Copyright Owner’s Suit Against Non-Resident For Uploaded Internet Material Supports Long-Arm Jurisdiction

The Second Circuit Court of Appeals in New York ruled that a copyright owner may sue a non-resident defendant where the owner has its business office even though defendant does no business in the owner’s jurisdiction. The uploading of copyrighted material onto the Internet by an Oregon defendant was sufficient to establish long arm jurisdiction under New York law because defendant “commit[ted] a tortious act without the state causing injury to person or property within the state.” N.Y.C.P.L.R. 302 (a)(3)(ii). Penguin Group (USA) Inc. v. American Buddha, Case No. 09-1739-cv (2nd Cir. May 12, 2011) (available here).

Defendant American Buddha (www.american-buddha.com) is an Oregon not-for-profit corporation with a principal place of business in Arizona that maintains a website known as the Ralph Nader Library. 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”)].” Slip opn. p. 2-3. Penguin (www.penguingroup.com) filed suit in 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.

Jurisdiction is established, subject to constitutional limits, by New York’s long-arm statute, N.Y. C.P.L.R. 302 (a) (3) (ii) which provides “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….” Many states have similar long-arm statutes.

“A plaintiff must demonstrate that: (1) the defendant’s tortious act was committed outside New York, (2) the cause of action arose from that act, (3) the tortious act caused an injury to a person or property in New York, (4) the defendant expected or should reasonably have expected that his or her action would have consequences in New York, and (5) the defendant derives substantial revenue from interstate or international commerce.” p. 4-5, citing Penguin Grp. (USA) v. Am. Buddha, 609 F.3d 30, 35 (2nd cir. 2010) and LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214 735 N.E.2d 883, 713 N.Y.S.2d 304, 307 (2000).

The trial court found that copyright owner Penguin did not plead infringement of any individual in New York who downloaded material from American Buddha’s site but “business was lost through the copying of the copyrighted works by American Buddha and not through their placement on the Internet.” p. 5. “[T]he alleged injury in this case involves online infringement that is dispersed throughout the country and perhaps the world.” p. 7.

A holder has the right “to exclude others from using his property … [and this is] a critical factor that tips the balance in favor of identifying New York as the situs of injury. In light of this right and the undisputed fact that American Buddha’s web sites are accessible by any New Yorker with an Internet connection, the court viewed the absence of any evidence of the actual downloading of … [the] works by users in New York” was not fatal. p. 8 (quotations omitted)(citing eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392 (2006)).

Effectively, the 2nd Circuit confirmed the New York Court of Appeals decision which held that “[i]n copyright infringement cases involving the uploading of a copyrighted printed literary work onto the Internet, … the situs of injury for purposes of determining long-arm jurisdiction under [the relevant section of New York’s long-arm jurisdiction statute is] … the location of the copyright holder,” p. 1-2, see Penguin Grp. (USA) Inc. v. Am Buddha, 16 N.Y.3d 295, 301-02, — N.E.2d —, —, — N.Y. S2d —, — (2011).

Compare the Penguin Group holding to the Florida Supreme Court, in Internet Solutions Corp. v. Marshall, 39 So. 3d 1201, 1203 (Fla. 2010), held “We conclude that posting defamatory material on a website alone does not constitute the commission of a tortious act within Florida for purposes of section 48.193(1)(b), Florida Statutes. Rather, the material posted on the website about a Florida resident must not only be accessible in Florida, but also be accessed in Florida in order to constitute the commission of the tortious act of defamation within Florida under section 48.193(1)(b).”

In another Florida case, Vision Media TV Group, LLC v. Forte, 724 F. Supp. 2d 1260, 1266 (S.D. Fla. 2010) the U.S. District Court stated that the facts do not support jurisdiction since they are “substantially [different] from facts where the Calder effects test has been met; namely, the intentional use of a Florida plaintiff’s trademarked name and picture on a website accessible in Florida in a manner meant to imply the endorsement by the plaintiff of the defendant’s product. See Licciardello v. Lovelady, 544 F.3d 1280, 1287-88 (11th Cir. 2008)”.

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