Nagravision SA v. Gotech Int'l Tech. Ltd. ( 2018 )

Case: 16-20817 Document: 00514340314 Page: 1 Date Filed: 02/07/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 16-20817
Fifth Circuit
FILED
February 7, 2018
NAGRAVISION SA, Lyle W. Cayce
Clerk
Plaintiff - Appellee
v.
GOTECH INTERNATIONAL TECHNOLOGY LIMITED; ZHUHAI GOTECH
INTELLIGENT TECHNOLOGY COMPANY LIMITED,
Defendants - Appellants
Appeal from the United States District Court
for the Southern District of Texas
Before REAVLEY, SOUTHWICK, and HAYNES, Circuit Judges.
REAVLEY, Circuit Judge:
Nagravision SA (“Nagravision”) filed suit against Zhuhai Gotech
Intelligent Technology Co. Ltd. and Gotech International Technology Ltd.
(collectively, “Gotech”) in the Southern District of Texas, alleging violations of
the Digital Millennium Copyright Act (“DMCA”) and the Federal
Communications Act (“FCA”). 1 Nagravision is a Swedish company, Gotech
Chinese. Gotech knowingly chose to ignore the lawsuit and even the ensuing
$100 million-plus default judgment. It did nothing at all until Nagravision
1 A third defendant, Globalsat International Technology Ltd. is not a party to the
appeal.
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No. 16-20817
took its judgment to a Hong Kong court, initiated enforcement proceedings,
and succeeded in freezing Gotech’s assets. Then Gotech decided to litigate in
the Southern District of Texas after all, filing a motion under Rule 60(b) for
relief from the default judgment. The district court denied that motion, and
Gotech appeals. We affirm.
Gotech moved under Rule 60(b)(1) and Rule 60(b)(4), but only its
arguments pertaining to the latter rule merit discussion. 2 Under Rule 60(b)(4),
a judgment must be set aside if it is void. Recreational Props., Inc. v. Sw.
Mortg. Serv. Corp., 804 F.2d 311, 314 (5th Cir. 1986). Gotech asserts that the
judgment is void for a plethora of reasons. We examine each one.
(1) Standing. Gotech contends that Nagravision lacked standing to
bring its claims, rendering the judgment void. Gotech is incorrect.
Nagravision is a provider of security technology, including technology
supporting subscription-based television providers, and this lawsuit is based
on Gotech’s sophisticated-but-illegal soft- and hardware that both steals
Nagravision technology and defeats Nagravision security, allowing for piracy
of pay-television programming. Under these circumstances, we have no doubt
that Nagravision suffered an injury traceable to Gotech’s misdeeds that can be
(and indeed has been) redressed through the court. See Lexmark Int’l, Inc. v.
Static Control Components, Inc., 134 S. Ct. 1377, 1386 (2014); Sayles v.
Advanced Recovery Sys., Inc., 865 F.3d 246, 250 (5th Cir. 2017). To the extent
Gotech argues about statutory standing rather than Article III standing, its
arguments do not advance the ball, for a lack of statutory standing would not
render the judgment void. See Blanchard 1986, Ltd. v. Park Plantation, LLC,
553 F.3d 405, 409 (5th Cir. 2008) (“This question of whether or not a particular
Gotech’s willful default precludes relief under Rule 60(b)(1). See, e.g., In re Chinese
2
Manufactured Drywall Prod. Liab. Litig., 742 F.3d 576, 594–95 (5th Cir. 2014).
2
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cause of action authorizes an injured plaintiff to sue is a merits question,
affecting statutory standing, not a jurisdictional question, affecting
constitutional standing.”). And, contrary to Gotech’s arguments, because
Nagravision asserted its own rights and injuries, there are no issues of
prudential standing. 3 See Superior MRI Servs., Inc. v. All. Healthcare Servs.,
Inc., 778 F.3d 502, 504 (5th Cir. 2015).
(2) Federal Question Jurisdiction. Nagravision based its lawsuit on
violations of federal law, and subject matter jurisdiction is clearly present. See,
e.g., Gilbert v. Donahoe, 751 F.3d 303, 311 (5th Cir. 2014). Nonetheless, Gotech
urges that subject matter jurisdiction is absent because the DMCA and FCA
do “not apply to claimed violations of foreign intellectual property rights.” This
argument about the statute’s application “confuses failure to state a claim with
lack of subject matter jurisdiction.” Id.; see also United States v. Rojas, 812
F.3d 382, 390 (5th Cir. 2016) (“[T]he question ‘whether a statute applies
extraterritorially is a question on the merits rather than a question of a
tribunal’s power to hear the case.’” (quoting Villanueva v. U.S. Dep’t of Labor,
743 F.3d 103, 107 (5th Cir. 2014))). The only question fit for our consideration
is whether the judgment was void for lack of subject matter jurisdiction, and
the answer to that question is no.
(3) Personal Jurisdiction, Lack of Proper Service. Defendants
raise one argument pertaining to only one of them. Specifically, Gotech asserts
that the court lacked personal jurisdiction over Zhuhai Gotech Intelligent
Technology Co. Ltd for want of proper service. Rule 4 permits service on
foreign defendants “by any internationally agreed means of service that is
reasonably calculated to give notice, such as those authorized by the Hague
3 We leave undecided the unbriefed question of whether the absence of prudential
standing would render the judgment void.
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Convention on the Service Abroad of Judicial and Extrajudicial Documents”
and “by other means not prohibited by international agreement, as the court
orders.” FED. R. CIV. P. 4(f)(1), (3). Service here was court-ordered email
service under Rule 4(f)(3), and Gotech has not shown that such service is
prohibited by international agreement. Service was therefore proper.
Overlooking Rule 4(f)(3) entirely, Gotech argues that the service did not comply
with the Hague Convention and Rule 4(f)(1). This argument misses the mark
because service was not effected pursuant to the Hague Convention, and that
agreement does not displace Rule 4(f)(3). See United States v. Real Prop.
Known As 200 Acres of Land Near FM 2686 Rio Grande City, Tex., 773 F.3d
654, 659 (5th Cir. 2014).
(4) Personal Jurisdiction, Rule 4(k)(2). Nagravision asserted
personal jurisdiction solely under Rule 4(k)(2), which “provides for service of
process and personal jurisdiction in any district court for cases arising under
federal law where the defendant has contacts with the United States as a whole
sufficient to satisfy due process concerns and the defendant is not subject to
jurisdiction in any particular state.” Adams v. Unione Mediterranea Di
Sicurta, 364 F.3d 646, 650 (5th Cir. 2004). There is no dispute that Gotech’s
contacts with the United States, taken as a whole, are sufficient to satisfy due
process concerns. The issue is whether the district court erred by finding
Gotech “not subject to jurisdiction in any state’s courts of general jurisdiction.”
FED. R. CIV. P. 4(k)(2)(A).
As an initial matter, the burden of proof to establish personal jurisdiction
over the defendants rests upon the plaintiff. Wilson v. Belin, 20 F.3d 644, 648
(5th Cir. 1994). In a case involving a default judgment allegedly rendered in
the absence of personal jurisdiction, we stated that, “[o]f course, the ‘burden of
undermining’” a default judgment “‘rests heavily upon the assailant.’” Hazen
Research, Inc. v. Omega Minerals, Inc., 497 F.2d 151, 154 (5th Cir. 1974)
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(quoting Williams v. State of N.C., 325 U.S. 226, 233–34, 65 S. Ct. 1092, 1097
(1945)). More recently, however, we stated that “the question who bears the
burden of proof in a Rule 60(b)(4) challenge to personal jurisdiction is one that
has not been answered for this circuit.” Jackson v. FIE Corp., 302 F.3d 515,
520 (5th Cir. 2002). Under the rule of orderliness, the older case would govern,
United States v. Broussard, 669 F.3d 537, 554 (5th Cir. 2012), but we need not
address all potential permutations of this rule to address the circumstance
here. The disagreements among the circuits as to which side bears the burden
of proof under Rule 60(b)(4) center on the fact that the plaintiff generally has
the burden of proof as to personal jurisdiction. See Oldfield v. Pueblo de Bahia
Lora, S.A., 448 F.3d 1210, 1217 (11th Cir. 2009) (addressing Rule 4(k)(2)(B)
and finding no personal jurisdiction due to the lack of necessary contacts); cf.
Bally Exp. Corp. v. Blaicar, Ltd., 804 F.2d 398, 401 (7th Cir. 1986) (noting the
general rule that the plaintiff has the burden of proving jurisdiction but
determining that the burden should be on the defendant to prove lack of
jurisdiction in a Rule 60(b)(4) context).
In this case, we have a very specific question of who bears the burden of
proof when a Rule 60(b)(4) challenge is made solely on the argument that the
requirement of Rule 4(k)(2)(A)—that defendant is not subject to jurisdiction in
any state’s courts of general jurisdiction—is not met. Given our holding in
Adams that plaintiffs do not have a general burden to negate jurisdiction in
every state, the burden to establish that there was a state meeting the criteria
necessarily must fall on the defendant. 364 F.3d at 651 (“Rather, so long as a
defendant does not concede to jurisdiction in another state, a court may use
4(k)(2) to confer jurisdiction.”)
Thus, Nagravision had the initial burden to plead and prove the requisite
contacts with the United States and plead Rule 4(k)(2)’s applicability (though
no need for “magic words”), but it had no burden to negate jurisdiction in every
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state. Between Nagravision’s allegations, the evidence attached to its motion
for default judgment, and our holding in Adams, there is no doubt that the
district court correctly (if only impliedly) found that Nagravision had met its
burden giving the district court the personal jurisdiction over Gotech necessary
to render the default judgment. See Sys. Pipe & Supply, Inc. v. M/V VIKTOR
KURNATOVSKIY, 242 F.3d 322, 324 (5th Cir. 2001) (holding that, because “a
judgment entered without personal jurisdiction is void,” district courts have
the duty to independently confirm their “power to enter a valid default
judgment”); Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 500 (5th
Cir. 2015) (explaining that, in considering whether to enter a default judgment,
evidence can be used to further support allegations in the complaint).
The burden then shifted to Gotech when it challenged the judgment to
do more than just criticize Nagravision’s complaint. Gotech had to
affirmatively establish that the court lacked personal jurisdiction under 4(k)(2)
because there was a state where its courts of general jurisdiction could properly
exercise jurisdiction over it. See Adams, 364 F.3d at 650. Gotech did nothing
of the kind. At most, it alleged that California was a state of such jurisdiction,
but it did nothing to prove that the district court’s implied finding was wrong
making the judgment void. Accordingly, the district court did not err in
denying the Rule 60(b) motion.
~~~
The judgment is AFFIRMED.
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