In a recent decision, the Ninth Circuit Court of Appeals found that an Australian cosmetics company was subject to the personal jurisdiction of a federal district court in California, despite having no traditional connection of ” minimum contact” with the State of California. The ruling relies on Federal Rule of Civil Procedure 4(k)(2), the rarely invoked rule allowing courts to exercise domestic jurisdiction over foreign parties who would otherwise not be subject to the jurisdiction of a US state. United States. Notably, the Ninth Circuit’s decision was largely based on the Australian company’s social media marketing – directed at “USA BABES” – and the use of US-based influencers.
Alya Skin Pty. ltd. is an Australian beauty and skincare brand known for its “World Famous Pink Clay Face Mask” featured below. She uses ALYA and ALYA SKIN to market her clay mask and other pink skincare products to customers around the world. Alya Skin started marketing its products in 2018.
Ayla LLC is a California-based beauty brand and retail company. It markets a variety of specialty skin, body and hair care products, including its own line of AYLA branded products. Ayla holds three trademark registrations in the United States for the AYLA trademark covering, among other goods and services, “cosmetics” and “online retail services in the field of cosmetics and beauty products”. Ayla started using the AYLA brand in 2011.
In February 2019, Ayla filed a lawsuit in the Northern District of California alleging that Alya Skin’s use of ALYA and ALYA SKIN to market its cosmetic products constitutes trademark infringement, false designation of origin and unfair competition under federal and California law. Alya Skin responded by filing a motion to dismiss, arguing that she was not subject to the personal jurisdiction of the Northern District of California.
The district court agreed and dismissed the case. In his decisionthe court quickly concluded that he had no specific personal jurisdiction over Alya Skin under the traditional “minimal contacts” test of International shoe and his descendants. It was undisputed that Alya Skin had no retail stores, offices, officers or employees, bank accounts or property in the United States. The court found that although Alya Skin operates a website accessible in California, it is a “standard and modern website” and the fact that California consumers can purchase goods on the website is not not sufficient on its own to confer jurisdiction in the absence of features that specifically target consumers in California.
The District Court further considered whether to exercise personal jurisdiction under the “national jurisdiction” provision of Federal Rule 4(k)(2). This rarely used provision was added to the Federal Rules of Civil Procedure to permit the exercise of personal jurisdiction where an action is brought under federal law, the defendant is not subject to the jurisdiction of courts of general jurisdiction. of a state and the federal court’s exercise of jurisdiction is consistent with due process. The due process analysis seeks to determine whether the defendant has sufficient contact with the United States as a whole, rather than with any particular state. The District Court assessed Alya Skin’s contacts with the United States and found them insufficient, finding that Alya Skin was targeting its marketing in an international market rather than the United States.
At appealthe Ninth Circuit re-evaluated Alya Skin’s contacts with the United States Ayla succeeded in convincing the appeals court that Alya Skin’s wrongful conduct was expressly aimed at the United States, resulting in a reversal of the decision of the district court.
According to the Ninth Circuit, evidence on the record showed significant contacts with the United States, including: (1) nearly 10% of Alya Skin’s sales are to US-based customers, a volume that the appeals court described as “substantial” in the country as a whole which were “regular and significant”; and (2) she uses a distributor in Idaho to fulfill some of her orders, demonstrating that Alya Skin was considering large shipments to US customers even though she was also shipping her products worldwide. While these contacts alone are not sufficient to confer jurisdiction, the Ninth Circuit further concluded that the sales of Alya Skin in the United States were not “random, isolated, or incidental” or simply placed in the mainstream of the international trade. Instead, Alya Skin had made an “intentional and explicit appeal” directly to US consumers, a finding based largely on Alya Skin’s use of Instagram and Facebook marketing.
Social media accounts managed by Alya Skin included information aimed specifically at Americans. The Ninth Circuit’s opinion refers to an Instagram post on Alya Skin’s account with the caption “Attention USA Babes, we are now accepting postpay.” And a November 2018 post on Alya Skin’s Facebook page announcing a Black Friday sale. Although Alya Skin presented evidence that “Black Friday is slowly spreading in Australia”, the court noted that Black Friday is an American invention and “remains the biggest shopping day in America”.
In addition to these two posts on Alya Skin’s social media accounts, the appeals court further relied on Alya Skin’s use of US-based social media influencers with a predominantly in the United States to create awareness of its products and advertising Alya Skin that its products are available for two to four day shipping in the United States
Alya Skin presented evidence that a large majority of her social media marketing was not aimed at the US market. However, the Ninth Circuit found that while “Alya Skin may have directed much of its advertising to international or Australian audiences, this does not alter the jurisdictional effect of marketing specifically targeting the United States”.
Accordingly, the appeals court found that personal jurisdiction was appropriate under rule 4(k)(2) “rarely exercised” and reversed the dismissal of the case by the district court.