Yogendra Singh via Unsplash.

Author’s Note: This is far from a scholarly criticism– it is a nuts & bolts look at how this thing should go down.  Preface:

Frankly, I think electronic service is the only way to get these scofflaws served.

A cause for hope came out of S.D.N.Y. recently, and I’ve been ruminating about it for a couple of weeks, because it reached a kinda-sorta right result, but for the wrong reason, and it upended another kinda-sorta right result based the wrong reason.  The succession of kinda-sortas and wrong reasons makes me look like that guy up above.  He’s just younger and thinner.

The hope?  That S.D.N.Y. would finally kill Gurung v. Malhotra and its demon spawn by recognizing the exclusive nature of the Hague Service Convention, as clearly held in Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694 (1988).

Reuters dropped this story into my newsfeed late last month, and I started reading with incredible (ultimately dashed) optimism.  The case really hit the bigtime this week on both Letters Blogatory, published by my friend, Ted Folkman (whose White Whale is Gurung), and the Transnational Litigation Blog— a fantastic, comprehensive blog by a team of top international law scholars.*

We give you Smart Study Co., Ltd. v. Acuteye-US et al., 1:21-cv-05860.  Folkman synopsizes quite succinctly:

“The case involved a claim to trademark and copyright infringement concerning the Baby Shark song, which no doubt will be running through your head for hours now that you have read the words ‘Baby Shark.’ The defendants were Chinese companies selling alleged knockoffs on the internet. The plaintiff sought and received a temporary restraining order and a preliminary injunction, and received leave to serve process by email.”

Those Chinese companies couldn’t get the song out of their heads either (go ahead, click the link– you know you want to), and they sought vengeful profit by producing all manner of Baby Shark-related memorabilia… which they have no legal right to do.  It’s an all-too common fact pattern in today’s Amazon-dominated economy: a Chinese manufacturer blatantly sells an infringing good via Amazon Marketplace, with no discernible paper trail that would allow a plaintiff to press an ordinary IP suit.  Plaintiffs sue anyway, and they ask the court for an order to serve electronically.  Because of the horrible, terrible, no good Gurung decision, and because judges are naturally (and justifiably) impatient, orders for electronic service under Rule 4(f)(3) are routinely and erroneously granted.  Text of that rule:

(f) Serving an Individual in a Foreign Country. Unless federal law provides otherwise, an individual—other than a minor, an incompetent person, or a person whose waiver has been filed—may be served at a place not within any judicial district of the United States:

(3) by other means not prohibited by international agreement, as the court orders.

(This applies to entities, too, by virtue of 4(h)(2).)

Remember– the ultimate goal is not damages (good luck enforcing that victory in the PRC!), but to keep the infringing goods out of the U.S. market.  A District Court default can smooth the road in a §337 proceeding, which is necessary to stop such goods at the port of entry. I see dozens of these cases on the docket every year, and it astounds me that courts and plaintiffs’ counsel still don’t have a solid handle on the best, proper way to serve the defendants, and quickly.  So here we go, with a real-world criticism of what’s happened lately in the Smart Study case.  (In short, the court denied a default motion,  inter alia, but with similarly tenuous reasoning to the initial order.)

It’s the summer of 2021, and along comes plaintiff Smart Study Co., who succeeds in getting a 4(f)(3) order for electronic service (based in large part on Sulzer Mixpac, a demon spawn of Gurung), and serves the Chinese vendors electronically.  Now in the summer of 2022, a pair of the defendants actually appear (gasp!) in opposition to Smart Study’s default motion, arguing in part what I’ve been saying for years:


Judge Woods says “whoa, wait a minute…” and denies Smart Study’s default motion, determining upon further consideration that the 4(f)(3) order was in error– including a withering criticism of Sulzer Mixpac.

Huzzah for Judge Woods, seemingly a rarity in the Southern District, where 4(f)(3) orders are doled out like candy on Halloween… but whoa, wait a minute.  Let’s dig deeper.  The original 4(f)(3) order was correct, but based on the wrong reasoning— or incorrect in light of what was originally argued–  so perhaps the denial of default was correct, and the original order just needs a tweak.  Everybody knows these scofflaw vendors are purposefully anonymous, and frankly, I think electronic service is the only way to get them served.  But getting to that point should be more meticulous than what the plaintiff did here.

The big, massive, gaping hole in everybody’s reasoning is this:  the methods articulated in Hague Service Convention are EXCLUSIVE, and because it’s a treaty, it’s the Supreme Law of the Land (I read that somewhere, I’m certain).  Trial judges’ and plaintiffs’ justifiable impatience notwithstanding, email is not permitted by the Hague Service Convention, so it’s OUT, arguably where the destination state doesn’t oppose Article 10(a), but unquestionably where that state has objected.

O’Connor, J.  Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 710 (1988).

Don’t take my word for it.  Take the word of this nice lady from Arizona–>

 “Those who eschew its procedures risk discovering that the forum’s internal law required transmittal of documents for service abroad, and that the Convention therefore provided the exclusive means of valid service.”  Schlunk, at 706.  (Emphasis mine, of course.)

And Justice Brennan, concurring:

“In response to this and other concerns, the Convention prescribes the exclusive means for service of process emanating from one contracting nation and culminating in another.”  At 710.  (Yes, yes, emphasis mine again.)


But– and it’s a critically important but– if the Hague Service Convention doesn’t apply, there’s no violation of it. See Article 1:

This Convention shall not apply where the address of the person to be served with the document is not known.

Smart Study was on the right track– the defendants’ evasion and purposeful anonymity shouldn’t shield them from service– but Smart Study didn’t build up enough steam to get the train moving.  All that’s missing in the original argument is a diligent search for the defendants’ addresses, or proper 4(f)(3) would be a foregone conclusion.

Still, a full year on, following defendants’ opposition to the default motion, Judge Woods and plaintiff’s counsel called in a bunch of experts on Chinese law, which is wholly irrelevant in light of (1) Hague exclusivity and (2) China’s clear objection to the entirety of Article 10.  Nobody needed to get into the tall weeds on this– Chinese municipal law is not applicable– the plaintiff just needed to flesh out the proper syllogism.  Follow my logic here…

  • Without an address for a defendant, the Hague Service Convention does not apply.
  • No Hague applicability, no exclusivity problem.
  • No exclusivity problem, no prohibition by international agreement to upend 4(f)(3).
  • So… get a competent investigator to undertake a diligent search, and lay a solid foundation for a 4(f)(3) order.

That’s what should have been the basis for the original 4(f)(3) motion.  Give the judge something to hang his hat on.**

Again, the ultimate goal is to keep the infringing goods out of the U.S. market– once a District Court default is issued, it makes a §337 proceeding much easier, and that’s really the only realistic hope a IP owner has in this sort of case.

Truly, 4(f)(3) is the way, but only with a proper foundation.***

* TLB really is a tremendous resource, especially for someone seeking scholarly commentary from smarter people than some smart-mouth solo in his home office in Kansas City.  One part of Professor Dodge’s post really bothered me, though:

Judge Woods disagreed. First, he read the Supreme Court’s decisions in Water Splash, Inc. v. Menon (2017) and Volkswagenwerk Aktiengesellschaft v. Schlunk (1988) as indicating that only methods of service specified in the Convention are permissible. This may be the least convincing aspect of his opinion. Water Splash considered whether Article 10’s permission to “send” documents through postal channels allowed them to be “served” that way, whereas Schlunk held that the Convention did not apply when service was completed within the United States according the forum’s law. Neither decision considered whether the means specified in the Convention are exclusive.

That last sentence sent my head spinning wildly off my shoulders.  I certainly agree that Water Splash is off point (and irrelevant to 4(f)(3) analysis anyway… it was all about mail, resolving a very silly semantic circuit split).  But Schlunk held far more than Prof. Dodge indicates– specifically that, if transmission abroad is necessary for service, then Hague doctrine is mandatory, as in “THOU SHALT ADHERE.”  It simply wasn’t necessary to transmit abroad to initiate the Schlunk suit.  The Schlunk opinion also specifically addressed exclusivity twice (once in the court’s opinion, once in concurrence, and not in mere dicta), holding that the Convention is indeed exclusive.  That’s the crux of this entire argument– and to my mind, the most convincing part of Judge Woods’ logic.  He simply didn’t flesh it out with O’Connor’s words.

Major kudos to Dodge, though, for this:

Finally, the decision in Smart Study provides an example of the distinctive issues raised in transnational litigation and covered in (The Transnational Litigation Blog). Judge Woods is clearly a capable and conscientious judge. He did an admirable job getting to the bottom of a difficult question once it came to his attention. But the fact that the question was not immediately apparent shows just how much education about transnational litigation remains necessary for both the bench and the bar.

Amen, sir.  Amen.  (Let’s just not be too emphatic about that… I’d still like to keep doing what I do.

** An alternative to (ie: better option than) an investigation?  Subpoena Amazon for the vendors’ contact details, insisting on true identities and addresses.  A takedown order is going to be part of the 337 anyway, so why not start early?  If they won’t comply, join them as a co-defendant and make them go blind on paperwork.

*** I omit discussion of Article 15 defaults here– sure, they’re valid, but constitutionally unsound without actual notice.  They can still be sought, though… but that’s a discussion for another post.  It’s a distractor in this situation, because Smart Study never applied to China’s Hague Central Authority.