UPLOADING TO THE INTERNET: WHERE TO SUE?

Ivan Hoffman, B.A., J.D.


        Where is the proper location for bringing suit against a claimed infringer when the infringement involves copyrighted materials which have been uploaded to the Internet?

        This is an exceptionally important question because the leverage available to a plaintiff suing in a home state, where the defendant does not reside and to where the defendant would have to travel, obtain legal counsel in etc. can be very significant.

        In Penguin Group (USA), Inc. vs. American Buddah,  the Second Circuit Court of Appeals had to decide this question.

        These were the facts in brief as stated by the Court:

The defendant American Buddha is an Oregon not-for profit corporation with its principal place of business in Arizona that maintains a website known as the Ralph Nader Library.2 [Not affiliated with the consumer advocate Ralph Nader] The website "provides access to classical literature and other works . . . , including [four] works published in print format by Plaintiff-Appellant Penguin Group (USA) Inc. [("Penguin")]."3 Am. Buddha II, 609 F.3d at 33 (internal quotation marks omitted). Having learned of the existence of American Buddha's website and its contents, Penguin filed suit against American Buddha in the United States District Court for the Southern District of New York, alleging that American Buddha's posting of the four Penguin books on the Internet violated Penguin's copyrights in works that it had published.4 American Buddha moved to dismiss the complaint pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, "contending that it has done nothing that would make it amenable to suit in New York." Penguin Grp. (USA) Inc. v. Am. Buddha, No. 09-cv-528, 2009 WL 1069158, at *1, 2009 U.S. Dist. LEXIS 34032, at *1 (S.D.N.Y. Apr. 21, 2009) ("Am. Buddha I"). The district court agreed, ruling, as we later characterized it, that the "situs of the injury" was "where the book[s in which Penguin holds the copyrights were] electronically copied -- presumably in Arizona or Oregon, where American Buddha and its computer servers were located -- and not New York, where Penguin was headquartered." Am. Buddha II, 609 F.3d at 32; see also Am. Buddha I, 2009 WL 1069158, at *4, 2009 U.S. Dist. LEXIS 34032, at *13. This appeal followed.
        The legal basis upon which jurisdiction turned was New York’s “long-arm” statute (many states have such statutes) which seeks to impose jurisdiction in New York over non-resident defendants and which states in part:
[A] court may exercise personal jurisdiction over any non-domiciliary . . . who . . .commits a tortious act without the state causing injury to person or property  within the state, . . . if he . . . expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or
international commerce . . . .
        The Court stated that the key element here was a determination as to whether the acts of the defendant, even though committed outside the state, caused injury inside the state.  In other words, the issue is where did Penguin suffer injury?  Was it in New York or was it where the defendant uploaded the copyrighted works?

        The Court stated:

We therefore certified the following question to the New York Court of Appeals:5 "In copyright infringement cases, is the situs of injury for purposes of determining long-arm jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) the location of the infringing action or the residence or location of the principal place of business of the copyright holder?" Id. at 32.
        In actuality, the New York Court of Appeals (a state appellate court from which the United States Circuit Court received this case for review), changed the above question to read:
"In copyright infringement cases involving the uploading of a copyrighted printed literary work onto the Internet, is the situs of injury for purposes of determining long-arm jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) the location of the infringing action or the residence or location of the principal place of business of the copyright holder?" [emphasis added]
        The Circuit Court adopted the reasoning of the New York Court of Appeals and stated:
"The New York Court of Appeals observed that “the Internet itself plays an important role in the jurisdictional analysis in the specific context of this case." Id. at 304, --- N.E.2d at ---, --- N.Y.S.2d at ---. "[T]he alleged injury in this case involves online infringement that is dispersed throughout the country and perhaps the world." Id. at 305, --- N.E.2d at ---, --- N.Y.S.2d at ---. The Court therefore concluded that "it is illogical to extend" the traditional tort approach that "equate[s] a plaintiff's injury with the place where its business is lost or threatened" to the context of "online copyright infringement cases where the place of uploading is inconsequential and it is difficult, if not impossible, to correlate lost sales to a particular geographic area." [emphasis added]

The Court also identified the right of a copyright holder "'to exclude others from using his property'" as a "critical factor that tips the balance in favor of identifying New York as the situs of injury."

        Therefore, the Circuit Court concluded that the place of jurisdiction was New York (and thus reversed the district court’s ruling) as the “situs of the injury” and remanded the case to the trial court to determine the other factors required by the statute and whether, under the circumstances particular to this case, the assertion of jurisdiction over the defendant in New York would violate the Due Process clause of the United States Constitution.

        Caution:  This case interprets the New York statute.  As indicated, many states have such statutes and the analysis, and thus the outcome, may vary so you should consult an attorney with experience in these matters.

Conclusion

        As indicated above, where suit can be brought is very important and if a defendant can be sued in the plaintiff’s home state, the financial and other pressures that have to be borne by such defendant can be significant.

Copyright © 2011 Ivan Hoffman.  All Rights Reserved.

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States law.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.

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