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Zvelo, Inc. v. Check Point Software Technologies, Ltd.

United States District Court, D. Colorado

September 30, 2019

ZVELO, INC., Plaintiff,
v.
CHECK POINT SOFTWARE TECHNOLOGIES, LTD., Defendant.

          ORDER

          PHILIP A. BRIMMER CHIEF UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendant Check Point Software Technologies, Ltd.’s Motion to Dismiss [Docket No. 28]. The Court has jurisdiction under 28 U.S.C. §§ 1331 and 1367.

         I. BACKGROUND

         This case arises out of a dispute over the alleged misappropriation of trade secrets. Plaintiff zvelo, Inc. is a technology company that offers to customers a database of categorized website addresses, or Uniform Resource Locators (“URLs”), for purposes of domain name filtering, content filtering, parental controls, content categorization, and other purposes. Docket No. 1 at 3, ¶ 12. This type of technology allows companies to filter or block access to certain websites on the companies’ computers. Id. at 2, ¶ 7. Because websites differ so widely, filtering websites based on form or content can be difficult. Id., ¶ 8. Thus, plaintiff’s database assigns categories to each unique URL, such as “news” or “malicious software” so that users can filter or block websites based on category. Id. at 2-3, ¶¶ 8-9. Plaintiff also compiles data about URLs that are actively visited to keep its database up-to-date on active and inactive websites. Id. at 3-4, ¶ 14. Plaintiff calls this knowledge of active websites the “zvelo Active Web, ” which, along with the categorizations of the URLs, makes up plaintiff’s database. Id. at 4, ¶ 15. Plaintiff contends its database is unique and valuable intellectual property that would be challenging for another company to recreate. Id. at 3-4, ¶ 14.

         Defendant Check Point Software Technologies, Ltd. is a company located in Israel that offers products and services that provide URL filtering functionality. Id. at 1, ¶ 2; id. at 8, ¶ 41. Plaintiff alleges that defendant’s products and services have illegally used plaintiff’s database and the proprietary information contained therein, resulting in trade secret misappropriation. Id. at 8-9, ¶¶ 42-43.

         Plaintiff filed this lawsuit on September 5, 2018, raising claims of (1) trade secret misappropriation under the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836, et seq., (2) trade secret misappropriation under the Colorado Uniform Trade Secrets Act, Colo. Rev. Stat. § 7-74-101, et seq., and (3) unjust enrichment. Docket No. 1 at 9-13. Plaintiff also seeks injunctive relief. Id. at 14. On February 8, 2019, defendant filed a motion to dismiss for lack of personal jurisdiction and for failure to state a claim under Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure, respectively. Docket No. 28. Plaintiff filed a response, Docket No. 37, to which defendant replied. Docket No. 46. The Court will first address the threshold question of whether it has personal jurisdiction over defendant. U.S. v. Botefuhr, 309 F.3d 1263, 1270 (10th Cir. 2002).

         II. LEGAL STANDARD – PERSONAL JURISDICTION

         The purpose of a motion to dismiss under Rule 12(b)(2) is to determine whether a court has personal jurisdiction over a defendant. The plaintiff bears the burden of establishing personal jurisdiction. Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1417 (10th Cir. 1988). A plaintiff can satisfy its burden by making a prima facie showing. Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). The court will accept the well-pleaded allegations of the complaint as true in determining whether plaintiff has made a prima facie showing that personal jurisdiction exists. AST Sports Sci., Inc. v. CLF Distribution Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008). If the presence or absence of personal jurisdiction can be established by reference to the complaint, the court need not look further. Id. The plaintiff, however, may also make this prima facie showing by putting forth evidence that, if proven to be true, would support jurisdiction over the defendant. Dudnikov, 514 F.3d at 1070. “[A]ny factual disputes in the parties’ affidavits must be resolved in plaintiffs’ favor.” Id.

         III. ANALYSIS

         In establishing whether a federal court has personal jurisdiction over a defendant, “the court must determine (1) whether the applicable statute potentially confers jurisdiction by authorizing service of process on the defendant and (2) whether the exercise of jurisdiction comports with due process.” Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006) (quoting Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th Cir. 2000)). The Colorado long-arm statute has been construed to extend jurisdiction to the full extent permitted by the Constitution, so the jurisdictional analysis here reduces to a single inquiry of whether jurisdiction offends due process. See Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005). Personal jurisdiction comports with due process where a defendant has minimum contacts with the forum state and where those contacts are such that assuming jurisdiction does not offend “traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945). Minimum contacts may be established under the doctrines of general jurisdiction or specific jurisdiction. Shaw v. Vircurex, No. 18-cv-00067-PAB-SKC, 2019 WL 2636271, at *2 (D. Colo. Feb. 21, 2019). Plaintiff argues that the Court has specific personal jurisdiction over defendant. Docket No. 37 at 2. In the alternative, plaintiff contends that personal jurisdiction is proper under Rule 4(k)(2) of the Federal Rules of Civil Procedure. Id. at 4.

         A. Specific Jurisdiction

         Specific jurisdiction is present only if the lawsuit “aris[es] out of or relat[es] to the defendant’s contacts with the forum.” Bristol-Myers Squibb Co. v. Superior Court of Calif., San Francisco Cty., 137 S.Ct. 1773, 1780 (2017). The specific jurisdiction analysis is two-fold. First, the Court must determine whether a defendant has such minimum contacts with Colorado that the defendant “should reasonably anticipate being haled into court” here. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Within this inquiry, the Court must determine whether the defendant purposefully directed its activities at residents of the forum, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985), and whether plaintiff’s claim arises out of or results from “actions by . . . defendant . . . that create a substantial connection with the forum State.” Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 109 (1987) (internal quotations omitted). Second, if defendant’s actions create sufficient minimum contacts, the Court must consider whether the exercise of personal jurisdiction over defendant offends “traditional notions of fair play and substantial justice.” Id. at 105. This latter inquiry requires a determination of whether the Court’s exercise of personal jurisdiction over the defendant is “reasonable” in light of the circumstances of the case. Id.

         Plaintiff argues that defendant has the requisite minimum contacts with Colorado because defendant “purposefully directed marketing and sales for its URL Filtering Software Blade in the United States, ” “willingly acknowledges that it has used [a] U.S.-based wholly-owned subsidiary” as a distributor for its products and services, and “admits that it sells its URL Filtering Software Blade to end-users in the United States through third-party resellers or distributors.” Docket No. 37 at 2-3. Further, plaintiff states that defendant “does not claim that it, its resellers, or its distributors make any effort to exclude Colorado from their sale efforts.” Id. at 3.

         Plaintiff’s argument misses the mark. The relevant inquiry is not whether defendant has minimum contacts with the United States in general and, incidentally, Colorado, but whether defendant has “purposefully availed itself of the privilege of conducting activities within the forum State or [has] purposefully directed its conduct into the forum State.” Bristol-Myers Squibb, 137 S.Ct. at 1785 (internal quotation marks and alteration marks omitted). “A defendant has ‘purposefully directed’ its activities at Colorado or its residents when it has (1) taken intentional action, (2) that was expressly aimed at Colorado, (3) with the knowledge that the brunt of the injury from the action would be felt in Colorado.” Pandaw Am. Inc., v. Pandaw Cruises India Pvt. Ltd., 842 F.Supp.2d 1303, 1309-10 (D. Colo. 2012) (citing Dudnikov, 514 F.3d at 1071). Plaintiff’s allegations fail to plead an intentional action that was expressly aimed at Colorado. Allegations that defendant directed its activities at the United States generally are insufficient to establish that defendant took intentional action that was expressly aimed at Colorado such that defendant is subject to personal jurisdiction in Colorado courts. See J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873, 885-86 (2011) (finding no personal jurisdiction in New Jersey court where the defendant had “directed marketing and sales efforts at the United States, ” but plaintiff had “not established that [defendant] engaged in conduct purposefully directed at New Jersey”); see also Id . ...


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