TOYS "R" US, INC. GEOFFREY, INC. Appellants v. STEP TWO, S.A. IMAGINARIUM NET, S.L. ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

District Court Judge: Honorable Katharine S. Hayden

(D.C. No. 01-00632)

Argued: September 12, 2002

Before: ALITO and FUENTES, Circuit Judges,

and OBERDORFER,* District Judge.

(Opinion Filed: January 27, 2003)

_________________________________________________________________

* The Honorable Louis F. Oberdorfer, Senior District Judge for the

District of Columbia, sitting by designation.

PAUL FIELDS (Argued)

ROBERT S. WEISBEN

HEATHER C. WILDE

Darby & Darby 805 Third Avenue New York, NY 10022

Counsel for Appellants

SUSAN H. FARINA

MARK G. MATUSCHAK (Argued)

ELIZABETH M. REILLY

Hale & Dorr 60 State Street Boston, MA 02109

Counsel for Appellees

OPINION OF THE COURT

OBERDORFER, District Judge:

Toys "R" Us, Inc. and Geoffrey, Inc. ("Toys") brought this

action against Step Two, S.A. and Imaginarium Net, S.L.

("Step Two"), alleging that Step Two used its Internet web

sites to engage in trademark infringement, unfair

competition, misuse of the trademark notice symbol, and

unlawful "cybersquatting," in violation of the Lanham Act,

15 U.S.C. S 1501 et seq., and New Jersey state law. The

District Court denied Toys' request for jurisdictional

discovery and, simultaneously, granted Step Two's motion

to dismiss for lack of personal jurisdiction. We hold that the

District Court should not have denied Toys' request for

jurisdictional discovery. We therefore reverse and remand

for limited jurisdictional discovery, relating to Step Two's

business activities in the United States, and for

reconsideration of personal jurisdiction with the benefit of

the product of that discovery, with a view to its renewing

administration of the case, in the event the District Court

finds that it does have jurisdiction.

I.

Toys, a Delaware corporation with its headquarters in

New Jersey, owns retail stores worldwide where it sells toys,

2

games, and numerous other products. In August 1999,

Toys acquired Imaginarium Toy Centers, Inc., which owned

and operated a network of "Imaginarium" stores for the sale

of educational toys and games. As part of this acquisition,

Toys acquired several Imaginarium trademarks, and

subsequently filed applications for the registration of

additional Imaginarium marks. Prior to Toys' acquisition,

the owners of the Imaginarium mark had been marketing a

line of educational toys and games since 1985 and had first

registered the Imaginarium mark with the United States

Patent and Trademark Office in 1989. Toys currently owns

thirty-seven freestanding Imaginarium stores in the U.S., of

which seven are located in New Jersey. In addition, there

are Imaginarium shops within 175 of the Toys "R" Us stores

in the U.S., including five New Jersey stores.

Step Two is a Spanish corporation that owns or has

franchised toy stores operating under the name

"Imaginarium" in Spain and nine other countries. It first

registered the Imaginarium mark in Spain in 1991, and

opened its first Imaginarium store in the Spanish city of

Zaragoza in November 1992. Step Two began expanding its

chain of Imaginarium stores by means of a franchise

system in 1994. It has registered the Imaginarium mark in

several other countries where its stores are located. There

are now 165 Step Two Imaginarium stores. The stores have

the same unique facade and logo as those owned by Toys,

and sell the same types of merchandise as Toys sells in its

Imaginarium stores. However, Step Two does not operate

any stores, maintain any offices or bank accounts, or have

any employees anywhere in the United States. Nor does it

pay taxes to the U.S. or to any U.S. state. (JA 135-36.) Step

Two maintains that it has not directed any advertising or

marketing efforts towards the United States. The record

does, however, indicate some contacts between Step Two

and the United States: for example, a portion of the

merchandise sold at Step Two's Imaginarium stores is

purchased from vendors in the United States. Additionally,

Felix Tena, President of Step Two, attends the New York

Toy Fair once each year. (JA 314.)

In the mid-1990s, both parties turned to the Internet to

boost their sales. In 1995, Imaginarium Toy Centers, Inc.

3

(which Toys later acquired) registered the domain name

and launched a web site featuring

merchandise sold at Imaginarium stores. In 1996, Step Two

registered the domain name , and began

advertising merchandise that was available at its

Imaginarium stores.1 In April 1999, Imaginarium Toy

Centers registered the domain name ,

and launched another web site where it offered

Imaginarium merchandise for sale. In June 1999, Step Two

registered two additional "Imaginarium" domain names,

and . In

May 2000, Step Two registered three more domain names:

, , and

.2 Step Two's web sites are

maintained by Imaginarium Net, S.L., a subsidiary of Step

Two, S.A. formed in 2000.

At the time this lawsuit was filed, four of the

aforementioned sites operated by Step Two were interactive,

allowing users to purchase merchandise online.3 When

buying merchandise via Step Two's web sites, purchasers

are asked to input their name and email address, as well as

a credit card number, delivery address, and phone number.

At no point during the online purchase process are users

asked to input their billing or mailing address. The web

sites provide a contact phone number within Spain that

_________________________________________________________________

1. Step Two maintains that goods have been available for purchase via

its web site only since November 2000. Before that time, merchandise

was advertised, but not sold, online.

2. Step Two originally contracted with the European company

Intercomputer Soft, S.A. (now owned by PsiNet Europe) to register the

domain names and ,

and with the European company Interdomain to register

, , and

. These domain names were ultimately registered

with Network Solutions, Inc. ("NSI"), a U.S. company. Step Two pays

PsiNet Europe to maintain these domain names, and does not send any

payments to NSI. (JA 314.)

3. The web sites at and

were not used to sell merchandise. Discovery may be necessary to

determine whether Step Two has changed its web sites during the course

of this litigation.

lacks the country code that a user overseas would need to

dial. Moreover, the prices are in Spanish pesetas and

Euros, and goods ordered from those sites can be shipped

only within Spain. Step Two's Imaginarium web sites are

entirely in Spanish.

Visitors to the four sales-oriented Step Two web sites may

elect to receive an electronic newsletter, or sign up for

membership in "Club Imaginarium," a promotional club

with games and information for children. Each registrant

for Club Imaginarium is required to provide a name and an

email address. At the time this suit was filed, there was a

section for "voluntary information," including the

registrant's home address, on the Club Imaginarium

registration page. This optional portion of the page required

users to choose from a pull-down list of Spanish provinces,

and did not accommodate mailing addresses in the United

States.4 After joining Club Imaginarium via the web site,

registrants receive an automatic email response.

Mr. Tena submitted an affidavit stating that Step Two

had not made any sales via its web sites to U.S. residents.

(JA 136.) Toys, however, adduced evidence of two sales to

residents of New Jersey conducted via Step Two's

Imaginarium web sites. These purchases were initiated by

Toys. Lydia Leon, a legal assistant in the Legal Department

of Geoffrey, Inc., made the first purchase. Ms. Leon, a

resident of New Jersey, purchased a toy via

on January 23, 2001. (JA

167-69.) The second purchase was made in February 2001

by Luis M. Lopez, an employee of Darby & Darby P.C.,

attorneys for Toys. Mr. Lopez is also a resident of New

Jersey, and accessed to make his

purchase. (JA 207-14.)

For both of these sales, the items were shipped to

Angeles Benavides Davila, a Toys employee in Madrid,

_________________________________________________________________

4. An earlier version of the Club Imaginarium registration form was

included in the record as Exhibit N of the Affidavit of Luis M. Lopez. (JA

272.) This page asked users to input the "Province," and did not have a

pull-down menu. There was no field for "Country." According to Step

Two, this alternate version was available only at

.

5

Spain; Ms. Benavides Davila then forwarded the items to

the offices of Geoffrey, Inc. in New Jersey. Both purchases

were made with credit cards issued by U.S. banks.

Additionally, both purchasers received in New Jersey an

email confirming their purchases, and a subsequent email

with a login and password to access Club Imaginarium.

One of the two purchasers also separately registered for

Club Imaginarium, exchanged emails with a Step Two

employee about his purchase, and received a copy of an

email newsletter from Step Two. Aside from these two sales,

there is no evidence in the record of a sale to anyone in the

United States. After learning of these two sales, Mr. Tena

submitted a second affidavit stating that his company does

not know where its purchasers reside, as that information

is not apparent from a purchaser's email address, and Step

Two keeps records only of shipping addresses. (JA 310-11.)

On February 7, 2001, Toys filed the instant complaint

against Step Two in federal district court. Step Two moved

to dismiss for lack of personal jurisdiction on April 10,

2001. Toys opposed the motion, and requested discovery on

the issue of jurisdiction. After hearing oral argument on

July 30, 2001, the District Court denied the discovery

request and granted the motion to dismiss. Toys appealed

these decisions on August 28, 2001.

II.

In the following discussion, we first consider the standard

for personal jurisdiction based upon a defendant's

operation of a commercially interactive web site, as

articulated by courts within this circuit and other Courts of

Appeals. In light of that standard and the arguments

presented in the proceeding below, we then assess the

propriety of the District Court's denial of jurisdictional

discovery.

A. Personal Jurisdiction Based on the Operation of a

Web Site

The advent of the Internet has required courts to fashion

guidelines for when personal jurisdiction can be based on

a defendant's operation of a web site. Courts have sought

to articulate a standard that both embodies traditional

6

rules and accounts for new factual scenarios created by the

Internet. Under traditional jurisdictional analysis, the

exercise of specific personal jurisdiction requires that the

"plaintiff 's cause of action is related to or arises out of the

defendant's contacts with the forum." Pinker v. Roche

Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). Beyond

this basic nexus, for a finding of specific personal

jurisdiction, the Due Process Clause of the Fifth

Amendment requires (1) that the "defendant ha[ve]

constitutionally sufficient `minimum contacts' with the

forum," id. (quoting Burger King Corp. v. Rudzewicz, 471

U.S. 462, 474 (1985)), and (2) that "subjecting the

defendant to the court's jurisdiction comports with

`traditional notions of fair play and substantial justice,' " id.

(quoting Int'l Shoe Co. v. Washington, 326 U.S. 301, 316

(1945)). The first requirement, "minimum contacts," has

been defined as " `some act by which the defendant

purposefully avails itself of the privilege of conducting

activities within the forum State, thus invoking the benefits

and protections of its laws.' " Asahi Metal Indus. Co., Ltd. v.

Superior Court of California, 480 U.S. 102, 109 (1987)

(quoting Burger King Corp., 471 U.S. at 475). Second,

jurisdiction exists only if its exercise "comports with

traditional notions of fair play and substantial justice," i.e.,

the defendant "should reasonably anticipate being haled

into court" in that forum. World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 297 (1980).

The precise question raised by this case is whether the

operation of a commercially interactive web site accessible

in the forum state is sufficient to support specific personal

jurisdiction, or whether there must be additional evidence

that the defendant has "purposefully availed" itself of the

privilege of engaging in activity in that state. Prior decisions

indicate that such evidence is necessary, and that it should

reflect intentional interaction with the forum state. If a

defendant web site operator intentionally targets the site to

the forum state, and/or knowingly conducts business with

forum state residents via the site, then the "purposeful

availment" requirement is satisfied. Below, we first review

cases from this and other circuits that articulate this

requirement. Next, we consider the role of related non-

Internet contacts in demonstrating purposeful availment.

7

We then assess whether the "purposeful availment"

requirement has been satisfied in the present case.

1. The "Purposeful Availment" Requirement in

Internet Cases

a. Third Circuit Cases

The opinion in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952

F. Supp. 1119 (W.D. Pa. 1997) has become a seminal

authority regarding personal jurisdiction based upon the

operation of an Internet web site. The court in Zippo

stressed that the propriety of exercising jurisdiction

depends on where on a sliding scale of commercial

interactivity the web site falls. In cases where the defendant

is clearly doing business through its web site in the forum

state, and where the claim relates to or arises out of use of

the web site, the Zippo court held that personal jurisdiction

exists. Id. at 1124. In reaching this conclusion, the Zippo

court relied on CompuServe, Inc. v. Patterson , 89 F.3d 1257

(6th Cir. 1996), which found the exercise of personal

jurisdiction to be proper where the commercial web site's

interactivity reflected specifically intended interaction with

residents of the forum state. Zippo, 952 F. Supp. at 1124

(citing CompuServe, 89 F.3d at 1264-66).

Analyzing the case before it, the Zippo court similarly

underscored the intentional nature of the defendant's

conduct vis-a-vis the forum state. In Zippo, the defendant

had purposefully availed itself of doing business in

Pennsylvania when it "repeatedly and consciously chose to

process Pennsylvania residents' applications and to assign

them passwords," knowing that the contacts would result

in business relationships with Pennsylvania customers. Id.

at 1126. The court summarized the pivotal importance of

intentionality as follows:

When a defendant makes a conscious choice to conduct business with the residents of a forum state, `it has clear notice that it is subject to suit there.' . . . If [the defendant] had not wanted to be amenable to jurisdiction in Pennsylvania, . . . it could have chosen not to sell its services to Pennsylvania residents.

Id. at 1126-27 (citing World-Wide Volkswagen, 444 U.S. at

297).

8

Since Zippo, several district court decisions from this

Circuit have made explicit the requirement that the

defendant intentionally interact with the forum state via the

web site in order to show purposeful availment and, in

turn, justify the exercise of specific personal jurisdiction.

See, e.g., S. Morantz, Inc. v. Hang & Shine Ultrasonics, Inc.,

79 F. Supp. 2d 537, 540 (E.D. Pa. 1999) (observing that "a

web site targeted at a particular jurisdiction is likely to give

rise to personal jurisdiction."). As another district court in

this Circuit put it, "[c]ourts have repeatedly recognized that

there must be `something more' . . . to demonstrate that the

defendant directed its activity towards the forum state."

Desktop Technologies, Inc. v. Colorworks Reprod. & Design,

1999 WL 98572, at *5 (E.D. Pa. Feb. 25, 1999) (citation

omitted) (emphasis added).

b. Case Law from Other Circuits

Several Courts of Appeals decisions have adopted

"purposeful availment" requirements that are consistent

with the principles articulated in the Zippo line of cases.

The Fourth Circuit, in ALS Scan v. Digital Service

Consultants, Inc., 293 F.3d 707 (4th Cir. 2002), expressly

incorporated an "intentionality" requirement when

fashioning a test for personal jurisdiction in the context of

the Internet:

a State may, consistent with due process, exercise judicial power over a person outside of the State when that person (1) directs electronic activity into the State, (2) with the manifested intent of engaging in business or other interactions within the State, and (3) that activity creates, in a person within the State, a potential cause of action cognizable in the State's courts.

Id. at 714 (emphasis added).

In Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir.

1997), the Ninth Circuit considered an infringement action

brought against a Florida web site operator whose allegedly

infringing site was accessible in Arizona, the state where

the plaintiff had its principal place of business. In declining

to exercise specific personal jurisdiction, the Cybersell court

found there must be " `something more'[beyond the mere

posting of a passive web site] to indicate that the defendant

9

purposefully (albeit electronically) directed his activity in a

substantial way to the forum state." Id. at 418. Decisions

from other circuits have articulated similar standards. See,

e.g., Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883,

890 (6th Cir. 2002) (holding that the purposeful availment

requirement is satisfied "if the web site is interactive to a

degree that reveals specifically intended interaction with

residents of the state") (citation omitted) (emphasis added).

2. Non-Internet Contacts

In deciding whether to exercise jurisdiction over a cause

of action arising from a defendant's operation of a web site,

a court may consider the defendant's related non-Internet

activities as part of the "purposeful availment" calculus.

One case that relies on non-Internet contacts for the

exercise of jurisdiction -- a case Toys repeatedly cites -- is

Euromarket Designs, Inc. v. Crate and Barrel Ltd ., 96 F.

Supp. 2d 824 (N.D. Ill. 2000). In Euromarket, the court

exercised jurisdiction over an Irish manufacturer based on

its commercially interactive web site, even though the

products purchased through the web site could not be

shipped to Illinois. The court identified a number of non-

Internet contacts between the defendant and Illinois,

including the fact that the defendant's vendors included

Illinois suppliers, its attendance at trade shows in Illinois,

and its advertisement in publications that circulate in the

United States (albeit originating outside). Id. at 838. The

Euromarket court also relied on the fact that the defendant

billed Illinois customers, collected revenues from Illinois

customers, and recorded sales from goods ordered from

Illinois, id., and that the web site was designed to

accommodate addresses in the United States. Id. at 836.

Thus far, Toys has not shown that Step Two maintained

the type of contacts that supported jurisdiction in

Euromarket -- i.e., that the defendant intentionally and

knowingly transacted business with residents of the forum

state, and had significant other contacts with the forum

besides those generated by its web site. This limited record

does not provide an occasion for us to spell out the exact

mix of Internet and non-Internet contacts required to

support an exercise of personal jurisdiction. That

determination should be made on a case-by-case basis by

10

assessing the "nature and quality" of the contacts. Zippo,

952 F. Supp. at 1127 (quoting Int'l Shoe, 320 U.S. at 320).

However, non-internet contacts such as serial business

trips to the forum state, telephone and fax communications

directed to the forum state, purchase contracts with forum

state residents, contracts that apply the law of the forum

state, and advertisements in local newspapers, may form

part of the "something more" needed to establish personal

jurisdiction. See Barrett v. Catacombs Press, 44 F. Supp. 2d

717, 726 (E.D. Pa. 1999), and cases there collected. It is

noteworthy that the Supreme Court in Burger King Corp.,

when expounding on the "minimum contacts" requirement,

referred generally to a defendant's "activities" in the forum

state -- a term that includes the aforementioned non-

Internet contacts. Burger King Corp., 471 U.S. at 475.

3. Personal Jurisdiction over Step Two

As Zippo and the Courts of Appeals decisions indicate,

the mere operation of a commercially interactive web site

should not subject the operator to jurisdiction anywhere in

the world. Rather, there must be evidence that the

defendant "purposefully availed" itself of conducting activity

in the forum state, by directly targeting its web site to the

state, knowingly interacting with residents of the forum

state via its web site, or through sufficient other related

contacts.

Based on the facts established in this case thus far, Toys

has failed to satisfy the purposeful availment requirement.

Step Two's web sites, while commercial and interactive, do

not appear to have been designed or intended to reach

customers in New Jersey. Step Two's web sites are entirely

in Spanish; prices for its merchandise are in pesetas or

Euros, and merchandise can be shipped only to addresses

within Spain. Most important, none of the portions of Step

Two's web sites are designed to accommodate addresses

within the United States. While it is possible to join Club

Imaginarium and receive newsletters with only an email

address, Step Two asks registrants to indicate their

residence using fields that are not designed for addresses in

the United States.

Moreover, the record may not now support a finding that

11

Step Two knowingly conducted business with residents of

New Jersey. The only documented sales to persons in the

United States are the two contacts orchestrated by Toys,

and it appears that Step Two scarcely recognized that sales

with U.S. residents had been consummated.5

At best, Toys has presented only inconclusive

circumstantial evidence to suggest that Step Two targeted

its web site to New Jersey residents, or that it purposefully

availed itself of any effort to conduct activity in New Jersey.

Many of the grounds for jurisdiction that Toys advanced

below have been deemed insufficient by the courts. First,

the two documented sales appear to be the kind of

"fortuitous," "random," and "attenuated" contacts that the

Supreme Court has held insufficient to warrant the exercise

of jurisdiction. See Burger King Corp., 471 U.S. at 475

(citations omitted). As for the electronic newsletters and

other email correspondence, "telephone communication or

mail sent by a defendant [do] not trigger personal

jurisdiction if they `do not show purposeful availment.' "

Barrett, 44 F. Supp. 2d at 729 (quoting Mellon Bank (East)

PSFS, N.A. v. DiVeronica Bros., Inc., 983 F.2d 551, 556 (3d

Cir. 1993)). The court in Barrett found that the exchange of

three emails between the plaintiff and defendant regarding

the contents of the defendant's web site, without more, did

not "amount to the level of purposeful targeting required

under the minimum contacts analysis." Id. at 729; see also

_________________________________________________________________

5. Toys argues that Step Two was aware that it was conducting business

with New Jersey residents. In particular, Toys points to the email

correspondence between Mr. Luis M. Lopez and a representative of Step

Two regarding Mr. Lopez's overpayment. Mr. Lopez requested that the

difference be mailed to his home address in "South Orange, NJ 07079,"

but did not spell out "New Jersey" or specify that he resided in the

United States. (JA 254, 256.) The Step Two representative, apparently

uncertain about the address, sent a reply stating"I have received your

address and as far as I can see, it is pretty far from here (we are in

Zaragoza). I would appreciate your giving me more information on the

address so that I can be sure that it will arrive." (JA 256.) Mr. Lopez's

response to this message -- if he sent one -- is not included in the

record. Although Step Two ultimately learned that Mr. Lopez is a United

States resident, a trier of fact could reasonably find from the

correspondence that the company did not contemplate that sales would

occur with U.S.-based purchasers.

12

Machulsky v. Hall, 210 F. Supp. 2d 531, 542 (D.N.J. 2002)

(minimal email correspondence, "by itself or even in

conjunction with a single purchase, does not constitute

sufficient minimum contacts."). Non-Internet contacts, such

as Mr. Tena's visits to New York and the relationships with

U.S. vendors, have not been explored sufficiently to

determine whether they are related to Toys' cause of action,

or whether they reflect "purposeful availment."

Absent further evidence showing purposeful availment,

Toys cannot establish specific jurisdiction over Step Two.6

However, any information regarding Step Two's intent vis-a-

vis its Internet business and regarding other related

contacts is known by Step Two, and can be learned by Toys

only through discovery. The District Court's denial of

jurisdictional discovery is thus a critical issue, insofar as it

may have prevented Toys from obtaining the information

needed to establish personal jurisdiction. We next turn to

whether the District Court properly denied Toys' request for

jurisdictional discovery.

B. Jurisdictional Discovery

The pivotal issue on appeal is whether the District Court

erred in denying Toys' request for jurisdictional discovery.

A district court's decision to deny jurisdictional discovery is

reviewed for abuse of discretion. See Brumfield v. Sanders,

6. As an alternative to the "minimum contacts" analysis for specific

jurisdiction, Toys argues that jurisdiction over Step Two may be based

on the "effects" test. Following the lead of the Supreme Court in Calder

v. Jones, 465 U.S. 783, 788-89 (1984), the Third Circuit has held that

personal jurisdiction may, under certain circumstances, be based on the

effects in the forum state of a defendant's tortious actions elsewhere.

Remick v. Manfredy, 238 F.3d 248, 258 (3d Cir. 2001). One of the Third

Circuit's requirements is that the "defendant expressly aimed his

tortious conduct at the forum . . . ." Id. (internal quotations omitted).

Even assuming that Step Two's registration of the Imaginarium

domain names and its operation of web sites under that name bring

about an injury to Toys in New Jersey (its corporate headquarters), Toys

has failed to establish that Step Two engaged in intentionally tortious

conduct expressly aimed at New Jersey. In the present case, this

intentionality requirement is the key missing component for jurisdiction

under either the "minimum contacts" analysis or the "effects" test.

13

232 F.3d 376, 380 (3d Cir. 2000); Pacitti v. Macy's, 193

F.3d 766, 776 (3d Cir. 1999).

Toys requested jurisdictional discovery for the purpose of

establishing either specific personal jurisdiction, or

jurisdiction under the federal long-arm statute, Fed. R. Civ.

P. 4(k)(2).7 The District Court denied Toys' request,

explaining that "the clear focus of the Court is directed, as

it should be, to the web site[,] [a]nd to the activity of the

defendants related to that web site, which is making sales

here, . . ." The court added that "the apparent

contradictions, if such there will be in the Tena affidavit,

[and] what else Mr. Tena might have been doing here, just

have no relationship to where the eye is directed and

should stay and that is, the web site activities of this

defendant." (JA 13-14.)

We are persuaded that the District Court erred when it

denied Toys' request for jurisdictional discovery. The court's

unwavering focus on the web site precluded consideration

of other Internet and non-Internet contacts -- indicated in

various parts of the record -- which, if explored, might

provide the "something more" needed to bring Step Two

within our jurisdiction. Cybersell, Inc., 130 F.3d at 418;

Desktop Technologies, Inc., 1999 WL 98572, at *3. Although

the plaintiff bears the burden of demonstrating facts that

support personal jurisdiction, Pinker, 292 F.3d at 368,

courts are to assist the plaintiff by allowing jurisdictional

discovery unless the plaintiff 's claim is "clearly frivolous."

Massachusetts School of Law at Andover, Inc. v. American

Bar Ass'n, 107 F.3d 1026, 1042 (3d Cir. 1997). If a plaintiff

presents factual allegations that suggest "with reasonable

particularity" the possible existence of the requisite

"contacts between [the party] and the forum state," Mellon

Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217,

1223 (3d Cir. 1992), the plaintiff 's right to conduct

jurisdictional discovery should be sustained.

7. The federal long-arm statute sanctions personal jurisdiction over

foreign defendants for claims arising under federal law when the

defendant has sufficient contacts with the nation as a whole to justify

the imposition of U.S. law, but without sufficient contacts to satisfy the

due process concerns of the long-arm statute of any particular state.

14

Where the plaintiff has made this required threshold

showing, courts within this Circuit have sustained the right

to conduct discovery before the district court dismisses for

lack of personal jurisdiction. See, e.g., In re Automotive

Refinishing Paint Antitrust Litigation, 2002 WL 31261330, at

*9 (E.D. Pa. July 31, 2002) (denying motion to dismiss and

permitting jurisdictional discovery where plaintiff made a

"threshold prima facie showing of personal jurisdiction over

Defendants"); W. Africa Trading & Shipping Co., et al. v.

London Int'l Group, et al., 968 F. Supp. 996, 1001 (D.N.J.

1997) (denying defendant's motion to dismiss where the

plaintiffs' "request for jurisdictional discovery is critical to

the determination of whether [the court can] exercise

personal jurisdiction over the defendant."); Centralized

Health Systems, Inc. v. Cambridge Medical Instruments, Inc.,

1989 WL 136277, at *1 (E.D. Pa. Nov. 8, 1989) (holding

motion to dismiss in abeyance to permit party to take

discovery on jurisdiction where distribution arrangement

might satisfy minimum contacts). Here, instead of adopting

a deferential approach to Toys' request for discovery, the

District Court appears to have focused entirely on the web

site, thereby preventing further inquiry into non-Internet

contacts.

The record before the District Court contained sufficient

non-frivolous allegations (and admissions) to support the

request for jurisdictional discovery. First, Toys' complaint

alleges that Step Two has "completely copied the

IMAGINARIUM concept" from Toys. Compl. at P 24. For

example, Toys alleges that "the mix of toys sold by Step

Two is identical to the mix of toys sold by Toys under the

IMAGINARIUM mark," and that "Step Two continues to

copy Toys' marketing developments and Intellectual

property." Id. at PP 24, 25. Underlying Toys' complaint is its

concern that Step Two is "attempt[ing] to expand [its]

business throughout the world including the United States

by operating international web sites that offer goods similar

to the goods offered in Toy's [sic] IMAGINARIUM stores." Id.

at P 29. Step Two's intent, according to Toys, is to

"capitalize for [its] own pecuniary gain on the goodwill and

excellent reputation of Toys . . . ." Id. at P 50.

It is well established that in deciding a motion to dismiss

for lack of jurisdiction, a court is required to accept the

15

plaintiff 's allegations as true, and is to construe disputed

facts in favor of the plaintiff. Pinker, 292 F.3d at 368. Given

the allegations as to Step Two's mimicry of Toys' ventures

on the Internet and its copy-cat marketing efforts, it would

be reasonable to allow more detailed discovery into Step

Two's business plans for purchases, sales, and marketing.

Limited discovery relating to these matters would shed light

on the extent, if any, Step Two's business activity--

including, but not limited to, its web site -- were aimed

towards the United States. This information, known only to

Step Two, would speak to an essential element of the

personal jurisdiction calculus.

Other aspects of the record should have also alerted the

District Court to the possible existence of the"something

else" needed to exercise personal jurisdiction. For example,

Step Two concedes that a portion of the merchandise sold

through its Imaginarium stores and web sites are

purchased from U.S. vendors, and that Mr. Tena attends

the New York Toy Fair each year. Further discovery into the

vendor relationships and Mr. Tena's activities here, if any,

may shed light on Step Two's intentions with respect to the

U.S. market, or the extent of its business contacts in the

United States. Discovery might also reveal whether these

non-Internet contacts directly facilitate Step Two's alleged

exploitation of Toys' marketing techniques by providing it

with a supply of items identical to Toys' inventory to sell on

its web sites.

The two documented sales to residents of New Jersey--

and the subsequent emails sent from Step Two to the two

purchasers -- also speak "with reasonable particularity" to

the possible existence of contacts needed to support

jurisdiction. Mellon Bank (East) PSFS, 960 F.2d at 1223.

Although affiliates of Toys orchestrated the two sales, Mr.

Tena's conflicting affidavits raise the possibility that

additional sales to U.S. residents may have been conducted

via the web sites. The need for additional discovery

regarding sales is further underscored by the parties'

uncertainty as to whether the residence of purchasers can

16

be determined from their credit card number or through

some other electronic means.8

Counsel for Toys mentioned some of these contacts when

it explained to the District Court why it should be allowed

jurisdictional discovery:

Mr. Tena states in his affidavit that he has substantial regular and systematic contacts with the United States, [and] he attends trade shows. He purchases from vendors in the United States. I think at the very least, Your Honor, we should be able to inquire into what these substantial and continuing contacts are. Because apparently he buys a lot of the toys that he resells from U.S. vendors, because the ones that we have got were in English that we would be permitted to take discovery on that aspect. To determine whether or not . . . he has made more sales within the State of New Jersey and in the United States as a whole, as far as accepting orders from United States residents. And/or whether there's a basis for general jurisdiction under Rule 4(k)(2), because of his regular and systematic contacts with the United States. Apparently a lot of his toys are obtained through United States vendors.

(JA 389.)

Toys' request for jurisdictional discovery was specific,

non-frivolous, and a logical follow-up based on the

information known to Toys. The District Court erred by

denying this reasonable request. Toys should be allowed

jurisdictional discovery, on the limited issue of Step Two's

business activities in the United States, including business

_________________________________________________________________

8. In its brief on appeal, Step Two contends that Toys should not be

allowed discovery because there is simply no basis for believing that

there are any other contacts to find and, moreover, seeking discovery

about other web site-generated contacts would be futile as Step Two

does not keep track of billing addresses or the physical location of its

email correspondents. At oral argument, however, counsel for Toys

suggested there are means by which an individual's residence can be

determined from a credit card number. Toys also suggests, in its brief on

appeal, that the residence of on-line purchasers may be determined from

the phone number that purchasers are required to input. These

possibilities can be explored through discovery.

17

plans, marketing strategies, sales, and other commercial

interactions. Although Step Two does not appear to have

widespread contacts with the United States, this limited

discovery will also help determine whether jurisdiction

exists under the federal long-arm statute. Accordingly, on

remand, the District Court should consider whether any

newly discovered facts will support jurisdiction under

traditional jurisdictional analysis, or under Rule 4(k)(2).

CONCLUSION

For all of the reasons set forth above, we reverse the

District Court's denial of Toys' request for jurisdictional

discovery, vacate the District Court's dismissal of Toys'

complaint, and remand the case for limited jurisdictional

discovery guided by the foregoing analysis, and for

reconsideration of jurisdiction with the benefit of the

product of that discovery.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

18