Quokka Sports v. Cup Int’l Ltd.

Citation: Quokka Sports, Inc. v. Cup Int’l Ltd., 99 F.Supp.2d 1105 (N.D. Cal. 1999).

Factual Background
The America's Cup is the major sailing race of the world. The first race was in 1851 when the schooner America accepted a British challenge, and came home with the trophy. Donated to the New York Yacht Club in 1857, the Cup was won by U.S. boats until 1983.

In 1956 the rules were changed so that challenges no longer had to sail from their home port to the New England area, and the maximum size was set at twelve meters, with a waterline length limited to 39 feet. Other clubs won the Cup, and at the time of this litigation, were held by the Royal New Zealand Yacht Squadron (“RNZYS”).

America's Cup Properties, Inc. (“ACPI”) holds the trademark “America's Cup” and all other intellectual property relating to the America's Cup event. The trademark is registered in the United States and other countries, including New Zealand. As a procedural matter, the shares of ACPI are transferred to the winner, so they were held by RNZYS at the time of this litigation. By a series of licenses, Telecom NZ was to have the official website], and it obtained several [[domain names, including three ending in “org.nz” and two in “co.nz”.

But a New Zealand company, Cup Int'l Ltd., went to Network Solutions (“NSI”) and obtained the names “americascup.com” and “teamnewzealand.com”. Then it started advertising, including:


 * As you can appreciate, the rule that applies to real estate applies to the web &mdash; location, location, location. Both of these .com domain names are best addresses, especially for the lucrative American market.

In April 1999 RNZYS, working with Telecom NZ, licensed Quokka Sports, Inc. (a Delaware corporation with a principal place of business in San Francisco) to operate the official America's Cup website. Negotiations with Cup Int'l were unsuccessful, so Quokka filed suit in the Northern District of California against the company and its stockholders.

Trial Court Decision
Explaining the grounds for his issuance of a temporary restraining order, Judge D. Lowell noted that the case went beyond previous decisions finding jurisdiction in Internet cases over defendants in other states. The court had to decide the question of “whether corporate and individual defendants in New Zealand can be subject to personal jurisdiction in California for trademark infringement claims involved in a disputed domain name. Based on the facts and circumstances in this case we find they can.”

Lowell ruled that the facts satisfied both the California and federal law of personal jurisdiction, citing as to the latter, Federal Rules of Civil Procedure, Rule 4, as amended in 1993):


 * "It is clear to the Court that in this case defendants aimed a significant portion of their commercial effort at the United States . . . defendants purposefully went to the United States registrar, NSI, to get a “.com.” Defendants admitted that they sought out a specific domain name to target the ‘lucrative American market. . . . The defendants apparently targeted the U.S. market because there is substantial interest in the America's Cup in the U.S. Of the 11 challenging teams, five are from the United States. Three of these teams are from California."

As examples of how defendants were “working” the American market, the court cited a list of U.S. companies that advertised on the site, e-mails with companies negotiating for space on the site, travel packages payable only in American dollars, and a bookstore apparently working with Amazon.com.

As to the two individual defendants, they are, apparently, the only shareholders of the defendant company. Both used e-mail to peddle the website. Their status as employees did not protect them, citing Calder v. Jones, 465 U.S. 783 (1984).

The court then found that plaintiff had shown the three factors needed for a TRO: an enforceable right in the trademark, likelihood of consumer confusion, and likelihood of irreparable harm.