-CWH Stevo Design, Inc. v. SBR Marketing Ltd., No. 2:2011cv00304 - Document 52 (D. Nev. 2013)

Court Description: ORDER Granting in part and Denying in Part 49 Motion to Alter/Amend Judgment. Dismissing without prejudice 7 Amended Complaint. Amended Complaint due within 20 days. Signed by Judge Larry R. Hicks on 1/24/2013. (Copies have been distributed pursuant to the NEF - SLR)

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-CWH Stevo Design, Inc. v. SBR Marketing Ltd. Doc. 52 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 9 10 11 12 13 14 15 *** ) STEVO DESIGN, INC., a Florida corporation; ) STEVEN BUDIN, an individual; and ALAN ) ROLLI, an individual, ) ) Plaintiffs, ) ) v. ) ) SBR MARKETING LTD., a foreign ) corporation; and BRIAN DANIELE, an ) individual, ) ) Defendants. ) ) 2:11-CV-00304-LRH-CWH ORDER 16 17 This is a copyright and trademark dispute, for the most part. Before the court is Stevo 18 Design, Inc., Steven Budin, and Alan Rolli’s (“Plaintiffs’”) motion to alter or amend judgment 19 under Federal Rule of Civil Procedure 59(e) (#491 ). Defendant SBR Marketing Ltd. (“SBR”) has 20 opposed this motion (#50), and Plaintiffs have replied (#51). 21 I. Facts and Procedural History 22 Plaintiff Stevo Design, Inc. (“Stevo”) is a Florida corporation with its principal place of 23 business in Florida. Stevo is in the business of selling, on pay-per-view and subscription bases, 24 licenses to access electronically-distributed sports betting reports, including compiled sports 25 26 1 Refers to the court’s docket number. Dockets.Justia.com 1 handicapping information. Plaintiffs Budin and Rolli are Stevo officers, and neither are Nevada 2 residents. 3 Defendant SBR is a foreign corporation with its principal place of business in Costa Rica. 4 SBR operates a website, www.sbrforum.com, which publishes sports betting and handicapping 5 information. SBR also operates a message board allowing users to post messages related to sports 6 betting and handicapping and to send messages to other users.2 Pro se defendant Brian Daniele, a 7 Virginia resident, is an SBR user. 8 SBR encourages users to frequent its website through the award of “loyalty points.” For 9 instance, a user receives two loyalty points for logging on to the website, and a user receives four 10 loyalty points for contributing content to the message board. SBR awards more than four loyalty 11 points for well thought-out “original” content. Users can also give each other loyalty points. These 12 loyalty points may be turned in for “credits” at off-shore gambling websites, and these credits are 13 redeemable for cash as long as they are gambled with first. 14 Plaintiff Stevo originally filed its complaint against SBR on February 24, 2011 (#1). Stevo 15 then amended its complaint to add the individual plaintiffs and defendant Daniele, as well as 16 several claims against Daniele (#7). The first amended complaint asserts sixty-five causes of action 17 against the defendants, including trademark infringement, copyright infringement, and Florida and 18 Nevada state law claims. These claims collectively allege that SBR and its users have published 19 Stevo’s protected works on SBR’s website without having obtained a license. For example, 20 defendant Daniele is alleged to have purchased sports analysis from Stevo and to have unlawfully 21 posted this analysis on SBR’s message board. 22 23 24 25 2 “A ‘message board’ is a system of online discussion allowing users to ‘post’ messages. Messages are organized by topic . . . and the system generally allows users to read and reply to messages posted by others.” Fair Housing Council of San Fernando Valley v. Roommates.Com, LLC, 521 F.3d 1157, 1163 n.10 (9th Cir. 2008). 26 2 1 On March 13, 2012, this court dismissed Plaintiffs’ amended complaint on the basis of 2 subject matter jurisdiction. (Order #45, p. 4.) Plaintiffs have timely objected to this judgment 3 through a motion to alter or amend under Rule 59(e). 4 II. 5 Discussion Plaintiffs allege that the court erred in dismissing their amended complaint. This allegation 6 stands, principally, on two legs. First, Plaintiffs argue that the court erroneously treated the 7 extraterritorial application of the copyright and trademark laws as jurisdictional in nature. Second, 8 Plaintiffs note that the Clerk of Court entered judgment against all defendants, whereas the court’s 9 order only dismissed claims against SBR. 10 Plaintiffs’ claims against defendant Daniele should not have been dismissed on the basis of 11 the extraterritorial application of the intellectual property laws. This was manifest error meriting a 12 reconsideration of the judgment under Rule 59(e). On reconsideration, however, Plaintiffs’ claims 13 do not warrant a different result. The court properly dismissed Plaintiffs’ claims, but for the wrong 14 reasons. Set forth below are the right ones. 15 A. Rule 59(e) 16 A motion to alter or amend judgment under Rule 59(e) is “an extraordinary remedy which 17 should be used sparingly.” McDowell v. Calderon, 197 F.3d 1235, 1255 n.1 (9th Cir. 1999) 18 (citation and quotation marks omitted). It is available in four “basic” situations: (1) where the 19 motion is necessary to correct “manifest errors of law or fact upon which the judgment rests;” (2) 20 where the motion is necessary to present newly discovered or previously unavailable evidence; (3) 21 where the motion is necessary to “prevent manifest injustice;” and (4) where the amendment is 22 justified by an intervening change in controlling law. Allstate Insurance Co. v. Herron, 634 F.3d 23 1101, 1111 (9th Cir. 2011). Since Rule 59(e) does not itself provide standards for granting or 24 denying a motion to alter or amend, “the district court enjoys considerable discretion in granting or 25 denying the motion.” Id. (citations and quotation marks omitted). Yet the Rule 59(e) motion may 26 not be used to “relitigate old matters, or to raise arguments or present evidence that could have 3 1 been raised prior to the entry of judgment.” 11 Charles Alan Wright et al., Federal Practice and 2 Procedure § 2810.1 (2d ed. 1995). Finally, amendment of the judgment will be denied if it would 3 serve no useful purpose. Id. 4 Plaintiffs’ first point of error is the court’s treatment of subject matter jurisdiction under the 5 copyright and trademark laws. In the March 13 order, the court observed that “all infringement [by 6 SBR] took place on SBR’s website operated entirely from Costa Rica.” (Order #45 at p. 3:22-23.) 7 The court also noted, incorrectly, that the amended complaint did not identify an SBR user who 8 “lives in the United States and uploaded [ ] handicap reports.” (Id. at 3:35.) (In fact, Daniele is one 9 such user. See First Amended Complaint (“FAC”) #7, ¶¶ 639, 641, 661, 663, 683, 685, 703, 705.) 10 The court concluded that “[n]either the Copyright Act [17 U.S.C. § 101 et seq.], nor the Lanham 11 Act [15 U.S.C. § 1051 et seq.] cover infringement of copyrights or service marks that occurred 12 entirely outside the United States,” and dismissed Plaintiffs’ claims against SBR for lack of subject 13 matter jurisdiction under 28 U.S.C. § 1331.3 (Order #45 at pp. 3-4.) 14 The court’s treatment of extraterritoriality as a limit of subject matter jurisdiction rather 15 than as an element of the copyright and trademark claims is not “manifest error” under Rule 59(e). 16 As a court in this Circuit has ruled, “There is currently no clear consensus among the courts 17 regarding whether the issue of the extraterritorial reach of the Copyright Act should be treated as 18 an issue of subject matter jurisdiction, or should instead be treated as an element of a claim.” 19 Shropshire v. Canning, 809 F. Supp. 2d 1139, 1143 (N.D. Cal. 2011). And Ninth Circuit precedent 20 provides conflicting treatments of extraterritoriality under the Copyright Act. Compare Peter Starr 21 Production Co. v. Twin Continental Films, 783 F.2d 1440, 1442 (9th Cir. 1986) (treating 22 extraterritoriality as a matter of subject matter jurisdiction) with Subafilms, Ltd. v. MGM–Pathe 23 Communications Co., 24 F.3d 1088, 1095 (9th Cir. 1994) (treating extraterritoriality as an element 24 25 26 3 Though the court explicitly discussed jurisdiction under § 1331 in its order, the court’s reasoning is equally applicable to jurisdiction under 28 U.S.C. § 1338(a) (giving federal courts original jurisdiction over copyright and trademark claims). 4 1 of the copyright infringement claim). Furthermore, Ninth Circuit courts have explicitly treated the 2 extraterritorial application of the Lanham Act as jurisdictional in nature. See 5 J. Thomas 3 McCarthy, McCarthy on Trademarks and Unfair Competition § 29:58 (4th ed. 2012) (“The Ninth 4 Circuit has developed an involved and elaborate test of subject matter jurisdiction when infringing 5 acts occur in a foreign nation.”); see also Zenger-Miller, Inc. v. Training Team, GmbH, 757 F. 6 Supp. 1062, 1069-71 (N.D. Cal. 1991) (treating an extraterritorial Lanham Act claim as exceeding 7 the court’s subject matter jurisdiction). Finally, the relationship of subject matter jurisdiction and 8 the extraterritorial application of the Copyright Act and the Lanham Act was fully argued by the 9 parties. (See SBR’s Motion to Dismiss #26, pp. 8-9; Plaintiffs’ Opposition #31, pp. 9-13.) Since 10 Rule 59(e) may not be used to “relitigate old matters,” Plaintiffs may not use Rule 59(e) to revisit 11 the proper interpretation of extraterritoriality. See Exxon Shipping Co. v. Baker, 554 U.S. 471, 486 12 n.5 (2008) (quoting Wright et al. § 2810.1). 13 However, entry of judgment in favor of defendant Daniele was manifest error. In its March 14 13 order, the court granted defendant SBR’s motion to dismiss, but SBR’s motion did not address 15 the claims against Daniele. Therefore, when the court dismissed Plaintiffs’ complaint, it dismissed 16 it as to defendant SBR but not as to defendant Daniele. The entry of judgment in favor of Daniele 17 had no basis and was therefore erroneous. See Executive Software North America, Inc. v. United 18 States District Court for Central District of California, 24 F.3d 1545, 1561 (9th Cir. 1994), 19 overruled on other grounds by California Department of Water Resources v. Powerex Corp., 533 20 F.3d 1087 (9th Cir. 2008) (holding that the failure to articulate the basis for declining jurisdiction 21 may be clear error). 22 B. Motion to Dismiss under Rule 12(b)(6) 23 In light of this error, Rule 59(e) allows the court to reconsider its judgment. Upon 24 reconsideration, the court concludes that while it had the power to hear Plaintiffs’ case, it did not 25 have the power to grant Plaintiffs’ relief under Federal Rule of Civil Procedure 12(b)(6). 26 \\\ 5 1 2 1. Legal Standard To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the 3 Federal Rule of Civil Procedure 8(a)(2) notice pleading standard. See Mendiondo v. Centinela 4 Hospital Medical Center, 521 F.3d 1097, 1103 (9th Cir. 2008). A complaint must contain “a short 5 and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 6 8(a)(2). The Rule 8(a)(2) pleading standard does not require detailed factual allegations; however, 7 a pleading that offers only “labels and conclusions” or “a formulaic recitation of the elements of a 8 cause of action” will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic 9 Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 10 Furthermore, Rule 8(a)(2) requires a complaint to “contain sufficient factual matter, 11 accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotation marks 12 omitted). A claim has facial plausibility when the pleaded factual content allows the court to draw 13 the reasonable inference, based on the court’s judicial experience and common sense, that the 14 defendant is liable for the misconduct alleged. See id. at 678-79. “The plausibility standard is not 15 akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has 16 acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant’s 17 liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. at 18 678 (internal quotation marks and citation omitted). 19 In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as 20 true. Id. (citation omitted). However, “bare assertions . . . amount[ing] to nothing more than a 21 formulaic recitation of the elements of a . . . claim . . . are not entitled to an assumption of truth.” 22 Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 556 U.S. at 23 680) (alteration in original) (internal quotation marks omitted). The court discounts these 24 allegations because they do “nothing more than state a legal conclusion – even if that conclusion is 25 cast in the form of a factual allegation.” Id. “In sum, for a complaint to survive a motion to dismiss, 26 6 1 the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be 2 plausibly suggestive of a claim entitling the plaintiff to relief.” Id. (quoting Iqbal, 556 U.S. at 678). 3 4 2. Copyright Infringement Claims against SBR Subsequent to the parties’ arguments on the motion to dismiss, a non-controlling decision in 5 this Circuit raised persuasive reasons for treating extraterritoriality as an element of the copyright 6 claim (rather than as a feature of subject matter jurisdiction). Thus, while the court did not commit 7 “manifest error” in treating the extraterritorial application of the Copyright Act as jurisdictional, 8 this persuasive authority warrants reconsideration of the court’s subject matter jurisdiction over 9 Plaintiffs’ copyright claims. 10 The Copyright Act has only limited extraterritorial reach. Litecubes, LLC v. Northern Light 11 Products, Inc., 523 F.3d 1353, 1368 (Fed. Cir. 2008). But does this limitation prevent a court from 12 hearing extraterritorial cases or does it prevent a court from granting relief in these cases? The 13 answer is important because a court’s ability to hear a case can never be waived, a court may 14 evaluate contested facts with respect to this ability, and this ability brings with it the discretion to 15 exercise supplemental jurisdiction. Arbaugh v. Y&H Corp., 546 U.S. 500, 524 (2006). 16 In Shropshire, the district court concluded that the extraterritorial application of the 17 Copyright Act is more properly considered an element of the infringement claim rather than a 18 question of subject matter jurisdiction–the court’s ability to hear a case. 809 F. Supp. 2d at 1144. 19 The Supreme Court in Arbaugh articulated a “readily adminstrable bright line rule”: “If the 20 Legislature clearly states that a threshold limitation on a statute’s scope shall count as 21 jurisdictional, then courts and litigants will be duly instructed. . . . But when Congress does not 22 rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as non- 23 jurisdictional in character.” 546 U.S. at 516. Since Congress has not indicated that the 24 extraterritorial restrictions on the scope of the Copyright Act limit a federal court’s subject matter 25 jurisdiction, “Arbaugh requires extraterritoriality to be decided as an element of a claim for 26 copyright infringement rather than an issue of subject matter jurisdiction.” Shropshire, 809 F. 7 1 2 Supp. 2d at 1144.4 However, while this court has subject matter jurisdiction to decide Plaintiffs’ copyright 3 claims, Plaintiffs’ inconsistent copyright ownership assertions have failed to allege facts sufficient 4 to state a claim.5 “[A] complaint . . . must contain either direct or inferential allegations respecting 5 all the material elements necessary to sustain recovery under some viable legal theory.” See 6 Twombly, 550 U.S. at 562. In the copyright context, these material elements include ownership of 7 the valid copyright and a showing that the defendant infringed the owner’s exclusive rights. Ellison 8 v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004). 9 Here, Plaintiffs allege both that Stevo owns the rights that have been infringed and that 10 Stevo’s websites own those rights. (Compare, e.g. FAC #7 at ¶ 26 (the websites own the rights) 11 with ¶ 630 (Stevo owns the rights).6 ) A parent may not assert the intellectual property rights of its 12 subsidiary in a copyright infringement action. See Lanard Toys Ltd. v. Novelty Inc., 511 F. Supp. 13 2d 1020, 1033 (C.D. Cal. 2007). Therefore, these allegations create a material inconsistency with 14 respect to the element of ownership. And inconsistent language in the pleadings relating to a 15 material element of a claim “fail[s] to state a plausible claim for relief as required to survive a 16 12(b)(6) motion.” Velazquez v. Arrow Financial Services LLC, 2009 WL 2780372 at *2 (S.D. Cal. 17 18 19 4 As noted in the discussion of the Lanham Act claims, below, Plaintiffs would likely succeed in showing that their copyright claims are within the reach of the Copyright Act. 20 5 21 6 22 23 24 25 26 This issue was briefed and argued prior to the court’s order dismissing Plaintiffs’ claims. Stevo customers don’t go to Stevo itself to purchase handicapping reports. Instead, they visit Stevo’s many websites. When they purchase a report from one of these websites, they agree to a “User Contract.” Under this contract, “this website is and shall remain the owner of all . . . copyrightable material.” (FAC #7 at Ex. 1, ¶ 4 (emphasis added).) The court may properly construe this contract in relation to the motion to dismiss. See Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). (Indeed, calling Plaintiffs’ allegations of ownership “inconsistent” is generous, since, “when a written instrument contradicts allegations in a complaint to which it is attached, the exhibit trumps the allegations.” Thompson v. Illinois Department of Professional Regulation, 300 F.3d 750, 754 (7th Cir. 2002). Under the Thompson rule, Plaintiffs may have pleaded that they are not the owners of the copyrights at issue.) 8 1 Aug. 31, 2009) (quoting Iqbal, 556 U.S. at 679). Since Plaintiffs have not plausibly pleaded the 2 ownership element, Plaintiffs have failed to state a claim for which relief may be granted. 3 4 3. Trademark Infringement Claims against SBR Plaintiffs have alleged trademark infringement against SBR under 15 U.S.C. § 1114(1), 5 false designation of origin under 15 U.S.C. § 1125(a), and dilution under 15 U.S.C. § 1125(c). SBR 6 argues that the court lacks subject matter jurisdiction to hear extraterritorial trademark 7 infringement claims or, alternatively, that the trademark doctrines of first sale and nominative fair 8 use deprive Plaintiffs of their claims. The marks at issue are the proper names of Stevo’s 9 handicapping analysts. Five of these marks are registered with the United States Patent and 10 11 12 Trademark Office, and seventeen are not. (FAC #7 at ¶¶ 22, 23.) a. The legal standard for Plaintiffs’ trademark claims. To prevail on a claim of trademark infringement under the Lanham Act, the owner of a 13 federally registered mark must show that the defendant used the mark in interstate commerce in 14 connection with the “sale, offering for sale, distribution, or advertising of any goods or services,” 15 and that such use is likely to cause consumer confusion. 15 U.S.C. § 1114(1); see also Network 16 Automation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137, 1144-45 (9th Cir. 2011). 17 Similar elements inhere in claims under 15 U.S.C. 1125(a) for false designation of origin. See New 18 West Corp. v. NYM Co. of California, Inc., 595 F.2d 1194, 1201 (9th Cir. 1979). “Whether we call 19 the violation infringement, unfair competition or false designation of origin, the test is identical: is 20 there a ‘likelihood of confusion?’” Id. 21 Dilution, on the other hand, is not confusion. Visa International Service Association v. JSL 22 Corp., 610 F.3d 1088, 1090 (9th Cir. 2010). Dilution is a cause of action “invented and reserved 23 for a select class of marks—those marks with such powerful consumer associations that even 24 non-competing uses can impinge on their value.” Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 25 875 (9th Cir. 1999) (citation omitted). The dilution claims require the plaintiff to show that its 26 mark is famous and distinctive, that the defendant began using its mark in commerce after the 9 1 plaintiff’s mark became famous and distinctive, and that the defendant’s mark is likely to dilute the 2 plaintiff’s mark. Visa International Service Association v. JSL Corp., 610 F.3d 1088, 1090 (9th 3 Cir. 2010). To prove dilution by blurring, the plaintiff must show that the association between the 4 plaintiff’s mark and the defendant’s mark “weakens the mark’s ability to evoke the first product in 5 the minds of consumers.” Id. Dilution by tarnishment occurs where the plaintiff’s mark is linked 6 with “something unsavory or degrading.” Toho Co., Ltd. v. Sears, Roebuck & Co., 645 F.2d 788, 7 793 (9th Cir. 1981) (interpreting California’s antidilution statute). The latter category includes 8 things like X-rated movies, adult content web sites, crude humor, and illegal drugs. 4 McCarthy, 9 supra, § 24:89. 10 11 b. Extraterritorial application of the Lanham Act. SBR’s first objection to Plaintiffs’ Lanham Act claims is that the Lanham Act does not 12 apply to extraterritorial infringement. The extraterritorial reach of the Lanham Act is “considerably 13 broader than that of the patent and copyright laws.” 5 McCarthy, supra, § 28:57. But even in the 14 copyright context, when “the point of origin of the communication is outside the U.S., but the 15 actual or intended recipients of the [infringing acts] . . . are located in the U.S., courts have readily 16 found that an act of infringement, to which U.S. law applied, takes place in the U.S.” Jane C. 17 Ginsburg & Robert A. Gorman, Copyright Law 234 (2012). Similarly, “[t]he use of an infringing 18 mark as part of an Internet site available for use in the United States may constitute an 19 infringement of the mark in the United States.” 5 McCarthy, supra, § 29:56. In Playboy 20 Enterprises, Inc. v. Chuckleberry Publishing, Inc., 939 F. Supp. 1032 (S.D.N.Y. 1996), for 21 example, the court found that an Italian website that “actively solicited [U.S.] customers to its 22 Internet site” was an infringer within the United States. 23 Here, SBR’s alleged infringement took place in the United States. SBR’s U.S.-centric 24 content–English-language analysis of American professional and collegiate sports–supports the 25 notion that the SBR website’s “intended audience” was United States consumers. In addition, the 26 complaint successfully alleges that at least one member of SBR’s “actual audience,” Daniele, 10 1 accessed the SBR website from Virginia. Therefore, whether Lanham Act extraterritoriality is an 2 issue of subject matter jurisdiction or an element of the Lanham Act claim, Plaintiffs have shown 3 that SBR’s alleged infringement lies within the reach of the Lanham Act. 4 5 c. The first sale rule for trademarks. SBR’s second objection falls under the “first sale” rule. Under this rule, “the right of a 6 producer to control distribution of its trademarked product does not extend beyond the first sale of 7 the product.” Sebastian International, Inc. v. Longs Drugs Stores Corp., 53 F.3d 1073, 1074 (9th 8 Cir. 1995). Therefore, a reseller of branded goods–who does not materially change the goods–is not 9 a trademark infringer. See id.; see also Softman Products Co., LLC v. Adobe Systems, Inc., 171 F. 10 Supp. 2d 1075, 1092 (C.D. Cal. 2001) (“The first sale doctrine does not apply, however, when an 11 alleged infringer sells trademarked goods that are materially different than those sold by the 12 trademark owner.”). The same goes for service marks, at least where the service can be sold and 13 resold without change to its “nature, quality, and genuineness.” See Tumblebus Inc. v. Cranmer, 14 399 F.3d 754, 766 (6th Cir. 2005) (explaining how service marks differ from marks on goods with 15 respect to the first sale doctrine). The rationale for the rule is that “trademark law is designed to 16 prevent sellers from confusing or deceiving consumers about the origin or make of a product, 17 which confusion ordinarily does not exist when a genuine article bearing a true mark is sold.” NEC 18 Electonics v. CAL Circuit Abco, 810 F.2d 1506, 1509 (9th Cir. 1987). Given the first sale 19 doctrine’s relationship to the likelihood of confusion, it is appropriate to raise the doctrine in a 20 Rule 12(b)(6) motion to dismiss. See Enesco Corp. v. Price/Costco Inc., 146 F.3d 1083, 1085 (9th 21 Cir. 1998) (reviewing, without objection, a district court’s dismissal under Rule 12(b)(6) pursuant 22 to the first sale doctrine). 23 The first sale doctrine applies to Stevo’s handicapping reports. Stevo’s marks are the proper 24 names of its sports analysts, and the service Stevo sells with these marks is “sports analysis.” 25 Drawing all inferences in Plaintiffs’ favor, SBR users bought trademarked sports analysis from 26 Stevo and then resold it (or gave it away) on SBR’s message board. SBR users usually repeated the 11 1 analysis verbatim. Thus, the complaint identifies predicate acts of infringement in which SBR users 2 resold a lawfully acquired trademarked service without material alteration. The first sale doctrine 3 teaches that such acts are not infringement at all. 4 Plaintiffs respond that SBR, by publishing the allegedly infringing posts, created initial 5 interest confusion as to the legitimate source of the handicapping reports. Thus, Plaintiffs seek an 6 exception to the first sale doctrine for resellers who “used the trademark in a manner likely to cause 7 the public to believe the reseller was part of the producer’s authorized sales force or one of its 8 franchises.” Sebastian International, Inc., 53 F.3d at 1076. The charge of initial interest confusion 9 is based on Google search results: a search for Stevo’s marks plus the word “picks” (i.e., “Steve 10 11 Budin picks”) returns results in which SBR’s website is ranked higher than any of Stevo’s. The exception to the first sale doctrine requires more than this. In Bandag, Inc. v. Al 12 Boster’s Tire Stores, 750 F.2d 911 (Fed. Cir. 1984), the reseller used the producer’s mark in a 13 phone book ad to suggest that the reseller was an authorized franchisee. The court found that this 14 conduct created the false impression that the reseller was an authorized dealer. 750 F.2d at 916. In 15 Bernina of America, Inc. v. Fashion Fabrics International, Inc., 2001 WL 128164 (N.D. Ill. Feb 9, 16 2001), the court concluded that the reseller misrepresented itself as an authorized dealer when the 17 reseller “[held] itself out to the public to be abreast of the latest news regarding [the trademark 18 owner].” On the other hand, when a website included comments critical of the mark owner, a court 19 has found confusion as to authorization or sponsorship “incredible.” Patmont Motor Werks, Inc. v. 20 Gateway Marine, Inc., 1997 WL 811770, *4 (N.D. Cal. Dec. 18, 1997). 21 22 Here, the complaint cannot be read to allege that SBR used Stevo’s marks in any ads or that SBR held itself out as knowledgeable as to Stevo’s workings.7 Moreover, Plaintiffs’ complaint 23 24 25 26 7 One of Plaintiffs’ complaint’s1,084 paragraphs alleges that SBR advertises that its visitors can obtain pay- per- view sports analysis for free. (FAC #7 at ¶ 56.) Not only is this allegation without any factual support, it also does not create the type of confusion needed to merit the exception to the first sale rule. Consumers would need to believe that a Stevo-authorized retailer provided for free what Stevo itself charged for. In context, therefore, it is implausible that such advertisements create the 12 1 identifies comments critical of Stevo’s analysts on the SBR message board. (FAC #7, ¶¶ 189-93.) 2 Nor do Plaintiffs allege SBR manipulated Google’s search results. For instance, Plaintiffs do not 3 allege that SBR purchased search engine keywords incorporating Stevo’s marks, or that SBR used 4 website metadata incorporating Stevo’s marks–conduct at the heart of initial interest confusion on 5 the internet. See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 6 1036, 1065 (9th Cir. 1999) (discussing how use of metadata can create initial interest confusion); 7 Playboy Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020, 69 U.S.P.Q.2d 1417 8 (9th Cir. 2004) (discussing how the purchase of trademarked keywords can create initial interest 9 confusion). In short, Plaintffs have alleged nothing to show that SBR created the type of confusion 10 needed to defeat application of the first sale doctrine. d. 11 The nominative fair use doctrine. 12 SBR’s third objection to Plaintiffs’ trademark claims is the nominative fair use doctrine. 13 This doctrine divides trademark “use” from trademark “mention.”8 To use a mark as a mark–a 14 “trademark use”–the defendant must attempt to identify the source of the mark with the defendant 15 itself. See Rescuecom Corp. v. Google Inc., 562 F.3d 123, 128-31 (2d Cir. 2009) (contrasting 16 trademark use with “use in commerce”). “Trademark mention” is any other use of a mark; it is “to 17 refer to a particular product for purposes of comparison, criticism, point of reference or any other 18 such purpose.” New Kids on the Block v. News America Publishing, Inc., 971 F.2d 302, 306 (9th 19 Cir. 1992). In a terminological infelicity common to this area of the law, nominative fair use 20 denotes trademark mention. 21 The Ninth Circuit identified three factors in attempting to carve out trademark mention 22 23 24 25 impression that SBR is an authorized retailer of Stevo’s services. See Electronic Arts, Inc., 2012 WL 3042668, at *5 (quoting Louis Vuitton Mallatier S.A. v. Warner Bros. Entertainment Inc., 2012 WL 2248593, at *8 (S.D.N.Y. Jun.15, 2012)). 8 26 In other words, the nominative fair use doctrine is an application of the use/mention distinction. See W.V.O. Quine, Mathematical Logic § 4 (1940). 13 1 from trademark use. First, the product or service in question must not be readily identifiable 2 without the trademark. Second, the mark may only be used to identify the product or service. And 3 third, the mark user must do nothing to imply “sponsorship or endorsement” by the trademark 4 holder. See New Kids on the Block, 971 F.2d at 308. 5 Courts are conflicted as to whether nominative fair use is an affirmative defense, 6 inappropriate for resolution at the motion to dismiss stage, or a defect of the pleadings. Compare 7 Health Grades, Inc. v. Robert Wood Johnson University Hospital, Inc., 634 F. Supp. 2d 1226, 1242 8 (D. Colo. 2009) (holding that nominative fair use involves questions of fact whose resolution is 9 inappropriate on a motion to dismiss) with Elecronic Arts, Inc. v. Textron Inc., 2012 WL 3042668, 10 at *5 (N.D. Cal. July 25, 2012) (holding that determining nominative fair use at the motion to 11 dismiss stage is appropriate if the pleadings show it is “implausible that a viewer will be 12 confused”). However, the Ninth Circuit–progenitor of nominative fair use–“did not intend [it] to 13 constitute an affirmative defense.” 6 McCarthy, supra, § 31:156.50; see also Cairns v. Franklin 14 Mint Co., 292 F.3d 1139, 1150 (9th Cir. 2002) (holding that the nominative fair use factors replace 15 the traditional Sleekcraft factors for likelihood of confusion where nominative fair use is at issue). 16 Instead, “nominative fair use” names a use of the mark that is not likely to confuse. Therefore, if 17 the pleadings fail to allege a mark use beyond nominative fair use, then the plaintiff has failed to 18 allege likelihood of confusion. That is, the plaintiff has failed to state a claim for which relief may 19 be granted. See KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 125 20 (2004) (noting that plaintiffs carry the burden on likelihood of confusion). 21 Here, Plaintiffs have failed to allege anything beyond SBR’s nominative fair use of their 22 marks. First, the marks at issue are the proper names of the handicapping analysts. It would be 23 difficult (if not impossible) to identify Stevo’s sports analysis services without using these marks, 24 especially since the quality of the analyst bears directly on the quality of the analysis (and 25 conveying information about quality is one of a trademark’s functions). Second, as alleged in the 26 complaint, when the marks appeared on SBR’s website, they only identified Stevo’s services. For 14 1 example, one SBR user identified as “Pin Fish” posted handicapping reports under the subject line 2 “redd, jordan, davis, nover, o’brien, mancini???” (FAC #7 at ¶ 80.) The subject line identifies 3 Plaintiffs’ analysts Redd, Jordan, Davis, Nover, O’Brien, and Mancini, and the body of the posting 4 contained these analysts’ reports. Third, the criticism of Stevo’s analysts on the message board 5 greatly reduces the likelihood that a visitor to SBR’s message board would infer Plaintiffs’ 6 “sponsorship or endorsement” of SBR users’ postings. (FAC #7 at ¶¶ 189-93.) Finally, the various 7 screen names under which Stevo’s reports were posted–“Pin Fish,” “PepperMillRick,” 8 “goldengreek,” etc.–do not suggest to a visitor that either the posting user or SBR itself is the 9 ultimate source of the report. 10 As with the first sale doctrine, Plaintiffs argue that SBR created initial interest confusion by 11 publishing Stevo’s marks and, therefore, the doctrine of nominative fair use is not applicable. The 12 court has already addressed the lack of initial interest confusion in the first sale context, above. The 13 cases decided under the nominative fair use doctrine similarly require more indicia of endorsement 14 than Plaintiffs have alleged. In Abdul-Jabar v. General Motors Corp., 85 F.3d 407 (9th Cir. 1996), 15 for example, the “commercial custom” of celebrity endorsements in television commercials created 16 an issue of fact as to whether the defendant’s commercial implied the celebrity plaintiff’s 17 endorsement of its product. In Downing v. Abercrombie & Fitch, 265 F.3d 994 (9th Cir. 2001), 18 another celebrity endorsement case, the court found an issue of fact with respect to endorsement 19 when the mark was used to describe the defendant’s product rather than the plaintiff’s. Here, 20 however, there is no “custom” of sports analysts endorsing SBR’s message boards. See Abdul- 21 Jabar, 85 F.3d at 413. Nor did SBR’s users (or SBR itself) use Stevo’s marks to describe their own 22 products or services rather than Stevo’s. See Downing, 265 F.3d at 1009. Therefore, the doctrine of 23 nominative fair use operates to deprive Plaintiffs of their trademark claims. 24 25 26 e. Dilution and contributory infringement. The first sale and nominative fair use doctrines bar Plaintiffs’ dilution and contributory trademark infringement claims. For the dilution claims, the bar is straightforward. See 15 U.S.C. 15 1 1125(c) (providing that nominative fair use is not actionable as dilution by blurring or 2 tarnishment). And since Plaintiffs have not successfully alleged any predicate acts of trademark 3 infringement by SBR users, SBR may not be liable for contributory infringement. See Perfect 10, 4 Inc. v. Visa International Service Association, 494 F.3d 788, 807 (9th Cir. 2007) (quoting Inwood 5 Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 855 (1982)) (holding that contributory trademark 6 infringement requires some predicate act of infringement). 7 8 9 4. State Law Claims against SBR Plaintiffs allege several Florida state claims against SBR. These claims are for misappropriation of trade secrets, misappropriation of licensable commercial property, civil theft, 10 and tortious interference with contractual relations. SBR responds that it is immunized against 11 these state claims by the Communications Decency Act (“CDA”), 47 U.S.C. § 230(c). 12 Under the CDA, “[n]o provider or user of an interactive computer service shall be treated as 13 the publisher or speaker of any information provided by another information content provider.” 47 14 U.S.C. §230(c)(1). An “interactive computer service” is “any information service . . . that provides 15 or enables computer access by multiple users to a computer server.” 47 U.S.C. § 230(f)(2). Today, 16 the most common interactive service providers are websites. Fair Housing Council of San 17 Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157, 1162 n.6 (9th Cir. 2008). However, the 18 immunity provided by the CDA does not extend to “any law pertaining to intellectual property.” 47 19 U.S.C. § 230(e)(2). (In this Circuit’s interpretation of this provision, “‘intellectual property . . . 20 mean[s] ‘federal intellectual property.’” Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1119 (9th 21 Cir. 2007). But see Atlantic Recording Corp. v. Project Playlist, Inc., 603 F. Supp. 2d 690, 703 22 (S.D.N.Y. 2009) (including state intellectual property laws within § 230(e)(2)’s mention of 23 “intellectual property”).) Nor does CDA immunity extend to a website that is responsible “in whole 24 or in part for the creation or development of information provided through the internet.” 47 U.S.C. 25 § 230(f)(3). 26 In Roommates.com, the Ninth Circuit considered the CDA immunity of a roommate16 1 matching website (“Roommate”) that required users to answer questions about age, race, sexual 2 orientation, and other topics before suggesting matches. The answers to these questions formed 3 part of a user’s website profile. Users were also “encouraged” to add open-ended “Additional 4 Comments.” 521 F.3d at 1161. The court found that Roommate qualified as an interactive 5 computer service–and therefore for immunity–for the purposes of the Additional Comments 6 section, but not for the purposes of its questions. Id. at pp. 1164-65, 1173-75. The former merited 7 immunity because the website did not “provide any specific guidance as to what the [comments] 8 should contain, nor did it encourage [unlawful comments].” Id. at 1173-74. The content of the 9 “Additional Comments” came “entirely from subscribers and is passively displayed by 10 Roommate.” Id. at 1174. In contrast, the Roommate formulated the questions itself and it required 11 users to answer these questions in order to use its roommate-matching service. Id. at 1165. The 12 questions contributed “materially to the alleged illegality of the conduct”–there, discriminatory 13 housing practices. See id. at 1168 (describing how Roommate’s search system contributed to 14 potential violations of the Fair Housing Act). Thus, the court held that Roommate’s questions fell 15 outside the scope of an interactive computer service and, consequently, outside section 230’s 16 immunity. 17 SBR’s message board is closer to Roommate’s Additional Comments section than to the 18 required questions. Congress intended the CDA’s grant of immunity to overrule a state court case 19 holding a website “responsible for a libelous message posted on one of its financial message 20 boards.” Id. at 1163. Thus, “passive” message boards with only occasional curation by message 21 board moderators warrant immunity under section 230. See, e.g., Carafano v. Metrosplash.com, 22 Inc., 339 F.3d 1119, 1124 (9th Cir. 2003) (discussing a dating website profile). On the other hand, 23 websites with a hand in the “development” of the online content do not warrant immunity. In the 24 internet context, development means “the process of researching, writing, gathering, organizing, 25 and editing information for publication on web sites.” Roommates.com, 521 F.3d at 1168 (quoting 26 from Wikipedia). 17 1 The question is then whether SBR’s practice of awarding loyalty points for posts makes 2 SBR a “developer” under the CDA. By the Roommates.com definition, it does not. First, though 3 SBR encourages users to visit and interact with the site through its loyalty points system, its 4 encouragement is not specifically directed at illegal publications (as were the questions in 5 Roommates.com). Second, the fact that SBR users may contribute loyalty points to each other 6 further attenuates SBR’s information-creating role: “[w]ithout reviewing every [user award of 7 loyalty points], [SBR] would have no way to distinguish unlawful [encouragement] from perfectly 8 legitimate [encouragement].” Id. at 1174. Yet the CDA was intended to relieve passive websites of 9 the burden of reviewing all website-user activity. Id. at 1163. Third, SBR’s policy favoring original 10 content also distinguishes SBR from a developer. See id. at 1171 (noting that, in Carafano, 11 evidence of the website’s “express policies” against unlawful postings was probative as to whether 12 the website was a developer of unlawful content under the CDA). Finally, SBR’s “sporadic” 13 attempts to eliminate infringing content are precisely the type of thing that the CDA promotes. 14 “Congress sought to spare interactive computer services [the choice between editing all postings or 15 editing none] by allowing them to perform some editing on user-generated content without thereby 16 becoming liable for all defamatory or otherwise unlawful messages that they didn’t edit or delete.” 17 Id. at 1163. Therefore, SBR is not a “developer” of user-generated content under the CDA, and 18 SBR is eligible for immunity. 19 Unfortunately, this does not conclude the inquiry. Immunity under section 230 applies only 20 to the treatment of a website as a “publisher or speaker” of user-generated content. Of course, not 21 all causes of action require publishing or speaking to establish liability, and therefore the court 22 must interrogate Plaintiffs’ state causes of action as to whether they require an element of 23 publishing or speaking. “To put it another way, courts must ask whether the duty that the plaintiff 24 alleges the defendant violated derives from the defendant’s status or conduct as a ‘publisher or 25 speaker.’ If it does, section 230(c)(1) precludes liability.” Barnes v. Yahoo!, Inc., 570 F.3d 1096, 26 1102 (9th Cir. 2009). Yet the court must also be mindful of attempts to plead around the publishing 18 1 or speaking element: “what matters is not the name of the cause of action . . . [but] whether the 2 cause of action inherently requires the court to treat the defendant as the ‘publisher or speaker’ of 3 content provided by another.” Id. at 1102-03. 4 Plaintiffs’ first state cause of action is for misappropriation of trade secrets under Florida 5 law.9 See Fla. Stat. § 688.001 et seq. “Misappropriation” is defined as either “acquisition” of a 6 trade secret by improper means or “disclosure” of a trade secret without permission. Fla. Stat. § 7 688.002(2). Construing Plaintiffs’ cause of action liberally, it states a claim under both the 8 acquisition and disclosure prongs. The claim under the disclosure prong clearly contemplates 9 disclosure through the SBR users’ posts. This is “publish[ing] or speak[ing]” under the CDA, and 10 therefore SBR is immunized from the disclosure claim. The acquisition claim presents a closer 11 question, yet the complaint alleges no facts from which the court may infer that SBR acquired 12 Plaintiffs’ trade secrets other than through users’ posts to SBR’s message board. Since SBR’s 13 publication of users’ posts is the means of “acquisition” under this theory of recovery, and since 14 SBR is immune from liability for publication under the CDA, this claim, too, must fail. 15 Plaintiff’s second state cause of action alleges “misappropriation of licensable commercial 16 property” under Florida common law. The cause of action merits quotation marks because it is not 17 clear that it is a cause of action in Florida at all.1 0 As used in the complaint, misappropriation is 18 19 20 21 22 23 24 25 26 9 SBR objects that a Nevada forum is not the proper place to adjudicate Florida law. Plaintiffs respond that a Nevada court can apply Florida law if it wants to. Neither has it right. When exercising diversity jurisdiction, this court is bound to apply the law of the forum state–here, Nevada. See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78 (1938). This includes Nevada’s choice of law rules. Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002). The court assumes, without deciding, that Nevada’s choice of law rules would require application of Florida law to Plaintiffs’ state law claims against SBR. 10 Florida has a “commercial misappropriation” statute preventing the unauthorized use of “the name, portrait, photography, or other likeness of any natural person without . . . consent.” Fla. Stat. § 540.08. But this cause of action requires Plaintiffs to allege that they are “authorized in writing” to use the names of natural persons. Fla. Stat. § 540.08(1)(b). This, Plaintiffs have not done. Florida also appears to recognize a common law action for “idea misappropriation,” but it requires a showing of confidentiality and novelty–qualities not at issue here. See Garrido v. Burger King Corp., 558 So. 2d 19 1 “[t]he common law tort of using the noncopyrightable information or ideas that an organization 2 collects and disseminates for a profit to compete unfairly against that organization, or copying a 3 work whose creator has not yet claimed or been granted exclusive rights in the work.” 4 MISAPPROPRIATION, Black’s Law Dictionary (9th ed. 2009). The elements of this tort are that 5 (1) the plaintiff must have invested time, money, or effort to “extract” the information, (2) the 6 defendant must have appropriated the information without a similar investment, and (3) the 7 plaintiff “must have suffered a competitive injury because of the taking.” Id.1 1 Even assuming 8 Florida recognizes this tort (or something similar), however, Plaintiffs’ claim falters at the third 9 element. The competitive injury contemplated by this cause of action–that SBR gave away for free 10 what Plaintiffs charged for–is impossible without characterizing SBR as a publisher or speaker. 11 SBR cannot give away that which it cannot disclose. Therefore, SBR is immunized as to this claim. 12 Plaintiffs’ third state law claim is similar to the second: contributory misappropriation of 13 licensable commercial property. But this claim is trickier:1 2 it does not require that SBR speak or 14 publish, merely that SBR induced others to speak or publish. Under this theory of recovery, a 15 plaintiff could allege that the website induced others to publish the offending content (rather than 16 published it itself). Such a theory threatens to swallow CDA immunity. As outlined above, SBR 17 generally encouraged users to post on its message board, but it did not tell users “what kind of 18 information they should or must include” and it did not “encourage or enhance” any infringing 19 content. Roommates.com, 521 F.3d at 1174. “Such weak encouragement cannot strip a website of 20 its section 230 immunity, lest that immunity be rendered meaningless as a practical matter.” Id. 21 Therefore, SBR must be immunized as to this claim as well. 22 23 24 25 26 79, 83 (Fla. Dist. Ct. App. 1990). 11 Plaintiffs have carefully alleged each element as outlined in the Black’s Law definition; therefore, Plaintiffs likely intended to allege this cause of action. 12 Again, to the extent it is recognized under Florida common law. 20 1 Plaintiffs’ fourth state law claim is civil theft under Florida law. Fla. Stat. § 772.11. 2 Florida’s section 722.11 provides a civil remedy for theft, defined as obtaining or using the 3 property of another with intent to appropriate the property to his or her unauthorized use.1 3 See Fla. 4 Stat. § 812.014(1). Yet only the only plausible mechanism of SBR’s “procuring” or “using” 5 Plaintiffs’ property is through publication. Since this cause of action derives from SBR’s “status or 6 conduct” as a publisher, SBR is immunized against it. Barnes, 570 F.3d at 1102. Plaintiffs’ fifth and final state law claim is tortious interference with contractual relations 7 8 under Florida common law. The elements of this claim are “(1) an advantageous (2) business 9 relationship (3) under which plaintiff has legal rights, plus (4) an intentional and (5) unjustified (6) 10 interference with that relationship (7) by the defendant which (8) causes (9) a breach of that 11 business relationship and (10) consequential damages.” Heavener, Ogier Services, Inc. v. R. W. 12 Florida Region, Inc., 418 So. 2d 1074, 1076 (Fla. Dist. Ct. App. 1982). There are at least two 13 problems with this claim. First, while Plaintiffs have alleged that SBR knew about specific 14 contracts its users had with Stevo, nothing in the complaint raises this allegation above the 15 “speculative level.” Twombly, 550 U.S. at 555. Second, and more importantly, the only interference 16 that the court may plausibly infer involves SBR’s publication of Stevo’s sports analysis. But then 17 this cause of action depends on SBR’s status as publisher as well. 18 C. The Lack of Personal Jurisdiction over Defendant Daniele 19 Defendant Daniele has objected that the court lacks personal jurisdiction over the claims 20 against him. (Daniele’s Answer #12, ¶ 12.) Taking every allegation in the complaint as true, 21 Plaintiffs have failed to allege facts sufficient to establish jurisdiction. Where a defendant challenges the exercise of personal jurisdiction, the plaintiff bears the 22 23 burden of demonstrating that the court has jurisdiction over the defendant. Schwarzenegger v. Fred 24 25 26 13 This section also requires a written demand be made on SBR prior to the filing of a civil action. 21 1 Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). Whether a court has jurisdiction over a non- 2 resident defendant depends on the “nature and quality” of the defendant’s contacts with the forum 3 state. William Schwarzer et al., California Practice Guide: Federal Civil Procedure before Trial § 4 3:101 (2011). When these contacts are “substantial, continuous, and systematic,” the court may 5 exercise jurisdiction over the defendant to the extent consistent with state law. See Perkins v. 6 Benguet Consolidated Mining Co., 342 U.S. 437, 445 (1952). When these contacts are less 7 substantial, the court may still exercise jurisdiction over the defendant on claims relating to his 8 contacts with the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-78 (1985); 9 Schwarzenegger, 374 F.3d at 802. In the latter case, the defendant must have purposefully directed 10 his activities toward the forum state, the claim must have arisen out of these activities, and the 11 exercise of jurisdiction must be reasonable. Schwarzenegger, 374 F.3d at 802. 12 Here Plaintiffs have not established the court’s jurisdiction over Daniele. Plaintiffs assert 13 three distinct bases of jurisdiction: that SBR paid Daniele to publish infringing material on SBR’s 14 message board, that Daniele’s publications relate to the “sports wagering” industry in Nevada, and 15 that Daniele’s publications were accessible in Nevada through the internet. Even accepting these 16 assertions as true, these are not the type of contacts that give rise to personal jurisdiction. See id. at 17 800 (noting that, in circumstances like these, the plaintiff need only make a prima facie showing 18 through its pleadings and affidavits that the exercise of personal jurisdiction over the defendant is 19 proper). 20 First, it is beyond cavil that Daniele’s alleged contacts with Nevada are not “substantial, 21 continuous, and systematic.” Second, Daniele’s status as SBR’s paid agent does not establish 22 jurisdiction over him. While an agent’s contacts may be imputed to the principal for purposes of 23 personal jurisdiction, the converse is not true. See Ochoa v. J.B. Martin & Sons Farms, Inc., 287 24 F.3d 1182, 1189 (9th Cir. 2002) (imputing an agent’s contacts to the principal); Holland America 25 Line, Inc. v. Wärtsilä North America, Inc., 485 F.3d 450, 459 (9th Cir. 2007) (holding that a parent 26 22 1 corporation’s contacts may not be imputed to its subsidiary). Plaintiffs’ attempts to impute SBR’s 2 contacts to Daniele must therefore fail. Third, the fact that Daniele’s publications related to sports wagering does not establish 3 4 jurisdictional contacts with Nevada. Plaintiffs urge that the publications were directed at Nevada 5 since the publications discussed sports wagering and since sports wagering is only legal in Nevada 6 (within the United States). But merely discussing sports betting on an online message board does 7 not provide the discussant with a “reasonabl[e] anticipat[ion]” of being haled into Nevada courts. 8 See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Furthermore, if 9 advertising alone is not sufficient to support jurisdiction in these circumstances–and it is not, see 10 Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 420 (9th Cir. 1997)–then simple publication must 11 not be, either. Finally, the fact that Daniele’s postings were available over the internet in Nevada is not 12 13 enough to establish purposeful direction toward the Nevada forum. This is especially true where, as 14 here, the alleged victims of the postings are not residents of the forum state. See Cybersell, 130 15 F.3d at 417 (holding that posting an infringing trademark on a web site is not sufficient to 16 demonstrate purposeful availment); Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 17 1129 (9th Cir. 2010) (holding that posting of infringing copyrighted material may give rise to 18 jurisdiction where the victim-plaintiff was a resident of the forum state); Young v. New Haven 19 Advocate, 315 F.3d 256, 263 (4th Cir. 2002) (holding that posting defamatory information on the 20 internet is not sufficient to subject the poster to jurisdiction in each state in which the information 21 is accessed). Therefore, even taking the allegations in the complaint as true, Plaintiffs have failed 22 to establish a prima facie showing that jurisdiction over Daniele is appropriate. 23 III. 24 25 26 Conclusion The court has the power to hear Plaintiffs’ case, but not the power to grant Plaintiffs relief. Thus, Plaintiffs’ claims remain dismissed. 23 1 2 3 4 5 6 7 IT IS THEREFORE ORDERED that Plaintiffs’ Motion to Alter or Amend Judgment under Rule 59(e) (#49) is GRANTED in part and DENIED in part. IT IS FURTHER ORDERED that Plaintiffs’ First Amended Complaint (#7) is DISMISSED without prejudice. IT IS FURTHER ORDERED that Plaintiffs are granted leave to file an amended complaint within twenty (20) days of the date of this Order. IT IS SO ORDERED. 8 9 DATED this 24th day of January, 2013. __________________________________ LARRY R. HICKS UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 24

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