Seller May Be Sued Outside Its Home State for Infringing Online Sales Through Amazon.com

Authored by D. Brian Kacedon, John C. Paul, and Benjamin A. Saidman

Abstract

A Massachusetts court found that it had jurisdiction to hear a patent and trademark infringement suit filed against a seller located in Washington because the seller purposefully directed activities at residents of Massachusetts through the national online retailer Amazon.com.

The ability to sell goods online and across state lines raises questions about a court’s ability to exercise personal jurisdiction over sellers located out of state. The questions have become more complex when third parties are involved, for example, when national retailers, such as Amazon.com, make it possible for merchants to sell products throughout the U.S. without personally entering the state or establishing their own websites to sell and market their products.

Recently, in PetEdge, Inc. v. Fortress Secure Solutions, LLC,¹ a Massachusetts district court considered whether it could hear a case involving an out-of-state merchant accused of patent infringement that sold its product to two residents of Massachusetts through Amazon.com.

Background

Fortress is a limited liability company based in Washington that sells pet products. Fortress doesn’t have an office in Massachusetts and isn’t registered to do business in Massachusetts. Fortress’s products are available for purchase and delivery in Massachusetts, but only through online retailers such as Amazon.com.

PetEdge, a Massachusetts-based pet products manufacturer, owns a patent and trademarks covering a product that allows pets to climb on to a bed. PetEdge purchased Fortress products on Amazon.com, which were shipped to PetEdge in Massachusetts. PetEdge brought suit against Fortress in the District of Massachusetts for patent and trademark infringement. Fortress moved to dismiss the complaint arguing that the court lacked personal jurisdiction to hear the suit.

The PetEdge Decision

The court denied Fortress’s motion, concluding that it had personal jurisdiction over Fortress. To establish personal jurisdiction over Fortress, the court required PetEdge to show that: (1) Fortress purposefully directed activities at the residents of Massachusetts; (2) PetEdge’s claim arose out of or related to those activities; and (3) the assertion of personal jurisdiction is reasonable and fair.

The court found that Fortress purposefully directed activities at the residents of Massachusetts. Fortress didn’t control its own sales by limiting its marketing and advertising to its own website. Rather, Fortress listed and sold its products to Massachusetts residents through national online retailers like Amazon.com. Notably, the court proceeded under the assumption that Fortress, not Amazon.com, shipped its product directly to Massachusetts residents. The court also observed that whenever Massachusetts Internet shoppers searched for "Pet Studio ramp steps" on Amazon.com, Fortress’s allegedly infringing product appeared alongside PetEdge’s patented product. The court held that because Fortress advertised and sold its accused products to residents of Massachusetts, sufficient minimum contacts existed for the court to hold personal jurisdiction over Fortress.

Satisfying the second requirement of the personal jurisdiction inquiry—the claims must arise from or be related to the minimum contacts—the court found that Fortress’s contacts with Massachusetts were all related to PetEdge’s claim for patent infringement. Concluding with the third prong, the court found that the assertion of personal jurisdiction was both reasonable and fair. The court found, therefore, that it had personal jurisdiction over Fortress, and denied Fortress’s motion to dismiss for lack of personal jurisdiction.

Strategy and Conclusion

This case demonstrates that using a national online retailer, such as Amazon.com, to sell products out of state may expose sellers to the possibility of defending suits in those states where the national retailer advertises or sells the accused products.

Endnotes

¹ The PetEdge decision can be found at http://www.finnegan.com/files/upload/LES_Insights_Column/2015/Petedge_ v_FortressSecureSolnsmad-1-15-cv-11988-24.pdf.