Expensify Inc. v. Swappoint AG

Background

Expensify, a U.S. corporation providing expense-management software, uses the “Karma Points” mark with its corporate credit card and charitable rewards program. Swappoint AG and its subsidiary, Karmapoint, are described as closely held Swiss corporations. Karmapoint operates a website and mobile application using the “Karmapoint” mark. The app allows users to create profiles and exchange recognition for good deeds.

Expensify alleged that it owns common-law rights in “Karma Points” and that the defendants’ U.S. trademark registration was overly broad and lacked a genuine intent to use the mark for the listed goods and services. Expensify brought three federal claims: a request for a declaration of non-infringement, cancellation of the defendants’ trademark registration for lack of a bona fide intent to use it, and liability for a false or fraudulent trademark registration.

Motion and jurisdictional standard

The defendants moved to dismiss for lack of personal jurisdiction. Expensify relied on Federal Rule of Civil Procedure 4(k)(2), the federal long-arm provision for claims arising under federal law when the defendant is not subject to the jurisdiction of any state court of general jurisdiction. The parties did not dispute that the first two Rule 4(k)(2) requirements were met. The issue was whether exercising jurisdiction would satisfy due process.

Because the motion was based on written materials rather than an evidentiary hearing, Expensify needed to make a prima facie showing of jurisdictional facts. The court considered evidence outside the complaint and treated uncontroverted allegations as true, resolving conflicts in affidavits in Expensify’s favor.

Analysis

For due-process purposes under Rule 4(k)(2), the relevant contacts are with the United States as a whole. The court applied the specific-jurisdiction framework, which asks whether the defendants purposefully directed activities toward or purposefully availed themselves of the forum, whether the claims arise from or relate to those activities, and whether exercising jurisdiction is reasonable.

The court held that the defendants’ U.S. trademark registration supported personal jurisdiction. Obtaining a property interest from a U.S. agency showed that the defendants had availed themselves of U.S. law and was not a random or incidental contact. The court also noted that the defendants’ app and website had been accessed in the United States and that the defendants acknowledged those U.S. accesses. Although those activities alone might not have shown that the defendants expressly aimed their conduct at the United States, they supported the jurisdictional conclusion based on the registration.

The court further held that Expensify’s claims arose out of or related to the defendants’ trademark-registration activities. Expensify’s allegations about the defendants’ broad assertion of trademark rights formed the basis of the dispute and prompted the declaratory-judgment action.

Finally, the court considered whether exercising jurisdiction was reasonable. It found that requiring the defendants to defend a lawsuit concerning their U.S.-registered trademark in the United States was not unreasonable. The defendants’ purposeful involvement in the forum favored Expensify; the burden of defending favored the defendants but was partly reduced by the availability of remote depositions; and the forum’s interest, efficiency, and Expensify’s interest in convenient relief favored Expensify. The court found no alternative forum and concluded that the defendants had not met their heavy burden of showing that jurisdiction would be unreasonable.

Ruling

Judge Laurel Beeler denied the motion to dismiss and stated that the ruling disposed of ECF No. 13. The opinion decided only the personal-jurisdiction issue; it did not resolve the underlying trademark claims.