I attended this morning’s Ninth Circuit en banc oral agument in Gator.com v. L.L. Bean along with Elizabeth Rader and incoming CIS Residential Fellow Colette Vogele. It was my first time attending a Federal appellate oral argument. Here are my impressions.
The Gator.com appeal deals with personal jurisdiction — whether it’s fair for one party to haul (or “hale”) another into court in a given location. Gator.com, as you may know, is a… uh… purveyor of… valuable advertising services to… uh… consumers who choose to install their software, which comes… bundled… with various no-cost software packages. (Whatever they do, they don’t make spyware, I’ll tell you that.) Anyway, the Gator software made Eddie Bauer pop-ups appear over the L.L. Bean website whenever one of Gator’s… uh… customers visited the site. L.L. Bean sent them a cease-and-desist letter telling them to stop, since, they said, the software infringed L.L. Bean’s trademarks. Gator is in California; L.L. Bean is in Maine.
When they got the letter, Gator sued L.L. Bean in Federal court in California, asking the court to tell Gator that their pop-up software didn’t infringe L.L. Bean’s trademark rights, as L.L. Bean’s letter claimed. (For you non-lawyers — this sort of “backwards lawsuit” made under the threat of an impending lawsuit is called a declaratory judgment suit. It happens all the time in situations like this.)
L.L. Bean moved to dismiss the suit for lack of personal jurisdiction. You see, L.L. Bean doesn’t have any stores in California. They don’t have any employees in California. They don’t pay taxes in California. They do, however, sell millions of dollars’ worth of goods to California consumers, and they did send that nasty letter to Gator. Without getting into too much civil procedure weenie-ness, the law isn’t clear on whether selling lots of goods to consumers in the jurisdiction with an interactive website and sending threatening letters to companies in the jurisdiction, without any physical presence in the jurisdiction, is enough to make it proper for the party to be able to be sued in the jurisdiction.
The district court ruled that there was no jurisdiction over L.L. Bean in California; a three-judge Ninth Circuit appellate panel reversed, holding that all of L.L. Bean’s Internet sales meant that they were doing business in California. L.L. Bean moved for rehearing en banc — by a larger panel of appellate judges. (In most circuits, en banc cases are decided by all active appellate judges in the circuit. But because the Ninth Circuit is so huge, they just select 10 judges at random and have them hear the case.)
The en banc panel focused more than I expected on the jurisdictional effect of the cease-and-desist letter. On one hand, L.L. Bean lobbed this potentially damaging document into California, and causing damage within the jurisdiction makes jurisdiction proper. On the other hand, all L.L. Bean was doing was enforcing their trademark rights, which they had a legal duty to do; the C&D wasn’t intended to cause any damage, only to ask Gator to stop infringing. Toward the end of the oral argument, L.L. Bean’s attorney (who was doing a great job with a hard case) made the point that they had no other way to tell Gator to stop, so if the court held that sending C&Ds caused personal jurisdiction to attach, every IP owner would be instantly amenable to suit anywhere someone infringed their IP rights, if they told the infringer to stop.
The panel decision had me convinced that L.L. Bean should be subject to California jurisdiction, but now I’m not so sure. Regardless, it was a great experience, and I really enjoyed watching a dozen smart lawyers hash over this minor, though thorny, ambiguity in the law of personal jurisdiction.
(Incidentally, on the way out, we noticed that L.L. Bean’s attorney’s briefcase was made of blue canvas, with brown leather piping and embroidered initials. Of course.)