Public Impact, LLC v. Boston Consulting Group, Inc.
Docket: No. 15-cv-464
Court: District Court, M.D. North Carolina; August 3, 2015; Federal District Court
Public Impact, LLC, a North Carolina-based education policy consulting firm, has filed a trademark infringement lawsuit against Boston Consulting Group, Inc. (BCG). The court is considering three motions: Public Impact’s request for a temporary restraining order and preliminary injunction, a motion to seal certain documents, and BCG’s motion to dismiss for lack of personal jurisdiction or to transfer venue. The court has decided to grant Public Impact’s motion to seal and BCG’s motion to dismiss for lack of personal jurisdiction, rendering Public Impact’s motion for injunctive relief moot and denying it without prejudice.
Public Impact owns the federally registered trademark "PUBLIC IMPACT," which has been in use since 1996 and was registered in 2006; it was declared incontestable in 2009. The firm serves various clients, including government agencies and nonprofits, and utilizes its trademark across multiple platforms. BCG, a global consulting firm based in Massachusetts and registered to do business in North Carolina, has previously engaged in education-related activities in the state, including attendance at state education meetings and managing federal education funding proposals. From 2007 to 2014, BCG generated approximately 0.3% of its worldwide revenue from North Carolina, though the specific contribution from education-related activities is unclear.
BCG also founded the "Centre for Public Impact: A BCG Foundation" (CPI), which operates globally but has no U.S. presence and is in the process of registering as a not-for-profit in Switzerland. CPI has held events outside the U.S. and has a digital presence, including a website managed by BCG. Despite its education-related focus, CPI’s activities and marketing do not connect to North Carolina.
On June 9, 2015, Public Impact filed a complaint against BCG, alleging unauthorized use of its registered trademark and claiming that BCG is misleading customers by operating under a similar name, “Centre for Public Impact,” which competes with Public Impact's consulting services. Alongside the complaint, Public Impact sought temporary and preliminary injunctive relief and requested to seal certain supporting documents. In response, BCG moved to dismiss the complaint for lack of personal jurisdiction and sought to transfer the case to Boston. The court conducted a hearing on Public Impact's motion for a temporary restraining order on June 17, 2015, after which both parties submitted additional briefs regarding BCG’s motions.
In addressing the motion to dismiss for lack of personal jurisdiction, the court noted that Public Impact must demonstrate personal jurisdiction by a preponderance of the evidence. However, without an evidentiary hearing, Public Impact only needs to establish a prima facie case of personal jurisdiction, with all reasonable inferences drawn in its favor. The court explained that personal jurisdiction depends on whether North Carolina's long-arm statute allows for jurisdiction and whether such jurisdiction aligns with due process. The Fourth Circuit has established that North Carolina's statute and the Due Process Clause are coextensive, requiring that the nonresident defendant must have "minimal contacts" with North Carolina. Thus, the primary inquiry is whether exercising personal jurisdiction over BCG adheres to due process requirements.
Personal jurisdiction over a defendant can be categorized as general or specific under the Due Process Clause. Public Impact claims that both types of jurisdiction can be exercised over BCG.
1. General Jurisdiction: The Supreme Court has established that general personal jurisdiction over a corporation is typically appropriate only in its state of incorporation or principal place of business. Public Impact argues that BCG’s registration to do business in North Carolina suffices for general jurisdiction. However, this argument is countered by established Fourth Circuit precedent, specifically Ratliff v. Cooper Labs. Inc., which states that merely registering to do business does not confer personal jurisdiction. The Fourth Circuit reaffirmed this principle in Rosenruist-Gestao E Servicos LDA v. Virgin Enters. Ltd., emphasizing that the designation of a statutory agent for service is inadequate for establishing general jurisdiction. Subsequent lower court cases, including Kuennen v. Stryker Corp., have similarly held that compliance with state domestication statutes is insufficient for general jurisdiction.
Public Impact’s attempts to challenge this precedent include claims that the Supreme Court’s ruling in Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee abrogated Ratliff, a claim the Fourth Circuit does not support and which lacks explanation regarding its implications. Additionally, Public Impact argues that Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining, Milling Co. allows for general jurisdiction based on state registration statutes, but this argument is weak and undermined by the Fourth Circuit's binding Ratliff decision and the evolving legal landscape since Pennsylvania Fire. The pivotal case of Int’l Shoe Co. v. Washington shifted the focus of personal jurisdiction from mere service of process within the state to whether a defendant has sufficient minimum contacts with the state that justify jurisdiction, underscoring the inadequacy of Public Impact’s arguments for general jurisdiction over BCG.
The Supreme Court's decision in Daimler established that "continuous and systematic" business contacts alone do not justify general jurisdiction; such contacts must be substantial enough to render a corporation "at home" in the forum state. Courts have interpreted this to mean that mere compliance with a state’s business registration does not equate to consent for jurisdiction. Public Impact failed to demonstrate that North Carolina's registration statute extends personal jurisdiction over BCG, as its interpretation is not clearly supported by the statute's language or existing case law.
For specific jurisdiction, the conduct must have a significant connection to the forum state, allowing it to be fair for the defendant to defend itself there. Specific jurisdiction hinges on three factors: (1) whether the defendant purposefully availed itself of the privilege of conducting activities in the state, (2) whether the claims arise out of those activities, and (3) whether exercising jurisdiction is constitutionally reasonable. The purposeful availment requirement ensures that jurisdiction is not based on random or fortuitous contacts. Public Impact argues that BCG has purposefully availed itself by maintaining a registered agent in North Carolina since 2007 and engaging in education-related business, including managing federal funding proposals and reorganizing the state’s Department of Public Instruction.
BCG has engaged in educational efforts in North Carolina, with its revenue from the state accounting for about 0.3% of its global revenue from 2007 to 2014, amounting to tens of millions of dollars. However, there are no allegations regarding the specific portion of this revenue derived from education-related activities in North Carolina. Additionally, there are no claims of in-person contact between BCG and Public Impact in North Carolina related to any business dealings, although they exchanged emails in 2012 about an education initiative. In 2010, BCG representatives attended a planning session of the North Carolina State Board of Education, but there is no evidence of Public Impact representatives being present or of any resulting business relationship. BCG also hosts an annual consulting “Case Competition” at Duke University, but Public Impact does not demonstrate how these contacts lead to the claims at issue.
For specific jurisdiction to be established, the defendant's conduct must have a substantial connection to the forum state in relation to the litigation. Public Impact's claims involve BCG's alleged trademark infringement, but the cited activities do not support these claims. Public Impact attempts to associate BCG's Internet activity with the alleged trademark infringement, but does not claim any infringement occurred in North Carolina outside of online platforms. Reference to the Fourth Circuit's ALS Scan case highlights that electronic contacts must be intentional and business-related to establish jurisdiction, and merely placing information online does not automatically confer jurisdiction across all states. In ALS Scan, the court found that passive Internet activity did not justify personal jurisdiction. Similarly, in Young v. New Haven Advocate, jurisdiction was denied because the targeted audience of the defendants' content was not in Virginia, demonstrating that intent and audience targeting are critical factors in jurisdictional analysis.
The Fourth Circuit determined that specific jurisdiction over out-of-state defendants based on their Internet presence is limited. In the case of Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., the court found that the Illinois corporation did not expressly aim its trademark-infringing conduct at Maryland, noting the website's semi-interactive nature and lack of exchanges with Maryland residents. Similarly, in the current case involving BCG and CPI, the court concluded that BCG's and CPI's website and social media do not support specific jurisdiction over BCG in North Carolina. CPI's website is primarily informational and minimally interactive, lacking direct engagement with North Carolina users. The site is designed for a global audience and does not indicate a specific intent to target North Carolina. Although Public Impact argued that BCG uses CPI for marketing in North Carolina, there is insufficient evidence to demonstrate that BCG intended to engage in business interactions within the state or used Public Impact’s trademark in any substantial way outside the Internet.
A claim of trademark infringement is established where the infringing sales occur. Public Impact argues that specific jurisdiction exists in any forum with Internet access where BCG previously conducted business, suggesting that past activities could lead to future trademark infringements. However, mere speculation and conclusory assertions about contacts with a forum state are insufficient to establish personal jurisdiction, allowing the court to deny jurisdictional discovery. The court finds Public Impact's assertions unpersuasive and determines it lacks both specific and general jurisdiction over BCG, granting BCG’s motion to dismiss.
Public Impact has also moved to seal its unredacted brief and declaration related to its motion for a preliminary injunction. BCG does not oppose this motion. While the public has a right to access documents in civil cases, a district court can seal documents if the public interest is outweighed by competing interests. The court must provide notice of the sealing request, allow for objections, consider less drastic alternatives, and provide factual findings supporting the sealing decision. Public Impact has redacted a small portion of proprietary financial information and provided public notice of its sealing request on June 9, 2015, with no objections raised. After considering alternatives, the court finds no less drastic option than sealing the specific financial figures, which, if disclosed, could harm Public Impact's business.
The court has granted Public Impact's motion to seal its unredacted brief and declaration due to the risk of revealing proprietary information. Consequently, the court also granted BCG's motion to dismiss for lack of personal jurisdiction. As a result, Public Impact's motion for a temporary restraining order and preliminary injunction was denied without prejudice as moot, and the action was dismissed without prejudice.
During the June 17, 2015 hearing, the parties did not have sufficient opportunity to fully brief the personal jurisdiction issue or gather evidence. BCG did not assert that Public Impact failed to cite a statutory basis for personal jurisdiction, and Public Impact did not establish that BCG's connections to North Carolina were substantial enough to render it "at home" there. The document references a split among courts outside of this circuit regarding personal jurisdiction standards. Public Impact did not allege any specific interactions by BCG, through CPI, with North Carolina residents via social media platforms. Citing precedent, Public Impact argued that U.S. courts typically handle Lanham Act cases with extraterritorial implications, but the referenced case involved in rem jurisdiction over a domain name, not personal jurisdiction over the owner.
