Case of the Day: Playboy Enterprises v. Smartitan
Posted on April 19, 2011
The case of the day, Playboy Enters. Int’l, Inc. v. Smartitan (Singapore) PTE Ltd. (N.D. Ill. 2011), is, I am sorry to say, our second case from the “adult entertainment” industry. In today’s case Playboy was licensing its trademarks for use on clothing and women’s bags to be sold in Japan, which makes the case less sordid than BluMedia v. Sordid Ones, the case we reviewed in January.
Playboy had licensed Smartitan, a Singapore business, to put its trademarks on consumer products to be sold in Japan. During the life of the contract, Eltex rather than Smartitan had made all royalty payments to Playboy (Eltex and Smartitan had a common shareholder). At some point, unbeknownst to Playboy, Smartitan supposedly “dissolved”, and the contract was taken over by Eltex. Playboy learned that Smartitan was using the marks on unauthorized products, and Smartitan was also frequently late with sales reports. Playboy audited Smartitan under their contract; at Smartitan’s request, the audit took place at the offices of Eltex in Hong Kong. After the audit. Playboy sued Smartitan and Eltex for breach of the contract. Smartitan moved to dismiss for insufficient service of process.Playboy had attempted the serve Smartitan in Singapore to no avail—it could not find anyone in Singapore on whom to make service. So Playboy sent the summons and complaint to Smartitan’s shareholder (who was also Eltex’s shareholder) in Hong Kong. The question was whether this service was sufficient. Smartitan argued that the service was improper under Rule 4(f)(2)(A), because Singapore law permitted service outside Singapore only with the permission of a Singapore court. But the court rejected the premise of this line of attack. It held that because Smartitan was Eltex’s alter ego, service on Eltex (which Playboy had accomplished without a hitch) was sufficient to bring Smartitan before the court.
Playboy is correctly decided. Because the service in Hong Kong was service on an alter ego, which under American law was sufficient, rather than an attempt at service on the Singapore company itself, Singapore law was irrelevant.