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Plixer International Inc. v. Scrutinizer GMBH

United States District Court, D. Maine

October 18, 2017

PLIXER INTERNATIONAL, INC., Plaintiff
v.
SCRUTINIZER GMBH, Defendant

          ORDER ON MOTION TO DISMISS FOR LACK OF JURISDICTION

          D. Brock Hornby United States District Judge.

         The issue here is whether a federal court in Maine has jurisdiction over a German company. The German company, named Scrutinizer GmbH, has no physical presence in the United States, but it offers cloud-based services from an interactive website that attracts customers from around the world, including the United States (and two customers from Maine). A Maine firm, Plixer International, Inc. owns the U.S. registered mark “Scrutinizer.” Plixer has filed this lawsuit claiming that the German defendant is infringing its registered mark by operating an interactive website using the name “Scrutinizer, ” providing services similar to the plaintiff's, generating income from customers in the United States, confusing the public, and diluting and infringing the mark. Am. Compl. ¶¶ 14-18; Pl. Opp'n at 1, (ECF No. 14). The German defendant has moved to dismiss. I previously dismissed by agreement any general jurisdiction claim. Order on Pending Motions at 1 (ECF No. 20). I also permitted limited discovery on the plaintiff's specific jurisdiction claim with reference to what is sometimes called the federal long-arm statute, Fed.R.Civ.P. 4(k)(2); see United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001). Id. at 1-2. After that discovery and further briefing, I now Deny the defendant's motion to dismiss the complaint, concluding that upon a prima facie record, the federal long-arm statute provides specific jurisdiction. It is a close call, however, and worthy of appellate review since the First Circuit has not addressed the issue of personal jurisdiction based solely upon an interactive website that offers cloud-based services, and the Supreme Court has never addressed 4(k)(2). See Sinochem Intern. Co. Ltd. v. Malaysia Intern Shipping Corp., 549 U.S. 422, 427 (2007) (mentioning 4(k)(2)'s role in case's procedural history but not discussing its application).

         Facts

         Under the First Circuit's “prima facie review” standard for determining personal jurisdiction, I accept the specific facts that the plaintiff alleges so far as evidence supports them after preliminary discovery. I also accept the facts the defendant offers to the extent that they are uncontradicted. See Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 31 (1st Cir. 2010).

         In its original legal memorandum resisting the defendant's motion to dismiss, the plaintiff offered the following facts to demonstrate that the German defendant purposefully availed itself of the Maine or United States market beyond the undisputed existence of the interactive website.

1. The defendant has two customers in Maine.
2. Its website is in English.
3. The website offers users the option to start a 14-day free trial.
4. The website says that the defendant's service is “Trusted by over 5000 projects and companies around the world.”
5. The defendant uses websites based in the United States in connection with its business.

         Pl. Opp'n. at 5-6. These assertions are supported by the evidence for purposes of this motion, with the clarification that the evidentiary support for #5 is that in providing its services, the defendant uses other data-tracking companies that use or may use servers located in the United States. See Exs. to Decl. of James G. Goggin, Esq. (ECF No. 15).

         As a result of the permitted limited discovery, the plaintiff now adds the following:

6. Over 3-1/2 years, the defendant had 156 United States sales transactions totaling about €165, 212.07 (c. $195, 477.54) in about 60% of the states.[1]
7. In January 2017, the defendant filed an application for a U.S. trademark for “Scrutinizer.” Pl. Suppl. Mem. at 1-2 (ECF No. 26).

         The defendant offers the following facts, and they are uncontested:

1. The defendant is not incorporated in Maine, does not aim its services at the Maine market, and has no employee contact in Maine. Def. Suppl. Mem. at 1-2 (ECF No. 27).
2. It does not direct advertising towards the United States. Def. Reply Mem. at 2 (ECF No. 17).
3. No employee of the defendant has ever been in the United States. Id.
4. It has no offices in the United States nor does it own property here. Id.
5. It has no U.S. phone number or agent for service of process. Id.
6. It does not maintain servers here. Id.
7. Its website accepts payment only in euros. Id.

         These facts in the parties' legal memoranda tell me little about what it is that the defendant actually does. But I am able to glean the following from the record about how the defendant's service and website operate:

1. The defendant is an information-technology company that provides its customers with a “self-service platform” to help the customers build better software.[2] Its customers use the defendant's self-service platform to improve source code the customers themselves have developed. The platform is “designed to improve source-code quality, eliminate bugs, and find security vulnerabilities in [the customers'] source-codes.” It “provides a controlled cloud environment in which customers can run open-source and proprietary software analysis tools and their own automated tests.” The defendant then “aggregates and refines the output . . . and presents it to the customer via its website.” Schmitt Decl. at 1 (ECF No.12-1).
2. A customer must provide the defendant with the log-in credentials to the customer's third-party hosting account. When the customer then logs in to the defendant's website, the defendant's service can access the customer's third-party account. Ex. A to Def. Reply Mem. at 1 (ECF No. 17-2).
3. The defendant's service “retrieve[s]” the customer's software hosted by the third-party account in order to analyze the software. Id. at 2.
4. Customers must open an account with the defendant and pay for a subscription to use the services. Id.
5. The defendant emails invoices for its services, and customers must pay “using the payment methods provided by the defendant and chosen by the customer on his ...

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