Intellectual Property (IP) law is an incredibly complex field, even before factoring in the effects of globalization and technology. Add those realities to the mix and jurisdiction, service of process, and enforcement of IP rights become even more complicated.
For example, when it comes to trademark infringement, how far can a local court reach when the plaintiff resides a state the defendant never even visited? That’s the issue Ludwig APC grappled with in two recent cases—two cases Ludwig APC won for its clients using a “lack of personal jurisdiction” strategy.
In both instances, Ludwig argued that its clients, the defendants, failed to meet the three-prong test necessary to establish the court’s personal jurisdiction over them:
- Neither purposefully directed or targeted their business towards the states in which they were sued;
- Neither of the claims against them arose directly from the defendants’ business in the state; and
- The particular state in each case was not the reasonable place for them to be sued.
Since neither case met the criteria for jurisdiction, the two separate cases—one in Maryland and one in California—were dismissed.
Case #1: Blackstone International vs. Mikia and E2 Limited
In a March 2020 proceeding, Blackstone International (BI) accused defendants Mikia (based in China) and E2 Limited (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 E2, dismissing the case because of issues with personal jurisdiction over E2 and due process notice for Mikia.
In its order, the court accepted the argument raised by Ludwig APC in E2’s defense that the state of Maryland had no personal jurisdiction over E2. BI’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.
Case #2: Spy Optic vs. AreaTrend
In the spring of 2020, 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.
On behalf of AreaTrend, Ludwig APC once again used the three-prong jurisdiction test to argue that the Southern District of California lacked personal jurisdiction. The court ruled with the defendant, pointing out that courts have: (1) general personal jurisdiction over a corporation only where it is incorporated or where the corporation has its principal place of business; or (2) specific personal jurisdiction on a case-by-case basis, if the defendant purposefully directed its allegedly offending business activities to California and other factors also favored hailing the foreign defendant into a California court. With regard to AreaTrend, neither form of personal jurisdiction was available; operating an e-commerce website from its home state of Ohio was not enough to bring AreaTrend into a California court.
Spy Optic later appealed to the U.S. Circuit Court of Appeals for the Ninth Circuit but lost, again, to the Ludwig APC legal team. The appeal judges affirmed the trial court’s dismissal for lack of personal jurisdiction.
Seek Qualified Counsel
“IP law is complex, especially when it spans international boundaries,” says Eric Ludwig, principle of Ludwig APC and a specialist in IP and business litigation. “That’s why I always recommend that everyone—whether you are based here in the United States or you are an overseas entity thinking about entering the U.S. market—retain competent US-based legal counsel.”
These cases underscore 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 around best practices concerning IP laws, patents, and trademarks.