Levi Strauss & Co. v. Connolly

Background

Levi Strauss & Co. (LS&Co.) asserted five claims against David James Connolly: federal trademark infringement; federal unfair competition based on false designation of origin and false description; federal dilution of famous marks; California trademark infringement and dilution; and California unfair competition.

LS&Co. alleged that Connolly operated the websites www.truckerjacket.com and www.greentab.clothing, using the GREEN TAB word mark and a logo showing a green tab protruding from a jacket pocket. LS&Co. alleged that these uses could cause the public to believe that Connolly’s goods and services were authorized, sponsored, or licensed by LS&Co. Connolly acknowledged operating www.truckerjacket.com, promoting denim recycling, selling denim products, partnering with Cotton Incorporated, and applying to register the GREEN TAB mark in the United States and Australia. He disputed other allegations, including whether he designed or manufactured the jacket identified in the complaint and whether LS&Co. owned rights in a GREEN TAB mark.

Connolly moved to dismiss, principally arguing that the court lacked personal jurisdiction over him. He also raised improper venue, insufficient service of process, failure to state a claim, and failure to join an indispensable party.

Personal Jurisdiction

The court applied Federal Rule of Civil Procedure 4(k)(2), which can establish nationwide personal jurisdiction for federal-law claims when the defendant is not subject to jurisdiction in any state’s courts and exercising jurisdiction is consistent with due process.

The court found the first requirement satisfied because LS&Co. asserted federal trademark claims. It found the second requirement satisfied because Connolly did not identify another state where jurisdiction would be proper. For due process, the court considered Connolly’s contacts with the United States as a whole rather than with California alone.

The court applied the three-part test for specific jurisdiction. It found that Connolly had purposefully directed activities at the United States because he operated interactive websites promoting and selling apparel under the GREEN TAB mark, partnered with U.S. companies, engaged in at least one U.S. sales transaction, used promotional statements specifically addressing the American market, listed prices in U.S. dollars according to LS&Co.’s evidence, provided links involving U.S. sales or shipping, and applied to register the GREEN TAB mark with the U.S. Patent and Trademark Office.

The court did not consider the purchase arranged by LS&Co.’s counsel in Palo Alto to be persuasive evidence of conduct expressly aimed at the United States. It nevertheless concluded that the other evidence satisfied the express-aiming requirement. The court also concluded that LS&Co.’s claims arose out of or related to Connolly’s U.S.-directed activities because the claims challenged his business activities involving the allegedly infringing GREEN TAB mark and jacket designs.

The court then considered whether exercising jurisdiction would be reasonable. It concluded that Connolly had not shown a compelling case that defending the lawsuit in the United States would be unreasonable. The court noted his business promotion directed at American consumers, partnerships with U.S. companies, the absence of evidence of financial hardship or another undue burden, and the fact that LS&Co. sought to enforce U.S. and California laws concerning activities in the United States. The motion to dismiss for lack of personal jurisdiction was denied.

Other Grounds for Dismissal

Venue. The court said Connolly’s venue objection was waived because he did not clearly raise it in his answer. The court alternatively concluded that, because he resides outside the United States, he may be sued in any federal judicial district. The motion to dismiss for improper venue was denied.

Service of process. Connolly argued that he was not properly served under the rules governing service on individuals in a foreign country. The court found that he had waived this objection by not raising it in his answer and by expressly agreeing in communications with LS&Co. to accept electronic service. The motion to dismiss based on improper service was denied.

Failure to state a claim. Connolly appeared to argue that LS&Co. could not prove its claims because it had not produced a registered design for a Trucker Jacket. The court explained that proof of a claim is different from whether the complaint adequately pleads a legally viable claim. Because Connolly did not identify a pleading deficiency, the motion to dismiss for failure to state a claim was denied.

Joinder. Connolly suggested that another party was indispensable because he did not design or manufacture the jacket identified in the complaint. The court found that he had not identified the proposed party or explained why that party’s presence was required for the court to provide complete relief. The motion to dismiss based on the alleged joinder problem was denied.

Disposition

The court denied Connolly’s motion to dismiss the complaint. It stated that it would concurrently issue a case management order concerning alternative dispute resolution and case deadlines.