United States District Court, N.D. California
ORDER REGARDING MOTION FOR DE NOVO DETERMINATION OF
DISPOSITIVE MATTER ASSIGNED TO MAGISTRATE JUDGE RE: NO. ECF
27, 28, 29
TIGAR UNITED STATES DISTRICT JUDGE
the Court is Plaintiff Electronic Frontier Foundation
(“EFF”)'s motion for a de novo determination
of a dispositive matter referred to the magistrate judge. ECF
No. 27. EFF seeks default judgment against the Defendant
Global Equity Management (SA) Pty Ltd (“GEMSA”).
The Court grants the motion, finds that there is personal
jurisdiction, and grants default judgment in favor of EFF.
REQUESTS FOR JUDICIAL NOTICE
conjunction with its motion, EFF seeks judicial notice of
nine complaints that GEMSA filed in federal district courts
against companies with principal places of business in
California. ECF No. 28. The Court may take judicial notice of
court filings. Bias v. Moynihan, 508 F.3d 1212, 1225
(9th Cir. 2007) (providing that a court “may take
judicial notice of proceedings in others court . . . if those
proceedings have a direct relation to matters at
issue.”). Accordingly, the Court grants EFF's
request for judicial notice of the nine publicly filed GEMSA
complaints in federal district courts.
ADMINISTRATIVE MOTION TO AUGMENT THE RECORD
also moved to augment the record under Civil Local Rule
72-3(b), 7-11 and 28 U.S.C. § 686. ECF No. 29. EFF seeks
to add two declarations to the record: (1) A declaration from
Kurt Opsahl, the General Counsel for EFF, describing
EFF's connections with California (its property, banking,
services, members, readers, and donors) and, (2) a
declaration from Benjamin Weed, a partner at K&L Gates
LLP who represents eBay in a suit in which GEMSA is suing
eBay in another court in this district. ECF No. 29-3
¶¶ 1-4. Weed explains that in January 2017,
GEMSA's director Schumann Rafizadeh came to San Francisco
for a several day mediation session, and, separately, for a
two day deposition regarding the eBay suit. ECF No. 29-3
28 U.S.C. § 636(b)(1), a district court “may . . .
receive further evidence” in reviewing a party's
objections to a magistrate judge's findings and
recommendations. Under Civil Local Rule 72-3(b), a party may
move to augment the record to accompany a motion for de novo
determination of a dispositive matter referred to a
magistrate judge. Accordingly, this Court grants EFF's
motion to augment the record and considers the declarations
filed herein. ECF No. 29.
a nonprofit that aims to protect civil liberties as they
relate to digital life, the internet, and other modern
technology. ECF No. 1 (“Compl.”) ¶ 4. EFF
advocates for free speech online and other civil liberties
through litigation, blog posts, and policy analysis.
Id. GEMSA is an Australian corporation that holds a
number of patents and has filed several patent infringement
lawsuits in the United States. Id. ¶ 5.
also advocates for reform of the United States patent system,
including through an article series called the “Stupid
Patent of the Month.” ECF No. 1 ¶ 9. The
“Stupid Patent of the Month” series
“call[s] attention to examples of questionable patents
that stifle innovation [and] harm the public” each
month in an effort to ultimately inspire patent reform.
Id. ¶ 10. On June 30, 2016, EFF staff attorney
Daniel Nazer published a “Stupid Patent of the
Month” article about a patent owned by GEMSA, U.S.
Patent No. 6, 690, 400 (“the '400 patent”)
and GEMSA's related litigation efforts. Id.
¶ 13; see Daniel Nazer, Stupid Patent of
the Month: Storage Cabinets on a Computer, Deeplinks
Blog (June 30, 2016),
(the “article”), available at ECF No. 1-5. The
article explains that the '400 patent claims the idea of
using a cabinet to graphically represent data organization,
and that GEMSA uses this basic idea to sue “just about
anyone who runs a website.” Id. The article
says that GEMSA “seems to be a classic patent
troll.” Id. The article calls on Congress to
pass venue reform legislation to reduce the harm caused by
frequent patent litigators like GEMSA. Id.
months after Nazer posted his article, GEMSA's counsel
emailed EFF a demand letter, alleging that EFF had slandered
the company and demanding that EFF retract the article,
remove all copies of the article from the internet, issue an
apology, and pay damages. Id. at ¶ 20-21. GEMSA
demanded a response within two weeks, and threatened
litigation if EFF did not comply. Id. ¶ 21. EFF
responded by letter, seeking clarification. Id.
¶ 22. GEMSA did not respond, and instead filed suit
against EFF in October 2016 in the Supreme Court of South
Australia. Id. ¶ 23. GEMSA failed to properly
serve EFF the lawsuit's initiating papers. Id.
The lawsuit sought an order requiring EFF to immediately
remove the article and restraining EFF from publishing any
content regarding GEMSA's intellectual property.
Id. ¶ 25. The lawsuit challenged nine specific
statements in the article as misleading and negligent.
Id. ¶ 27. For example, GEMSA alleged that: (1)
EFF's statement that the ʼ400 patent is
“stupid” was false, (2) EFF's description of
the patent did not “accurately depict the
complexities” of the patent, and (3) EFF “did not
have reasonable grounds” for stating that the local
rules for the district court for the Eastern District of
Texas, where GEMSA filed its cases regarding the patent,
favor frequent patent litigators like GEMSA. Id.
GEMSA alleged that EFF's article harmed GEMSA's
litigation efforts in the United States, as demonstrated by
cancelled mediations, and a court setting a Markman
hearing. Id. ¶ 31-32. According to GEMSA, such
harm was part of a conspiracy by EFF, Airbnb (a defendant in
a GEMSA patent litigation case), and Mark Cuban (an EFF
donor), though GEMSA did not provide further details on this
alleged conspiracy. Id. Although EFF never appeared
in the Supreme Court of South Australia, on October 31, 2016,
that court issued an injunction against EFF which ordered EFF
to immediately remove the article and restrained EFF from
publishing any content regarding GEMSA's intellectual
property. Id. ¶ 34. EFF faces asset seizure,
imprisonment, and other potential penalties for failing to
comply with the Australian injunction. Id.
counsel emailed EFF a second demand letter in January 2017
which included a copy of the injunction, and demanded that
EFF remove the article, remove all references to the article
across the internet, and pay $750, 000 in damages.
Id. ¶ 35. Counsel for EFF responded in February
2017 declining to comply as the injunction was unenforceable
because EFF's commentary consisted of
“substantially true facts, protected opinion, and
rhetorical hyperbole.” Id. ¶ 36. EFF has
not removed the article and does not intend to do so, but
nonetheless feels chilled from speaking about GEMSA's
intellectual property. Id. ¶ 36-68.
turned to this Court for declaratory relief from the
injunction under the Securing the Protection of our Enduring
and Established Constitutional Heritage Act (the
“SPEECH Act”), 28 U.S.C. §§ 4101-4105
and the Declaratory Judgment Act, 28 U.S.C. §§
2201-2202. EFF alleges that declaratory relief is due because
the Australian injunction violates EFF's free speech
rights under the United States Constitution and under
California law, as the article's statements are true,
opinion, hyperbole, or otherwise protected by the First
Amendment. Id. ¶ 42. Moreover, EFF alleges that
the Australian court's exercise of jurisdiction did not
comport with United States due process, and therefore also
did not comply with the Hague Convention. EFF seeks only a
declaration (1) “that the Australian Injunction is
repugnant to the United States Constitution and the law of
California and the United States, ” and (2) “that
the Australian Injunction cannot be enforced in the United
States.” Id. at 19.
has not appeared in this action. ECF No. 14 at 10.
Accordingly, EFF seeks default judgment on its claims.
Id. EFF argues that default judgment is due because
the Australian injunction was a prior restraint on speech,
which would not survive constitutional scrutiny in the United
States under the SPEECH Act and the Declaratory Judgment Act.
Id. at 10. In its motion for default judgment, EFF
also elaborates on this Court's jurisdiction over GEMSA.
EFF explains that this case closely resembles a case where
the Ninth Circuit found personal jurisdiction because
defendants sent demand letters and served process against a
California company in California, but obtained a French
court's order against that plaintiff. Id. at 16
(citing Yahoo! Inc. v. La Ligue Contre Le Racisme Et
L'Antisemitisme, 433 F.3d 1199 (9th Cir. 2006)).
Judge James, who was originally assigned this case, ordered
EFF to provide supplemental briefing on how the Court had
personal jurisdiction over GEMSA under the Supreme
Court's test articulated in Walden v. Fiore, 134
S.Ct. 1115, 1122 (2014) and whether GEMSA was properly
served. ECF No. 17. In its supplemental brief, EFF explained
that in addition to the contacts with California alleged in
the complaint, GEMSA retained counsel in California to
prosecute three unrelated infringement actions. ECF No. 22 at
2 n.1. EFF also argued that GEMSA's successful effort to
obtain the Australian injunction was a part of a
“course of conduct explicitly aimed at suppressing a
Californian's speech about litigation involving
California companies such as Airbnb that is of interest to
readers in the Northern District and throughout California.
Id. at 3. EFF explained that GEMSA was properly
served because its process server left the documents on the
reception counter in compliance with Australian law, and
therefore in compliance with the Hague Convention.
Id. at 5-6.
thereafter, Judge James issued a Report and Recommendation
(“R&R”) recommending that this Court deny the
Motion for Default Judgment. ECF No. 23. Judge James
concluded that the Court had subject matter jurisdiction over
the federal questions raised under the Declaratory Judgment
Act and the SPEECH Act. Id. at 6. Judge James also
concluded that GEMSA was properly served. Id. at 12.
The R&R concluded, however, that the court lacked
personal jurisdiction because GEMSA did not direct any
conduct towards California or any resident of California
other than the conduct involving EFF at issue in this case.
Id. at 8-9. Judge James also rejected EFF's
argument that GEMSA reached out to this district because it
is prosecuting unrelated patent infringement cases in this
district, as those cases were transferred to this district
over GEMSA's opposition. Id. at 9-10.
then filed a motion for a de novo determination of the
R&R, which is the subject of this order. ECF No. 27. EFF
objects to the R&R's determination that this Court
lacked specific personal jurisdiction over GEMSA.
Id. at 8. EFF argues that the Report misinterpreted
Walden, and that another Supreme Court case,
Calder v. Jones, 465 U.S. 783 (1984), compels a
finding of personal jurisdiction in this case. Id.
at 10-11. EFF explains that GEMSA knowingly injured EFF in
California because GEMSA knew EFF operated in California when
it sought its injunction against EFF's operations.
Id. at 15. EFF argues that under
Calder's effects test, the effect of GEMSA's
speech suppressing injunction is felt in California, where
EFF does its speaking and where many of its readers reside.
Id. at 20.
subject matter jurisdiction is based on a federal question,
as is the case here, a federal court applies the long-arm
statute of the state in which it sits to determine whether
there is personal jurisdiction. Glencore Grain Rotterdam
B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123
(9th Cir. 2002). California's long-arm statute provides
that personal jurisdiction extends as far as federal due
process allows. Daimler AG v. Bauman, 134 S.Ct. 746,
753 (2014) (applying California law). Under this standard,
specific personal jurisdiction exists where:
(1) the defendant has performed some act or consummated some
transaction within the forum or otherwise purposefully
availed himself of the privileges of conducting activities in
the forum, (2) the claim arises out of or results from the
defendant's forum-related activities, and (3) the
exercise of jurisdiction is reasonable.
Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th
Cir. 2006) (citation omitted). “If the plaintiff
succeeds in satisfying both of the first two prongs, the
burden then shifts to the defendant to ‘present a
compelling case' that the exercise of jurisdiction would
not be reasonable.” Schwarzenegger v. Fred Martin
Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (quoting
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477
decide whether the first prong is met in tort cases, the
Ninth Circuit applies the “effects test” set
forth in Calder v. Jones, which “is satisfied
if (1) the defendant committed an intentional act; (2) the
act was expressly aimed at the forum state; and (3) the act
caused harm that the defendant knew was likely to be suffered
in the forum state.” Love v. Associated Newspapers,
Ltd., 611 F.3d 601, 609 (9th Cir. 2010); see
also, 465 U.S. 783. The Ninth Circuit has held that a case
brought under the First Amendment, asserting that a foreign
court's order is unenforceable by an American court, is
likewise analyzed under the “effects test.”
Yahoo!, 433 F.3d at 1206.
this test, courts determine whether “the defendant has
directed his actions at the forum state, even if those
actions took place elsewhere.” Picot v.
Weston, 780 F.3d 1206, 1212 (9th Cir. 2015). “An
intentional act is one denot[ing] an external manifestation
of the actor's will . . . not includ[ing] any of its
results, even the most direct, immediate, and
intended.” Morrill v. Scott Fin. Corp., 873
F.3d 1136, 1142 (9th Cir. 2017) (internal citations omitted).
“[R]andom, fortuitous, or attenuated contacts are
insufficient to create the requisite connection with the
decision to grant or deny a plaintiff's motion for
default judgment is soundly within this Court's
discretion. See Aldabe v. Adabe, 616 F.2d 1089, 1092
(9th Cir. 1980). The Court may evaluate the following factors
in considering a motion for default judgment:
(1) the possibility of prejudice to the plaintiff, (2) the
merits of plaintiff's substantive claim, (3) the
sufficiency of the complaint, (4) the sum of money at stake
in the action, (5) the possibility of a dispute concerning
material facts, (6) whether the default was due to excusable
neglect, and (7) the strong policy underlying the Federal
Rules of Civil Procedure favoring decisions on the merits.
NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th
Cir. 2016) (citing Eitel v. McCool, 782 F.2d 1470,
1471-72 (9th Cir. 1986) (the “Eitel
factors”)). In assessing default judgment, the factual
allegations in the complaint are taken as true. TeleVideo
Sys., Inc. v. Heidenthal, 826 F.2d 915, 916-17 (9th Cir.
1987). As EFF seeks default judgment in the form of
declaratory relief stating that GEMSA's injunction is
unenforceable under the SPEECH Act, EFF “bear[s] the
burden of establishing that the foreign judgment would not be
enforceable.” 28 U.S.C. § 4104 (a)(2).
Whether the Court has jurisdiction over GEMSA
as here, entry of judgment is sought against a party who has
failed to plead or otherwise defend the action, the Court has
an affirmative duty to determine whether it has jurisdiction
over the subject matter and the parties. In re Tuli,
172 F.3d 707, 712 (9th Cir. 1999). At the outset, the Court
agrees with and adopts the portions of the well-reasoned
R&R concluding that the Court has subject matter
jurisdiction over the claims and that GEMSA was properly
served. ECF No. 23, at 6, 10-12. Remaining at issue, however,
is whether the Court has specific personal jurisdiction over
relevant here, specific personal jurisdiction exists where:
(1) the defendant purposefully availed itself, (2) the claim
arises out of the defendant's forum-related activities,
and (3) the exercise of jurisdiction is reasonable.
Pebble Beach, 453 F.3d at 1155. The first prong is
analyzed under the effects test which “is satisfied if
(1) the defendant committed an intentional act; (2) the act
was expressly aimed at the forum state; and (3) the act
caused harm that the defendant knew was likely to be suffered
in the forum state.” Love, 611 F.3d at 609.
alleges that this Court has specific personal jurisdiction
over GEMSA under these standards because GEMSA: (1) emailed
EFF a demand letter in August 2016 demanding that EFF take
certain actions which would infringe on EFF's First
Amendment rights in California; (2) obtained a court
injunction that required EFF to carry out those acts in
California; (3) engaged an agent to physically present EFF a
copy of the injunction in California; (4) mailed a second
demand letter to California threatening to enforce the
injunction and demanding that EFF remove the article, pay
$750, 000, and engage with California based internet
companies to deindex the article; and (5) carries out
significant litigation activities in this district, including
when its director entered California for a mediation and
deposition regarding the same '400 patent at issue in
this case. Compl. ¶ 8, 19-34; ECF No. 27 at 15-16.
The applicability of Walden v. Fiore
Court first addresses EFF's contention that the R&R
misapplies Walden in concluding that the Court lacks
personal jurisdiction over GEMSA. ECF No. 27 at 11-12.
Walden, the Supreme Court expressly reaffirmed the
Calder effects test, which guides this Court's
analysis, but narrowed its application by holding that
“the plaintiff cannot be the only link between the
defendant and the forum.” Walden, 134 S.Ct. at
1122. The Court held that while “the parties'
relationships with each other [continue to] be significant in
evaluating their ties to the forum, ” Walden,
134 S.Ct. at 1123 (quotation omitted), “a
defendant's relationship with a plaintiff or third party,
standing alone, is an insufficient basis for
jurisdiction, ” id. (emphasis added). But
Walden did not eliminate the plaintiff/defendant
relationship from consideration. Post-Walden cases
in the Ninth Circuit and in this district have continued to
consider contacts between a plaintiff and a defendant, along
with the defendant's other contacts with the forum, in
finding personal jurisdiction. See RHUB Commc'ns,
Inc. v. Karon, No. 16-CV-06669-BLF, 2017 WL 3382339, at
*7 (N.D. Cal. Aug. 7, 2017) (concluding that because
Walden directed the court to focus on the
defendant's contacts with the forum states itself, and
not to limit its analysis to contacts with the plaintiff,
such a showing was made where defendant initiated contact
with employees in the forum state); Bittorrent, Inc. v.
Bittorrent Mktg. GMBH, No. 12-CV-02525-BLF, 2014 WL
5773197, at *5-8 (N.D. Cal. Nov. 5, 2014) (finding personal
jurisdiction where a trademark infringement scheme hurt
plaintiff's reputation, and therefore injured the
California-based plaintiff in California despite the
cybersquatting occurring in Germany); see also
Picot, 780 F.3d at 1215 (finding the effects test was
not met because, as in Walden, the injury was
“not tethered to California in any meaningful
way” because the conduct occurred fully out of state).
Walden court found no personal jurisdiction because
there was no conduct in the forum state, and the only
connection between the defendant and that forum was the harm
the plaintiffs felt, which could have been felt in any state.
Walden, 134 S.Ct. at 1125-26. Plaintiffs filed suit
in Nevada in response to the defendant seizing their gambling
winnings as they attempted to board a plane from Georgia to
Nevada. Id. at 1119. The conduct in question
occurred in Georgia, not in Nevada. The defendants did
nothing to reach out to the plaintiffs in Nevada ' the
forum state ' and the plaintiffs maintained residences in
both Nevada and California. Id. The Court found that
the harm at issue, the deprivation of money, was not
“tethered to Nevada in any meaningful way”
because it would have been felt in any state the plaintiffs
chose to be in (and the plaintiffs in fact maintained
residences in multiple states). Id. at 1125. In
short, Walden stands for the proposition that a
defendant's relationship to the forum must rely on
something other than merely “random, fortuitous, or
attenuated contacts.” Id. at 1123 (internal
by contrast, there are two instances of relevant conduct that
are neither random nor attenuated in their relationship to
the forum: (1) an injunction granted in an Australian court,
and (2) a threat to enforce that injunction in California
should the current motion be denied. Unlike the seizure at
issue in Walden, the effects of these actions cannot
be felt with equal force just anywhere. Indeed, California
may properly be said to be the epicenter of the parties'
dispute. EFF is a California nonprofit whose employees, and a
significant amount of donors and readers, are located in the
state. ECF No. 29-2. EFF uttered the challenged speech here.
If the injunction is enforced, the actions to take the speech
down will occur here. Likewise, the harm to EFF will also
occur here. Cf. id.; see also Bristol-Myers
Squibb Co. v. Superior Court of California, San Francisco
Cty., 137 S.Ct. 1773, 1782 (2017) (rejecting specific
jurisdiction where the plaintiffs were not California
residents, did not claim to have suffered harm in California,
and all the conduct giving ...