System Designs, Inc. v. New Customware Co., Inc.

248 F. Supp. 2d 1093, 66 U.S.P.Q. 2d (BNA) 1501, 2003 U.S. Dist. LEXIS 3271, 2003 WL 940804
CourtDistrict Court, D. Utah
DecidedMarch 5, 2003
Docket1:01-cr-00070
StatusPublished
Cited by11 cases

This text of 248 F. Supp. 2d 1093 (System Designs, Inc. v. New Customware Co., Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
System Designs, Inc. v. New Customware Co., Inc., 248 F. Supp. 2d 1093, 66 U.S.P.Q. 2d (BNA) 1501, 2003 U.S. Dist. LEXIS 3271, 2003 WL 940804 (D. Utah 2003).

Opinion

MEMORANDUM OPINION AND ORDER DENYING MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

CASSELL, District Judge.

Defendant New CustomWare Company, Inc. (“New CustomWare”) filed a motion to dismiss this action for lack of personal jurisdiction. Plaintiff System Designs, Inc. (“System”) responded arguing sufficient contacts to establish jurisdiction. After reviewing the record and hearing oral argument, the court finds sufficient contacts with Utah to establish personal jurisdiction over New CustomWare and therefore denies its motion to dismiss.

Statement of Facts

The facts relevant to this issue do not appear to be in dispute. Since 1978, System Designs owned and used the registered trademark of “CustomWare,” for use with its computer software. System is a Utah company. Its computer software applications involve payroll administration, accounting applications, inventory management, and work flow management. System currently maintains a website advertising its software.

New CustomWare provided training, consulting, and mentoring services to companies focusing specifically on JAVA web service technology and used the New Cus-tomWare mark in connection with its services. New CustomWare typically provided training to its customers on-site, and at their customer’s facilities throughout the United States. New CustomWare provided seminars to the general public throughout the United States, but held none in Utah.

New CustomWare formerly maintained a website — www.CustomWare.com—-and on that website indicated it served over 500 clients. The New CustomWare clients included large corporations with a national presence, including U.S. West, Wells Fargo, AT & T, Dell, Qwest and Sprint. The website advertised New CustomWare and indicated it will provide service at any location of the customer’s choice. The site allowed customers to register and pay for New CustomWare training courses on line. The site also included a limited access section restricted to those with a username and password provided by the defendant. The limited access section of the website provided updates related to JAVA (a programming language) and the training courses New CustomWare offered. Visitors to the website could communicate with New CustomWare about their training needs via an e-mail through the website. Approximately 10 customers actually used the website to register for classes.

New CustomWare essentially was a “virtual” company.’ Its president, Mr. Salil Deshpande, resided in California. The primary asset of New CustomWare consisted of the “trainers” employed by New CustomWare to travel around the United States and teach the classes requested by the New CustomWare clients. New Cus-tomWare had neither a manufacturing plant nor any “brick and mortar” facility housing its products. Instead, its trainers resided throughout the United States. New CustomWare never taught a class in Utah nor did any of their trainers reside in Utah.

From June 2001 through November 2001, New CustomWare placed advertisements in JAVA Developer’s Journal (“JDJ”), advertising its services and including the CustomWare mark. During *1096 this time frame, over 100,000 individuals per month subscribed to JDJ throughout the United States. During May 2001, JDJ sold 966 copies of this publication in Utah, either through subscriptions or newsstand sales.

In October 2000, System sent a letter (apparently one of several) to New Cus-tomWare advising it that continuing use of the New CustomWare mark infringed on System’s trademark rights. New Custom-Ware claims it never received the letter and, in any event, continued to use the New CustomWare mark.

On October 4, 2001, System filed a complaint in this court, alleging trademark infringement and federal and state unfair competition claims. System sought a preliminary and permanent injunctions, declaratory judgment, general and punitive damages, and costs and fees. New Cus-tomWare responded, raising affirmative defenses including lack of personal jurisdiction, improper venue, forum noncon-viens, laches, statute of limitations, and abandonment of trademark. New Cus-tomWare further counterclaimed, alleging the trademark had became generic and seeking cancellation of the trademark.

Recently, New CustomWare ceased operations. It now only collects receivables.

Standard of Review

The matter is currently before the court on New Custom Ware’s motion to dismiss. System bears the burden of establishing personal jurisdiction over a nonresident defendant in a diversity action. 1 However, New CustomWare filed this motion for lack of personal jurisdiction based on affidavits and other written materials, and thus System need only make a prima facie showing of personal jurisdiction. 2 The court resolves all factual disputes in the plaintiffs favor in determining whether the plaintiff has made the required prima facie showing. 3

Specific Personal Jurisdiction

System only alleges specific personal jurisdiction over New CustomWare. Specific personal jurisdiction exists when a non-resident defendant purposefully establishes sufficient minimum contacts with the forum state, the cause of action arises out of these contacts, and jurisdiction is constitutionally reasonable. 4 The evaluation of specific jurisdiction requires a three-part inquiry: 1) the defendant’s acts or contacts must implicate Utah under the Utah long-arm statute; 2) a nexus must exist between the plaintiffs claims and the defendant’s acts or contacts; and 3) the application of the Utah long-arm statute must satisfy the requirements of federal due process. 5 Utah’s long-arm statute provides in pertinent part:

Any person ... who in person or through an agent does any of the following enumerated acts, submits himself to the jurisdiction of the courts of this state as to any claim arising out of or related to:
1) the transaction of any business within the state;
2) the contracting to supply goods or services to the state;
*1097 3) the causing of any injury within this state whether tortious or by breach of warranty ... 6

The Utah legislature declared that the long-arm statute must be interpreted broadly “so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the Fourteenth Amendment to the United States Constitution.” 7 It is frequently helpful to undertake the due process analysis first, because any set of circumstances that satisfies due process will also satisfy the long-arm statute. 8 The court will proceed in this fashion.

A. Minimum Contacts

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Bluebook (online)
248 F. Supp. 2d 1093, 66 U.S.P.Q. 2d (BNA) 1501, 2003 U.S. Dist. LEXIS 3271, 2003 WL 940804, Counsel Stack Legal Research, https://law.counselstack.com/opinion/system-designs-inc-v-new-customware-co-inc-utd-2003.