Business its legal, ethical, and global environment, 12th edition Marianne M. Jennings

Case3.1

ALongArmtoSouthAmerica?

Automobili Lamborghini S.P.A. v Lamborghini LatinoAmericaUSA

400 F.Supp.3d 471 (E.D. Va. 2019)

Facts

JorgeAntonio Fernandez Garcia, who lived inSouthAmerica,toldAnthony Crudup (defendants), who lived in the United States, that he had 99-year worldwide licensingagreementstomanufactureand sell "lifestyle" merchandise (cigars, t-shirts) with the Lamborghini trademark. The two formedapartnershiptosell the merchandise viathe website they createdtogether, www.lamborghinigrupo.com. Inaddition, Garciadirected what merchandise would be offeredand how it wouldappear on the website in exchange for 12% of the profits from sales in the United States. The Lamborghini company (plaintiffs) filed suitagainst the two for trademark infringement because there was no 99-yearagreement. Garciahas movedtodismiss the case because he cannot be forcedtocometothe United Statestodefendalawsuit.

Judicial Opinion

ELLIS, T.S., Judge

It is well-settled that exercising jurisdiction overadefendant is consistent with due processaslongas the defendant has sufficient "minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair playand substantial justice."Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The Fourth Circuit has held that "asingleact byadefendant can be sufficienttosatisfy the necessary 'qualityand nature' of such minimal contacts,although 'casual' or 'isolated' contactsare insufficienttotrigger suchan obligation." Of particular relevance here, the Fourth Circuit has held thatadefendant's Internetactivity can serveasabasis for exercising specific personal jurisdiction if the defendant "(1) directs electronicactivity intothe [forum], (2) with the manifested intent of engaging in business or other interactions within the [forum],and (3) thatactivity creates, inaperson within the [forum],apotential cause ofaction cognizable in the [forum]'s courts."ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002).

Garciawas the one who held thealleged licensing rights, Garciahadtoapproveall business decisions relatingtothe marketingand sale of Lamborghini-marked merchandise on the www.lamborghinigrupo.com website. The two menalsoagreed onaplan forallocating profits made from selling Lamborghini merchandise in the United States, with 12% of the profitstogotoGarcia. Through the www.lamborghinigrupo.com website, Garciaand Crudup made two confirmed sales of Lamborghini-marked cigars intothe United States in Virginiaand Florida.

These facts demonstrate that Garciahas sufficient contacts with the United Statesasawhole such that the exercise of personal jurisdiction would comport with the limits of due process under theALS Scantest. First, the facts show that Garcia"direct[ed] electronicactivity intothe [United States]," in satisfaction of the firstALS Scanelement. It is undisputed that the www.lamborghinigrupo.com website specifically targeted the United States market; indeed, the only confirmed sales made by Garciaand Crudup through the website weretopurchasers in the United States.And importantly, the evidence persuasively demonstrates that Garciapersonally marketedand sold products intothe United States through the website. In fact,as Crudup testified, Garciahad the final say with respecttoall decisions concerning the marketingand sale of products on the website,as he was the holder of the purported licensing rights. Theabove factsalso show that Garciawastoreceive 12% of the profits from selling Lamborghini-merchandise intothe United States through the website. This evidence makes clear that Garciapersonally directed electronicactivity intothe United States through his participation in marketingand selling Lamborghini-marked products through the www.lamborghinigrupo.com website, undertaken in concert with Crudup.

Garciaargues that his participation in the operation of the website wastoo limitedtoconnect himtothe marketingand sale of products intothe United States taking place on the website. In support, GarciacitesHard Candy, LLC v. Hard Candy Fitness, LLC, 106 F. Supp. 3d 1231 (S.D. Fla. 2015), in which the district court ruled that two parent companies'approval rights overasubsidiary company were insufficienttosupport the exercise of personal jurisdiction under the Floridalong-armstatute over the parent companies by imputing the subsidiary's forum contacts underagency principles. That case is inapposite because here it is unnecessarytoimpute Crudup's contactstoGarciaunderagency principles. Garciapersonallyand substantially participated in marketingand selling productsintothe United States through the website; thus, it is clear that Garciahimself targeted the United States through his electronicactivity,as is required under the first element of theALS Scantest.

Garciamakes much of the fact that the two products sold by Garciaand Crudup through the website were purchased by private investigators hired by plaintiffs, but this in no way impacts the minimum contactsanalysis. "[T]he fact that the purchaser [of the infringing product] happenedtobean investigator in plaintiffs' employ does not gotothe question whether [the defendant] purposefullyavailed itself of the privilege of doing business in [the forum]."

It is hereby ordered that defendant's motiontodismiss for lack of personal jurisdiction is denied.

Case Questions

1. List theactivities that Garciaengaged in with regardtothe United States.
2. How much contact with the United States is necessarytoallowaU.S. federal courttotake jurisdiction overan out-of-the-county defendant?
3. Explain why Garciaraises the issue of who bought the goods from the website.