Trademark Infringement Update: Second Circuit Reverses to Find Jurisdiction Based on Shipment of Single Counterfeit Chloé Handbag

August 13th, 2010

In a decision rendered on August 5, 2010 by the U.S. Court of Appeals for the Second Circuit, that court reversed the district court’s refusal to exercise jurisdiction based on Defendants’ shipment of a single counterfeit Chloé handbag from California to New York in the case of Chloé v. Queen Bee, 09-3361-cv (2nd Circuit, Aug. 5, 2010).

The Second Circuit’s Chloé v. Queen Bee opinion can be found here.

Interestingly, it appears that the single shipment of the counterfeit Chloé handbag was a ploy. The sale was actually orchestrated by Chloé’s attorneys as a “trap sale” to open up Defendants Queen Bee of Beverly Hills and its principal Simone Ubaldelli to claims of trademark infringement attorneys

The district court found; that even though Chloé provided evidence that Defendants had made numerous sales of other (non-Chloé) goods to customers in New York, that such evidence was insufficiently related to Chloé’s claims of trademark infringement and counterfeiting as to subject Queen Bee and its principal Simone Ubaldelli to personal jurisdiction in New York. Further, the district court found that declined to exercise jurisdiction over Defendants based on the single shipment from California to New York.

Reversing the D.C.’s ruling, the Second Circuit’s three Judge panel consisting of Raggi and Hall, Circuit Judges, and Carman, Judge for the U.S. International Trade court; found that Ubaldelli’s conduct in the single act of shipping an item into New York, combined with the substantial business activity of Queen Bee in that state, was sufficient to subject both defendants to personal jurisdiction in New York courts. The panelists found that New York’s long-arm statute, N.Y. C.P.L.R. § 302(a) (McKinney 2001), and with due process.

This appellate opinion reversed the district court’s refusal to exercise personal jurisdiction over Defendant Queen Bee in the D.C.’s ruling, Chloé v. Queen Bee of Beverly Hills, LLC, 571 F.Supp.2d 518 (S.D.N.Y.2008).

It is also noteworthy to Internet law firms and lawyers that Chloé also attempted to argue that personal jurisdiction was proper under the Calder v. Jones “effects test,” as articulated by the Supreme Court. Calder’s “effects test” would submit Defendants to personal jurisdiction on the trademark infringement claim on the basis that the claims is a tort and its effects will be felt in New York where the ‘Chloé’ trademark owner is located. However, the Second Circuit declined to decide the jurisdiction issue under this theory.

Conclusion, quoting the Second Circuit opinion;

“In light of our holding that Chloé “has made a threshold showing of minimum contacts at the first stage of the inquiry,” Metro. Life, 84 F.3d at 568, Ubaldelli’s generalized complaints of inconvenience arising from having to defend himself from suit in New York do not add up to “‘a compelling case that the presence of some other considerations would render jurisdiction unreasonable.’” id. (quoting Burger King, 471 U.S. at 477). Consequently, we hold that asserting jurisdiction over Ubaldelli comports with “traditional notions of fair play and substantial  justice,” see Int’l Shoe, 326 U.S. at 316, such that it satisfies the reasonableness inquiry of the Due Process Clause.” at 23, 24

Check below for other related analyses examining personal jurisdiction over defendants in intellectual property claims;