Blockchange Ventures I GP, LLC v. Blockchange, Inc.

Background

Blockchange Ventures I GP, LLC alleged that it had used the “Blockchange” name for its digital-asset investment services since at least 2017 and held a federal trademark registration for that mark. It alleged that Blockchange, Inc. also operated under the name “Blockchange,” and that the United States Patent and Trademark Office had rejected two of Blockchange, Inc.’s applications because of a likelihood of confusion with Blockchange Ventures’ registration.

The complaint asserted federal trademark infringement, trademark dilution, and unfair competition under the Lanham Act; common-law trademark infringement and unfair competition; deceptive acts and practices under New York General Business Law §§ 349 and 350; and trademark dilution under New York General Business Law § 360-L.

Blockchange, Inc. described itself as a California corporation headquartered in San Jose, California, and characterized its business as providing software as a service to federally regulated registered investment advisers. It denied having various New York contacts, including a New York address, property, bank account, office, telephone listing, agents, or employees. Its declaration also stated that it did not buy or sell assets or solicit business in New York, but the court found that this statement was unclear about whether the company sold its software product to New York customers.

Motion and jurisdictional dispute

Blockchange, Inc. moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, Rule 12(b)(3) for improper venue, and Rule 12(b)(6) for failure to state a claim. The parties focused on whether New York’s long-arm statute, New York Civil Practice Law and Rules § 302(a)(1), authorized jurisdiction.

Blockchange Ventures alleged that Blockchange, Inc.’s website allowed customers to exchange information with the company, contact its employees, submit information through a contact form, and use other interactive features. It also alleged that Blockchange, Inc. knowingly and repeatedly sold its investment services through the website to New York customers. The court found that the website, by itself, appeared to be an interactive “middle ground” site rather than one that directly completed transactions. The complaint did not identify specific New York sales, but it did allege that sales had occurred.

The parties also disputed Blockchange, Inc.’s relationship with Gemini Trust Company, LLC. Blockchange Ventures relied on press releases describing a partnership through which the companies offered digital-asset management capabilities. Blockchange, Inc. said there was no contract or joint enterprise and that it merely used Gemini’s application programming interface to serve one non-New York customer. The court could not determine from the existing record which description was accurate or whether the relationship was connected to the alleged trademark infringement.

Court’s analysis

For jurisdiction under § 302(a)(1), a defendant must have transacted business in New York or contracted to provide goods or services there, and the plaintiff’s claims must arise from those activities. The court explained that a single purposeful transaction can be enough, but there must be some connection between the transaction and the claims.

The court held that the parties’ conflicting evidence created genuine disputes about jurisdictional facts. It authorized limited jurisdictional discovery to determine whether Blockchange, Inc. had sold services under the allegedly infringing mark to New York customers and to clarify the Gemini relationship. The authorized discovery included document discovery and no more than two depositions of Blockchange, Inc.’s designated corporate representative.

The court did not separately address venue because Blockchange, Inc.’s venue argument depended largely on the same jurisdictional issues. It stated that Blockchange, Inc. could renew its motion on personal-jurisdiction or other grounds after discovery.

Disposition

The court directed the parties to complete jurisdictional discovery by September 16, 2021. It ordered Blockchange Ventures to state whether it intended to continue pursuing the action in the district or consented to dismissal without prejudice for lack of personal jurisdiction. The court denied Blockchange, Inc.’s motion to dismiss without prejudice to renewal after jurisdictional discovery. The order did not decide the merits of the trademark, dilution, unfair-competition, or deceptive-practices claims.