Second Circuit Addresses Personal Jurisdiction in Context of Online Copyright Infringement
Penguin Group sued American Buddha for copyright infringement in the Southern District of New York, alleging that American Buddha, an Oregon not-for-profit corporation with its principal place of business in Arizona, provided access on a website to four works published by Penguin.
American Buddha filed a motion to dismiss alleging that it was not subject to jurisdiction in New York. Interpreting New York's long-arm statute, the district court granted the motion to dismiss, concluding that Penguin's injury occurred where the books were uploaded--Oregon or Arizona--and therefore Penguin could not show that it suffered injury within New York, as required by the statute.
On the appeal's first visit to the Second Circuit, the court certified a question to the New York Court of Appeals that it felt necessary to decide the case:
In copyright infringement cases, is the situs of the injury for purposes of determining long-arm jurisdiction under [New York's long-arm statute] the location of the infringing action or the residence or location of the principal place of business of the copyright holder?
In response, the New York Court of Appeals answered the following modified question:
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 [New York's long-arm statute] the location of the infringing action or the residence or location of the principal place of business of the copyright holder?
The court answered that modified question as follows:
[A] New York copyright owner alleging infringement sustains an in-state injury pursuant to [New York's long-arm statute] when its printed literary work is uploaded without permission onto the Internet for public access.
According to the Second Circuit, the Internet played an important role in the New York Court of Appeals' jurisdictional analysis as did the copyright holder's right to exclude others from using its property. As to the role of the Internet, the New York Court of Appeals 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."
Thus, in light of the answer of the New York Court of Appeals to the Second Circuit's certified question (as modified), the court concluded that the situs of Penguin's alleged injury was New York. The Second Circuit therefore vacated the district court's order dismissing the case and remanded it for consideration of the remaining jurisdictional requisites.
The case cite is Penguin Group (USA) Inc. v. American Buddha, Docket No. 09-1739-cv (2d Cir. May 12, 2011).
