GS1 GDSN. (Rudolph Decl. ¶¶ 23-24).
GS1 Global develops and administers the GDSN, an internet-based network
of interconnected data pools used to transmit product data. (Second Am. Compl.
¶ 18). However, GS1 GDSN runs the day-to-day operations with regard to the
GDSN. (See Second Am. Compl. ¶¶ 18-20); (See also Rudolph Decl. ¶ 17). This
includes forming participation agreements with users, permitting their use of the
GDSN.

(Rudolph Decl. ¶ 27).

The GDSN contains a structure and rules for

describing product attributes, a taxonomy used to classify and disseminate GDSN
data, and data pools operated as clearinghouses for GDSN data. (Second Am.
Compl. ¶¶ 18-19). There are approximately 183 W isconsin companies that use the
GDSN.

(Rudolph Decl. ¶ 26 & Ex. 10).

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The GDSN is governed by a set of

standards and rules (“GDSN Rules”), developed and administered by GS1 Global.
(Rudolph Decl. ¶¶ 33-34). GDSN Rules must be approved by GS1 Global before
going into effect. (Rudolph Decl. ¶ 34). The GDSN Rules are published on GS1
Global’s website and may also be downloaded there. (Rudolph Decl. ¶ 29 & Ex. 12).
GDSN users are required to be familiar with the GDSN Rules and comply with them
as a condition of use. (Rudolph Decl. ¶ 27 & Ex. 11).
Additionally, GS1 GDSN also operates the Global Registry, part of the GDSN
system.

(Rudolph Decl. ¶¶ 17, 40).

information

directory,

detailing

The Global Registry acts as a central

subscription

information,

guaranteeing

the

uniqueness of registered items and parties, and ensuring all data pools in the GDSN
comply with rules. (Rudolph Decl. Ex. 19). GS1 Global provides information about
the Global Registry on its website. (Rudolph Decl. ¶ 40). GDSN users, including
those in W isconsin, register their products on the Global Registry. (Rudolph Decl.
¶¶ 40-45).
GS1 U.S., Inc. (“GS1 U.S.”) is a member organization of GS1 Global.
(Second Am. Compl. ¶ 10). GS1 Global shares office space with GS1 U.S. in New
Jersey. (Second Am. Compl. ¶¶ 9-10). From 2004 to 2009, GS1 Global’s current
CEO and President served as CEO for both GS1 Global and GS1 U.S. (Second
Am. Compl. ¶ 12). Companies that wish to obtain GS1 Global-controlled bar codes
or that wish to exchange product data through the GDSN must obtain a “company
prefix” made available only through these member organizations. (Second Am.

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Compl. ¶ 21). GS1 Global’s website specifically directs individuals to these member
organizations. (Shaw Decl. Ex. C). GS1 U.S. is the sole source for U.S. companies,
including those in W isconsin, to obtain a company prefix. (Second Am. Compl.
¶ 21).
ANALYSIS
Edgenet has not established that this court has either general or specific
jurisdiction over GS1 Global and it will, therefore, grant the motion to dismiss.
Personal jurisdiction over a non-resident defendant exists so long as the law of the
state in which the district court is located authorizes such jurisdiction. Fed. R. Civ.
P. 4(k)(1); Janmark, Inc. v. Reidy, 132 F.3d 1200, 1201 (7th Cir. 1997).3 Subjection
to personal jurisdiction in W isconsin requires satisfaction of the state’s long-arm
statute, W is. Stat. § 801.05, as well as a finding that the exercise of jurisdiction
comports with constitutional due process. Kopke v. A. Hartrodt S.R.L., 2001 W I 99,
¶ 8, 245 W is. 2d 396, 629 N.W .2d 662. Upon a motion to dismiss for lack of
personal jurisdiction, the plaintiff bears the burden of establishing a prima facie case
for such jurisdiction. Steel Warehouse of Wis., Inc. v. Leach, 154 F.3d 712, 714 (7th
Cir. 1998). Upon demonstration of a prima facie case, the burden shifts to the
defendant to show that the exercise would violate due process. Id.

3

Jurisdiction may also exist if the federal statute permits nationwide service or if the
defendant is not otherwise subject to personal jurisdiction in any state, Fed. R. Civ. P. 4(k), but
neither condition exists here.

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Under the Constitution, due process requires certain minimum contacts with
the forum state in order to exercise personal jurisdiction. Cent. States, Se. & Sw.
Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 942-43 (7th Cir.
2000) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-76 (1985)).
Sufficient minimum contacts depend on whether the exercise is one of general or
specific jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1277 (7th Cir.
1997).

General jurisdiction permits suit on any cause of action because of

continuous and systematic contacts, whereas specific jurisdiction arises out of the
particular contacts with the forum state.

Id.

The W isconsin long-arm statute

generally tracks these two types of jurisdiction. See W is. Stat. § 801.05. Here,
Edgenet argues that jurisdiction exists under three separate provisions of the longarm statute, essentially arguing for the existence of both general and specific
jurisdiction in this case.
I.

GENERAL JURISDICTION
GS1 Global is not subject to general jurisdiction in W isconsin. Under the long-

arm statute, a Wisconsin court has jurisdiction over a non-resident defendant that
is “engaged in substantial and not isolated activities within [the] state, whether such
activities are wholly interstate, intrastate, or otherwise.” W is. Stat. § 801.05(1)(d).
The W isconsin legislature intended the long-arm statute to provide for exercise of
jurisdiction to the full extent consistent with due process and thus is “to be given a
liberal construction in favor of the exercise of jurisdiction.” The substantial contacts

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required must be “continuous and systematic.”

Travelers Ins. Co. v. George

McArthur & Sons, 130 N.W .2d 852, 854 (W is. 1964). Substantial and not isolated
contacts may be established where a defendant “solicit[s], create[s], nurture[s], or
maintain[s], whether through personal contacts or long-distance communications,
a continuing business relationship with anyone in the state.” 2010 W I App 10, ¶ 13,
322 W is. 2d 738, 780 N.W.2d 529. W isconsin courts look to the contacts’ quantity,
nature and quality, and source and connection with the cause of action, as well as
the interests of the state and the convenience of the parties. Nagel v. Crain Cutter
Co., 184 N.W .2d 876, 881 (W is. 1971); Schroeder v. Raich, 278 N.W .2d 871, 874
(W is. 1979). Constitutionally, due process requires that the contacts be such that
maintenance of the suit will not offend “traditional notions of fair play and substantial
justice.” uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010). At
base, general jurisdiction “requires the defendant to have such extensive contacts
with the state that it can be treated as present in the state for essentially all
purposes.” Id. at 426. The contacts must be such that they “approximate physical
presence.” Tamburo v. Dworkin, 601 F.3d 693, 701 (7th Cir. 2010). As becomes
relevant here, the maintenance of a public website is insufficient, standing alone, to
establish general jurisdiction that comports with due process. Id.
Here, Edgenet first points to GS1 Global’s operation of its website, and then
attempts to show additional contacts justifying the exercise of general jurisdiction.
Because it finds the additional contacts insufficient, even assuming the website

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would otherwise tip the scales in favor of general jurisdiction, it will refrain from
analyzing the website in detail here. Edgenet lists three categories of additional
contacts: (1) maintenance of continuing business relationships with forum residents;
(2) agents conducting business in the forum state; and (3) making sales to forum
residents. Edgenet cites to cases to illustrate that these categories of activity justify
the exercise of general jurisdiction, but the cases cited merely show that such
contacts may be sufficient. In each case, the court still conducted an individualized
analysis, rather than simply relying on the general character or categorization of the
acts.4 W ith that said, the court will proceed to analyze the asserted contacts.
Edgenet discusses contacts undertaken by GS1 Global itself, as well as by
organizations that it attempts to paint as agents of GS1 Global. While Edgenet cites
to a 1994 case from this district to establish agency, Hayeland v. Jaques, 847 F.
Supp. 630, 634 (E.D. W is. 1994), a more recent W isconsin appellate decision
provides the proper guidance.

In analyzing whether the court had general

jurisdiction over Nissan Japan, the W isconsin Court of Appeals held that the longarm statute’s general jurisdiction provision did not authorize jurisdiction over a parent
corporation on the basis of the contacts of a wholly owned subsidiary under an
agency theory.

Rasmussen v. Gen. Motors Corp., No. 2007AP35, 2010 WL

4

Arnold v. Miller, No. 08-234, 2009 WL 2020838, at *3-5 (S.D. Ill. July 9, 2009); Shepherd
Invs. Int’l v. Verizon Commc’ns Inc., 373 F. Supp. 2d 853, 862-66 (E.D. Wis. 2005); Thomas Publ’g
Co. v. Indus. Quick Search, Inc., 237 F. Supp. 2d 489, 491 (S.D.N.Y. 2002); PKWare, Inc. v.
Meade, 79 F. Supp. 2d 1007, 1012-14 (E.D. Wis. 2000); see also PKWare, 79 F. Supp. 2d at 1013
(“each case must be determined on its own facts”).

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1994047, ¶¶ 12-23 (Wis. App. May 20, 2010).5 The court, agreeing with a W estern
District of W isconsin case analyzing the same issue, noted that “the corporate
structure and corresponding presumption of separateness requires more than an
agency theory to assert general jurisdiction over a parent corporation.” Id. at ¶ 23.
The court concluded that the only provision allowing jurisdiction over a parent
corporation based on the agency of its subsidiary is § 801.05(4)(a), the provision
authorizing specific jurisdiction based on acts performed on behalf of the defendant.
Id. The court finds this pronouncement more persuasive than earlier cases from this
district because it comes directly from a W isconsin court, and is more recent. As
such, Edgenet’s attempt to impute the activities of GS1 GDSN and GS1 U.S. for
purposes of establishing the required “substantial and not isolated activities” fails.
Instead, the court will analyze the remaining direct contacts of GS1 Global.
Edgenet points to “continuing business relationships” between GS1 Global
and W isconsin companies, explaining that at least ten W isconsin companies have
participated in the GSMP. It also asserts that GS1 Global and its agents used the
GSMP and the website to acquire and disseminate the materials at issue here.
However, this assertion cites only to a paragraph of the complaint alleging such
conduct from GS1 U.S. as well as defendants 1Sync, Inc. and American Hardware

5

The court notes that unpublished appellate opinions may not be cited in Wisconsin as
precedent, but so long as an unpublished opinion was issued on or after July 1, 2009, it may be
cited for persuasive value. Wis. Stat. § 809.23(3). Thus, despite the fact that Rasmussen is not
binding on Wisconsin courts, it remains a stronger indication of Wisconsin law than prior decisions
from this district attempting to divine how a Wisconsin court would rule.

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Manufacturers Association – not GS1 Global. (Second Am. Compl. ¶ 93). Thus, the
court may ignore this second assertion because it is based on a parent-subsidiary
theory of agency. Edgenet also argues continuing business relationships in that
Edgenet has been a certified data pool provider for GS1 Global and that, as such,
it has paid fees to GS1 GDSN. Again, the court may ignore the payment of fees to
GS1 GDSN. The remainder of Edgenet’s argument focuses on the activity of GS1
Global’s subsidiaries and can likewise be ignored.
As to the GSMP, while GS1 Global does in fact participate in the GSMP by
responding to the messages and input of participants, the process occurs through
an open forum on its website that participants choose to engage in. To the extent
GS1 Global’s exchange of electronic messages regarding a standards-setting
process establishes contacts approximating presence in Wisconsin, that participation
would seem to likewise establish the equivalent of presence in any forum in which
a company voluntarily chooses to participate in the GSMP. That cannot be the
proper intent of the W isconsin long-arm statute, and, even if it were, it would not
satisfy due process.6

GS1 Global establishes standards for a system that

companies voluntarily choose to participate in. In an effort to improve the standards
it has established, GS1 Global has passively made its website an area in which
companies may choose to engage and participate in the refining and further

6

In fact, the court is skeptical that contacts occurring by means of a website are sufficient
additional contacts to support the exercise of jurisdiction when combined with the existence and
accessibility of the website itself. However, it need not decide such, as it finds the contacts
insufficient even when considered.

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development of these standards. It is only after a given company, potentially located
anywhere in the world, has actively reached out and made contact with GS1 Global
through its website that GS1 Global then responds. The nature and quality of this
act is not so much GS1 Global making contact with the forum state as it is
companies within the forum state making contact with GS1 Global. GS1 Global’s
status as the overall administrator of the GDSN does not change this analysis.
Edgenet attempts to paint itself as acting as a data pool provider on behalf of
GS1 Global, but the reality is that GS1 Global offers a standardized system of
exchanging information that companies are free to avail themselves of, but when
they do, they do so for their own business purposes, not for the benefit of GS1
Global. In this way, the general availability of the GDSN and GSMP are unlike the
availability of a product for purchase. Further, when a company does avail itself of
the use of the GDSN, it deals with GS1 Global’s subsidiaries. The fact that Edgenet
and other W isconsin companies use the GDSN establishes no more continuous and
systematic contact with W isconsin by GS1 Global than does a W isconsin-based
website developer’s use of the coding standards developed by the W orld W ide W eb
Consortium in building a website. Neither of these forms of contact suggest that
GS1 Global has solicited, created, or maintained business relationships in
W isconsin. In sum, the nature and quality of GS1 Global’s direct contacts are not
sufficient to approximate physical presence in a way that suggests GS1 Global

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should be subject to jurisdiction for any cause of action, regardless of its relation to
these contacts. Thus, GS1 Global is not subject to general jurisdiction in W isconsin.
II.

SPECIFIC JURISDICTION
Edgenet has also failed to establish that W isconsin’s long-arm statute permits

specific jurisdiction over GS1 Global and, in any event, the exercise of such would
violate due process. W isconsin statute permits the exercise of specific jurisdiction
in a number of situations, including where there is an injury within W isconsin by
means of an out-of-state act so long as, at the time of injury, “[s]olicitation or service
activities were carried on within [W isconsin] by or on behalf of the defendant.” W is.
Stat. § 801.05(4)(a). Additionally, specific jurisdiction is also proper where the action
“[a]rises out of . . . services actually performed for the defendant by the plaintiff within
[W isconsin] if such performance within [W isconsin] was authorized or ratified by the
defendant.” W is. Stat. § 801.05(5)(b). Further, as with general jurisdiction, the
exercise of specific jurisdiction must comport with due process. uBID, 623 F.3d at
426. The court discusses each statutory argument for jurisdiction in turn, followed
by a discussion of due process.
A.

Solicitation Within Wisconsin

Edgenet is not able to establish that GS1 Global undertook solicitation or
service activities in W isconsin, or that such were performed on its behalf. The longarm statute creates personal jurisdiction where there is an injury within W isconsin
by means of an out-of-state act so long as, at the time of injury, “[s]olicitation or

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service activities were carried on within [W isconsin] by or on behalf of the
defendant.” Wis. Stat. § 801.05(4)(a). The W isconsin Supreme Court has stated
that while a single tortious act may be sufficient to permit the exercise of jurisdiction
in accord with due process, this subsection “require[s] an additional contact.” Fields
v. Peyer, 250 N.W .2d 311, 315 (W is. 1977). The court further explained that the
rationale of the solicitation element is that “where a defendant solicits or advertises
for business, he anticipates a direct or indirect financial benefit and subjects himself
to the jurisdiction of the courts of the state in which he advertises.” Id. at 316. As
the W estern District of W isconsin has noted, the “solicitation” term has generally
been equated with advertising, promoting, or selling products or services. Fried v.
Surrey Vacation Resorts, Inc., No. 08-CV-534, 2009 W L 585964, at *3 (W .D. W is.
Mar. 6, 2009). GS1 Global disputes only the occurrence of solicitation or service
activities. As is evident from the text of the provision, either direct activities or
activities performed on behalf of the defendant may suffice. Edgenet argues both.
1.

Direct Activities

First, Edgenet argues that GS1 Global engaged in the requisite solicitation or
service activities by operating its interactive website, soliciting new and amended
rules through the GSMP, and developing and administering the GDSN. Edgenet’s
reference to the operation of the website seems primarily tied to the GSMP and the
administration of the GDSN, as these are the primary interactive elements Edgenet

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has repeatedly discussed. The existence of the website in and of itself is not
specifically a solicitation or service activity conducted in W isconsin.
Neither is the ability to participate in the GSMP a solicitation or service activity
conducted in W isconsin. Given the interpretation of “solicitation” as being businessrelated, it would make little sense for the term “service” to have no business-related
meaning. GS1 Global’s responses via its website to input volunteered by companies
around the world are not service activities. GS1 Global is in no way obligated to
make these responses and they do not provide participating companies with a
benefit other than potentially better-crafted standards sometime in the future.
Moreover, participants are not entitled to the potentially improved standards by virtue
of participation in the GSMP; they still must pay fees to use the GDSN. It would be
too strained a reading of the statute to characterize GS1 Global’s responses to
internet messages, part of a voluntary, collaborative standards-setting process, as
a service provided by it to each individual W isconsin company that chooses to
participate in the GSMP.
GS1 Global’s role in the GSMP cannot be properly characterized as
solicitation either. W hile GS1 Global, through the existence of the Community Room
as a method for participating in the GSMP, may passively “invite” the participation
of GDSN users from around the world, the court does not find this sufficiently
analogous to the active solicitation through advertising or other direct contact
undertaken within W isconsin to satisfy the statute. Further, this “solicitation” does

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not anticipate financial benefit for GS1 Global because, even after rules developed
through the GSMP are implemented in the GDSN, it is GS1 GDSN to whom
companies pay subscription fees in order to participate in the GDSN. In sum, the
availability of the GSMP through GS1 Global’s website is not conduct actively
requesting or seeking the participation of W isconsin residents with the anticipation
of financial benefit.
Edgenet’s argument with regard to GS1 Global’s development and general
administration of the GDSN similarly fails. To be clear, while Edgenet uses the term
“administration” in its arguments, it appears to actually refer to the fact that GS1
Global controls the standards used in the GDSN in an overarching manner. The
daily operation of the GDSN is in fact controlled directly by GS1 GDSN. W ith that
cleared up, the development and general administration of the GDSN is not itself a
service carried out in W isconsin because GS1 Global is not performing the acts for
the benefit of any W isconsin resident. Instead, GS1 Global has independently
developed a system that companies may choose to use, but until any actual use of
the GDSN occurs, the overall development and administration of the network is no
more a service than is the research, design, and manufacture of a product that a
company hopes to later sell. Moreover, Edgenet and others in W isconsin may make
use of the GDSN within W isconsin, but GS1 Global’s activities in developing and
administering the network do not occur in W isconsin. To the extent that access to

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and the ability to use the GDSN is itself a service, that is controlled by GS1 GDSN,
not GS1 Global.
Edgenet makes little argument that development and overarching control of
the GDSN is a form of solicitation other than in its original brief (Docket #19) in which
it argues that GS1 Global’s website contains information about how to join the GDSN
and provides a link to an application site. The cited evidence (Rudolph Decl. ¶ 29
& Ex. 12), however, reflects at most a passive referral to separate entities that
actually enable a company to join the GDSN. Nothing about the links on GS1
Global’s website suggest direct solicitation within W isconsin. As such, Edgenet has
not sufficiently shown that GS1 Global has directly carried on solicitation or service
activities within W isconsin.
2.

Activities On Behalf of GS1 Global

Next, Edgenet argues that the activities of GS1 GDSN and GS1 U.S. may be
imputed to GS1 Global, that is, they have carried out solicitation or service activities
in W isconsin on behalf of GS1 Global. W isconsin has equated the “on behalf of”
language with the existence of an agency relationship. Pavlic v. Woodrum, 486
N.W .2d 533, 535 (W is. App. 1992); see also Stauffacher v. Bennett, 969 F.2d 455,
458 (7th Cir. 1992); Schimpf v. Gerald, Inc., 2 F. Supp. 2d 1150, 1162-63 (E.D. W is.
1998); Insolia v. Philip Morris, Inc., 31 F. Supp. 2d 660, 671-72 (W .D. W is. 1998).
The requisite agency exists where the defendant manifests to the agent that they
may act on the defendant’s account. Pavlic, 486 N.W.2d at 535. Alternatively,

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apparent authority to act may exist where a third party reasonably believes the
defendant consented to have the act done on its behalf by the apparent agent. Id.
More specifically, apparent authority exists upon establishing: (1) acts by the agent
or defendant justifying a belief in the agency; (2) knowledge of the acts by the
defendant; and (3) reasonable reliance on the existence of the relationship by the
plaintiff. Insolia, 31 F. Supp. 2d at 671. However, “[b]y itself, the mere existence of
a parent-subsidiary relationship is insufficient to establish that a principal-agent
relationship exists between the two entities.” Id. W hat’s more, the requirement that
the defendant anticipate a financial benefit remains intact. See Schimpf, 2 F. Supp.
2d at 1162-63 (holding solicitation on behalf of defendant existed where agent
solicited money for investment with defendant).
Edgenet offers the following in order to establish an agency relationship
between GS1 Global and GS1 GDSN: (1) authority granted to GS1 GDSN to enter
participation agreements with GDSN users, conferring the right to use the GDSN;
(2) entrustment of the maintenance and operation of the Global Registry to GS1
GDSN for which GS1 Global exercises some policy making authority over; (3) GS1
Global has informed GS1 GDSN not to undertake policies or actions unless ratified
by GS1 Global; and (4) GS1 Global plans to eliminate or reduce GS1 GDSN’s role
in GDSN activities. It also asserts that GS1 U.S. is an agent because it is the sole
source of company prefixes in the U.S. However, because the court finds the
financial benefit requirement lacking, the actions of GS1 GDSN and GS1 U.S.

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cannot be considered solicitation or service activities on behalf of GS1 Global.
Edgenet glosses over the requirement, briefly asserting that GS1 Global benefits
from the activities of both alleged agents and citing as an example the fact that
GDSN users who execute participation agreements with GS1 GDSN must join a
data pool to whom the user pays a fee, and the data pool in turn pays subscription
fees to GS1 GDSN. This is clearly a financial benefit to GS1 GDSN, but it does not
evidence a financial benefit to GS1 Global. The fact that a corporation’s subsidiary
financially benefits cannot satisfy the requirement as to the parent. The purpose of
allowing jurisdiction on the basis of acts by an agent is to avoid allowing a defendant
to escape jurisdiction by indirectly performing activities that would normally permit
jurisdiction.

Because direct solicitation or service activities must be done in

anticipation of financial benefit to the defendant, it follows that such activities
performed on behalf of the defendant must similarly be done in anticipation of
financial benefit to the defendant.7 If there is no financial benefit to the defendant,
then the activity is not truly being performed on behalf of the defendant.

For

example, it would make little sense to impute the activities of an “agent” to the
defendant on the theory that the defendant authorized, or apparently authorized, the
“agent” to conduct its own affairs. The only way to read the fees ultimately being
paid to GS1 GDSN as a financial benefit to GS1 Global is to impermissibly assume
such on the basis of the parent-subsidiary relationship. Not only is this improper, but
7

This is not to say that the agent may not simultaneously derive its own financial benefit
from the activity.

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in this case may not even be accurate. As Edgenet itself has pointed out, GS1
Global has had to loan money to GS1 GDSN to cover shortfalls in revenue. This
tends to show separate accounting practices. As to GS1 U.S., that organization is
not even alleged to be a subsidiary of GS1 Global. Edgenet has likewise shown
nothing to suggest that GS1 U.S.’s activities financially benefit GS1 Global. Thus,
Edgenet’s argument fails for a lack of financial benefit to GS1 Global.
In fact, a lack of financial benefit to GS1 Global seems to undermine the claim
of agency itself. Imputation of a solicitation or service activity performed by a
subsidiary that only financially benefits the subsidiary does little more than obscure
the fact that activity is essentially being imputed on the basis of the parent-subsidiary
relationship alone. That relationship is not sufficient to permit jurisdiction. In sum,
Edgenet has not shown that GS1 GDSN or GS1 U.S. performed solicitation or
service activities in W isconsin on behalf of GS1 Global.
B.

Services Performed by Edgenet for GS1 Global

GS1 Global is likewise not subject to jurisdiction under § 801.05(5)(b).
W isconsin permits the exercise of jurisdiction where the action “[a]rises out of . . .
services actually performed for the defendant by the plaintiff within [W isconsin] if
such performance within [W isconsin] was authorized or ratified by the defendant.”
W is. Stat. § 801.05(5)(b). With regard to the services required, the W isconsin
Supreme Court has cited the revision notes for subsection (5) to explain that:

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Three jurisdictional facts are required by this subsection: (I) a claim
arising out of a bargaining arrangement made with the defendant by or
on behalf of the plaintiff; (ii) a promise or other act of the defendant,
made or performed anywhere, which evidences the bargaining
arrangement sued upon; and (iii) a showing that the arrangement itself
involves or contemplates some substantial connection with the
state. . . . In summary[,] actions arising out of isolated bargaining
transactions have been regarded as supporting the exercise of
personal jurisdiction in numerous situations where the transactions
involved, or contemplated, some substantial contact with the forum
state.
Flambeau Plastics, Corp. v. King Bee Mfg. Co., 129 N.W .2d 237, 240-41 (Wis.
1964), overruled in part on other grounds by 131 N.W .2d 331 (W is. 1964); see also
Pavalon v. Fishman, 140 N.W .2d 263, 265 (W is. 1966) (quoting the three
jurisdictional facts from the revision notes and citing Flambeau). W isconsin cases
applying subsection (5)(b) tend to involve services in the sense of contractual or
other business-related performance. E.g. Regal Ware, Inc. v. TSCO Corp., 558
N.W .2d 679, 681-82 (W is. App. 1996); Landreman v. Martin, 530 N.W .2d 62, 66
(Wis. App. 1995); Brown v. LaChance, 477 N.W.2d 296, 303 (Wis. App. 1991).
Edgenet argues two methods of performing services for GS1 Global: (1) Edgenet’s
operation as a GS1-certified data pool provider; and (2) Edgenet’s participation in
the GSMP.
Edgenet’s operation of a certified data pool does not constitute a service
performed for the benefit of GS1 Global. W hile GS1 Global indeed develops and
even likely encourages adoption of a standardized system for exchanging supply
chain information, Edgenet operates as a certified data pool provider in order to

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profit, not to benefit GS1 Global. Edgenet performs its data pool services on behalf
of the companies that use its data pool; GS1 Global, at best, indirectly benefits in the
sense that its standards have been adopted. In fact, the structure of Edgenet’s
complaint illustrates this point. The general theme of Edgenet’s allegations have
been that the defendants purposely misappropriated and misused Edgenet’s
material, which is offered and incorporated into its data pool services in addition to
the standards administered by GS1 Global. Edgenet has pointed out that this
misappropriated material provides it with a leg up in the competition against
defendant 1Sync, Inc., a data pool provider which is a subsidiary of GS1 U.S., a
member organization of GS1 Global. Thus, Edgenet’s own complaint paints a
picture of data pool services provided, albeit indirectly, in competition with GS1
Global rather than for its benefit.

Thus, operation of a certified data pool is

insufficient to satisfy subsection (5)(b).
Likewise, Edgenet’s participation in the GSMP does not constitute a service
performed for GS1 Global’s benefit. A review of cases in which W isconsin courts
have applied subsection (5)(b), as well as the explanation in the revision notes, show
that the type of action taken by Edgenet here is not properly a service within the
meaning of the statute. Here, Edgenet has shown only that users of the GDSN are
permitted to access a specific portion of GS1 Global’s website and participate in a
process to improve standards. While GS1 Global may benefit in an abstract way
from the participation of companies in strengthening the standards it administers,

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there is no evidence that GS1 Global has entered bargaining arrangements with
each company contemplating some type of service agreement. GS1 Global is free
to adopt or ignore suggestions or other input given by companies participating in the
GSMP, just as GDSN users are in no way compelled to participate in the GSMP.
Further, there is no showing that the communications that occur through the GSMP
in any way show that GS1 Global has entered individual arrangements with each
participant that contemplate a substantial connection with the company’s given state.
It is clear that subdivision (5)(b) does not cover participation in the GSMP. In sum,
§ 801.05(5)(b) does not permit the exercise of jurisdiction under these facts.
C.

Due Process

As a final matter, even if these activities were sufficient under W isconsin’s
long-arm statute, the exercise of specific jurisdiction here would violate due process.
In order to satisfy due process, the defendant must have: (1) purposefully directed
the activity at the forum state or purposefully availed itself of the privilege of
conducting business therein; (2) the injury must arise out of the forum-related
activities; and (3) the exercise of jurisdiction must comport with traditional notions of
fair play and substantial justice. Tamburo, 601 F.3d at 702. More specifically,
purposeful direction can be broken into three elements: “(1) intentional conduct (or
‘intentional and allegedly tortious’ conduct); (2) expressly aimed at the forum state;
(3) with the defendant’s knowledge that the effects would be felt – that is, the plaintiff
would be injured – in the forum state.” Id. at 703. The Seventh Circuit drew these

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requirements from Calder v. Jones, in which the Supreme Court held that personal
jurisdiction in California existed over both a reporter for, and the president and editor
of, the National Enquirer, both of whom resided in Florida. Calder v. Jones, 465 U.S.
783 (1984). Before recounting the Seventh Circuit’s treatment of Calder, it is first
worth relaying what the Supreme Court itself said in that case:
The allegedly libelous story concerned the California activities of a
California resident. It impugned the professionalism of an entertainer
whose television career was centered in California. The article was
drawn from California sources, and the brunt of the harm, in terms both
of the respondent’s emotional distress and the injury to her professional
reputation, was suffered in California. In sum, California is the focal
point both of the story and of the harm suffered. Jurisdiction over
petitioners is therefore proper in California based on the “effects” of
their Florida conduct in California.
Id. at 788-89. The Seventh Circuit noted that Calder’s “express aiming” requirement
has been read both broadly, to require only conduct targeted at a plaintiff known to
be a resident of the forum state, and narrowly, to require the state be the “focal
point” of the conduct. Tamburo, 601 F.3d at 704. In fact, the Tamburo court noted
that the circuit’s own prior decisions appeared to be in tension on this point. Id. In
one, the Seventh Circuit held jurisdiction was not proper in Indiana for malicious
prosecution where that conduct occurred solely in California, despite the fact that the
plaintiff resided in Indiana and was thus harmed there. Wallace v. Herron, 778 F.2d
391, 395 (7th Cir. 1985). In Wallace, the Seventh Circuit decided that Calder did not
alter the requirement that jurisdictionally sufficient conduct must create a “substantial

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connection” with the forum. 778 F.2d at 395; Tamburo, 601 F.3d at 705 (citing
Wallace).
In the other relevant case, the Seventh Circuit stated that “there can be no
serious doubt after [Calder] that the state in which the victim of a tort suffers the
injury may entertain a suit against the accused tortfeasor.” Janmark, Inc. v. Reidy,
132 F.3d 1200, 1202 (7th Cir. 1997). The Tamburo court also discussed a case
relied on in Janmark, wherein the National Football League’s Indianapolis Colts sued
the Canadian Football League’s Baltimore Colts in Indiana for copyright
infringement. Indianapolis Colts, Inc. v. Metro. Baltimore Football Club Ltd. P’ship,
34 F.3d 410 (7th Cir. 1994). In Indianapolis Colts, the court found jurisdiction proper
on the basis of the injury occurring in Indianapolis, as well as “entry” into Indiana by
the Baltimore Colts on the basis of cable-television broadcasts of their games in
Indiana. Id. at 412. W ithout deciding whether “entry” into the state, in addition to the
injury, was required, the Indianapolis Colts court noted that:
In Calder as in all the other cases that have come to our attention in
which jurisdiction over a suit involving intellectual property (when
broadly defined to include reputation, so that it includes Calder itself)
was upheld, the defendant had done more than brought about an injury
to an interest located in a particular state.
Id.
Analyzing all three cases, the Tamburo court wrote that it would be hard to
reconcile Janmark with the other two cases if it was understood to broadly authorize
jurisdiction wherever injury occurred.

Tamburo, 601 F.3d at 705.

-26-

The court,

however, read further into Janmark, recognizing that, despite some of its broad
language, it ultimately focused on more than just the location of injury and
“considered the relationship between the allegedly tortious conduct and the forum
state itself.”

Id. at 706.

However, the Seventh Circuit once again found it

unnecessary to definitively decide the breadth of Calder because it found both a
forum-state injury as well as the tortious conduct having been specifically directed
at the forum, “making the forum state the focal point of the tort.” Id. In Tamburo, an
Illinois resident brought suit against residents of Canada, Colorado, Michigan, Ohio,
and Australia for actions taken accusing the plaintiff of stealing their data and urging
boycott of the plaintiff’s software products. Id. at 697. These activities took place
through “blast” emails and posts on the defendants’ websites. Id.8 The messages
variously encouraged readers to boycott the plaintiff’s products, as well as to contact
and harass the plaintiff. Id. at 706. The defendants also contacted the plaintiff
directly, accusing him of theft and demanding removal of stolen data, as well as
threatening to expose the theft to the online community. Id. The court found
jurisdiction over the Canadian, Coloradan, Michigander, and Ohioan, citing to a
Tenth Circuit case for further support, and writing that “the individual defendants
purposely targeted [the plaintiff] and his business in Illinois with the express goal of
inflicting commercial and reputational harm on him there, even though their alleged

8

The plaintiff also alleged that the Australian defendant reposted messages to a private
email listserv, but the court found a lack of personal jurisdiction over the Australian defendant for
a whole host of reasons primarily involving a lack of detail in the complaint, making that aspect less
applicable here. See id. at 708.

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defamatory and otherwise tortious statements were circulated more diffusely across
the Internet.” Id. at 707.
Here, Edgenet has alleged that the defendants posted proprietary material on
GS1 Global’s website, which is alleged to constitute copyright infringement as well
as misappropriation of trade secrets. But, even if the complaint is read liberally
enough to conclude that GS1 Global’s conduct can be characterized as having
posted the material, 9 it is not sufficient to show that the conduct was purposefully
directed at W isconsin. Looking to whether GS1 Global expressly aimed the posting
of the material at W isconsin, there is little doubt that Edgenet allegedly suffered an
injury in the state. However, the court reads Calder, through the lens of Tamburo,
to require more than the alleged victim’s presence in a given state. Instead, the
court must ensure that W isconsin was the “focal point” of the activity, here the
posting of the allegedly misappropriated materials. Based upon the submitted
affidavits and the complaint, that is not the case. Posting of the material on GS1
Global’s website made it generally available to companies located anywhere in the
world. The posted material was not, for example, solely or primarily of use only to

9

It is questionable the complaint can even be read in such a way. Though Edgenet asserts
in its brief that GS1 Global intentionally posted the material on its website, the complaint itself
suggests only that defendants GS1 U.S., 1Sync, Inc., and American Hardware Manufacturers
Association obtained the proprietary information, created derivative works, and posted it to GS1
Global’s website. (Second Am. Compl. ¶¶ 75-94). At the end of Edgenet’s recitation of improper
conduct, it adds a one-paragraph allegation that GS1 Global “supervised, facilitated, approved, and
has been unjustly enriched” by the activity of the other three defendants. (Second Am. Compl.
¶ 95). While this is not meant as a comment on whether GS1 Global can be held liable for
copyright infringement or misappropriation of trade secrets, it would bear on whether GS1 Global’s
activity was directed at Wisconsin. However, the court finds it unnecessary to make the
determination.

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competitors or companies in W isconsin, nor is there anything else to suggest that
the posting of this material was done to explicitly reach W isconsin.

The only

connection with W isconsin apparent from the submitted materials is Edgenet’s
presence in the state.
Indianapolis Colts provides a useful comparison by looking at the difference
between posting materials to a generally accessible website versus entry into a state
by means of television broadcasts. In Indianapolis Colts, the defendant entered
Indiana by means of broadcasts because each broadcast specifically communicated
the infringing trademark to residents of the forum state. W hile broadcast deals can
certainly be national in scope, that national character (or even hypothetically worldwide or nearly world-wide character) is not analogous to the passive world-wide
reach of a website. A broadcast deal is established to target a specific market, often
for a variety of reasons (such as advertising revenue), and it is a calculated decision
made in an attempt to reach that forum. Thus, even though a nation-wide broadcast
makes the conduct much more generally available, the deal is done with the intent
of reaching into each given state. A website, however, is accessible world-wide by
its inherent nature.10 There is no particularized decision to enter each forum that has
access to the internet; there is only a decision to create a presence on the internet.
Thus, similar to how the existence of a website alone cannot support general
jurisdiction, a website cannot be viewed as a purposeful entry into each and every
10

With certain exceptions, such as censorship or other blocking that may be performed by
particular governments or other entities that have the ability to control internet traffic.

-29-

forum in the world. Instead, something about the conduct occurring on the website
must indicate it was purposefully directed at the forum. That is lacking here. To
reiterate, nothing about the simple posting of allegedly infringing material, beyond
the location of the victim, indicates that the action was focused on W isconsin. That
is not enough to make the state the focal point of GS1 Global’s activity and,
therefore, Edgenet has failed to show that GS1 Global purposefully directed its
conduct toward W isconsin.11 Thus, the exercise of specific jurisdiction under these
circumstances would violate due process.
III.

CONCLUSION
At the end of the day, Edgenet has failed to establish that either general or

specific personal jurisdiction over GS1 Global is proper in W isconsin. GS1 Global’s
contacts with W isconsin are not of sufficient nature and quality to approximate
presence in such a way as to subject it to jurisdiction for any cause of action.
Further, Edgenet has not shown that GS1 Global has directly carried out solicitation
or service activities in the state, or that such have been carried out on its behalf.
Edgenet also does not satisfy the provision permitting jurisdiction where a plaintiff
performs services in the state on behalf of the defendant. Moreover, even if any of
these specific-jurisdiction provisions were satisfied, the exercise of specific
jurisdiction would not comport with due process. Thus, the court will grant GS1
Global’s motion to dismiss.
11

Neither has Edgenet made an argument for purposeful availment, and it would not
succeed in any event, as reasoned with regard to Wisconsin’s long-arm statute.

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Accordingly,
IT IS ORDERED that defendant GS1 AISBL’s Motion to Dismiss for Lack of
Jurisdiction (Docket #87) be and the same is hereby GRANTED; and
IT IS FURTHER ORDERED that Counts Six and Seven of the Second
Amended Complaint (Docket #43) as against defendant GS1 AISBL be and the
same are hereby DISMISSED for want of personal jurisdiction.
Dated at Milwaukee, W isconsin, this 27th day of June, 2011.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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