Free Opening Brief in Support - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE ING BANK, fsb (d/b/a ING DIRECT), and ING DIRECT BANCORP, Plaintiffs, v. EVERBANK, EVERBANK FINANACIAL CORP., and STONE & WARD, INC. (d/b/a STONE WARD) Defendants. ____________________________________ ) ) ) ) ) Civil Action No. 07-cv-154-GMS ) ) ) ) ) ) ) ) )

PLAINTIFFS' OPENING BRIEF IN SUPPORT OF THEIR MOTION TO ENLARGE BRIEFING SCHEDULE TO PERMIT JURISDICTIONAL DISCOVERY NECESSARY TO RESPOND TO DEFENDANT STONE WARD'S MOTION TO DISMISS

Francis DiGiovanni (#3189) Stanley C. Macel, III (#492) CONNOLLY BOVE LODGE & HUTZ LLP 1007 North Orange Street P.O. Box 2207 Wilmington, Delaware 19899-2207 (302) 658-9141 Of Counsel: Jennifer Fraser CONNOLLY BOVE LODGE & HUTZ LLP 1990 M Street, N.W., Suite 800 Washington, D.C. 20036 (202) 331-7111 Dated: May 22, 2007

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TABLE OF CONTENTS I. II. NATURE AND STAGE OF THE PROCEEDING.................................................. 2 ARGUMENT ............................................................................................................ 3 A. B. 1. 2. C. III. Jurisdictional Discovery is Presumptively Allowable .......................................... 3 The Facts Known at this Point Strongly Indicate that Personal Jurisdiction Over Stone Ward is Proper ............................................................................................ 4 Specific Jurisdiction Over Stone Ward Can Be Shown.................................... 4 General Jurisdiction over Stone Ward Can Be Shown ..................................... 6 Jurisdictional Discovery is Necessary to Discover the Extent of Stone Ward's Contacts and Actions ............................................................................................ 7 CONCLUSION..................................................................................................... 9

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TABLE OF AUTHORITIES Cases ADP Investor Commun. Servs. v. In House Attorney Servs., 390 F. Supp. 2d 212 (E.D.N.Y. 2005) .......................................................................... 3, 4 Atlanta Gas Light Co. v. Semaphore Adver. Inc., 747 F. Supp. 715 (S.D. Ga. 1990)..................................................................................... 4 Clay v. Hopperton Nursery, Inc., 533 F.Supp. 476 (D. Ky. 1982)......................................................................................... 5 eSpeed, Inc. v. BrokerTec USA, L.L.C., 2004 U.S. Dist. LEXIS 19760 (D. Del. 2004) .................................................................. 5 Hansen v. Neumueller GmbH, 163 F.R.D. 471 (D. Del. 1995) ......................................................................................... 3 Helicopteros Nacionales de Columbia S.A. v. Hall, 466 U.S. 408 (1984).......................................................................................................... 6 M & L of Del. Inc. v. Wallace, 2004 U.S. Dist. LEXIS 21863 (D. Del. Oct. 18, 2004) .................................................... 5 McNeil Nutritionals, LLC v. Sugar Ass'n, 2005 U.S. Dist. LEXIS 7628 (D. Del. Apr. 29, 2005)..................................................... 3 Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446 (3d Cir. 2003).......................................................................................... 3, 7 Statutes 10 Del. C § 3104 ...................................................................................................... 3, 5, 6

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I.

NATURE AND STAGE OF THE PROCEEDING This is an action arising under the Lanham Act of 1946, the Delaware Trademark

Act, the Delaware Uniform Deceptive Trade Practices Act, and Delaware common law. Plaintiffs ING Bank, fsb, and ING DIRECT Bancorp (collectively, "ING DIRECT"), brought suit against EverBank, an Internet bank, and its advertising agency, Stone & Ward, Inc. ("Stone Ward"), after EverBank and Stone Ward embarked on an advertising and promotional campaign that improperly used and traded upon the ING name and ORANGE BALL DESIGN mark. Compl. (D.I.1.) at. ¶ 21. ING DIRECT alleges that EverBank and Stone Ward are liable for trademark infringement, use of false designations, unfair competition, trademark dissolution, injury to business reputation, unfair competition, and unjust enrichment. See Compl. at ¶¶ 37-60. Stone Ward created the advertisements and marketing materials that infringed ING DIRECT's trademarks, falsely designated advertisements as ING DIRECT advertisements, caused unfair competition with ING DIRECT, diluted ING DIRECT's trademarks, injured ING DIRECT's business reputation, and unjustly enriched EverBank as well as Stone Ward. Compl. at ¶¶ 37-60. The accused advertising campaign had a national scope, appearing as internet banner advertisements and in the form of directly distributed marketing material. Compl. at ¶¶ 37-60. In response to the Complaint, on May 11, 2007, defendant Stone Ward filed a motion to dismiss (D.I. 11), alleging that ING DIRECT's claims against it should be dismissed for lack of personal jurisdiction.

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ING DIRECT has now moved this Court for an extension of time, of approximately seventy-five (75) days, in which to take jurisdictional discovery and subsequently file its opposition to Stone Ward's motion to dismiss. The extension is necessary so that ING DIRECT may obtain information from Stone Ward pertaining to its contacts with Delaware and its actions that affect Delaware citizens and property. The jurisdictional discovery sought by ING DIRECT is necessary to respond to Stone Ward's motion to dismiss. II. ARGUMENT A. Jurisdictional Discovery is Presumptively Allowable

"[C]ourts are to assist the plaintiff by allowing jurisdictional discovery unless the plaintiff's claim is `clearly frivolous.'" McNeil Nutritionals, LLC v. Sugar Ass'n, 2005 U.S. Dist. LEXIS 7628, at *4 (D. Del. Apr. 29, 2005) (Ex. F) (quoting Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003)). "Thus, resolution of [a motion to permit jurisdictional discovery] begins with the presumption of allowing discovery to establish personal jurisdiction." Id. (quoting Hansen v. Neumueller GmbH, 163 F.R.D. 471, 474 (D. Del. 1995)). Plaintiff's obligation on such a motion is to satisfy the Court "that there is some indication that this particular defendant is amenable to suit in this forum." Hansen, 163 F.R.D. at 474. ING DIRECT's claims against Stone Ward in this case are not "clearly frivolous"; to the contrary, they are clearly meritorious. Courts have held that advertising agencies are subject to a court's personal jurisdiction under similar circumstances. In ADP

Investor Communication Services v. In House Attorney Services, 390 F. Supp. 2d 212, 220 (E.D.N.Y. 2005), the court held that it had personal jurisdiction over an advertising

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agency where the agency played a "crucial role" by designing television advertisements later broadcast by the plaintiffs. As the ADP court pointed out, "in an age of advanced communications technology, physical presence of the defendant in [the forum state] is no longer dispositive." Id. Similarly, the court in Atlanta Gas Light Co. v. Semaphore Advertising, Inc., 747 F. Supp. 715 (S.D. Ga. 1990), found personal jurisdiction over an advertising agency in a case involving the Lanham Act. The circumstances of the instant case involving Stone Ward likewise give rise to personal jurisdiction over the advertising agency. B. The Facts Known at this Point Strongly Indicate that Personal Jurisdiction Over Stone Ward is Proper

ING DIRECT has competent evidence to demonstrate that this Court may properly exercise personal jurisdiction over defendant Stone Ward under the Delaware long-arm statute. 10 DEL. C. § 3104. Allowing discovery on this jurisdictional issue will shed additional light on Stone Ward's contacts with Delaware. Defendant Stone Ward's contacts with the Delaware support both specific and general jurisdiction over Stone Ward. 1. Specific Jurisdiction Over Stone Ward Can Be Shown

Stone Ward created the accused advertisements, and profited financially by doing so. By creating web-based advertisements for EverBank that so closely resembled and misappropriated ING's trademarks and marketing materials, Stone Ward intentionally designed the advertisements to obtain business from Delaware residents (internet users) at the expense of a Delaware resident (ING DIRECT). The Third Circuit has held that "[the] foreseeability that [a] defendant's conduct would cause him to be hauled into court in the forum state is critical to the due process analysis." M & L of Delaware, Inc. v.

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Wallace, 2004 U.S. Dist. LEXIS 21863, at *6-7 (D. Del. Oct 18, 2004) (Ex. G) (citing Intel Corp. v. Broadcom Corp., 167 F. Supp. 2d 692, 700 (D. Del 2001)). "In particular, a defendant's deliberate attempt to enter, advertise, and promote itself can be sufficient to confer specific personal jurisdiction over the defendant." Id. (internal citations omitted). "Even minimal marketing efforts are held sufficient to confer personal jurisdiction." Id. at *7 (citing Clay v. Hopperton Nursery, Inc., 533 F. Supp. 476, 478 (D. Ky. 1982) (holding that where a defendant advertised in a trade journal that had 152 subscribers in the state in question, the exercise of personal jurisdiction was nevertheless appropriate)). Even if this Court finds that Stone Ward did not specifically target its web-based banner advertising at Delaware residents, this Court may still exercise specific jurisdiction over Stone Ward. See 10 DEL. C. § 3104(C)(1) & (3). Directly targeting a website to the forum state is only one of the ways to meet specific jurisdiction. Specific jurisdiction can also be exercised if the defendant purposefully availed itself of conducting activity in the forum state "through sufficient other related contacts." eSpeed, Inc. v. BrokerTec USA, L.L.C., 2004 U.S. Dist. LEXIS 19760, at *11 (D. Del. 2004) (Ex. H). Stone Ward intentionally designed the advertisement at issue to trade on the

trademarks and goodwill of ING DIRECT, which has its headquarters in Delaware. This much was admitted by Stone Ward employee Ross Dobson, who stated that the "orange" color of the ball in the Stone Ward-created advertisement was "not accidental." See Article from www.us-banker.com, attached to the Complaint as Exhibit C. Mr. Dobson further stated that "[w]e wanted to be very relevant to this target audience, the segment of customers that tend to be most attracted to ING. ING is the market leader, the Goliath. They're the giant." Id. This is relevant to the specific jurisdiction requirement that there

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be a "nexus" between the plaintiff's cause of action and the conduct of the defendant that is used as a basis for jurisdiction. See Helicopteros Nacionales de Columbia S.A. v. Hall, 466 U.S. 408, 414 (1984). Accordingly, specific jurisdiction over Stone Ward can and will be demonstrated. 2. General Jurisdiction Over Stone Ward Can Be Shown

Stone Ward's ongoing contacts with Delaware are sufficient for this court to exercise general jurisdiction over Stone Ward. Delaware courts have interpreted 10 DEL. C. § 3104(C)(4) as a general jurisdiction provision. That provision states that "as to a cause of action brought by any person arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident, or a personal representative, who in person or through an agent . . . [c]auses tortious injury in the State or outside of the State by an act or omission outside the State if the person regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State." In other words, this provision allows the Court to exercise jurisdiction when the defendant's contacts with the forum state are unrelated to the cause of action. Stone Ward has significant contact with Delaware. Stone Ward's website boasts national clients including Meineke Car Care Centers, Terminix, and TCBY. See Ex. A hereto (from http://www.stoneward.com/clients/). This is in addition to other national clients. Upon information and belief, Stone Ward creates advertisements for these

companies that directly target Delaware residents and appear in Delaware publications (or in Delaware franchise locations) on a regular basis. Stone Ward's website describes Stone Ward's radio, television, interactive, and "guerrilla" advertisements for Terminix,

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and television and print advertisements for Meineke. http://www.stoneward.com/work/).

See Ex. B hereto (from

In addition, Stone Ward has created in-store

advertising for national clients, including the TCBY frozen yogurt franchises. See Ex. C hereto (Adweek article dated March 4, 2003)1. According to Adweek, "Stone Ward has handled the [TCBY] brand's in-store marketing and freestanding inserts." Id. That would mean that Stone Ward has been responsible for the in-store advertising and promotion at the seven (7) TCBY franchises located in the state of Delaware. See Ex. D hereto (printout of http://storelocator.tcby.com/locator). Further, Stone Ward has created interactive website marketing for TCBY, which allows internet users (including Delaware internet users) to interact with the website and navigate through various images and choices. See Ex. E hereto (from http://www.stoneward.com/work/). This satisfies the requirements of general jurisdiction, which requires systematic and continuous contact between the defendant and the forum state. Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 466, 453-54 (3d Cir. 2003). C. Jurisdictional Discovery is Necessary to Discover the Extent of Stone Ward's Contacts and Actions

ING DIRECT needs to take discovery in order to oppose certain of the arguments raised by Stone Ward in its motion to dismiss. Stone Ward alleges that it lacks minimum contacts with Delaware, and thus it does not meet either the requirements of the Delaware long-arm statute (Def.'s Br. pp. 4-8), or Constitutional due process (Def.'s Br. pp. 8-10). ING DIRECT needs discovery to test Stone Ward's assertion that it "does not do business in Delaware, has no office in Delaware, has no clients in Delaware and no contacts with Delaware."
1

Def.'s Br. p. 1. Similarly, ING DIRECT needs discovery to ascertain the

Available at http://www.adweek.com/aw/regional/east/article_display.jsp?vnu_content.

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accuracy of Stone Ward's position that it has never "purposefully directed its activities to Delaware or its residents," derived "revenue from Delaware," or "engaged in a persistent course of conduct in Delaware." Def.'s Br. p. 2. ING DIRECT seeks jurisdictional discovery to learn the following (among other) information about Stone Ward's contacts with Delaware and activities relating to its advertising, marketing, and promotional campaigns: (1) the type and nature of business Stone Ward has solicited in person or by other mediums in Delaware, (2) the business contacts Stone Ward has made with Delaware, (3) the advertisements Stone Ward has created and/or put into the stream of commerce directed towards Delaware residents, (4) the advertisements Stone Ward has created and/or published in Delaware publications, (5) the level of interactivity of websites designed by Stone Ward that solicit Delaware business, (6) the level of involvement Stone Ward has in placing the ads it designs into the stream of commerce, and (7) any training Stone Ward employees may have received in Delaware. This information will show that Stone Ward's contacts with Delaware meet the requirements of the Delaware long-arm statute as well as the minimum contacts required under the Due Process Clause. Under the current schedule, ING DIRECT's opposition to defendant Stone Ward's motion would be due May 25, 2007. In light of the approaching deadline, ING DIRECT respectfully moves for an extension of the normal briefing deadlines in order to permit ING DIRECT to conduct the necessary discovery and to prepare its opposition.

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ING DIRECT believes that the requisite discovery can be completed within a period of approximately sixty (60) days. ING DIRECT proposes a single deposition pursuant to Fed. R. Civ. P. 30(b)(6) on topics pertaining to Stone Ward's contacts with Delaware and the facts relevant to personal jurisdiction. ING DIRECT also proposes to serve some document requests that are narrowly tailored to the facts relevant to personal jurisdiction. Assuming that in that time frame defendant Stone Ward produces

appropriate documents and a prepared witness, sixty (60) days should be sufficient to conduct the necessary discovery. ING DIRECT also seeks an additional 15 days to prepare and file its answering brief to Stone Ward's motion to dismiss. III. CONCLUSION ING DIRECT has made an appropriate showing that its claims against Stone Ward are not "clearly frivolous," and that Stone Ward is amenable to suit in this Court, whether it be pursuant to specific or general jurisdiction. ING DIRECT should thus be granted the opportunity to take jurisdictional discovery of Stone Ward, and to subsequently file its answering brief to Stone Ward's motion to dismiss.

/s/ Francis DiGiovanni Francis DiGiovanni (#3189) Stanley C. Macel, III (#492) CONNOLLY BOVE LODGE & HUTZ LLP 1007 North Orange Street P.O. Box 2207 Wilmington, Delaware 19899-2207 (302) 658-9141

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Of Counsel: Jennifer Fraser CONNOLLY BOVE LODGE & HUTZ LLP 1990 M Street, N.W., Suite 800 Washington, D.C. 20036 (202) 331-7111 Dated: May 22, 2007

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CERTIFICATE OF SERVICE I hereby certify that on this 22nd day of May, 2007, the attached PLAINTIFFS' OPENING BRIEF IN SUPPORT OF THEIR MOTION TO ENLARGE BRIEFING SCHEDULE TO PERMIT JURISDICTIONAL DISCOVERY NECESSARY TO RESPOND TO DEFENDANT STONE WARD'S MOTION TO DISMISS was served upon the below-named counsel of record at the address via hand delivery and email: Julia Heaney Morris, Nichols, Arsht & Tunnell LLP 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 Richard D. Kirk Ashley B. Stitzer The Bayard Firm 222 Delaware Avenue, Suite 900 P.O. Box 25130 Wilmington, DE 19899-5130

/s/ Francis DiGiovanni Francis DiGiovanni (#3189)

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