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Toys “R” Us, Inc. v. Step Two, S.A.

United States Court of Appeals for the Third Circuit
318 F.3d 446 (3d Cir. 2003)


Facts

Toys “R” Us, Inc. (Toys) (plaintiff) is a Delaware corporation that has its headquarters in New Jersey. Toys sells toys and games worldwide. Toys acquired Imaginarium Toy Centers, Inc. (Imaginarium), which sells educational toys and games, in 1999. Previously, Imaginarium registered its trademark with the United States Patent and Trademark Office in 1989. Imaginarium and Toys both began making online sales in the 1990s. Step Two, S.A. and Imaginarium Net, S.L. (Step Two) (defendants) are Spanish companies that began selling educational toys and games under the Imaginarium mark, which was registered in Spain, in 1991. Step Two’s stores and merchandise are essentially identical to Toys’, but Step Two does not have any stores, offices, assets, or employees in the United States. Step Two pays no taxes in the U.S. and claims to have done no advertising in the country. Nevertheless, Step Two buys merchandise from U.S. sellers, and its president visits New York annually for a toy fair. Step Two maintains interactive websites where customers can purchase merchandise. Customers must input their shipping address, but not their billing address. The websites are in Spanish, prices are in pesetas or Euros, and merchandise cannot be shipped outside Spain. The sites do not accommodate U.S. addresses. Nevertheless, an employee and attorney working for Toys were able to purchase merchandise through the site, have it shipped to a colleague in Spain, set up an account, and receive a newsletter. Toys and Geoffrey, Inc. (Toys) sued Step Two in federal district court for trademark infringement, unfair competition, and other violations of federal and New Jersey law. Toys sought discovery on the issue of personal jurisdiction over Step Two, but the district court denied the motion. Toys appealed to the United States Court of Appeals for the Third Circuit.

Rule of Law

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Issue

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Holding and Reasoning (Oberdorfer, J.)

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  • A "yes" or "no" answer to the question framed in the issue section;
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