Intellectual Property (IP) law is an incredibly complex field, especially in light of the globalization of technology. Globalization and the widespread usage of online commerce complicate jurisdiction and proper notice. They also increasingly raise the question of whether a company can be sued in a state where they do not have offices.
In two recent cases, Ludwig APC grappled with these issues and won the cases for their clients using the same strategy. In both cases, Ludwig argued lack of jurisdiction by showing that the clients failed to meet the three-prong test of jurisdiction. Neither of the defendants purposefully targeted their business towards the states where they were sued, neither of the claims arose directly from the defendants’ business in the state, and the state was not the reasonable place where they should be sued. Since they did not meet the criteria for jurisdiction, two separate cases—one in Maryland and one in California—were dismissed.
In a March proceeding, Blackstone International (BI) accused defendants Mikia (based in China) and E2 (Ludwig’s Hong Kong-based client) of producing counterfeit tower-style fans and selling them to Costco. The matter resulted in the U.S. District Court in Maryland ruling in favor of the E2 Limited, dismissing the case because of issues with jurisdiction and due process notice.
The court’s opinion, which contains to separate rulings, underscores the main issues with Blackstone International’s case. First, on its own motion, the court rules BI failed to properly serve defendant Mikia with a summons and complaint, so as to notify the overseas company that BI had sued it for infringing on their patent. Proper service, while more difficult when dealing with companies that are headquartered in different countries, remains vital. The court concludes that because BI did not properly serve Mikia in China, the Maryland court could move forward.
In the second prong of its order, the court accepted the argument raised by E2’s defense lawyer, Eric Ludwig, who specializes in IP and business litigation, that there was no personal jurisdiction over E2. Blackstone’s lawyers attempted to use Maryland’s Long-Arm Statute to sue E2 in the state of Maryland, but Ludwig utilized the three-prong test to prove that the court proceedings should properly have taken place in China. The court agreed.
A similar case came before the courts in April 2020, and Ludwig’s defendant received the same result. California-based company Spy Optic sued Ohio-based AreaTrend for selling sunglasses and other items on their website that allegedly held Spy Optic’s trademark, which they referred to as “The Spy Marks.” Spy Optic alleged that AreaTrend’s website sold items with their trademarks without prior authorization from Spy Optic, and they concluded that the items must be counterfeit.
Spy Optic brought the case against AreaTrend in California, contending that because AreaTrend operated an interactive website where California residents could purchase items, they could be sued in California court. Ludwig argued that the Southern District of California lacked jurisdiction over his client AreaTrend once again using the three-prong test. The court ruled with the defendant, pointing out that courts have jurisdiction over a corporation where it was incorporated and where it has its principal place of business.
“IP law is complex, especially when it spans international boundaries,” says Ludwig. “That’s why I always recommend that everyone—whether you are based here in the United States or an overseas company entity thinking about entering the United States market—retain competent US-based legal counsel.” This case underscores the importance of retaining a lawyer who can commit to a process of due diligence on behalf of the client and advise on various legal issues, especially in the area of best practices concerning IP laws, patents, and trademarks.
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