Case of the Day: Louis Vuitton Malletier v. Baglouisvuitton.Store, 2019 U.S. Dist. LEXIS 78748 (S.D. Fla. Mar. 21, 2019)

Summary:

LVMH, maker of Louis Vuitton bags, sought to serve process on counterfeit bag makers located in China, India, Pakistan, Indonesia, among others and petitioned the court for an alternate means of service. 

The court permitted service by alternate means under Rule 4(f)(3) of the Federal Rules of Civil Procedure, and allowed the petitioner to effectuate service by sending emails and posting on a designated website. 

Takeaway:

Service is becoming more and more of an issue as the global economy is more integrated. With the multilateral treaties slower to function, expect more of these measures that simply circumvent the multilateral structure in the Hague.

Academic Corner: Prosecuting Chinese "Spies" - An Empirical Analysis of the Economic Espionage Act, 40 Cardozo L. Rev. 751 (A. Kim, Dec. 2018)

In this seminal paper, Andrew Kim for the first time conducted an empirical study on Chinese and Asian defendants charged under the Economic Espionage Act. Kim found that there has been a dramatic increase in the number of Asians in the past decade, as 62 percent of all defendants since 2009 have been of Asian descent. On average, Asian defendants received harsher sentences compared to non-Asian defendants, but were also found not guilty at at higher rate than non-Asian defendants. Kim expresses concern that, just as much as there is a pretextual crime of "Driving While Black," a new pretextual crime called "Researching While Asian" may be emerging.

It is an important and timely article, particularly for Asian Americans who may become subject to racial profiling.

Case of the Day: Freeplay Music, LLC v. Nian Infosolutions Private Ltd., 2018 U.S. Dist. LEXIS 115659 (S.D.N.Y. July 10, 2018)

Summary:

Plaintiff Freeplay is an online music library that charges license fee for using the music in its library. Defendant, an Indian corporation, operates a news website focusing on Bollywood entertainment news. Plaintiff alleged the defendant made unauthorized use of its music. The defendant failed to appear before the court, and the plaintiff moved for a default judgment.

The magistrate judge castigated the plaintiff for not responding properly to the order to show cause why the suit should not be based on the lack of personal jurisdiction. However, the court nonetheless found New York could exercise long arm personal jurisdiction over the defendant, as the defendant was alleged to have committed tort against a New York copyright holder.

Takeaway:

Any time a New York court is willing to exercise its long arm jurisdiction over a foreign party, it is news. Even more so when the court acts in the context of a default judgment, going entirely by the plaintiff's allegations of fact.

Case of the Day: Sindhi v. Raina, 2018 U.S. Dist. LEXIS 70177 (N.D. Tex. Apr. 26, 2018)

Summary:

In the previous litigation, plaintiff claimed copyright infringement against the defendant and obtained a default judgment. The court then denied the defendant's motion to overturn the default and entered a final judgment and permanent injunction. The defendant appealed to the Fifth Circuit, and also filed counter-sued in India, claiming the plaintiff in the previous litigation filed a frivolous and defamatory lawsuit. Plaintiff moved for an anti-suit injunction.

The court found that the litigation in India is somewhat duplicative of the previous litigation, but it also contained additional claims that were not present in the previous litigation. The court therefore issued the anti-suit injunction only as to the duplicative claims.

Takeaway:

Partial anti-suit injunction! Now that's new. It would be interesting to see how the court in India would react to this decision.

Case of the Day: Huawei Techs. Co. v. Samsung Elecs. Co., 2018 U.S. Dist. LEXIS 63052 (N.D. Cal. Apr. 13, 2018)

Summary:

Plaintiff Huawei filed near-simultaneous actions in both China and the United States against defendant Samsung in May 2016, alleging violation of a licensing agreement on certain patent portfolio. The Chinese action progressed faster than the U.S. action, such that the court in China issued an injunction against Samsung. Samsung filed motion with the U.S. court to stop the enforcement of the injunction from the Chinese court.

The court issued an anti-suit injunction, finding that the issues were virtually identical and so were the parties. The court rejected the plaintiff's offer to bifurcate the issues so as to avoid the anti-suit injunction, as the court found the separation impractical.

Takeaway:

Wow, wow, wow. In international litigation, this is about as big a blockbuster one can see: U.S. court's most closely guarded weapon (anti-suit injunction,) wielded against the world's second largest economy, in a field of business worth trillions. 

Wonder why Samsung was not inclined to file an anti-suit injunction earlier in the process. Strategically, it ended up being the right move to wait until the Chinese court produced a result that defeated the U.S. court action--but what a tough decision to litigate in two countries rather than come out firing with an anti-suit injunction application right away.

Ongoing Case Highlight: Apple, Inc. v. Samsung Elecs. Co., 2018 U.S. Dist. LEXIS 25377 (N.D. Cal. Feb. 15, 2018)

Summary:

Plaintiff Apple previous prevailed on the claim that defendant Samsung infringed upon its patent. As a result, Apple had a judgment that entitled it to ongoing royalties based on Samsung's sales of the infringing products post-judgment. In the instant action, Apple claimed it was also entitled to royalties for Samsung products that designed around the infringed patent.

The court denied Apple's motion. The court found that the workaround design was not "colorably different," but at any rate, the workaround design did not infringe upon Apple's patent. 

Takeaway:

My practice does not include intellectual property, so I found this ruling somewhat confusing. If a new product is not meaningfully different from the old product that infringed a patent, how does the new product not infringe? Also, why is it that the judge decide whether the new product infringes the patent? Isn't it a question of fact to be determined by the jury? Post-judgment world is a strange place in civil procedure.

Case of the Day: Synopsys, Inc. v. Ubiquiti Networks, Inc., 2018 U.S. Dist. LEXIS 14147 (N.D. Cal. Jan. 29, 2018)

Summary:

Plaintiff alleges the defendant pirated its software and stored the software in servers based in Taiwan. Then the defendant allegedly had its employees access the software remotely, for which the plaintiff sued for the Digital Millennium Copyright Act (DMCA) and fraud. In the course of the litigation, Plaintiff sought to conduct discovery over the Taiwanese servers, and the defendant objected.

The court granted the motion to compel. The court found the information stored in the servers in Taiwan is relevant. The court also rejected the defendant's claim that the DMCA did not apply to violations occurring wholly outside of the country, noting that this is a discovery motion and there are plausible scenarios under which the information stored in Taiwanese servers may be relevant--because, for example, the court may yet hold that the act of piracy happened in the United States rather than Taiwan. The court also found the Ninth Circuit's "Server Test" from Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) to be inapposite, as the Server Test does not cover the situation in which the violative act was initiated in the United States.

Takeaway:

Thrillsville! This is about as exciting as a case can get if you care about territoriality principles. Here is the perfect manifestation of the contradictions in Equity Extraterritoriality. On one hand, the question is: if territoriality principles are to be observed, on what basis could the United States court exercise jurisdiction over servers located in Taiwan? On the flip side: if the Server Rule is an attempt to apply the territoriality principles into digital information, why formulate a separate test based on "control," i.e. the location of the person initiating the action? The difference runs from the fact that the court is taking a different approach to a discovery motion rather than the merits, but such distinction cannot be considered meaningful when we are discussing the application of territoriality, a bedrock principle in international law.

Case of the Day: IPOX Schuster, LLC v. Nikko Asset Mgmt. Co., 2018 U.S. Dist. LEXIS 9161 (N.D. Ill. Jan. 20, 2018)

Summary:

Plaintiff is a financial management firm that produces "indexes" of companies that recently made initial public offerings. Defendant, a Japanese investment trust, commissioned Lazard Asset Management and Lazard Japan Asset Management to create the "Nikko Fund," a financial product composed of the stocks of U.S. companies that recently went public. In creating the Nikko Fund, Lazard used the information collected by the plaintiff. The plaintiff sued under a number of theories, and the defendants moved for a summary judgment.

The court granted summary judgments on most of the claims. There was no common law misappropriation, because the plaintiff's information was not time-sensitive and Lazard was not free-riding off the plaintiff's information. There was no trademark violation to the extent that the Nikko Fund was marketed in Japan. There was no contract between the parties, either express or implied. The court, however, denied summary judgment on the claims of fraud and trademark violation based on the defendant's presentation of the "Nikko Fund" in New York.

Takeaway:

So this is fun. In the finance industry, everyone steals ideas from everyone else--and this case seems to say there can be some recourse, depending on the circumstances.

Case of the Day: Apple Inc. v. Qualcomm Inc., 2017 U.S. Dist. LEXIS 145835 (S.D. Cal. Sept. 7, 2017)

Summary:

Apple sued Qualcomm in the Southern District of California as well as in a number of countries, including Japan, China, Taiwan and UK, alleging essentially that Qualcomm refused to offer a fair licensing deal for the Qualcomm's patents that set the 3G and 4G cellular communication standards. In response, Qualcomm filed for an anti-suit injunction as to all foreign actions.

The court denied the motion. The court found the U.S. litigation would not dispose of the foreign actions because there were no identity of issues. The court also found Apple and Qualcomm had no contractual relationship, which made inapplicable Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012), in which the Ninth Circuit granted the anti-suit injunction. The court further found the foreign actions were not vexatious or threatening to its jurisdiction, or otherwise frustrate the home forum's public policy.

Takeaway:

As telecom industry becomes even more global, it is pushing all of the private international law devices in the U.S. civil procedure to a breaking point. Wisely, the court here backed off perhaps the most controversial device in the U.S. private international law. But Qualcomm's attorneys (an all-star team made up of Quinn Emanuel, Cravath Swain & Moore and Jones Day) were right to try the tack. How much longer before an adventurous U.S. court wreaks a global havoc in the telecom industry with an anti-suit injunction?

Case of the Day: Bd. of Trs. of the Leland Stanford Junior Univ. v. Chinese Univ. of Hong Kong, 2017 U.S. App. LEXIS 11382 (Fed. Cir. June 27, 2017)

Summary:

A Stanford professor and a Chinese University professor separately developed a new method for diagnosing fetal conditions involving abnormal number of chromosomes (such as Down's Syndrome.) The Stanford professor filed patent first, then the CUHK professor filed later. Then the Stanford professor claimed that his earlier patent included the concept included the patent that the CUHK professor filed. The Patent Trial and Appeal Board ruled in favor of the CUHK professor. The case was initially appealed to the U.S. District Court for the Northern District of California, in which parties conducted extensive discovery. But pursuant to the intervening of case of Biogen MA, Inc. v. Japanese Found. for Cancer Research, 785 F.3d 648 (Fed. Cir. 2015), the case was transferred to the Federal Circuit.

The Federal Circuit first held that Biogen was correctly decided, and the discovery material cannot be used for consideration because, pursuant to Biogen, the District Court never had subject matter jurisdiction. Reviewing the PTAB decision de novo, the court vacated and remanded, finding that the PTAB failed to specifically explain its decision.

Takeaway:

The civil procedure of the Federal Circuit is always fascinating. One implication of this case is that, in a situation similar to this one, the parties may never have the chance to conduct extensive discovery, since they are skipping the District Court entirely.

Ongoing Case Update: Apple Inc. v. Samsung Elecs. Co., 2017 U.S. Dist. LEXIS 119149 (N.D. Cal. July 28, 2017)

Summary:

This blog covered this case previously in this post.

In the underlying suit, Samsung advanced an "article of manufacture" theory, which states that a patented design is not necessarily applied to the entire product that is sold, and thus profits from the entire product should not always be awarded. (This is distinct from "apportionment" theory, which states that the patentee must show what portion of the infringer's profit was due to the patented design and what portion was due to the article itself.) The Supreme Court approved the "article of manufacture" theory in Samsung Elecs. Co. v. Apple Inc., 136 S.Ct. 1453 (2016). Accordingly, Samsung requested a new trial as to the "article of manufacture" issue. Apple opposed, arguing Samsung did not preserve the issue for a retrial.

The court granted new trial, finding that the jury instruction in the underlying action prejudiced Samsung as to the "article of manufacture" theory. The court found that Samsung properly objected to the jury instruction, which was inconsistent with the Supreme Court's decision. The court then invited further briefing as to a number of legal questions, including the test for identifying the article of manufacture, whether such an identification is a question of law or fact, burden of proof, etc.

Takeaway:

We are breaking new grounds with each step of this litigation. Although the Supreme Court endorsed the "article of manufacture" theory, it punted to the lower courts the task of formulating the legal task for applying the theory. Bears watching for all IP practitioners.

Case of the Day: Juicero, Inc. v. iTaste Co., 2017 U.S. Dist. LEXIS 86033 (N.D. Cal. June 5, 2017)

Summary:

Plaintiff sued a Chinese manufacturer who allegedly copied the design of its juice maker. Although the defendant retained a U.S. attorney to correspond with the plaintiff, the attorney was not authorized to accept service on behalf of the defendant. The plaintiff moved to effect service under alternative means.

The court granted the motion, allowing service of process through a number of means including service upon the defendant's U.S. attorney, service through the defendant's Facebook account and email. 

Takeaway:

Is it too soon to make jokes about the expensive juice machine that does the same thing as your own hands? Of all things to (allegedly) copy!

At any rate, serving a Chinese company always has been a headache. This is an instance of the U.S. court showing a great deal of flexibility to effectuate service of process.

Ongoing Case Highlight: Apple Inc. v. Samsung Elecs. Co., 2017 U.S. Dist. 97765 (N.D. Cal. June 23, 2017)

Summary:

In the initial trial between Apple versus Samsung, the jury found that Samsung willfully infringed Apple's patents, but the court found as a matter of law that there was no willful infringement. Due to an intervening Supreme Court decision of Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016), the Federal Circuit remanded the willful infringement point for the trial court to reconsider.

In Halo, the Supreme Court criticized the previous standard as "unduly rigid" in that the patent holder had to prove the objective unreasonableness of an infringer's defenses. Thus, the court applied the new standard of the initial showing of subjective willfulness, followed by a discretionary assessment of enhanced damages. Based on the new standard, the court found that there was sufficient evidence for the jury to find subjective willful infringement. Based on the discretionary factors, the court enhanced the damages by 30 percent.

Takeaway:

Another interesting episode of the intellectual property dispute of the century! It is fascinating how this dispute over the first Smartphone is carving out new laws as it progresses.

Case of the Day: Waymo LLC v. Uber Techs., 2017 U.S. Dist. LEXIS 88411 (N.D. Cal. June 8, 2017)

Summary:

Plaintiff Waymo sued Uber for stealing intellectual property regarding driverless vehicle technology. Specifically, plaintiff claimed that a former Waymo employee took confidential documents from Waymo and founded his own company called Ottomotto. Later, Uber acquired Ottomotto. But before the acquisition transaction closed, Uber and Ottomotto, through their attorneys, jointly retained an outside expert to interview Ottomotto employees who previously worked for Waymo as a part of due diligence. Plaintiff Waymo moved to compel production of the report produced by the outside expert.

The court granted the motion. The court first found that individual employees at Ottomotto had no attorney-client privilege with the expert, as the expert was retained by the corporations Uber and Ottomotto and not directly by individuals. The court also found Uber had no attorney-client privilege, as Uber and Ottomotto were on opposite sides of a transaction. Further, the common interest between Uber and Ottomotto did not create an attorney-client privilege, as common interest/joint defense doctrine is not an independent source of privilege.

Takeaway:

Admittedly, this case does not have much to do with Asia. (I'm sure both Waymo and Uber both have a lot of Asian shareholders, however.) But you don't see a case like this every day--the perfect sample of a common situation, an ideal archetype that belongs in a case book.

If you're a white collar defense practitioner (like I am,) or an M&A/deals attorney, you would read this case very closely and commit the holding to memory. It is extremely common for a successor firm to be sued for the (alleged) sins of the firm that it acquired--which means managing attorney-client privilege throughout the deal structuring is critical. It is also extremely common for two companies to jointly engage a single expert to investigate a potentially problematic transaction that involved both firms, and destroy the attorney client privilege in the process. This case could have had a different result if Uber's deal counsel anticipated litigation and retained the expert on its own, rather than jointly with Ottomotto.

Case of the Day: Global Equity Mgmt (SA) Pty. Ltd. v. Alibaba.com, Inc., 2017 U.S. Dist. LEXIS 42987 (E.D. Tex. Mar. 24, 2017)

Summary:

An Australian corporation sued a number of Alibaba.com and a number of related entities. Alibaba's U.S. operations run through a Delaware corporation with the principal place of business in San Jose, California, and other entities include a Hong Kong corporation and a Cayman Islands corporation. The plaintiff brought suit in Texas, alleging that there are certain witnesses residing in the Houston area.

The court granted the motion to transfer the case to the Northern District of California. The court noted that the witnesses identified by the plaintiff are not likely to be trial witnesses. The court also noted that "it is generally a fiction that patent cases give rise to local controversy or interest, particularly without record evidence suggesting otherwise."

Takeaway:

The procedural course of this case is interesting. There was another set of defendants whose cases were already transferred out to the Eastern District of Virginia, based on the theory that the complained-of activity of the defendants occurred on Amazon's server located in the E.D. Va. The defendants in this case represent the leftovers who did not utilize Amazon's server.

Personal jurisdiction and venue determination based on server activity is rather interesting. I am not sure if there is a consistent jurisprudence developed as to the relationship between a server and minimum contact. From my experience, server activity often might be just an excuse for courts to either accept or decline jurisdiction based on the court's sense of proper jurisdiction and venue. Further study would be helpful in this area.

Case of the Day: Power Integrations, Inc. v. Park, 2017 U.S. Dist. LEXIS 26467 (N.D. Cal. Feb. 24, 2017)

Summery:

Delaware corporation with principal place of business in San Jose, California, sued its former employee (who is a South Korean citizen and resident) for intentional interference with contractual relations. Allegedly, the employee used the plaintiff's proprietary information to obtain patents in the U.S. and South Korea, then sent letters to the plaintiff's customers (which includes Samsung Electronics) that the customers were infringing upon his patent.

The court first found that it had personal jurisdiction over the defendant, as the defendant expressly aimed his activities to California. The court, however, found that it lacked subject matter jurisdiction insofar as it needs to determine the validity of the Korean patent obtained by the defendant. Accordingly, the court granted a partial motion to dismiss, with leave to amend the complaint by deleting references to the validity of the Korean patent.

Takeaway:

This is a strange case. The court here declined to assess the validity of the Korean patent, but U.S. courts assess the validity of obligations created under foreign laws all the time! For example, compare this case to Tech Sonic, Inc v. Sonics & Materials, Inc., 2016 U.S. Dist. LEXIS 94979 (D. Conn. July 20, 2016) that this blog previously covered. Also, here are my general thoughts on U.S. courts applying foreign laws.

I am actually not in favor of U.S. courts reaching beyond its territorial jurisdiction willy-nilly. (I discuss this in greater detail when my forthcoming academic paper, Equity Extraterritoriality.) But in this instance, the court is being excessively modest. There is no reason why the plaintiff here should go through the trouble of amending its complaint just to avoid the Korean law question as to the patents.

Case of the Day: Wave Studio, LLC v. Gen. Hotel Mgmt., 2017 U.S. Dist. LEXIS 34797 (S.D.N.Y. Mar. 10, 2017)

Summary:

Plaintiff is a New York corporation with principal place of business in White Plains. The principal of the plaintiff is a Malaysian citizen who lives in Singapore. The defendant is a British Virgin Islands corporation whose principal place of business is Singapore. Plaintiff sued the defendant for infringement of intellectual property right.

The court granted a summary judgment against the plaintiff based on forum non conveniens. Although the case was filed more than two years ago, the court found the delay was not a bar to a forum non conveniens claim, and found Singapore was an adequate alternate forum.

Takeaway:

Here is forum non conveniens, the greatest procedural weapon for foreign defendants. Although forum non conveniens is usually raised at the outset of the litigation, it can be deployed at any stage of the litigation, as this case shows. Although the law says that plaintiffs are entitled to deference in their choice of forum, it is rarely the case that the courts actually use the deference to overcome a forum non conveniens claim.

Case of the Day: GeoVector Corp. v. Samsung Elecs. Co., 2017 U.S. Dist. LEXIS 20872 (N.D. Cal. Feb. 14, 2017)

Summary:

Plaintiff GeoVector alleged that defendant Samsung misappropriated its VR-related technology when it gave a presentation to Samsung in 2002 and 2006. The negotiation failed in 2008, and allegedly, Samsung began selling phones incorporating the plaintiff's technology between 2009 and 2013.

The court dismissed the claim because the three-year statute of limitation has run. The plaintiff claimed that Samsung coaxed them into not filing suit by entering into a licensing negotiation in 2009, when the plaintiff raised the alleged patent violation with Samsung. The court found it was unreasonable for the plaintiff to rely on the post-2009 negotiation, as Samsung clearly indicated it was not about to enter into a licensing agreement.

Takeaway:

Here comes another victim of sloppy lawyering (if the plaintiff consulted a lawyer to negotiate with the defendant, that is.) Because the plaintiff never thought ahead about the litigation strategy in case their business negotiation failed, they took too long to file a suit and lost because of statute of limitations. Remember: even if you are a transactional attorney, you must always look ahead and think about how the structure of your transaction affects any future lawsuit.

Milestones: McBee v. Delica Co., 417 F.3d 107 (1st Cir. 2005)

Summary:

Plaintiff Cecil McBee is a renowned jazz musician. Defendant is a Japanese clothing retailer who started a line of clothing named "Cecil McBee," and holds the Japanese trademark for the name Cecil McBee. Plaintiff first sued in Japan to invalidate the trademark, and ultimately lost. Plaintiff then sued in the U.S. alleging Lanham Act violation, and the district court dismissed for the lack of subject matter jurisdiction.

The circuit court affirmed, but for a slightly different reason. The court found that Lanham Act may be applied to extraterritorial activities of a foreign party to the extent that such activity affects the U.S. market, subject to comity concerns. Finding that the Japanese company's activities do not affect the U.S. market because the defendant took care not to have their products sold in the United States, the circuit court affirmed the decision to dismiss.

Takeaway:

One notable part in the case: the plaintiff himself spent $2,500 to purchase defendants' products via online and had it shipped to U.S., and the court found it to be insufficient to establish a Lanham Act subject matter jurisdiction. Arguably, the purchase makes the point that it is possible for a U.S. party to get the offending product from abroad, but it does not appear to be sufficient.

Case of the Day: Dyson, Inc. v. Sharkninja Operating LLC, 2017 U.S. Dist. LEXIS 14435 (N.D.Ill. Feb. 2, 2017)

Summary:

Plaintiff sued the defendant alleging patent violation regarding a handheld vacuum cleaner. Defendant, in turn, sought to examine the plaintiffs' employees in United Kingdom, Singapore and Denmark pursuant to the Hague Convention. The magistrate judge issued a letter rogatory allowing examination as to one of the three patents involved. Defendant appealed to the district judge.

Although the defendant submitted additional information indicating that the plaintiffs' employees are likely to have information regarding the other two patents, the district judge affirmed the magistrate judge's order, based on the "clearly erroneous standard"--if there are there are two permissible views of facts, choosing one or the other cannot be clearly erroneous.

Takeaway:

This is one of the opinions that makes you wonder if there is a bigger backstory. Asking for a letter rogatory is a big step--especially considering that one can simply ask the district court to examine witnesses who are located abroad. Why bother going through the Hague Convention? And why are these witnesses so important that the party needed to file an interlocutory appeal, expending more lawyer time?

One final lesson: evidentiary ruling is difficult to win on appeal. It is important to get it right on the first shot, because "clearly erroneous" standard is a hard one to overcome.