7 July 2023TrademarksLiz Hockley

Amazon sellers face revival of suit in jurisdiction row

District court erred in dismissing suit brought by Herbal Brands over online sales, say judges | Products sold to Arizona consumers by New York defendants via Amazon did constitute personal jurisdiction.

The  US Court of Appeals for the Ninth Circuit has reversed a district court’s decision to dismiss a health company’s trademark claims against a number of Amazon sellers for lack of personal jurisdiction.

The opinion of the Ninth Circuit judges, filed yesterday (July 5), offers hope to Arizona-based  Herbal Brands of reviving its claim against a number of New York residents who, the firm alleges, sold over 23,000 of its products via the Amazon website without authorisation.

The company, which sells health, wellness and nutrition products under various trademarks and brands, filed a complaint in Arizona against the defendants in 2021.

It claimed that the unauthorised sale of Herbal Brands products via Amazon to Arizona residents violated the  Lanham Act and state law, and said it had sent three cease-and-desist letters to the defendants asserting that they were infringing trademarks and tortiously interfering with agreements it had with authorised sellers.

The district court dismissed the suit for lack of personal jurisdiction over the defendants, stating that Herbal Brands had failed to demonstrate that the defendants “expressly aimed” their conduct at Arizona, and that jurisdictional discovery would only reveal a “sporadic smattering of sales to consumers” in the state. Herbal Brands appealed.

‘An intentional act’

The Circuit judges disagreed with the district court’s finding, concluding that “the sale of physical products into a forum via an interactive website can be sufficient to establish that a defendant expressly aimed its conduct at the forum” providing two requirements were met.

Firstly, the sales should take place “as part of the defendant’s regular course of business” and second, it should be evident that the defendant had exercised control over the distribution of the products.

Judge Susan Graber wrote that both standards had been met in this case. The defendants’ sale of products to Arizona residents was an “intentional act”, she said, and the cease-and-desist letters had informed them that their actions were causing harm in Arizona.

The Amazon storefronts, through which they sold allegedly infringing products, constituted their regular business, the judges opined. They said that the defendants had controlled the distribution of the products by selecting a website that accepted orders from and delivered to all 50 US states.

The district court’s decision was reversed and remanded.

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