Washington Shoe v. A-Z Sporting Goods

Case Title and Citation:  Washington Shoe v. A-Z Sporting Goods, Case Nos. 11-35166 and 11-35206

Court: United States Court of Appeals for the Ninth Circuit

Document status: Judgment of the district court is reversed and remanded.

Issue or relevant point: Whether or not Defendant-Appellee, an Arkansas corporation is subject to personal jurisdiction for willful copyright infringement in Washington?

Ruling:  The Court of Appeals reversed the district court dismissal of the copyright infringement claim on the ground of lack of personal jurisdiction.

Summary

Plaintiff-Appellant Washington Shoe is a Washington corporation doing a business in manufacturing and selling shoes in the state of Washington for over 100 years.  Defendant-Appellee A-Z is an Arkansas corporation that sells goods relating to hunting, fishing, and outdoor activities.  A-Z purchased shoes from Washington Shoe for a few years, and A-Z through a Washington salesman representative was also provided with brochures and catalogs containing other Washington Shoe products and copyright notifications.

In 2009, Washington Shoe discovered that two of its copyrighted children boots were displayed and sold in A-Z’s store without permission.  A-Z admitted that the boots were purchased from China and not from Washington Shoe.  A-Z also argued that the boots had no name on them or other indication that they were subject to copyright.

Washington Shoe sent a cease-and-desist letter to A-Z, informing A-Z that the boots in dispute were copyrighted.  A-Z was also advised to stop selling the boots, and was asked for an accounting of past sales.  A second cease-and-desist letter was also sent, informing A-Z that its acts constituted violation of Washington Shoe’s copyright, and that it may be held liable for actual or statutory damages.  Although A-Z then stopped selling the boots from its store, the remaining inventory was sold to a thrift store.

Washington Shoe filed a complaint against A-Z in the U.S. District Court for the Western District of Washington, alleging copyright infringement.  A-Z filed a motion to dismiss on the grounds of lack of personal jurisdiction, and forum non conveniens.  The court granted A-Z’s motion to dismiss, but denied its request for attorneys’ fees.  Washington Shoe appealed the decision on the dismissal.

The Ninth Circuit court employed the three-part due process test to determine whether A-Z, a non-resident defendant, had sufficient minimum contacts with the Washington state to be subject to jurisdiction in the Washington federal court.  The test to determine whether a non-resident defendant was subject to the courts personal jurisdiction encompassed the following:

1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails itself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; 

2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and

3) the exercise of jurisdiction must comport with fair play and substantial justice (i.e., it must be reasonable).

The Court viewed the first prong as the only issue in this case.  The Ninth Circuit analyzed whether A-Z  had: (1) committed an intentional act, (2) expressly aimed at the forum state, and (3) that caused harm that the defendant knows is likely to be suffered in the forum state.

First, the appellate court found that A-Z’s conduct constituted an intentional act of copyright infringement, because A-Z admitted that the boots in dispute were bought from China, and not from Washington Shoe, and were displayed and sold to its retail store, and sold to the thrift store after receiving cease-and-desist letters. The Court concluded that A-Z has committed an intentional act pursuant to the Calder test.

Second, the Court noted A-Z had been buying shoes from Washington Shoe for years, and was aware that the infringing boots are owned and copyrighted under Washington Shoe.  It elaborated that the “express aiming” requirement is satisfied, and specific jurisdiction exists, “when ‘the defendant is alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the forum state.’”[1]

Finally, the court determined that A-Z’s intentional act of infringement could result in an economic loss both in Arkansas where the infringing act took place, and in Washington where the copyright holder has its principal place of business.  A-Z was aware that the impact of its willful infringement was likely to be suffered in Washington. 

Conclusion

Particularly in a pre-trial phase, the doctrine of a long-arm statute of the State extends jurisdiction over a non-resident defendant if the defendant: 1) willfully violates a copyright [intentional act], 2) purposefully directed its related activities at the forum state [expressly aimed], and 3) knows harm from its intentional act would likely be suffered in the forum state [knowing harm].