You run a manufacturing company in, say, Boston or New York, and you sell your goods over Amazon.com or another e-commerce platform. You do not own stores or offices in other states, nor do you sell through retailers or distributors in other states. You’d expect that if you were ever sued, the complaining party would have to sue you in Boston or New York. But you would be wrong. Because you sell your goods nationally through a national e-commerce site, you might be subject to suit in any state in which your goods can be purchased. That’s what some New York companies discovered when they were sued for trademark infringement in Arizona. In that case, the Court of Appeals for the Ninth Circuit held that several New York-based Amazon resellers could be sued for trademark infringement in Arizona on the basis that the resellers shipped their products nationally.
The case arose because the plaintiff, Herbal Brands, an Arizona-based company, sued several New York-based resellers in federal court in Arizona, alleging that the resellers’ products infringed Herbal Brands’ trademarks. The resellers argued that the Arizona court lacked personal jurisdiction over them. The Arizona court agreed with the resellers, but the Court of Appeals reversed and found that the Arizona court had jurisdiction to hear the case, finding that the resellers’ placement of goods for sale on a website such as Amazon.com such that the goods could be and were shipped into Arizona was enough to provide a federal court in that state with jurisdiction over the resellers.
The resellers then sought an appeal to the Supreme Court, arguing that because their sales on Amazon.com were not predominantly in Arizona and their marketing was not predominantly aimed at Arizona consumers, Arizona was not the central focus of the allegedly infringing activity. In opposition, Herbal Brands argued that the resellers’ regular sales to Arizona were enough for an Arizona court to hear the case, even though the resellers themselves were located on the opposite site of the country and had no contact with Arizona apart from these sales. The Supreme Court declined to hear the appeal, thus leaving the Ninth Circuit’s ruling intact.
Appeals courts in other jurisdictions have held that national sales do not necessarily lead to jurisdiction in a particular state. That said, the Ninth Circuit’s ruling makes it more likely that companies that sell their wares through national e-commerce platforms could be subject to personal jurisdiction, at least in states within the Ninth Circuit—California, Arizona, Oregon, Washington, Idaho, Montana, Nevada, Alaska, and Hawaii—even if those companies have no locations in those states and do not specifically target consumers in those states.
The Ninth Circuit decision is Herbal Brands, Inc. v. Photoplaza, Inc., 72 F.4th 1085 (9th Cir. 2023). To learn more about how this case could affect your trademark rights, please contact the authors or your lawyer at McCarter & English, LLP.