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Axiom Foods, Inc. v. Acerchem International, Inc.

United States Court of Appeals, Ninth Circuit

November 1, 2017

Axiom Foods, Inc., a California corporation; Growing Naturals, LLC, an Arizona limited liability company, Plaintiffs-Appellants,
v.
Acerchem International, Inc., an entity of unknown origin, Defendant, and Acerchem UK Limited, a United Kingdom limited company, Defendant-Appellee.

          Submitted April 3, 2017

         Appeal from the United States District Court for the Central District of California Percy Anderson, District Judge, Presiding D.C. No. 2:15-cv-00870-PA-AJW

          Jim D. Bauch (argued) and Daniel C. Lapidus, Lapidus & Lapidus PLC, Beverly Hills, California, for Plaintiffs-Appellants.

          Henry L. Self III (argued) and Brian G. Wolf, Lavely & Singer P.C., Los Angeles, California, for Defendant-Appellee.

          Before: DAVID M. EBEL, [*] MILAN D. SMITH, JR., and N. RANDY SMITH, Circuit Judges.

         SUMMARY [**]

         Personal Jurisdiction

         The panel affirmed the dismissal of a copyright infringement action for lack of personal jurisdiction over a defendant United Kingdom limited company.

         Applying the "effects" test, the panel concluded that the nonresident defendant committed an intentional act by adding plaintiffs' logos to a newsletter and sending it to a list of recipients. The defendant did not, however, expressly aim its intentional act at the forum state of California. Following Walden v. Fiore, 134 S.Ct. 1115 (2014), the panel held that while a theory of individualized targeting may remain relevant to the minimum contacts inquiry, it will not, on its own, support the exercise of specific jurisdiction.

         The panel held that Federal Rule of Civil Procedure 4(k)(2) did not permit the district court to exercise personal jurisdiction over the United Kingdom company. The panel concluded that such an exercise of jurisdiction would not comport with due process because there were insufficient contacts between the defendant and the United States.

          OPINION

          Judge Milan D. Smith, Jr.

         Axiom Foods, Inc. and Growing Naturals, LLC (collectively, Appellants) appeal from the district court's dismissal of their copyright infringement action against Acerchem UK Limited for lack of personal jurisdiction. We affirm.

         FACTUAL AND PROCEDURAL BACKGROUND

         Appellant Axiom Foods, Inc. (Axiom) is a California corporation that supplies organic and chemical-free products made from whole-grain brown rice, peas, and other "superfoods, " to the food, beverage, and nutraceutical industries. Appellant Growing Naturals, LLC (GN) is an Arizona limited liability company that develops and sells natural food products, such as plant-based proteins and rice milk powders. GN partners with Axiom to produce and sell goods containing Axiom's products. Appellants do business in California.

         Acerchem International, Inc. (Acerchem International), which is based in Shanghai, China, is a wholesale manufacturer of health and nutritional products, including rice protein. Appellee Acerchem UK Limited (Acerchem UK), a United Kingdom limited company, is a wholly-owned subsidiary of Acerchem International. Acerchem UK maintains its principal place of business in the United Kingdom, and does not conduct business in the United States.

         On November 20, 2014, Elva Li, an employee of Acerchem UK, sent a newsletter promoting Acerchem UK's rice protein products to 343 email addresses. Appellants' "As Good as Whey" and "Non-GMO" logos were used in the newsletter. Most of the newsletter's recipients were located in Western Europe. No more than ten recipients were located in California.

         Appellants subsequently registered their copyrights for the "As Good As Whey" and "Non-GMO" logos with the United States Copyright Office. After the registrations became effective, Appellants filed a complaint against Acerchem International and Acerchem UK in the Central District of California, on February 6, 2015.[1] The complaint asserted two claims for copyright infringement pursuant to 17 U.S.C. § 501 based on Acerchem UK's use of Appellants' logos in its November 20, 2014 newsletter.

         Acerchem UK filed a motion to dismiss the complaint for lack of personal jurisdiction and failure to state a claim.

         The district court ordered jurisdictional discovery and granted the parties leave to file supplemental briefing.

         On September 11, 2015, the district court granted Acerchem UK's motion to dismiss for lack of personal jurisdiction.[2] The district court declined to rule on Acerchem UK's motion to dismiss for failure to state a claim. Appellants timely appealed.

         STANDARD ...


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