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Inventel Products, LLC v. Li

United States District Court, D. New Jersey

October 10, 2019

JIMMY LI, et al Defendants.


          WILLIAM J. MARTINI, U.S.D.J.

         Plaintiff InvenTel Products, LLC's ("InvenTel" or "Plaintiff) brings this action for various direct and contributory violations of its intellectual property rights. The matter comes before the Court on Defendant Google LLC's ("Google") motion to compel arbitration, dismiss, or transfer the case to the Northern District of California, ECF No. 43, and Defendants Shopify Inc. and Shopify (USA) Inc.'s ("Shopify") motion to dismiss, ECF No. 53. For the reasons set forth below, the motions are GRANTED IN PART and DENIED IN PART.

         I. BACKGROUND

         InvenTel sells a variety of consumer products in the United States via mail-order and online sales, including the HD MIRROR CAM® ("HD MIRROR CAM"). The HD MIRROR CAM is a security camera for automobiles. InvenTel holds patents, copyrights, and trademarks on HD MIRROR CAM technology and marketing materials.

         Defendants Jimmy Li, Lin Amy, and Wu Jinzhao ("Li Defendants") allegedly produce counterfeit HD MIRROR CAMs ("Counterfeit Products") in China and market them to U.S. customers online. The online sale of the Counterfeit Products is the subject of a related action ("Prior Action") brought by InvenTel against the Li Defendants, Google, Shopify, GoDaddy, and others (collectively, "Defendants"). See InvenTel Products, LLC v. Li, 18-cv-16590.

         After voluntarily dismissing Google from the Prior Action, InvenTel learned of a new website created by the Li Defendants to further market the Counterfeit Products: ("Website"). On April 2, 2019, InvenTel initiated this suit alleging similar acts of infringement to the Prior Action but occurring on the new Website. On June 17, InvenTel dismissed the Prior Action against Shopify.

         In this matter, InvenTel alleges that it "duly notified Google regarding the infringement by the Li Defendants" but "despite such notice .. . Google has permitted and continues to permit the Li Defendants" to use Google's advertisement services called "Adworks". Compl. ¶¶ 88-89, ECF No. 1. Other than notice through the Prior Action and settlement negotiations thereof, however, the Complaint does not specify how or when InvenTel notified Google of any infringement, or whether such notice related to the new Website. See Id. ¶¶ 91-95. The Complaint does quote the Website's claim that "[w]e use Google Analytics to help us understand how our customers use the Site - you can read more about how Google uses your Personal Information here." Id. ¶ 96 (linking to Google's privacy policy and opt out option).

         As to Shopify, InvenTel makes general allegations about Shopify's business model and inadequate trademark infringement policy. Id. ¶¶ 54-66. With respect to the infringement at issue here, InvenTel alleges Shopify "hosts and/or has hosted some of the" websites used by the Li Defendants to sell Counterfeit Products. Id. ¶ 67. Thus, Shopify "facilitates sales" of the infringing products. Id. ¶ 68. Inventel alleges it notified Shopify of the Li Defendants' infringement in October 2018, via the Prior Action, and in settlement discussions, but Shopify continues to facilitate the Li Defendants' sales. Id. ¶69-71. Finally, the Complaint quotes language from the Website stating that "we use Shopify to power our online store" and referencing a Shopify website. Id. ¶ 73.

         On April 16, 2019, the Court entered an order temporarily restraining Defendants from infringing on InvenTel's intellectual property rights. See Order, ECF No. 6 ("TRO"). After Google, GoDaddy, and Shopify submitted briefing and supporting material, the Court terminated the TRO and denied InvenTel's motion for a preliminary injunction. Op. & Order, ECF Nos. 18-19, 29-30. Now before the Court is Google's motion to compel arbitration, transfer, or dismiss, ECF No. 43, and Shopify's motion to dismiss pursuant to Federal Rule of Civil Procedure ("FRCP") 12(b)(2) and 12(b)(6), ECF No. 53.


         Shopify argues (A) it is not subject to the Court's personal jurisdiction while (B) Google argues this matter should be dismissed because the parties agreed to arbitrate or litigate in a different forum. Alternatively, both Google and Shopify argue (C) that Plaintiff fails to state a claim upon which relief can be granted. Each argument is taken in turn below.

         A. Personal Jurisdiction Over Shopify

         Shopify argues it is not subject to the personal jurisdiction of this Court. Shopify Br. at 6-11, ECF No. 53-2. Specifically, Shopify argues (1) it is not subject to General Jurisdiction in New Jersey, (2) it has no actual involvement with the Website at issue, and (3) even crediting the allegations of involvement, the Court lacks specific jurisdiction. Id.

         1. General Jurisdiction

         Shopify argues because it is not incorporated in New Jersey, does not have a principle place of business in New Jersey, and has no offices in New Jersey, it is not subject to general jurisdiction in New Jersey. Shipify Br. at 7. In response, "Inventel declines to address the issue of General Jurisdiction at this time, but reserves the right to seek Discovery into the extent of Shopify's affiliations within the State of New Jersey if the Court declines to find [s]pecific [j]urisdiction." InvenTel Opp. to Shopify at 13 n.2, ECF No. 58.

         InvenTel's response is insufficient. A party may not "decline[] to address the issue" to avoid the consequences of an argument. Id.; see, e.g., Alpine Bus. Grp., Inc. v. Sabathia, 10-cv-4850, 2011 WL 589959, at *2 (D.N.J. Feb. 10, 2011) ("An unsupported position is considered waived or abandoned."). The allegations in the Complaint confirm Shopify's place of incorporation and business. Compl. ¶¶ 7-8. Nothing in the Complaint sets forth a basis for finding general jurisdiction exists, including the allegation that Shopify regularly conducts business throughout the United States. Compare Compl. ¶¶7-8, with Daimler AG v. Bauman, 571 U.S. 117, 139 (2014) (rinding no general jurisdiction despite sizable sales in California). Thus, the Court need not provide discovery, as requested by InvenTel. InvenTel Opp. to Shopify at 13 n.2; Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d446, 456 (3d Cir. 2003) ("If a plaintiff presents factual allegations that suggest.. . the possible existence of the requisite contacts between the party and the forum state, the plaintiffs right to conduct jurisdictional discovery should be sustained." (emphasis added) (cleaned up)).

         2. Specific Jurisdiction

         Shopify challenges the Court's specific jurisdiction based on both (a) outside evidence and (b) accepting the allegations in the Complaint. Shopify Br. at 8-11.

         a. Outside Evidence

         When deciding Rule 12(b)(2) motions, "[i]f the district court does not hold an evidentiary hearing, the plaintiffs need only establish a prima facie case of personal jurisdiction. Moreover, it is well established that in deciding a motion to dismiss for lack of jurisdiction, a court is required to accept the plaintiffs allegations as true, and is to construe disputed facts in favor of the plaintiff." Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009).

         Here, the Court has not held an evidentiary hearing. While Shopify encourages the Court to take judicial notice of its previous factual finding, it would be improper to credit Defendant's Counsel's word over the allegations in the Complaint without holding a hearing and providing for very limited discovery. See id.; see also Toys "R" Us, Inc., 318 F.3d at 456 (mandating jurisdictional discovery once prima facie showing of jurisdiction made). However, because InvenTel fails to make the threshold showing of prima facie jurisdiction, discovery and a hearing are unnecessary. See Toys "R" Us, Inc., 318 F.3d at 456.

         b. Accepting the Allegations

         The only substantive allegations against Shopify relating to the alleged infringement are that Shopify (1) "hosts and/or has hosted some of the Li websites which, as discussed above, were used to advertise, market and sell products in the United States and specifically in New Jersey"; (2) "facilitates sales in the United States and specifically in New Jersey"; (3) failed to stop infringing ...

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