The Naughtys LLC v. Does
| Decision Date | 03 March 2022 |
| Docket Number | Civil Action 4:21-CV-492-0 |
| Parties | THE NAUGHTYS LLC v. DOES 1-580 |
| Court | U.S. District Court — Northern District of Texas |
Pending before the Court is a Motion to Dismiss Plaintiffs Complaint [doc. 17] filed on April 28, 2021 by Defendant Doe 242 ("Doe 242"), who is identified as a store named Kuerqi that is located in China and owned by Wu Lian Yun.[1]
Plaintiff, The Naughtys LLC, is engaged in the business of designing, manufacturing, distributing, and retailing Christmas ornaments known collectively as the "Naughty Santa" ornaments and owns copyrights for such ornaments. Plaintiff, in its Complaint for copyright infringement filed on April 2, 2021, alleges that Defendant Does 1-580, who are individuals and businesses residing in foreign jurisdictions, placed counterfeit "Naughty Santa" ornaments (the "Infringing Products") for sale on online webstores (the "Infringing Websites"), which were hosted by third-party e-commerce platforms, such as Amazon, Walmart, AliExpress, DHgate, and eBay (the "Marketplaces"), and such ornaments were sold and shipped to buyers in the United States, including Texas. (Plaintiffs Complaint ("PL's Compl.") at 1-8.)
Doe 242, in its Motion to Dismiss, claims that Plaintiffs claims against it should be dismissed based on five reasons: (1) Plaintiff has not served any legal documents on Defendant; (2) service should be performed in accordance with the Hague Service Convention; (3) the Court does not have personal jurisdiction over Defendant; (4) Defendant did not willfully infringe on Plaintiffs rights as Defendant purchased the "involved products" from its regular supplier, "Yi Wu Xing Mai e-commerce Co., Ltd." and thought supplier was the rightful owner of such products; and (5) the Temporary Restraining Order entered by the Court is too long and strict.[2] (Defendant's Motion to Dismiss Plaintiffs Complaint ("Def.'s Mot. to Dismiss") at 2-3.)
In its response [doc. 47], Plaintiff states that, as the Court had already ordered Plaintiff to serve Defendant at its mailing address provided in Defendant's motion, the only remaining issue is whether the Court has personal jurisdiction over Defendant. (Plaintiffs Response to Doe 242's Motion to Dismiss ("PL's Resp.") at 1.) Plaintiff claims that the Court has personal jurisdiction over Defendant because Defendant actually shipped an Infringing Product to Texas and "promoted, advertised, marketed, and offered for sale products that infringe on Plaintiffs copyrights ... on Amazon while offering shipping to Arlington, Texas." (PL's Resp. at 3.) In addition, Plaintiff argues:
This lawsuit is certainly not ... a "rare case," as this Court's exercise of jurisdiction is both "fair" and "just." Defendant's burden of defending this lawsuit in a state to which it sold Infringing Products does not outweigh Plaintiffs right to protect the integrity of its intellectual property-particularly because Plaintiff has presented evidence (which Defendant has not disputed) that Defendant infringed Plaintiffs rights. Further, Plaintiffs goodwill and reputation are irreparably damaged when Infringing Products are sold that are not authorized, produced, or manufactured by Plaintiff-which leads to damaged brand confidence and loss of future sales and goodwill. Defendant's illegal sale of the Infringing Products further irreparably harms Plaintiff because Defendant has denied Plaintiffs ability to control the nature and quality of the Infringing Products. Plaintiff thus has a critical interest in convenient and effective relief. Moreover, there is a public interest in preserving rights provided by federal copyright laws ....
(PL's Resp. at 4 (internal citations omitted).) In support of its arguments, Plaintiff attached copies of the following: (1) Doe 242's store pages from Amazon.com that showed two several allegedly Infringing Products being advertised for sale; (2) an order form, dated February 2021, showing that one allegedly Infringing Product had been order from an address in Texas and was delivered in March; (3) a photograph of the mailing label and packaging from the delivered package; and (4) photographs of the front and back of the allegedly Infringing Product. (Plaintiffs Appendix to Plaintiffs Response to Doe 242's Motion to Dismiss [doc. 48] at 1-8.)
In Defendant's Reply to Plaintiffs Response [doc. 66], Defendant claims that Defendant is a "Chinese seller," does not live in the United States, operates a store "based on the international internet," and has not purposefully availed itself of the privilege of conducting business in Texas or purposefully directed his activities at Texas. (Defendant's Reply to Plaintiffs Response ("Def.'s Reply") at 2. In addition, Defendant claims that it is not registered to do business in Texas, has no regular and established place of business in Texas, does not maintain any offices, employees, or telephone listings in Texas, does not have any employees who visit Texas for business purposes, and does not pay taxes, maintain any bank accounts or participate in any meetings, trade shows, or other marketing-related activities in Texas. (Def.'s Reply at 2.) Defendant claims that the Court lacks personal jurisdiction over Defendants for two reasons: (1) there is insufficient evidence to prove Plaintiffs injury stemmed from Defendant's forum-related activities, and (2) Plaintiffs actions did not comport with the traditional notions of fair play and substantial justice because Plaintiff "induced the defendant to send the product to Texas for noncommercial purposes." (Id.)
In an order dated June 9, 2021, the Court, in accordance with objections presented by some of Defendants at a hearing, ordered Plaintiff to, inter alia, file a brief establishing whether personal jurisdiction exists as to all 580 Defendants no later than June 18, 2021. (Court's June 9, 2021 Order on Preliminary Injunction [doc. 81] at 1, n.3.)[3] Plaintiff, on June 1 8, 2021 filed Plaintiffs Supplemental Brief Supporting Personal Jurisdiction [doc. 93], In such brief, Plaintiff claimed that personal jurisdiction existed as to all 580 Defendants because (1) many of Defendants had actually sold products that infringe on Plaintiffs copyrights and (2) the Defendants advertised the Infringing Products for sale through Infringing Webstores via the Marketplaces, such as AliExpress, Amazon, DHgate, eBay, Walmart, and Wish, while offering shipping to the United States and Texas. (Plaintiffs Supplemental Brief Supporting Personal Jurisdiction at 1.) Plaintiff requested that, if the Court did not find that personal jurisdiction existed as to one or more Defendants, for the Court to direct the Marketplaces to provide Plaintiff with additional information relating to Defendants' sales of any products and of the Infringing Products to Texas. (Id. at 9.) Various Defendants filed responses to Plaintiffs Supplemental Brief Supporting Personal Jurisdiction [docs. 99 (response filed by Does 58, 89, 108, and 171), 100 (response filed by the "Epean Defendants"[4] and the "Li Defendants"[5]), 108 (response filed by the "Shan Defendants"[6])], and Plaintiff filed a Reply on June 28, 2021 [doc, 107].
The Court, in an Order dated July 13, 2021, noted that, with over 500 Defendants, it was necessary to direct the briefing on personal jurisdiction. (Court's July 13, 2021 Order at 1 [doc. 118].) The Court found that Defendants could be categorized into four groups: (1) Defendants who never sold a counterfeit product; (2) Defendants who sold a counterfeit product but only to Plaintiffs investigator or Plaintiff; (3) Defendants who sold counterfeit products in Texas, and elsewhere in the United States; and (4) Defendants who have only sold counterfeit products overseas. (Id.) The Court then set forth a briefing schedule for the parties to brief the issue of personal jurisdiction based on the four categories set forth above. (Id. at 1-2.)
Plaintiff on July 27, 2021, filed Plaintiffs Second Supplemental Brief Supporting Personal Jurisdiction [doc. 125], In this brief, Plaintiff listed the various Defendant Does that fit in the categories of (1) Defendants who never sold a counterfeit product (over 90 Defendant Does listed) and (2) Defendants who sold a counterfeit product but only to Plaintiffs investigator or Plaintiff (23 Defendant Does listed). (Plaintiffs Second Supplemental Brief Supporting Personal Jurisdiction ( ) at 2-5.) As to categories (3) and (4) set forth above, Plaintiff indicated that such Defendants were unknown. (PL's Second Suppl. Br. at 5.) Plaintiff stated as to category (3) that the "Marketplaces have only produced data as to overall sales by Defendants, but this data does not distinguish between sales are to [sic] Texas or otherwise" and indicated that it was seeking, in its Motion for Limited Jurisdictional Discovery [doc. 124, filed July 27, 2021 ], for "the Marketplaces to provides this data in a format that shows all sales to Texas (to demonstrate minimum contacts), as well as sales of Infringing Products to Texas." ( Plaintiff also set forth three additional categories (numbered 5 to 7): (5) Defendants from whom Plaintiff purchased, and has received a copy of an Infringing Product (in addition to those Defendants named in Group 2) (over 125 Defendant Does listed, including Doe 242[7]);[8] (6) Defendants who sold copies of the Infringing Products to consumers who are not associated with Plaintiff (over 75 Defendant Does listed); and (7) Defendants for whom the Marketplaces have failed to provide any sales data as order...
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