Personal Jurisdiction Not Found Where Only 10 Copies of Allegedly Infringing Newsletter Were Sent To Recipients In California

The World in U.S. Courts: Winter 2018 - Personal Jurisdiction/Forum Non Conveniens | November.01.2017

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Axiom Foods, Inc. v. Acerchem International, Inc., US Court of Appeals for the Ninth Circuit, November 1, 2017

Plaintiffs are US manufacturers of natural and organic foods that sued the defendants, a Chinese company and its UK subsidiary, for copyright infringement. The claims arose from the UK defendant’s alleged misappropriation of the plaintiffs’ copyrighted logos in a newsletter sent to 334 recipients. Most of the recipients were located in Western Europe; “no more than ten” were in the forum State of California. In this case, the Court of Appeals affirmed the decision of the district court that it did not have personal jurisdiction over the defendants.

The Court of Appeals observed that personal jurisdiction must be judged under the law of the forum, and that California courts could assert their authority to the full extent permitted by the Due Process Clause of the US Constitution. As relevant to the tort of infringement, due process imposes an “effects test,” which requires (1) the defendant must . . . “purposefully direct” his activities toward the forum . . . ; (2) “the claim must be one which arises out of or relates to the defendant’s forum-related activities”; and (3) “the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.” “Purposeful direction,” in turn, requires the commission of an “intentional act,” “expressly aimed” at the forum state, which causes harm “that the defendant knows is likely to be suffered in the forum state.”

Focusing on the maximum ten California-based recipients of the newsletter, the Court of Appeals found that the State was not “the focal point both of the [newsletter] and of the harm suffered,” and that specific jurisdiction under the “effects test” thus could not be found. In so doing, it dismissed arguments that other recipients outside of California may themselves have had corporate or other connections with the State, noting that jurisdiction must be based only on a defendant’s forum-related contacts, not links to the forum possessed by entities with which the defendant dealt.

The Court of Appeals similarly found no basis for jurisdiction under Federal Rule of Civil Procedure 4(k)(2), which “is nearly identical to traditional personal jurisdiction analysis with one significant difference: rather than considering contacts between [the defendant] and the forum state, we consider contacts with the nation as a whole.” The plaintiffs provided evidence that the newsletter was sent to 70 recipient companies with affiliated companies in the US, but did not establish the relationship between those recipients and the US companies. Citing this failure of proof, the Court of Appeals declined to assert jurisdiction under the Rule 4(k)(2).

[Editor’s note: The Axiom Foods case is also discussed in the Intellectual Property-Copyright section of this report, as certain courts apply special personal jurisdiction standards in copyright infringement cases.]

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