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February 1, 2023

Lit Alerts—January 2023

A Publication of the Litigation Practice Group

Personal Jurisdiction: Post-Suit Consent to Jurisdiction Insufficient to Defeat Application of Federal Rule 4(k)(2)

The US Court of Appeals for the Federal Circuit held this month, as a matter of first impression, that a foreign defendant’s unilateral post-suit consent to jurisdiction in a different forum did not defeat personal jurisdiction in the forum in which the action was filed. In In re Stingray IP Solutions, LLC, the plaintiff originally filed suit in the Eastern District of Texas against companies organized and headquartered in China and Hong Kong. The defendants moved to dismiss, or in the alternative, to transfer to the Central District of California under 28 U.S.C. §1406. After jurisdictional and venue discovery, the district court transferred the case, finding that the “[d]efendants are amenable to suit in the CDCA.” The Federal Circuit granted mandamus review to resolve the “deep[] split over whether a defendant can defeat personal jurisdiction under Rule 4(k)(2) by unilaterally consenting to suit in a different district.”

Federal Rule 4(k)(2) provides that “[f]or a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if [] the defendant is not subject to jurisdiction in any state's courts of general jurisdiction,” among other conditions. The Federal Circuit held that “the defendant's burden under [this] requirement entails identifying a forum where the plaintiff could have brought suit—a forum where jurisdiction would have been proper at the time of filing, regardless of consent.” Further, a “defendant cannot simply use a ‘unilateral statement of consent’ to preclude application of Rule 4(k)(2) and ‘achieve transfer into a forum it considers more convenient (or less convenient for its opponent).’”

Trademark: PTO Refuses Registration of Mark Without English Translation

Alibaba Group Holding Limited applied to register the trademark “ZHIMA” in standard characters for a wide variety of goods and services in November 2015. Later Alibaba assigned the application to Advanced New Technologies Co., Ltd. (Applicant) in 2019. Earlier this month, the Trademark Trial Appeal Board (the Board) agreed with the Examining Attorney and refused registration of the mark on appeal because the Applicant failed to submit a translation of ZHIMA as required by Trademark Rule 2.32(a)(9). The Applicant refused to submit the following statement as instructed by the Examining Attorney: “ZHIMA is a transliteration of Chinese characters that mean ‘sesame’ in English.”

Section 809.01 of the Trademark Manual of Examining Procedure (TMEP) explains that translations are required for non-English words during examination of a trademark application because the foreign equivalent may be regarded in the same way as the English term for purposes of determining descriptiveness. These types of equivalents may require disclaimers. In its decision, the Board showed the translation of ZHIMA using several Chinese-English dictionaries.

On appeal after an initial refusal, the Applicant argued that a translation was unnecessary because ZHIMA itself is a coined term without any meaning. It further contended that those familiar with both Chinese and English languages would never translate “ZHIMA” into the Chinese characters that the Applicant sought to register in a co-pending, related application before the Patent and Trademark Office. The Board disagreed.

Contracts: Second Circuit Affirms Commercial Tenant’s Duty to Pay Rent During COVID Shutdown, Rejecting Force Majeure and Similar Excuses

The US Court of Appeals for the Second Circuit affirmed a decision by the District Court for the Southern District of New York that fashion retailer Desigual USA could not get out of lease obligations for its New York Fifth Avenue store based on COVID-19 business restrictions. The panel held that the lease contract Desigual signed in January 2020 required the company to pay rent even in the event it could not use the property due to natural occurrences, changes to law, or other conditions beyond the landlord's control.

Desigual argued that the COVID-19 pandemic, which reached the United States in March 2020—after the parties had signed the lease contract but before the landlord delivered the property to Desigual—triggered the frustration-of-purpose and impossibility doctrines under New York law. The frustration-of-purpose doctrine typically excuses contractual obligations if a cataclysmic, wholly unforeseeable event renders a contract useless to one party. The impossibility doctrine excuses contractual obligations when an act of God or a law makes it impossible for a party to perform its obligations.

The Second Circuit disagreed with Desigual’s claims that government-imposed shutdowns and later restrictions on retail operations excused its duty to pay rent under these doctrines: "Desigual's] frustration-of-purpose and impossibility claims fail for the same reason: the terms of the lease allocated the risk of events like the COVID-19 pandemic and ensuing government shutdown orders to [Desigual]," the panel's order said.

The contract expressly required Desigual to pay rent even if events or circumstances interfered with the company's use of the property, as long as those circumstances were beyond the landlord's control, the court explained. 

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.