Advanced Tactical manufactures and sells PepperBall projectile irritants. The product, PepperBalls, resemble paintballs, but PepperBalls contain irritants and are designed to be used for crowd control by police, private security firms and similar organizations.
Advanced Tactical was headquartered in Indiana, though the company had at least one office in California. Advanced Tactical became the manufacturer of PepperBall items after it acquired trademark and other property in a foreclosure sale from a company called PepperBall Technologies Inc.
During the foreclosure sale, the chief operating officer of one of the PepperBall suppliers contacted Real Action Paintball Inc., a California company. The chief operating officer of this supplier asked Real Action whether it was interested in acquiring irritant projectiles. A deal was reached between the supplier and Real Action.
After the contract was agreed, Real Action posted an announcement on its website that it had acquired the “machinery, recipes and materials once used by PepperBall Technologies Inc.”
When Advanced Tactical learned of Real Action’s announcement, it issued a cease-and-desist letter. In response, Real Action added a disclaimer stating that it was not affiliated with PepperBall Technologies or its brands.
Advanced Tactical then filed suit in the Northern District of Illinois in Chicago alleging intentional violations under the Lanham Act, common law trademark infringement, unfair competition, trade dress infringement and misappropriation of trade secrets.
Complaints by Advanced asserted that jurisdiction was proper under Indiana’s long-arm statute. Real Action contested jurisdiction. Advanced argued that jurisdiction was proper because of Real Action’s e-mail to its subscriber list announcing its acquisition of PepperBall’s recipe. The list included several residents of Indiana. Because the Lanham Act lacked a federal rule for personal jurisdiction, the appeals panel determined that it must look to the forum for the governing rule on personal jurisdiction. The court cited LinkAmerica Corp. v. Cox, 49S04-0603-CV-88 (Dec. 5, 2006). The panel continued that the Indiana Supreme Court had ruled that Indiana’s long-arm statute reduces analysis of personal jurisdiction to the issue of whether the exercise of such jurisdiction is consistent with the federal due process clause. With the use of the minimum contact analysis, the court of appeals found that none of Real Action’s moves met the requisite minimum contacts standard.
The panel also discarded one of the arguments that online activities were common for corporations. The panel also maintained that companies operate such e-mail lists, and the operation of such a list alone was not sufficient to show that Real Action made a substantial connection to each state or country associated with the subscriber’s postal mail addresses. Finally, the panel reached the decision that because an interactive website accessible by a resident in the forum state was similarly not sufficient to establish jurisdiction without a more targeted effort on the part of the defendant. Accordingly, the court of appeals reversed the district court and remanded the case with directions to dismiss the complaint.
Advanced Tactical Ordinance Systems, LLC v. Real Action Paintball, Inc., No. 13-3005 (7th Cir., May 9, 2014).
Kreisman Law Offices has been handling federal civil litigation, business disputes and commercial litigation for individuals and businesses for more than 38 years in and around Chicago, Cook County and its surrounding areas, including Blue Island, Harvey, Alsip, Oak Forest, Orland Park, Countryside, Willowbrook, Melrose Park, Elmwood Park, River Grove, River Forest, Harwood Heights, Burr Ridge, Park Ridge, Vernon Hills and Northbrook, Ill.
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