Facebook v. StudiVZ 2009 WL 1190802(N.D. Cal.)
FACTS:
StudiVZ launched a website in 2005 which is supposedly strikingly similar visually and functionally to Facebook’s social networking website. The website became quite popular in Germany and StudiVZ launched several other websites that were designed to target other age groups. Facebook learned of StudiVZ’s websites in 2006 and sent a demand letter, with allegations of claims for infringement of intellectual property rights under German law. Facebook sent StudiVZ another letter in January of 2007. In 2006, certain entities of Holtzbrink publishing group became interest-holders in StudiVZ’s various social networking sites. In August 2006 and October 2007, Facebook began negotiations to purchase StudiVZ’s websites. However, negotiations were unsuccessful. After the negotiations failed, Facebook sent demand letters to Holtzbrink again alleging infringement of intellectual property rights.
PROCEDURAL POSTURE:
This is an action for trade dress infringement under the Lanham Act, breach of contract, breach of implied covenant of good faith and fair dealing and violations of the Computer Fraud and Abuse Act and California Penal Code § 502(c), brought before the United States District Court for the Northern District of California, San Jose Division. The defendants filed a motion to dismiss for lack of personal jurisdiction.
HOLDING:
Motion to dismiss deferred. Court defers ruling with respect to forum non conveniens until the issue of personal jurisdiction is fairly presented.
ANALYSIS:
I. Forum Non Conveniens
Under the doctrine of forum non conveniens, courts have broad discretion to decline jurisdiction in favor of a more convenient forum. A party moving to dismiss based on forum non conveniens must show (1) the existence of an adequate alternative forum and (2) that the balance of private and public interest factors weighs in favor of dismissal. American Dredging Company v. Miller
To determine whether to dismiss an action, the court must determine (1) the degree of deference properly accorded the plaintiff’s choice of forum, (2) whether the alternative forum proposed by the defendants is adequate to adjudicate the parties’ dispute and (3) a balance between the private and public interests implicated in the choice of forum. Norex Petroleum Ltd. V. Access Indus., Inc.
The plaintiff, Facebook would ordinarily be accorded a great deal of deference in choice of forum. However, because Facebook is a multinational corporation with “a significant business presence in Germanyâ€, is currently litigating a similar suit in Germany and the conduct complained of occurred principally in Germany, Facebook’s choice of forum is given reduced deference. Germany is an adequate forum because it permits litigation of the subject matter in dispute. Facebook offered little meaningful explanation to private interest factors. Facebook claims that there would be difficulty in gaining witness testimony but gave no suggestion of “more effective means of protecting its US trademark interests than by shutting off the pipeline of infringing goods at the source, Germany.†The majority of public interest factors are neutral because neither German courts nor the Court are overburdened.
II. Sinochem
“The consideration ordinarily accorded the plaintiff’s choice of forum should impel a federal court to dispose of jurisdictional issues first.†“Only where subject-matter or personal jurisdiction is difficult to determine, and forum non conveniens considerations weigh heavily in favor of dismissal does the court properly take the less burdensome course.†Sinochem
Under the holding of Sinochem, it is possible, as suggested by Facebook, that the personal jurisdiction question will “meaningfully inform the Court’s ultimate decision.â€
IMPORTANT DICTA:
“Neither the Lanham Act nor the CFAA contains a special venue provision.â€
UNANSWERED QUESTIONS:
Does the court have personal jurisdiction over the parties?
LIKELY FUTURE IMPORTANCE:
This case will likely set precedent for Internet companies and choice of venue, especially if a motion to dismiss is eventually granted.
FACTS:
StudiVZ launched a website in 2005 which is supposedly strikingly similar visually and functionally to Facebook’s social networking website. The website became quite popular in Germany and StudiVZ launched several other websites that were designed to target other age groups. Facebook learned of StudiVZ’s websites in 2006 and sent a demand letter, with allegations of claims for infringement of intellectual property rights under German law. Facebook sent StudiVZ another letter in January of 2007. In 2006, certain entities of Holtzbrink publishing group became interest-holders in StudiVZ’s various social networking sites. In August 2006 and October 2007, Facebook began negotiations to purchase StudiVZ’s websites. However, negotiations were unsuccessful. After the negotiations failed, Facebook sent demand letters to Holtzbrink again alleging infringement of intellectual property rights.
PROCEDURAL POSTURE:
This is an action for trade dress infringement under the Lanham Act, breach of contract, breach of implied covenant of good faith and fair dealing and violations of the Computer Fraud and Abuse Act and California Penal Code § 502(c), brought before the United States District Court for the Northern District of California, San Jose Division. The defendants filed a motion to dismiss for lack of personal jurisdiction.
HOLDING:
Motion to dismiss deferred. Court defers ruling with respect to forum non conveniens until the issue of personal jurisdiction is fairly presented.
ANALYSIS:
I. Forum Non Conveniens
Under the doctrine of forum non conveniens, courts have broad discretion to decline jurisdiction in favor of a more convenient forum. A party moving to dismiss based on forum non conveniens must show (1) the existence of an adequate alternative forum and (2) that the balance of private and public interest factors weighs in favor of dismissal. American Dredging Company v. Miller
To determine whether to dismiss an action, the court must determine (1) the degree of deference properly accorded the plaintiff’s choice of forum, (2) whether the alternative forum proposed by the defendants is adequate to adjudicate the parties’ dispute and (3) a balance between the private and public interests implicated in the choice of forum. Norex Petroleum Ltd. V. Access Indus., Inc.
The plaintiff, Facebook would ordinarily be accorded a great deal of deference in choice of forum. However, because Facebook is a multinational corporation with “a significant business presence in Germanyâ€, is currently litigating a similar suit in Germany and the conduct complained of occurred principally in Germany, Facebook’s choice of forum is given reduced deference. Germany is an adequate forum because it permits litigation of the subject matter in dispute. Facebook offered little meaningful explanation to private interest factors. Facebook claims that there would be difficulty in gaining witness testimony but gave no suggestion of “more effective means of protecting its US trademark interests than by shutting off the pipeline of infringing goods at the source, Germany.†The majority of public interest factors are neutral because neither German courts nor the Court are overburdened.
II. Sinochem
“The consideration ordinarily accorded the plaintiff’s choice of forum should impel a federal court to dispose of jurisdictional issues first.†“Only where subject-matter or personal jurisdiction is difficult to determine, and forum non conveniens considerations weigh heavily in favor of dismissal does the court properly take the less burdensome course.†Sinochem
Under the holding of Sinochem, it is possible, as suggested by Facebook, that the personal jurisdiction question will “meaningfully inform the Court’s ultimate decision.â€
IMPORTANT DICTA:
“Neither the Lanham Act nor the CFAA contains a special venue provision.â€
UNANSWERED QUESTIONS:
Does the court have personal jurisdiction over the parties?
LIKELY FUTURE IMPORTANCE:
This case will likely set precedent for Internet companies and choice of venue, especially if a motion to dismiss is eventually granted.