Colorado recently dismissed a lawsuit against a Dutch cannabis company because the company lacked personal jurisdiction. The case highlighted two common issues International litigation. Growcentia, Inc. is in. Jamie BV, Case No. 20-cv-2619-WJM-NYW (Colorado, August 10, 2021). The first involves the provision of procedures (complaints and subpoenas) services to foreign companies in accordance with the Hague Convention. The second question concerns whether it is possible to require foreign cannabis companies to defend themselves in the jurisdiction in which the plaintiff filed a lawsuit.
The lawsuit itself involved trademark infringement. The plaintiff produced a “science-based solution for cannabis and cannabis growers” under the MAMMOTH product line, and recently launched CANNCONTROL, a fungicide and insecticide. The plaintiff sold CANNCONTROL with the MAMMOTH logo. The defendant is a Dutch limited liability company whose principal place of business is in the Netherlands. (For background on Dutch cannabis, see here, here, with here).
According to the defendant, it will not manufacture, sell, advertise, distribute or market products to anyone in the United States. But the defendant claimed to own several “Canna” and “Canna-formative” trademarks for goods and services in the cannabis industry. In July 2020, the defendant sent a letter to the plaintiff requesting the plaintiff to abandon its “CANNCONTROL” trademark application, and may not seek to register or use the name or trademark of “CANN” or “CANNA” or any other trademark or domain name for related goods or services. See or plant cultivation, nutrition, growth or care. After receiving the letter, the plaintiff filed a lawsuit requesting a declaratory judgment of non-infringement of trademark rights.
With its letter, the defendant clearly did not want the plaintiff to sell the product under the name of CANNCONTROL. However, the defendant did not file a lawsuit against this issue, but dismissed the case on the grounds of improper service and lack of personal jurisdiction.
The defendant first argued that the plaintiff did not properly serve the lawsuit in accordance with the requirements of the Hague Convention on the Overseas Service of Judicial and Non-Judicial Documents in Civil or Commercial Affairs (“The Hague Convention“). Lawyers involved in international disputes often use the Hague Convention. (See here with here Some of our articles on the Hague Convention). For non-litigation readers, the Hague Convention is a treaty implemented by many (but not all) countries/regions. It explains the rules and procedures of how to deal with foreign litigation within that country. It is important to know that every country has different rules. Some countries have fully adopted the Hague Convention, while others have only adopted certain parts or imposed different or additional procedures and restrictions. Some countries have not yet adopted all of them.
The courts dealt with challenges to services under the Hague Convention by basically avoiding analysis. The court explained that even if it was served improperly, its ruling would only tell the plaintiff to serve the subpoena and complaint again—and do it correctly. Once this happens, the court infers that it will have to fight another reason for dismissal (lack of personal jurisdiction). Therefore, judicial efficiency is conducive to solving the personal jurisdiction issue first: if the court does not have jurisdiction over the defendant, the issue of service is irrelevant.
When it comes to personal jurisdiction, the standard “test” used in almost every specific jurisdiction issue uses vague language. First, the court asked whether the defendant had “minimal contact” with the court (in this case, Colorado), so that the defendant “should reasonably expect to be arrested there.” Next, if there is enough minimal contact, the court will consider whether the exercise of jurisdiction will “offend the traditional concept of fair competition and substantive justice.” This language is derived from the long history of judgments by the U.S. Supreme Court. Although the language does not provide clear rules, judicial decisions that have applied these principles over the years have provided guidance in most cases.
The analysis of personal jurisdiction depends to a large extent on facts.The court first pointed out that the only direct The defendant’s contact with Colorado was the suspension and termination letter it sent to the plaintiff. Is this enough? No, the court stated that based on the Tenth Circuit’s case, the court found that a cessation and termination letter alone was not sufficient to allow the court to exercise jurisdiction and force the Dutch company to defend the lawsuit brought by it in the Federal Court of Colorado. .
The court next considers whether the defendant has other indirect The contact with Colorado—together with this letter—may make it fair to ask the defendant to appear in court and defend against the plaintiff’s claim. The plaintiff pointed to the defendant’s trademark licensee, Hortisol USA, and argued that the defendant might have been taken to Colorado because Hortisol advertises, markets, and sells products throughout the United States. The court stated that this was not enough because the previous records did not reflect any corporate relationship between the two companies. Instead, there are only fair licensing and sales agreements for confidential and proprietary trademarks governed by Dutch law. And these companies maintain independent corporate identities and independent business operations. Based on these facts, the court could not determine that Hortisol was the defendant’s “domestic counterparty” or the defendant’s “US branch”.
The plaintiff further argued that Hortisol’s advertising and sales linked the defendant to Colorado. The court disagreed, because this type of advertisement was aimed at the entire United States, not the state of Colorado. The plaintiff also proposed a “commercial flow” theory in which it is appropriate to exercise jurisdiction because the defendant placed its Canna products in the commercial flow and expected that they would be sold in Colorado. (Side note: The theory of business flow originated from decades of cases in the U.S. Supreme Court). The court disagreed and quoted the opinion of the recent Tenth Circuit, stating that the defendant must “specially pay attention” to the status of the court in order to meet the purposeful provision requirements of the commercial flow theory. It is not enough that the defendant “may have predicted” that the benefits will eventually appear in Colorado.
Finally, the plaintiff argued that the defendant had initiated enforcement actions in jurisdictions other than Colorado.However, the problem is that none of these actions established the defendant’s this Controversy or Colorado.
Therefore, the court rejected the lawsuit on the grounds of lack of personal jurisdiction. Although it may be too bad for the plaintiff, let us remember that it filed a lawsuit seeking a declaration of non-infringement. Therefore, if the defendant seriously protects its so-called intellectual property rights, it will file a lawsuit for this.
For more reports on cannabis trademark and other intellectual property lawsuits, check out some recent posts: