Kowalski v. Hawaii International Seafood, Inc. et al

Filing 104

ORDER GRANTING DEFENDANT CLEARSMOKE TECHNOLOGIES, LTD.'S MOTION TO VACATE ENTRY OF DEFAULT AND QUASH SERVICE AND DENYING ITS MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR LACK OF PERSONAL JURISDICTION (DOC. 29 ). Signed by JUDGE HELEN GILLMOR o n 08/10/2012. (eps) -- Plaintiffs' service is ordered QUASHED. The March 23, 2012 Entry of Default against Clearsmoke is VACATED CERTIFICATE OF SERVICEParticipants registered to receive el ectronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
Anova Food, LLC; Anova Food,
)
Inc.; Clearsmoke Technologies, )
Ltd; DOES 1-10,

Civ. No. 11-00795 HG-RLP

William R. Kowalski; Hawaii
International Seafood, Inc.,

Defendants.
ORDER GRANTING DEFENDANT CLEARSMOKE TECHNOLOGIES, LTD.’S MOTION
TO VACATE ENTRY OF DEFAULT AND QUASH SERVICE
AND
DENYING ITS MOTION TO DISMISS FIRST AMENDED COMPLAINT FOR LACK OF
PERSONAL JURISDICTION (DOC. 29)
On January 2, 2012, Plaintiffs William R. Kowalski and
Hawaii International Seafood, Inc. (“Plaintiffs”) filed a fourcount First Amended Complaint asserting claims for patent
infringement in violation of 35 U.S.C. § 271 (Count 1), unfair
competition and/or deceptive trade practices under 15 U.S.C. §
1125(a) (Count 2), unfair methods of competition under Hawaii
Revised Statute (“H.R.S”) § 480-2 (Count 3), and unfair and
deceptive trade practices in violation of H.R.S. § 481A-3 (Count
4). (Doc. 6).

The Plaintiffs allege that Defendants Anova Food,

LLC (“Anova LLC”), Anova Food, Inc. (“Anova Inc.”), and
Clearsmoke Technologies, Ltd. (“Clearsmoke”) have infringed a
patent that covers a process for treating food with smoke without
1

the food retaining smoke taste or odor, and falsely represented
that the food has been processed with a non-infringing process.
On March 23, 2012, the Clerk of the Court issued an Entry of
Default for Defendant Clearsmoke. (Doc. 23-2).

On April 5, 2012,

Defendant Clearsmoke filed a Motion to Vacate Entry of Default,
Quash Service, and Dismiss First Amended Complaint. (Doc. 29).
The Motion to Vacate Entry of Default and Quash Service is
GRANTED.

The Motion to Dismiss for lack of personal jurisdiction

is DENIED.

PROCEDURAL HISTORY
On December 19, 2011, Plaintiffs William R. Kowalski and
Hawaii International Seafood, Inc. (“Plaintiffs”) filed a
Complaint. (Doc. 1).
On January 2, 2012, the Plaintiffs filed a First Amended
Complaint. (Doc. 6).
On March 23, 2012, the Plaintiffs filed a Request for Entry
of Default Against Defendant Clearsmoke Technologies, Ltd. (Doc.
23).
On the same date, the Clerk of the Court entered Default
against Defendant Clearsmoke Technologies, Ltd. (Doc. 23-2).
On April 5, 2012, Defendant Clearsmoke Technologies, Ltd.
filed a Motion to Vacate Entry of Default, Quash Service, and
Dismiss First Amended Complaint. (Doc. 29).
2

On April 12, 2012, Defendant Anova Food, LLC filed a
Statement of No Opposition to the Motion. (Doc. 33).
On the same date, Defendant Anova Food, Inc. filed a
Statement of No Opposition to the Motion. (Doc. 35).
On April 23, 2012, the Plaintiffs filed an Opposition, along
with Declarations of William R. Kowalski, Sheree Belshe, Milton
M. Yasunaga, and Exhibits 1-41. (Doc. 39).
On April 24, 2012, the Plaintiffs filed a Motion for Order
Allowing Service Upon Clearsmoke Technologies, Ltd.’s U.S.
Counsel. (Doc. 41).
On May 2, 2012, the Plaintiffs filed a Declaration of Milton
M. Yasunaga and Exhibits 42-52 to their Opposition. (Doc. 44).
On May 7, 2012, Defendant Clearsmoke Technologies, Ltd.
filed Evidentiary Objections to the Plaintiff’s evidence. (Doc.
51).
On the same date, Defendant Clearsmoke Technologies, Ltd.
filed a Reply in support of its Motion to Vacate Entry of
Default, Quash Service, and Dismiss First Amended Complaint.
(Doc. 52).
On May 9, 2012, the Plaintiffs filed a Motion for
Consideration of New Information and Corresponding Enlargement of
Time regarding their Opposition, additional Exhibits 53-56, and
Certificate of Compliance with Local Rule 7.5. (Doc. 57).
On May 10, 2012, the Court issued an Order granting the

3

Motion for Consideration of New Information and Corresponding
Enlargement of Time regarding their Opposition, and allowing the
Defendants an opportunity to respond to the evidence cited
therein. (Doc. 59).
On May 21, 2012, the Plaintiffs filed a Response to
Defendant Clearsmoke Technologies, Ltd.’s Evidentiary Objections.
(Doc. 61).
On May 25, 2012, Defendant Clearsmoke Technologies, Ltd.
filed a Response to the Plaintiff’s new information. (Doc. 67).
On June 8, 2012, the Plaintiffs filed a Reply in Support of
their new information. (Doc. 76).
On the same date, the Plaintiffs filed a Signed Declaration
of Charles Umamoto in support of the Reply. (Doc. 78).

An

unsigned copy of the Declaration had been attached to the Reply.
Pursuant to Local Rule 7.2(d), the Court elected to decide
the Motion without a hearing.

BACKGROUND
The Plaintiffs allege that Defendants Anova Inc., Anova LLC,
and Clearsmoke have processed, imported, offered to sell, or sold
food made with a process covered by a Patent owned by Plaintiffs,
without authorization. (First Amended Complaint at ¶ 8 (Doc. 6)).
Plaintiffs also allege that the Defendants have advertised and
sold fish that they falsely described as fish that had not been

4

processed in a manner covered by the Patent. (Id. at ¶ 14).
According to the Plaintiffs, Clearsmoke Technologies, Inc.
made patent-infringing smoke that was used on Anova Inc.’s fish,
and helped to promote Anova Inc.’s fish and the process used on
it. (Id. at 6).

Plaintiffs allege that Defendant Clearsmoke

Technologies, Ltd. (“Clearsmoke”) is a successor company to
Clearsmoke Technologies, Inc. (Id.).

Defendant Anova Food, LLC

(“Anova LLC”) maintains that it is a company that has taken over
the business and assets of Anova Inc.

Plaintiffs believe Anova

Inc. must still be operating. (Id.).

Plaintiffs claim that Anova

Inc., Anova LLC, and Clearsmoke are related companies with common
owners and staff. (Id.).
Clearsmoke contends that it has not been served with the
Complaint and Summons.

The Plaintiffs filed an affidavit from a

process server, Jamie Snyder, who declares that she served
Clearsmoke by delivering the Complaint and Summons to Scott
Purinton.

Clearsmoke claims that Purinton is not authorized to

accept service on its behalf.

STANDARD
I.

Service of Process
Service of process “is the means by which a court asserts

its jurisdiction over the person.” SEC v. Ross, 504 F.3d 1130,
1138 (9th Cir. 2007).

To accomplish service of process, a
5

plaintiff must serve a summons and complaint in accordance with
the requirements of Federal Rule of Civil Procedure 4. Id.

Even

when a defendant has “actual notice, the manner of service of
process must substantially comply with Rule 4 requirements.”
Crane v. Battelle, 127 F.R.D. 174, 177 (S.D. Cal. 1989).
The burden of proving service is generally on the Plaintiff.
See SEC v. Internet Solutions for Business, Inc., 509 F.3d 1161,
1165 (9th Cir. 2007).

While a process server’s affidavit is

prima facie evidence of service, that evidentiary presumption can
be overcome by “strong and convincing evidence.” SEC v. Internet
Solutions for Business, Inc., 509 F.3d 1161, 1163 (9th Cir.
2007).

When a court finds that proper service has not been

accomplished, the remedy “is to quash service and require [the]
plaintiff to effect proper service.” Agricola ABC, S.A. de C.V v.
Chiquta Fresh North Am., LLC, 2010 WL 4809641, at *4 (S.D. Cal.
2010).

II.

Personal Jurisdiction
In patent infringement cases, district courts apply the law

of the Federal Circuit to determine whether the exercise of
personal jurisdiction is proper “because the jurisdictional issue
is intimately involved with the substance of the patent laws.”
Autogenomics, Inc. v. Oxford Gene Tech, Ltd., 566 F.3d 1012, 1016
(Fed. Cir. 2009) (internal quotation marks omitted); see also
6

Hildebrand v. Steck Mfg. Company, Inc., 279 F.3d 1351, 1354 (Fed.
Cir. 2002).
Determining whether personal jurisdiction is proper involves
two inquiries: (1) “whether a forum state’s long-arm statute
permits service of process,” and (2) “whether assertion of
personal jurisdiction violates due process.” Genetic Implant, 123
F.3d at 1458 (citing Burger King Corp. v. Rudzewicz, 471 U.S.
462, 471-76 (1985)).

Hawaii’s long-arm statute allows personal

jurisdiction to service on a defendant to the full extent
permissible by the Due Process Clause of the Fourteenth Amendment
of the United States Constitution. H.R.S. § 634-35; Cisnerso v.
Trans Union, LLC, 293 F.Supp.2d 1156, 1164 (D. Haw. 2003).

As

Hawaii’s long-arm statute “is coextensive with the limits of due
process, the two inquiries collapse into a single inquiry:
whether jurisdiction comports with due process.” Inamed Corp. v.
Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001).
Personal jurisdiction may be either general or specific.
Autogenomics, 566 F.3d at 1017.

General jurisdiction “requires

that the defendant have ‘continuous and systematic’ contacts with
the forum state and confers personal jurisdiction even when the
cause of action has no relationship with those contacts.” Id.
(quoting Silent Drive, 326 F.3d at 1200)).

Specific jurisdiction

may be exercised where:
(1) the defendant purposefully directed its activities
at residents of the forum, (2) the claim arises out of
7

or relates to those activities, and (3) assertion of
personal jurisdiction is reasonable and fair.
Id. (quoting Breckenridge Pharm, Inc. v. Metabolite Labs, Inc.,
444 F.3d 1356, 13634 (Fed. Cir. 2006)).
If the parties have not conducted discovery, the plaintiff
“need only make a prima facie showing” that the defendant is
subject to personal jurisdiction. Avocent, 552 F.3d 1324, 1328
(quoting Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d
1194, 1201 (Fed. Cir. 2003)).

The district court must “accept

the uncontroverted allegations in the plaintiff’s complaint as
true and resolve any factual conflicts in the affidavits in the
plaintiff’s favor.” Elecs. for Imaging, Inc. v. Coyle, 340 F.3d
1344, 1349 (Fed. Cir. 2003).

ANALYSIS
Defendant Clearsmoke Technologies, Ltd. (“Clearsmoke”) Moves
to Vacate Entry of Default, Quash Service, and Dismiss for lack
of personal jurisdiction.

The Court first considers whether

Clearsmoke was properly served, and then considers whether
Clearsmoke would be subject to personal jurisdiction if it had
been served.

I.

Service of Process
Clearsmoke argues that the default entered against it should

8

be vacated because it was never served.

A summons and complaint

must be served in accordance with the requirements of Federal
Rule of Civil Procedure 4.

Even when a defendant has “actual

notice, the manner of service of process must substantially
comply with Rule 4 requirements.” Crane v. Battelle, 127 F.R.D.
174, 177 (S.D. Cal. 1989).

The burden of proving service is

generally on the Plaintiff. See SEC v. Internet Solutions for
Business, Inc., 509 F.3d 1161, 1165 (9th Cir. 2007).
The Plaintiffs filed an affidavit from a process server,
Jamie Snyder, who declares that she served Clearsmoke by
delivering the Complaint and Summons to Scott Purinton, an
individual who is “authorized to accept” service on behalf of
Clearsmoke. (Doc. 12).

Rule 4 authorizes service on a company by

delivering the summons and complaint to an officer, managing or
general agent, or any other agent authorized to receive service
of process. Fed. R. Civ. P. 4(h)(1)(B).
While a process server’s affidavit is prima facie evidence
of service, that evidentiary presumption can be overcome by
“strong and convincing evidence.” SEC v. Internet Solutions for
Business, Inc., 509 F.3d 1161, 1163 (9th Cir. 2007).

Clearsmoke

contends that Purinton has never been its employee or agent, and
is not authorized to accept service on its behalf.

Clearsmoke

submitted a Declaration of Purinton, who avers that he has no
connection to Clearsmoke, and that he expressly told Snyder that

9

he could not accept service for Clearsmoke. (Declaration of Scott
Purinton, attached to Clearsmoke’s Motion (Doc. 29-2)).
Clearsmoke claims that it is a Malta company and has no offices
in the United States.

Purinton’s Declaration constitutes “strong

and convincing evidence” that Clearsmoke was not served. See
Surefire, LLC v. Casual Home Worldwide, Inc., 2012 WL 2417313, at
*2 (S.D. Cal. 2012).
The Plaintiffs argue that the process server’s affidavit is
credible because there is evidence that Clearsmoke previously
shared an office address with the Anova company in the State of
Georgia.

The Plaintiffs have not, however, submitted any

evidence that controverts Purinton’s claims that he is not
Clearsmoke’s agent and expressly told the process server that he
could not accept service on its behalf.

As the burden of proof

is on the Plaintiffs, and Clearsmoke has provided convincing
evidence that it was not served, the Court finds that the
Plaintiffs have failed to properly serve Clearsmoke in accordance
with Rule 4.
When a court finds that proper service has not been
accomplished, the remedy “is to quash service and require [the]
plaintiff to effect proper service.” Agricola ABC, S.A. de C.V v.
Chiquta Fresh North Am., LLC, 2010 WL 4809641, at *4 (S.D. Cal.
2010).

The Plaintiffs have requested leave to provide alternate

methods of service, and have filed a Motion for Order Allowing

10

Service on Clearsmoke’s United States counsel.

The Plaintiff’s

request for alternate service will be addressed in a separate
order resolving that motion.
Clearsmoke’s Motion to Vacate Entry of Default and Quash
Service is GRANTED.
QUASHED.

The Plaintiffs’ attempted service is ordered

The March 23, 2012 Entry of Default against Clearsmoke

is VACATED.

II.

Personal Jurisdiction
Clearsmoke contends that it has not purposefully directed

any activities at Hawaii or Hawaii residents, and lacks the
minimum contacts with the state necessary for the exercise of
personal jurisdiction to comport with the Due Process Clauses of
the Fifth and Fourteenth Amendments of the United States
Constitution.1
Due process requires that defendants have “minimum contacts

1

In a “federal question case [in which] a federally created
right is at issue, we examine due process in light of the fifth
amendment rather than the fourteenth amendment.” Dakota Indus.,
Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1389 n. 2 (8th
Cir. 1991). Although this is a federal question case, the
Fourteenth Amendment is also involved in that determining whether
personal jurisdiction is present requires examining the forum
state’s long-arm statute. Genetic Implant, 123 F.3d at 1458.
Hawaii’s long-arm statute permits personal jurisdiction to the
full extent permitted by the Fourteenth Amendment. The due
process inquiry in this case therefore concerns the protections
provided by the Due Process Clauses of both the Fifth and
Fourteenth Amendments, collapsing into a single inquiry.
11

with the forum state, so that the exercise of personal
jurisdiction does not offend traditional notions of fair play and
substantial justice.” Am. Nat’l Red Cross, 112 F.3d at 1050
(citing Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)).

If a

defendant’s contacts with the forum state are “continuous and
systematic,” general jurisdiction may be exercised. Red Wing
Shoe, 148 F.3d at 1359.

If the defendant has purposefully

directed its activities to the forum state and the plaintiff’s
cause of action arises from those activities, specific
jurisdiction may be exercised if it would be reasonable.
HolleyAnne Corp. v. TFT,Inc., 199 F.3d 1304, 1307-08 (Fed. Cir.
1999).

A.

General Personal Jurisdiction

To be subject to general jurisdiction, Clearsmoke must have
“continuous and systematic general business contacts” with the
State of Hawaii. Autogenomics, 566 F.3d at 1017 (quoting
Helicopteros, 466 U.S. at 416)).

“[S]poradic and insubtantial

contacts with the forum state . . . are not sufficient to
establish general jurisdiction . . . .” Campbell Pet Co. v.
Miale, 542 F.3d 879, 884 (Fed. Cir. 2008).
Clearsmoke states that it is a company that was organized
under the laws of Malta in 2006, but has been “effectively
defunct” for over a year and a half. (Motion at 8 (Doc. 29-1)).

12

Clearsmoke claims that it has never done business in Hawaii (nor
in the United States), has no employees or agents in Hawaii, and
has never shipped products or performed services in Hawaii.
Before ceasing business operations, Clearsmoke states that it
made filtered wood smoke that it sold to seafood producers in
countries outside the United States.

Clearsmoke states that it

also sometimes trained those seafood producers in how to apply
the smoke to fish.

Clearsmoke submitted Declarations from Dimas

Wibowo, its sole shareholder, and Blane Olson, a prior Clearsmoke
Director, in support. (Declaration of Dimas Wibowo (Doc. 29-5);
Declaration of Blane Olson (Doc. 29-4)).
The Plaintiffs claim that Clearsmoke is subject to general
jurisdiction in Hawaii because products made with its
“Clearsmoke” smoke are sold at Sam’s Club supermarkets and at
Outback Steakhouse restaurants.

Such contacts are insufficient

to subject Clearsmoke to general jurisdiction in the state.

The

standard for general jurisdiction, in which a party can be
subjected to jurisdiction based on acts that are unrelated to its
contacts with the forum, is “fairly high.” Helicopteros
Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984).
To be subject to general jurisdiction, a company must have
“continuous and systematic general business contacts.” Id. at
415-16.

Here, Plaintiffs claim that Clearsmoke is subject to

personal jurisdiction based on a “stream of commerce” theory, by

13

selling products to third-parties who in turn have sold the
products in Hawaii.

The Federal Circuit has stated that it is

“unclear whether contacts based solely on the ‘stream of
commerce’ may suffice to establish general jurisdiction,” and has
pointed out that the “Fifth Circuit, for example, has held that
such contacts will not support a finding of general
jurisdiction.” Avocent Huntsville Corp. v. Aten Intern. Co.,
Ltd., 552 F.3d 1324, 1331 (Fed. Cir. 2008) (citing Bearry v.
Beech Aircraft Corp., 818 F.2d 370, 375 (5th Dir. 1987)).
It is clear, however, that if a party is to be haled into a
forum for reasons that are wholly unrelated to its contacts with
the forum, such contacts must be substantial. Id.; Helicopteros,
466 U.S. at 414.

Plaintiffs claim that Clearsmoke has sold smoke

companies who have in turn sold fish made with the smoke in
Hawaii, but Plaintiffs do not claim that Clearsmoke continuously
and systematically does business in Hawaii.

The stream-of-

commerce contacts identified by Plaintiffs are insufficient to
confer general jurisdiction. See Campbell Pet Co. Miale, 542 F.3d
879, 993 (Fed. Cir. 2008) (no general jurisdiction over
defendants who directly made 12 sales to customers in the forum
state); Avocent, 552 F.3d at 1328 (no general jurisdiction based
on defendant’s products being available for sale in the forum
under a “stream of commerce” theory).

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B.

Specific Jurisdiction

Specific jurisdiction may be exercised where:
(1) the defendant purposefully directed its activities
at residents of the forum, (2) the claim arises out of
or relates to those activities, and (3) assertion of
personal jurisdiction is reasonable and fair.
Avocent, 552 F.3d at 1332 (quoting Breckenridge Pharmaceutical,
Inc. v. Metabolite Laboratories, Inc. 444 F.3d 1356, 1363 (Fed.
Cir. 2006)).

“With respect to the last prong, the burden of

proof is on the defendant, which must ‘present a compelling case
that the presence of some other considerations would render
jurisdiction unreasonable.’” Breckenridge, 444 F.3d at 1363
(quoting Akro, 45 F.3d at 1545-46).

1.

Specific Jurisdiction Factor 1: Purposefully
Directed Activities

The Plaintiffs claim that Clearsmoke and the other
Defendants, acting in consort, have shipped large quantities
(thousands of multi-pound bags) of patent-infringing products to
Hawaii through intentionally established distribution channels.
The Plaintiffs claim that the products are sold in packaging that
is labeled with the “Clearsmoke” trademark.

The Plaintiffs also

claim that Clearsmoke and the other Defendants have solicited
sales of patent-infringing fish to Hawaii companies and sold fish
directly to a Hawaii supermarket.
The Plaintiffs’ Opposition to Clearsmoke’s Motion to Dismiss
15

is largely the same as the Opposition the Plaintiffs filed to
Defendants Anova LLC and Anova Inc.’s Motions to Dismiss.

The

Plaintiffs frequently refer to “Defendants” without
distinguishing between them, as if their actions were all
imputable to each other.

Although there is evidence that

Clearsmoke, Anova LLC, and Anova Inc. may share common owners and
employees, the Plaintiffs have not argued that they are alter
egos of each other or presented legal authority that shows their
actions are imputable to each other.

Some of the evidence cited

by Plaintiff to support personal jurisdiction over Clearsmoke
does not show a link to Clearsmoke.

For example, the Plaintiffs

submitted a Declaration of Gary Ishimoto, the President of
Diamond Head Seafood Wholesale, Inc.

Ishimoto states, “From time

to time over the years Anova Food contacted me to see if Diamond
Head Seafood was interested in buying Clearsmoke frozen fish from
Anova . . . .” (Declaration of Gary Ishimoto at ¶ 2, attached to
Plaintiffs’ Motion for Consideration of New Information and
Corresponding Enlargement of Time at ¶ 3 (Doc. 57-3)).

Ishimoto

references communications with “Anova Food,” but never mentions
communications or contacts with Clearsmoke, Ltd.

Only the

evidence that reflects purposefully direct activities on the part
of Clearsmoke is considered in the following discussion.

Distribution Channels

16

The Plaintiffs submitted evidence that thousands of multipound bags of fish made with Clearsmoke’s smoke are sold at Sam’s
Club supermarkets in Hawaii, in packaging labeled with the
“Clearsmoke” trademark.

The Plaintiffs also submitted evidence

that fish made with Clearsmoke smoke may be sold at Outback
Steakhouse and Ruth’s Chris restaurants in Hawaii.

The

Plaintiffs also claim that fish made with Clearsmoke has been
sold at Foodland supermarkets in Hawaii.
Clearsmoke does not dispute that large quantities of fish
products made with its smoke are sold in Hawaii.

Clearsmoke also

does not dispute that thousands of such products are sold at
Hawaii Sam’s Club supermarkets in packaging that is labeled with
the “Clearsmoke” trademark.

Clearsmoke argues that these facts

are insufficient to confer jurisdiction over it because the
products were shipped to the state and sold there by third
parties over whom Clearsmoke exercises no control or direction.
Clearsmoke contends that it sells its smoke only to seafood
suppliers outside the United States.

According to Clearsmoke,

the suppliers in turn sell the smoke-treated seafood to the Anova
companies.

The Anova companies then sell the products to

customers in the mainland United States, including Odyssey.
According to Clearsmoke, Odyssey sells fish to Sam’s Club in the
mainland United States, and Sam’s Club then ships the products to
its Hawaii stores.
Personal jurisdiction may be present in a patent
17

infringement action in a forum where a company distributes
products through third-parties, even though the company does not
itself directly sell products in the state. Beverly Hills Fan Co.
v. Royal Sovereign Corp., 21 F.3d 1558 (Fed. Cir. 1994).

In

Beverly Hills Fan, the Defendants were accused of selling patentinfringing fans in Virginia.

One of the Defendants, Ultec, was a

Chinese company that manufactured the accused fans in Taiwan.
The other Defendant, Royal, was a New Jersey company that
imported and distributed the fans in the United States.

The

Plaintiffs submitted evidence that 52 of the accused fans were
available for sale at a retailer in Virginia.

The evidence also

showed that the fans were accompanied by a manual that identified
Royal as the source, and a warranty that indicated it would be
honored by Royal.

The Court of Appeals held that this evidence

was sufficient to show that the Defendants had “ongoing
relationships” with the retailer, from which it could be inferred
that a distribution channel was “intentionally established, and
that the defendants knew, or reasonably could have foreseen, that
a termination point of the channel was Virginia.” Id. at 1564.
As a result, the defendants were held to have purposefully
availed themselves of the forum and were subject to personal
jurisdiction there.
There is more evidence of an ongoing relationship between
Clearsmoke and forum state retailers in this case than there was
evidence of such a connection in Beverly Hills Fan.
18

First, there

is no dispute that thousands of packages of fish made with
Clearsmoke smoke is sold at Hawaii Sam’s Club supermarkets, far
more than the mere 52 fans at issue in Beverly Hills Fan.
Second, there is no dispute that the fish is sold in packaging
that clearly displays the “Clearsmoke” trademark.
In this case, moreover, there is also evidence that
Clearsmoke was involved in directly soliciting sales to Hawaii
companies, which provides further evidence of purposefully
directing distribution efforts to Hawaii.

The Plaintiffs

submitted copies of email correspondence between Hilo Fish Co.
and Tropic Fish Hawaii, LLC, both Hawaii fish companies, and
Clearsmoke representative Blane Olson.

In a Declaration

submitted by Clearsmoke, Olson states that he was a “Director” of
Clearsmoke “on and off until December 2010.” (Declaration of
Blane Olson (Doc. 29-4)).

In the emails, Olson discusses a

potential sale of Anova fish, and Olson states that he will send
samples. (Exhibit 53, 56 attached to Plaintiffs’ Motion for
Consideration of New Information (Doc. 57-)).

The emails do not

indicate Olson’s title or the company he works for, but his email
address ends with “@clearsmoke.com.”

The Plaintiffs submitted a

copy of a Declaration signed by Olson, in which he states that he
has done work for “both Clearsmoke and Anova marketing programs.”
(Exhibit 48 (Doc. 44-8)).

The Plaintiffs also submitted a copy

of the transcript of a trial in which Anova Inc. was the
defendant, and whose attorney stated, in his opening statement:
19

“Clearsmoke Limited is Anova, Inc.’s sister company that works
with Anova, Inc. to process and sell Clearsmoke branded tuna to
Anova, Inc.’s customers.

There is no secret about Blane Olson

participating [sic] and serving the Anova, Inc. customer because
it is a process where the two companies have to work together.”
(Exhibit 51 (Doc. 44-11)).
When the evidence is viewed as a whole and in the light most
favorable to the Plaintiffs, it shows that Clearsmoke has
purposefully directed commercial activities at the State of
Hawaii.

Although Clearsmoke argues that it did not control the

third-parties who distributed products made with its smoke or
require them to sell products in Hawaii, there is no requirement
that a company maintain strict control over its distributers in
order for it to be subject to personal jurisdiction in the
locations where its products are sold. See Beverly Hills Fan, 21
F.3d 1558.

2.

Specific Jurisdiction Factor 2: Claim Arises Out
of Purposefully Directed Activities

The second prong of the specific jurisdiction test requires
that the Plaintiffs’ claims arise out of the Defendants’
purposefully directed activities. 3D Systems, 160 F.3d at 1378.
Here, the Plaintiffs have alleged that Clearsmoke has engaged in
patent infringement by selling, offering to sell, and assisting
others in selling and offering to sell products through
20

intentionally established distribution channels.

Selling and

offering to sell products constitutes patent infringement.
HollyAnned Corp. v. TFT, Inc., 199 F.3d 1304, 1308 (Fed. Cir.
1999).

The Plaintiffs submitted evidence that fish made with

Clearsmoke smoke is sold in large quantities in Hawaii, in
packaging labeled with the “Clearsmoke” trademark.

The

Plaintiffs also submitted evidence that Blane Olson, an
individual who worked for Clearsmoke, directly solicited sales of
fish made with Clearsmoke’s smoke to Hawaii companies.
Plaintiffs’ patent infringement claims arise from Clearsmokes’s
alleged sales and offers to sell its products in the forum.

The

second prong of the specific jurisdiction test is satisfied.

3.

Specific Jurisdiction Factor 3: Reasonable and
Fair to Exercise Jurisdiction

The third prong of the specific jurisdiction test asks
whether it would be “reasonable and fair” to exercise
jurisdiction over the non-resident defendant. 3D Systems, 160
F.3d at 1379-80.

The burden of proving it would be unreasonable

or unfair is on the Defendants, who must “present a compelling
case that the presence of some other considerations would render
jurisdiction unreasonable.” Akro, 45 F.3d at 1545-46 (quoting
Burger King, 471 U.S. at 476-77)).

Factors bearing on the

reasonableness inquiry include: “the burden on the defendant, the
forum State’s interest in adjudicating the dispute, the
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plaintiff’s interest in obtaining convenient and effective
relief, the interstate judicial system’s interest in obtaining
the most efficient resolution of controversies, and the shared
interest of the several States in furthering fundamental
substantive social policies.” Patent Rights Protection Group, LLC
v. Video Gaming Technologies, Inc., 603 F.3d 1364, 1369 (Fed.
Cir. 2010) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462,
476-77 (1945)).
Clearsmoke argues that it would be unreasonable and unfair
to be required to defend itself in Hawaii because the
jurisdiction is far from its home, and it maintains no employees,
offices, or property in the state.

Clearsmoke maintains that its

principal place of business for the last ten years was Bali,
Indonesia.

The Plaintiffs contend that the Plaintiffs have

already litigated numerous similar patent infringement actions in
Hawaii, and that many of the relevant documents are located in
the state.
Clearsmoke has pointed to no reason why it would be
unreasonable or unfair for it to be required to defend itself in
Hawaii other than that it will be more costly because it will
have to ship documents and witnesses to the state.

By its own

admission, Clearsmoke is an international company that is based
in Malta and does most of its business in Indonesia.

The need to

transport documents and witnesses to Hawaii is not a large burden
for a company that is accustomed to conducting business
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internationally, and it certainly does not outweigh the
Plaintiffs’ interest in litigating an action in the forum where
the patent infringing conduct has allegedly occurred, nor the
State of Hawaii’s interest in adjudicating a dispute based on
activities directed at its residents.

A finding that the

exercise of jurisdiction would be unreasonable or unfair is
“limited to the rare situation in which the plaintiff’s interest
and the state’s interest in adjudicating the dispute in the forum
are so attenuated that they are clearly outweighed by the burden
of subjecting the defendant to litigation within the forum.”
Patent Rights, 603 F.3d at 1369.

Transportation costs “are not

generally a reason to find jurisdiction unreasonable.” Original
Creations, Inc. v. Ready America, Inc., 2011 WL 4738268, at *6
(N.D. Ill. 2011) (citing Beverly Hills Fan, 21 F.3d at 1569)).
Jurisdiction in Hawaii is reasonable and fair under the
circumstances in this case.
Clearsmoke’s Motion to Dismiss for lack of personal
jurisdiction is DENIED.

CONCLUSION
Defendant Clearsmoke, Technologies Ltd.’s Motion to Vacate
Entry of Default and Quash Service (Doc. 29) is GRANTED.
Plaintiffs’ service is ordered QUASHED.
of Default against Clearsmoke is VACATED.

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The March 23, 2012 Entry

Defendant Clearsmoke, Technologies Ltd.’s Motion to Dismiss
for lack of personal jurisdiction (Doc. 29) is DENIED.

IT IS SO ORDERED.
DATED: August 10, 2012, Honolulu, Hawaii.

/S/ Helen Gillmor

Helen Gillmor
United States District Judge

William R. Kowalski; Hawaii International Seafood, Inc. v. Anova
Food, LLC; Anova Food, Inc.; Clearsmoke Technologies, Ltd.; DOES 110; Civil No. 11-00795 HG-RLP; ORDER GRANTING DEFENDANT CLEARSMOKE
TECHNOLOGIES, LTD.’S MOTION TO VACATE ENTRY OF DEFAULT AND QUASH
SERVICE, AND DENYING ITS MOTION TO DISMISS FIRST AMENDED COMPLAINT
FOR LACK OF PERSONAL JURISDICTION (DOC. 29).

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