Judge: service via email OK for alleged Chinese patent infringers

Service of process via email complied with the requirements of constitutional due process in a case involving Chinese defendants who had not provided names or addresses but used email to conduct online businesses that infringed on design patents, a U.S. District Court judge has found.

Eastern District of Virginia Judge M. Hannah Lauck‘s analysis of the federal rule regarding service on individuals in foreign countries directed her to an international agreement with an explicit exception in which the address of the foreign party is unknown, thereby leaving it to the court’s discretion.

“Thus, the Court may order a method of service upon Defendant pursuant to Rule 4(f) even if Plaintiff has not yet exhausted the other mechanisms of service, so long as the method complies with the requirements of constitutional due process and is not prohibited by international agreement,” the judge wrote.

Lauck held that service to the email addresses used by the defendants to conduct their online businesses was likely to provide notice. However, she refused to grant the plaintiff’s ex parte motions for a temporary restraining order and expedited discovery.

The opinion is Heshan Jiahojia Sanitary Ware Industry Co Ltd. v. The Unincorporated Associations Identified in Schedule A (VLW 025-3-451).

Infringement complaint

Heshan Jiahojia Sanitary Ware Industry owns two patents for water faucets with distinctive waterfall designs.

Per the verified complaint, 23 defendants marketed and sold counterfeit faucets that infringed on those patents through webstores, such as Amazon, Wayfair and Temu.

Because the defendants are unincorporated associations believed to reside in China, the plaintiff filed an ex parte motion for service via email.

The plaintiff also sought an ex parte temporary restraining order to freeze all the defendants’ activity associated with the sale of any infringing faucets, as well as to enjoin the transfer of any monies associated with those sales.

Only one defendant, known as Forious, has appeared in the case and filed a motion to dismiss for misjoinder. The plaintiff opposed Forious’ motion, citing the defendant’s sales of infringing products. The plaintiff later withdrew Forious from its temporary restraining order motion.

Electronic service

The plaintiff asserted that electronic service was appropriate because the defendants have not provided names and physical addresses of their storefronts; they appear to rely primarily on electronic communication to conduct their webstores; and they are based in China.

Ordinarily, the Hague Convention would govern service of process in this matter, because both the United States and China are signatories. However, the Hague Convention contains an explicit exemption where the address of the foreign party to be served is unknown[.]

— Judge M. Hannah Lauck

According to Federal Civil Procedure Rule 4(f), electronic service on individuals in a foreign country may be given by any internationally agreed means reasonably calculated to give notice, or any method reasonably calculated to give notice and not otherwise prohibited.

“Ordinarily, the Hague Convention would govern service of process in this matter, because both the United States and China are signatories,” Lauck wrote. “However, the Hague Convention contains an explicit exemption where the address of the foreign party to be served is unknown[.]”

Since the Hague Convention did not apply here, the judge noted that “‘Rule 4(f) does not denote any hierarchy or preference of one method of service over another,’” citing Enovative Techs., LLC v. Leor.

“Instead, the decision to order alternative service of process rests ‘within the sound discretion of the court,’” Lauck said.

So long as the method complied with constitutional due process and was not prohibited by international agreement, the judge held that a court may order service pursuant to Rule 4(f) even if the plaintiff has not yet exhausted other means.

“And courts have ‘routinely found that electronic service of process, including email process, complies with these requirements when a plaintiff can demonstrate that the defendant will likely receive the email and thus notice of the suit,’” Lauck said.

Here, the defendants operate several online businesses, maintaining online platforms where they sell their products on Amazon, Temu and Wayfair.

“Thus, service of process to the email addresses that Defendants utilize to conduct their online business is likely to provide notice to Defendants and therefore complies with the requirements of constitutional due process,” the judge explained.

Lauck said she was also not aware of any other international agreement between China and the United States that prohibits service by email.

Crucial safeguards

A court may issue an ex parte temporary restraining order under Rule 65(b)(1) only if specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss or damage will result to the movant before the adverse party can be heard in opposition.

Additionally, the movant’s attorney must certify in writing any efforts made to give notice and the reasons why it should not be required.

“Issuing a temporary restraining order without notice constitutes an extraordinary remedy,” Lauck explained. “‘[T]he requirements of Rule 65(b)(1) are not merely technical niceties that a court may easily disregard, but rather are crucial safeguards of due process.’”

To ensure that the rights of all concerned are protected, Rule 65(b) prescribes certain safeguards for the issuance of temporary restraining orders that must be “scrupulously honored,” the judge said, quoting McKnight v. Frederick Cnty. Dep’t of Soc. Servs.

Thus, “‘“[a]ny temporary restraining order granted without notice must comply with the provisions of Rule 65(b) in order to assure the restrained party some measure of protection in lieu of receiving formal notice and the opportunity to participate in a hearing,”’” she added.

Efforts to notify

Plaintiff’s counsel suggested in their restraining order memorandum that the defendants would have “not only a strong incentive, but the opportunity to move any assets away from U.S.-based financial institutions outside the jurisdiction of this and other U.S. courts[.]”

But that argument was directed at establishing the first of the two 65(b)(1) prongs regarding immediate and irreparable injury, loss or damage if a temporary restraining order is not issued ex parte, Lauck pointed out.

“While it may be the case that Plaintiff’s explanation as to why notice should not be required under 65(b)(1)(B) is the same, Plaintiff’s counsel does not say so,” she wrote. “Indeed, he does not even cite 65(b)(1)(B) in his memorandum.”

Nor did the memo make any reference to the second prong’s additional requirement: certification of any efforts made by plaintiff’s counsel to notify the defendants.

“As courts in this district have routinely held, failure to comply with this requirement is grounds for denial of a temporary restraining order,” Lauck concluded.

And because the plaintiff sought information that was only necessary if the temporary restraining order had been granted, the judge said the motion for expedited discovery was premature.

“The Court sees no reason, and Plaintiff provides no argument, as to why information about the Defendants’ identities, sales information and the location and value of each of the Defendants’ financial accounts at Amazon, Temu and Wayfair would be necessary in the absence of a temporary restraining order,” Lauck wrote.

Further proceedings   

Attorneys from DNL Zito in Washington, D.C., represented the plaintiff. Lawyers from Venable in Tysons represented the only defendant that appeared in the case. No one responded to a request for comment.

On the date Lauck issued her opinion, the plaintiff voluntarily dismissed several defendants that had not appeared in the case. In a joint status report, the plaintiff asked to sever Forious into a new case once all defendants are served.

Forious wants the court to rule on misjoinder.

The plaintiff filed an unopposed motion for expedited discovery from Temu of contact information for three of the defendants.