Summary
The Seventh Circuit held that the district court lacked personal jurisdiction over China-based online vendors sued for trademark infringement in a Schedule A action. The record showed only that the vendors' online stores were accessible in Illinois and offered shipping there, not that completed sales occurred in Illinois. The court vacated the default judgment and remanded with instructions to dismiss the case for lack of jurisdiction.
Topics
Practice areas
Questions Presented
- Whether the district court clearly erred in finding that the defendants had completed sales to Illinois residents.
- Whether the defendants' operation of online stores accessible in the United States and offering shipping to Illinois established specific personal jurisdiction in Illinois.
- Whether the default judgment should be vacated and the action dismissed for lack of personal jurisdiction.
Holdings
- The district court clearly erred in finding that the defendants sold products to Illinois customers because the evidence showed only that Illinois residents could place orders, not that any purchase was completed.
- Operating an online store accessible in Illinois and capable of accepting orders for shipment to Illinois, without evidence of completed forum-state sales or other purposeful forum-directed conduct, is insufficient to establish specific personal jurisdiction.
- The default judgment must be vacated, and the case must be dismissed against the defendants for want of personal jurisdiction.
Key quotations
“merely “operat[ing] a website, even a highly interactive website, that is accessible from, but does not target, the forum state” is not enough to sustain jurisdiction.” (5)
“A defendant may not be “haled into court simply because the defendant owns or operates a website that is accessible in the forum state.”” (6)
Factual background
Liu sued foreign vendors operating e-commerce stores through platforms including Walmart.com and eBay.com, alleging trademark infringement and related Lanham Act violations. The defendants, based in China, operated Walmart.com stores offering shipping to the United States, but the record contained only screenshots showing that products could be ordered and shipped to an Illinois address, not evidence of completed Illinois sales. The defendants defaulted, later appeared, and challenged the judgment for lack of personal jurisdiction and improper service.
Procedural history
Liu sued hundreds of foreign online vendors for trademark infringement, counterfeiting, and false designation of origin under the Lanham Act. The defendants did not appear, and the Northern District of Illinois entered default judgment against them based in part on its finding that they had sold allegedly infringing products to Illinois residents. After appearing, the defendants moved under Rule 60(b) to vacate the judgment. The district court denied the motion, and the Seventh Circuit vacated the default judgment and remanded with instructions to dismiss for lack of personal jurisdiction.
Remand instructions
Vacate the default judgment and remand with instructions to dismiss the case against the defendants for want of jurisdiction.