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Rescuecom Corp. v. Hyams

July 5, 2006

RESCUECOM CORPORATION, PLAINTIFF,
v.
JASON HYAMS, DEFENDANT.



The opinion of the court was delivered by: Chief Judge Norman A. Mordue:

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

Defendant moves (Dkt. No. 15) to dismiss the amended complaint (Dkt. No. 13) for lack of personal jurisdiction, Fed. R. Civ. P. 12(b)(2), and failure to state a claim on which relief can be granted. Fed. R. Civ. P. 12(b)(6). For the reasons set forth herein, the Court dismisses the complaint for lack of personal jurisdiction.

AMENDED COMPLAINT

Defendant is a resident of the State of Texas. Plaintiff, a New York corporation, is a computer services franchising business headquartered in Syracuse, New York. It offers franchises nationwide and has 52 franchises, five of which are in New York. One of its trademarks is its name, "Rescuecom." It provides training, advertising, accounting, dispatching and other support for its franchisees, whose role is to provide services to customers. According to the amended complaint, "[a]ll of Rescuecom's business services are provided and enabled through its patent pending, proprietary business management software called SYSTEM ONE, which allows franchisees and technicians to access the entire system, and receive dispatch and messages anytime, anywhere, in a wireless 'handheld' computer[.]"

On October 29, 2001, defendant entered into a Franchise Agreement with plaintiff. By letter dated August 22, 2002, plaintiff terminated defendant's franchise for "failing and refusing to actively operate his franchised business as required by the Franchise Agreement."

Plaintiff sued defendant in New York State Supreme Court, Onondaga County, for violations of continuing obligations of the Franchise Agreement, including the covenant which prohibited him from competing with plaintiff, using its name and trademarks, and referring to himself as a former Rescuecom franchisee. On January 6, 2003, plaintiff filed a bankruptcy petition in the Southern District of Texas, Houston Division, resulting in a stay of plaintiff's New York action. Defendant was discharged and the bankruptcy case was closed on May 20, 2003.

Thereafter, defendant registered an internet domain name "rescuecomfranchise.com" and created and maintained a website, "texasrino.com," to which the "rescuecomfranchise.com" domain name forwarded and was linked (hereafter, the domain name rescuecomfranchise.com and the website texasrino.com together are referred to as "the website"). The domain name rescuecomfranchise.com expired April 17, 2004; the texasrino.com website expired on May 2, 2004 and all content has been removed therefrom (although plaintiffs state that it could be reactivated at any time). According to the amended complaint:

The Rescuecomfranchise.com Website contains various "warnings" to prospective franchisees that clearly profess that Rescuecom Corporation is a fraudulent enterprise, engages in deceptive advertising and fails to provide promised services to its franchisees.

The Rescuecomfranchise.com Website further lists the names of various former Rescuecom franchisees, carrying the implication that said former franchisees voluntarily agreed to have their names listed on the site. Upon information and belief, those names are being used without permission, and in some cases, despite requests made by such named parties to have their names removed from the Rescuecomfranchise.com Website. Defendant Hyams' Rescuecomfranchise.com Website contains a message forum where persons may partake in conversations regarding their alleged interactions with Rescuecom Corporation. The Website also allows viewers to become registered users and obtain user names and passwords by entering into a registration agreement with defendant Hyams. The Website allows registered users special rights such as the ability to send private messages or email to each other.

At least two registered users of the Rescuecomfranchise.com Website are New York residents.

The Rescuecomfranchise.com Website contains "hyperlinks" to third party commercial websites some of which sell products or services competitive with those products and services offered by Rescuecom Corporation. The links include the following:

1. An advertisement for a book entitled "Franchise Fraud", which also serves as a hyperlink to the commercial website "Amazon.com", where viewers may purchase this book, or other books directly on-line;

2. An advertisement for a product called Electronic Service Control ("ESC") which provides dispatch, service and accounting information to a wireless handheld computer. This product is similar to, and therefore competitive with Rescuecom Corporation's Handheld Unit, which provides franchisees with dispatch, service and accounting information to a wireless hand held computer.

3. A hyperlink to a website called "comptroub.com", a commercial website for Computer Troubleshooters, a computer services franchising company which competes with Rescuecom Corporation.

4. A hyperlink to a website called "ascii.com", a commercial website for an association of computer services companies which offers various business services to its members, which are similar to, and therefore competitive with, some of the services offered by Rescuecom Corporation to its franchisees.

Upon information and belief, defendant Jason Hyams advertised his Rescuecomfranchise.com Website by using plaintiff's trademark "Rescuecom" as a search term or key word with, or to be used by, one or more Internet search engines, such as "Google.com" so that persons typing in the search word "Rescuecom" will receive defendant's domain name "Rescuecomfranchise.com" as a result.

Upon information and belief, potential Rescuecom franchisees are predominantly computer professionals and computer companies and likely perform Internet searches on the term "Rescuecom" as a means of contacting, researching and evaluating Rescuecom Corporation as a company.

Defendant Hyams did not have permission from plaintiff to establish a website using or linking to a domain name containing plaintiff's trademark "Rescuecom", nor ...


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