The American Automobile Association (AAA) recently sued Darba Enterprises, Inc. for using the AAA mark in its domain name, on its website, and in pay-per-click advertisements. Darba moved to dismiss the claim based on lack of personal jurisdiction; however, the court held that by maintaining a commercial website, Darba reached beyond its home state of Nevada to purposefully avail itself of the benefits of the California forum. The American Automobile Association Inc. v. Darba Enterprises, Inc., No. C-09-00510 (N.D. Cal. Apr. 21, 2009).
To satisfy due process, personal jurisdiction exists over a non-resident defendant if the defendant has either a continuous or systematic presence in the state, or minimum contacts with the forum state such that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). To determine whether a defendant has sufficient minimum contacts, the Ninth Circuit applies the following three-part test: (1) the nonresident defendant must purposefully avail itself of the privilege of conducting activities in the forum; (2) the claim must arise out of or result from the defendant's forum-related activities; and (3) the exercise of personal jurisdiction over the defendant must be reasonable. Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997); Pebble Beach Co. v. Caddy, 453 F.3d 1151 (9th Cir. 2006); Schwarzenegger, 374 F.3d at 802.
In this case, the district court held that AAA successfully established all three elements of the minimum contacts test. First, Darba purposefully availed itself of the benefits of doing business in California because the company collected contact information from California residents and sold this information to a third party. Furthermore, by utilizing pay-per-click advertisements to ensure that its name would appear when Internet users searched for AAA insurance, Darba intended to lure Internet users to its website, including those from California. Second, the court held that AAA's trademark infringement claim arose directly out of Darba's forum-related activities. In fact, AAA received at least two complaints from California residents who had mistakenly entered their information into Darba's website thinking it was an AAA website. And finally, third, the court held that Darba failed to present a compelling case that the exercise of jurisdiction in California would be unreasonable. For these reasons, the court found that jurisdiction was proper and denied Darba's motion to dismiss.
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