The World in U.S. Courts: Fall 2017 - Personal Jurisdiction/Forum Non Conveniens | June.29.2017
International Diamond Importers (IDI) is a New York-based designer, manufacturer, and seller of jewelry that enjoys US trademark and copyright protection. The defendants—a New York Corporation (Med Art), a Turkish Corporation (Turkish Zen) , and the Turkish citizen (Emil Güzeliş) who serves as CEO of both companies—were alleged to have infringed that IP in connection with similar jewelry sold in 2016 at an international jewelry fair in Hong Kong allegedly attended by New York buyers.
The Court considered whether it had personal jurisdiction over Turkish Zen, first addressing “general” personal jurisdiction, which could support claims of any kind. The Court noted that Turkish Zen is neither incorporated nor has its principal place of business in the US—the two facts on which general personal jurisdiction typically must be based. But an exception to this principle exists where a US corporation (here, Med Art) is a “mere department” of a non-US parent or other related defendant company based elsewhere. In such case, the court’s general personal jurisdiction over the US entity is deemed to attach to its non-US relative.
The Court stated that the determination whether Med Art was a “mere department” of Turkish Zen would be based on four factors, each of which it found to be satisfied:
The Court found that specific personal jurisdiction—jurisdiction only for claims arising out of a defendant’s contacts with the forum—also existed as to Turkish Zen and Güzeliş. The Court noted that the first requirement for jurisdiction was satisfaction of New York’s “long-arm” statute, which in pertinent part reaches a defendant that either “(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered” in New York, or “(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.” The Court found the first test to be satisfied by its prior holding that Turkish Zen supplied about 99% of Med Art’s stock and used the US company essentially as a “sales office.” The second test was satisfied by the relationship among the defendants (which included a New York corporation) and their profitability.
The Court also found the assertion of jurisdiction over Turkish Zen and Güzeliş satisfied the requirements of the Due Process Clause of the US Constitution because they “purposely availed themselves of the New York forum” by doing business through Media Art, creating a reasonable anticipation that they might be sued in New York based on their US activities. The Due Process Clause has an independent requirement that jurisdiction be “reasonable,” and the Court found it to be satisfied by the defendants’ substantial New York activities and the State’s interest in resolving intellectual property disputes between New York business owners.