Sunday, May 18, 2014

Bensusan Restaurant Corp. v. King case brief summary

Bensusan Restaurant Corp. v. King case brief

FACTS
Bensusan Restaurant (Bensusan), a New York corporation, sued Richard King individually and in his capacity doing business as "The Blue Note," a Columbia, Missouri corporation, in the Southern District of New York for trademark infringement, dilution, and unfair competition. The web site described "The Blue Note" as mid-Missouri’s finest live entertainment venue, identified its location in Columbia, Missouri, and provided the Missouri telephone number for King’s box office. The web site also initially contained a disclaimer that this establishment should not be confused with "The Blue Note" jazz club in New York’s Greenwich Village and a hyperlink to the New York club’s web site. When Bensusan objected to the disclaimer, King removed the hyperlink and modified its wording. Is a web site an offer to sell a product in a forum where allegedly infringing work is located?

Holding: The Second Circuit found that personal jurisdiction could not be exercised over King because the requirements of the New York "long-arm" statute were not satisfied.
ii. The court analyzed three prongs of the New York "long-arm" statute.

Any of the three prongs authorize jurisdiction in New York over nonresident defendants:
  • (1) an act by a nonresident defendant who does business in New York (King did not conduct business in NY)
  • (2) an act by a nonresident defendant within New York which cause injury in New York (His allegedly tortious acts were committed outside the state of New York) or 
  • (3) an act, outside New York, by a nonresident defendant who derives substantial revenue from interstate commerce, where the defendant expects or should reasonably expect the act to have consequences in New York. (King’s business operations were of a local character)
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  1. Bensusan Restaurant Corp. v. King
                                                              i.      Issue: whether the creation of a web site, which exists either in MO or in cyberspace, is an offer to sell the product in NY.
                                                           ii.      Held: no personal jurisdiction.
1.      PJ: the mere fact that a person can gain information on the allegedly infringing product is not the equivalent of a person advertising, selling or making an effort to target its product in NY. No allegation or proof that any infringing goods were shipped into NY or that any other infringing activity directed at NY or caused by King to occur there.
a.       Substantial revenue: must derive substantial revenue required from ISC, not mere participation.
b.      Foreseeability: defendant expects or should reasonably expect the act to have consequences in that state. D must make a discernable effort to serve, directly or indirectly, a market in the forum state.
c.       Significant economic injury: only indirect financial loss resulting from the fact that the injured person resides in NY.
2.      Purposeful Availment: no benefits derived from NY.
a.       Stream of commerce, but w/o more, is not purposefully directing toward the forum state.
3.      Continuous and systematic business: D did not actively seek out or encourage NYers to enter the site.

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