N. Am. Software, Inc. v. James I. Black & Co.

2011 Ohio 3376
Ohio Court of Appeals·Decided July 8, 2011·No. C-100696·Published·Cited by 9 cases

Opinion

IN THE COURT OF APPEALS

FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

NORTH AMERICAN SOFTWARE, : APPEAL NO. C-100696 INC., TRIAL NO. 10CV-05072 :

Plaintiff-Appellant, D E C I S I O N.

:

vs.

:

JAMES I. BLACK & COMPANY,

Defendant-Appellee. :

Civil Appeal From: Hamilton County Municipal Court Judgment Appealed From Is: Affirmed Date of Judgment Entry on Appeal: July 8, 2011

Benjamin, Yocum & Heather, LLC, and Bradford C. Weber, for Plaintiff-Appellant, Karen Comisar Prescott, for Defendant-Appellee.

Please note: This case has been removed from the accelerated calendar.

D INKELACKER , Presiding Judge.

{¶1} Plaintiff-appellant North American Software, Inc., (“NAS”) appeals from the judgment of the Hamilton County Municipal Court that dismissed its action against defendant-appellee James I. Black & Company (“JIBC”) for lack of personal jurisdiction. For the following reasons, we affirm the judgment of the trial court.

Factual and Procedural Background

{¶2} NAS is an Ohio corporation that has created and developed a line of commercial software known as the “Helper Series.” This software assists financial professionals in collecting and organizing their client data, including contact information and portfolio statistics. NAS licenses its software nationwide from its only office, which is located in Cincinnati, Ohio.

{¶3} JIBC is a Florida corporation that does business in Florida. According to NAS, JIBC purchased licenses in 1999 for three individuals to operate Helper Series software. Since then, the Florida company has obtained from NAS licenses for four additional users, along with several software updates. JIBC does not dispute that these transactions occurred, but maintains that NAS solicited the initial purchase.

{¶4} NAS presented evidence that between 1999 and 2007, it had several contacts with JIBC. For instance, JIBC communicated with NAS at least 100 times by mail, email, and telephone, including calls to NAS’s Cincinnati telephone number, which contains the local “513” area code. The nature of these communications, however, remains unclear. Also during this period, JIBC transmitted its clients’

information on five occasions to NAS by mail, email, and “File Transfer Protocol” for “data conversion and integration” into the Helper Series software.1

{¶5} NAS alleges that in 2002, it mailed a software update to JIBC known as Version 4.6 that included a “click-wrap agreement.” Essentially, when a user installed the program, he or she was prompted to accept the terms of a licensing agreement. NAS claims that JIBC, by accepting the terms of this agreement, agreed to pay NAS an annual fee both to operate the software and to receive technical support. The licensing agreement also revoked all previous licenses obtained by JIBC. To ensure compliance with the licensing agreement, the software was designed to stop functioning without temporary codes that NAS would provide from time to time. The agreement contained an Ohio choice-of-law provision, but no forum selection clause.

{¶6} In its complaint, NAS claimed that in 2004, JIBC began failing to pay the total amount due under the agreement, resulting in an arrearage. NAS also alleged that since 2005, JIBC had been breaching the 2002 licensing agreement by operating a previous version of the Helper Series software without a license. NAS sought damages under theories of breach of contract and unjust enrichment, and the company also requested injunctive relief. The trial court dismissed the complaint for lack of personal jurisdiction without an evidentiary hearing, and this appeal followed.

Assignment of Error

{¶7} In its sole assignment of error, NAS asserts that the trial court erred in dismissing its complaint against JIBC for lack of personal jurisdiction. But before

1 T.d. 10.

we consider this assignment of error, we must address whether NAS’s claims belong in state court.

{¶8} “Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction over the subject-matter, the court shall dismiss the action.”2 Although neither party raised this issue below or on appeal, it appears that at least some of NAS’s claims may be preempted by the federal Copyright Act, falling within the exclusive jurisdiction of the federal courts.3

{¶9} Under the Copyright Act, whether a state claim is preempted depends on “(1) whether a work is fixed in a tangible medium of expression within the subject matter of copyright and (2) whether the rights addressed are equivalent to the exclusive copyright rights.”4 To survive a preemption challenge based on the equivalency of protected rights, the state law claim must contain an “extra element” which renders the state claim “qualitatively different from a copyright infringement claim.”5

{¶10} We are satisfied that NAS’s claims, at least insofar as they seek to enforce a promise to pay, contain an “extra element,” and, therefore, do not fall within the exclusive jurisdiction of the federal courts.6 Nevertheless, to the extent that the trial court had subject-matter jurisdiction, we hold that the court properly dismissed NAS’s complaint for lack of personal jurisdiction over JIBC.

2 Civ.R. 12(H)(3). See also State v. Lomax, 96 Ohio St.3d 318, 2002-Ohio-4453, 774 N.E.2d 249, at ¶17 (“Since subject-matter jurisdiction cannot be waived and may be raised by this court sua sponte, appellant’s failure to raise this argument on appeal does not foreclose this court’s authority to review the issue.”). 3 Section 1338(A), Title 28, U.S. Code. See also Ritchie v. Williams (C.A.6, 2005) 395 F.3d 283, 285 (observing that “federal law vests exclusive jurisdiction over * * * preempted copyright claims in the federal courts”). 4 State v. Boyd, 1st Dist. No. C-090550, 2010-Ohio-4313, at ¶8. 5 State v. Perry, 83 Ohio St.3d 41, 43, 1998-Ohio-422, 697 N.E.2d 624, quoting United States ex rel. Berge v. Bd. of Trustees of Univ. of Ala. (C.A.4, 1997), 104 F.3d 1453, 1463 (emphasis in original). 6 See Wrench LLC v. Taco Bell Corp. (C.A.6, 2001), 256 F.3d 446, 456.

Standard of Review

{¶11} The issue of personal jurisdiction is a question of law that we review de novo.7 Because the trial court decided the issue upon written submissions without an evidentiary hearing, NAS had to make only a prima facie showing of personal jurisdiction.8 A plaintiff makes a prima facie showing by presenting sufficient evidence for reasonable minds to conclude that the trial court has jurisdiction.9 “In making this determination, the court must ‘view allegations in the pleadings and the documentary evidence in a light most favorable’ to the plaintiff and resolv[e] all reasonable competing inferences in favor of the plaintiff.’ ”10

{¶12} Whether an Ohio court has personal jurisdiction over a nonresident defendant involves a two-part inquiry. First, we must determine whether Ohio’s long-arm statute, R.C. 2307.382, and its complementary civil rule, Civ.R. 4.3(A), confer jurisdiction. If so, we next must decide whether exercising jurisdiction comports with due process of law as guaranteed by the Fourteenth Amendment to the United States Constitution.11 The Long-Arm Statute and Complementary Civil Rule

{¶13} R.C. 2307.382 and Civ.R. 4.3(A) enable Ohio courts to exercise jurisdiction over nonresident defendants in causes of action arising from several enumerated circumstances, including a nonresident’s “[t]ransacting any business in this state.”12 Courts have construed this phrase broadly to mean not only “to

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