Rio Properties v. Rio International

Citation: Rio Properties, Inc. v. Rio Int'l Interlink, 284 F.3d 1007 (9th Cir. 2002)(full-text).

Factual Background
Las Vegas hotel and casino operator Rio Properties Inc. ("Rio") owns a gambling empire consisting of the Rio Race & Sports Book, which allows customers to wager on professional sports. In order to protect its rights in the “Rio” name, Rio registered several trademarks with the U.S. Patent and Trademark Office. When Rio sought to expand its presence on the internet, it registered the domain name, www.playrio.com. Using that address, Rio operates a website that informs prospective customers about its hotel and allows people to make reservations.

RII, doing business as Rio International Sportsbook, is a Costa Rican entity that participates in an internet sports gambling operation. It enables its customers to bet on sporting events online or through a 1-800 telephone number. It also runs a website at www.riosports.com.

When Rio learned of RII, it demanded that RII cease and desist from operating www.riosports.com website. RII disabled the website but soon activated www.betrio.com to host an identical sports gambling operation.

Trial Court Proceedings
Rio filed an action alleging various trademark infringement claims and seeking to enjoin RII from the continued use of the name Rio. Rio attempted to locate RII in the United States for service of process. When Rio could not serve RII by conventional means, Rio filed an emergency motion for alternate service of process.

The district court granted Rio’s motions. Pursuant to a court order, Rio served RII by regular mail to its attorney and its international courier, and by email to its internet address. Further, default judgment was entered against RII for its failure to comply with discovery orders.

Appellate Court Proceedings
RII appealed the sufficiency of the court-ordered service of process, the district court’s exercise of personal jurisdiction, and the propriety of the [[default judgment.

The appellate court first held that the alternative service was proper since the gambling business actively evaded the conventional means of service attempted by Rio. The court held that Rio was not required to attempt every conventional means of service before requesting alternative service. Further, email service was an appropriate alternative as the method of communication preferred by the gambling business.

Also, the defendant's advertisements in the forum state and the injury to Rio in the forum were sufficient to provide personal jurisdiction over RII. Finally, RII’s multiple transgressions during the litigation justified the sanction of default judgment.