Personal
Jurisdiction for Copyright Infringement on the Internet
L. Marc Zell, Advocate, member of the bars of Israel, Washington D.C.,
Maryland and Virginia; Keith Shaw, Advocate, member of the bar of Israel,
Solicitor of the Supreme Court of England and Wales; Zell & Co., Jerusalem and Tel Aviv.
An Affiliate of the FANDZ International Law Group
Introduction and Factual Synopsis
This Memorandum addresses certain jurisdictional issues under U.S. copyright
law pertaining to possible copyright infringement actions against an Internet
Organization publisher. The facts based on which this memorandum was prepared
are as follows: a non-profit non-U.S. unincorporated association (“Association”)
was established for the sole purpose of designing and publishing a site
on the World Wide Web (the “Web Site”) devoted to analyzing
educational and other pedagogical materials produced and utilized in certain
foreign countries.
The Association obtained copies of various foreign language elementary
and secondary textbooks from certain foreign countries. It was assumed
for the purpose of this memorandum that the textbooks in question are
subject to copyright protection under local and international law. The
Association made English translations of portions of the textbooks for
purpose of analyzing their content. Excerpts of the translations were
included on the Web Site. It was understood that the Association did not
obtain permission from the authors or copyright owners to translate the
quoted portions or otherwise to make use of the copyrighted texts. The
Association does not intend to exploit the copyrighted materials commercially,
the plan being to make these materials available to the general public.
Other than as set forth explicitly in this Memorandum, it was assumed
that there will not be any marketing or promotion of any products or business
transactions through the Web Site and no other contractual relationships
will be entered into in the United States by the Association in connection
with the Web Site or its contents.
The Web Site itself is structured to operate as a “passive”
site. In other words, it will be accessible by persons searching the Internet
for relevant information. Persons locating the Web Site will be able to
view and download files on demand. While visitors to the Site will be
able to communicate with the Association through an email hyperlink on
the Site, there will be no other possibility for interaction with visitors
as the Site is currently designed.
It was understood that the Web Site will be contained in whole or in
part upon a server provided by an independent Internet Service Provider
(“ISP”) located somewhere in the United States. No details were
available regarding the identity or location of the ISP. It was presumed
that the Association or the Organization (see below) would enter into
a service agreement with the ISP providing for the technical maintenance
of the Web Site and connectivity to the Internet.
It was understood that the Association has entered into negotiations
with an American organization (“Organization”) aimed at an agreement
under which the Organization would apparently reimburse some of the costs
involved in setting up and maintaining the web-site or shall share some
of these costs.
It was understood that the Organization is a not-for-profit, tax exempt
organization under United States law. The Organization maintains its principal
offices in New York and maintains regional offices throughout the United
States and in a foreign country. We assumed that the Organization would
give publicity for the web-site in its newsletters and other public educational
materials in a manner consistent with its status as a non-profit, tax
exempt organization. The proposed agreement between the Association and
the Organization was not reviewed.
This Memorandum does not consider whether the translated materials included
in the Web Site actually infringe any existing copyrights in the text
books.
Issue
Would a U.S. court have personal jurisdiction to hear a suit filed by
the copyright owner of one of the school text books against the Association
for copyright infringement based on the materials included in the Web
Site?
Discussion
United States copyright law does not provide an independent basis for
obtaining personal jurisdiction over defendant infringers, even though
subject matter jurisdiction over copyright infringement actions is vested
exclusively in the United States district courts. 28 U.S.C. §1338(a);
see Annot., Exclusive Jurisdiction of Federal Courts under 28 USCS §1338(a)
of Action Involving Breach of Contract Concerning Copyright, 119 A.L.R.
Fed. 471 (Lexis Ed. 1997). Rather, except as noted below, personal jurisdiction
in a copyright infringement action is determined by applying the “long-arm”
statute of the state in which the United States district court is situated.
E.g., Mode Art Jewelers Co. v. Expansion Jewelry, Ltd., 409 F Supp 921,
193 USPQ 48 (S.D. N.Y. 1976). If under the pertinent long-arm statute,
the federal court is not able to obtain personal jurisdiction over a non-resident
defendant, a federal court may still be able acquire personal jurisdiction
over a non-resident defendant under a special provision of the Federal
Rules of Civil Procedure allowing the exercise of personal jurisdiction
where the defendant has certain “national contacts” with the
United States as a whole, as opposed to a particular state jurisdiction.
1. Current Case Law on Internet Jurisdiction
There are currently no reported cases that specifically address the issue
of personal jurisdiction for copyright infringement on the Internet and
therefore analogy must be made to case law which involved different causes
of action, but in which personal jurisdiction was predicated in major
part upon Internet-related activity.
Over the past few years, there has been a significant increase in the
number of reported decisions dealing with the activity of a defendant
on the Internet as the basis for personal jurisdiction in U.S. courts.
Many of these cases deal with trademark infringement claims and interpret
specific sections of the forum state’s long-arm statute. We point
out that the jurisprudence in this area is still evolving. Indeed, there
have been two reported appellate decisions dealing with the problem. Given
the divergent approaches already appearing in the case law, it is not
unlikely that the matter will require decision by the United States Supreme
Court in the not too distant future.
At present, courts tend to group Internet-based activity for jurisdictional
analysis into three categories, see e.g., Internet Activity as the
Basis for Personal Jurisdiction, 32 Int’l Law. 243 (1998), ranging
from mere passive web-site activity to extensive use of the Internet as
a medium for the consummation of commercial transactions. A number of
the courts dealing with Internet personal jurisdiction issues have specifically
made reference to the three distinct categories. See e.g. Blackburn
t/a Wholesale Rug Outlet v. Walker Oriental Rug Galleries, Inc., 999 F.Supp.
636 (E.D. Penn. 1998); Transcraft Corporation v. Doonan Trailer Corp.,
1997 U.S. Dist. LEXIS 18687 (N.D.Ill., November 17, 1997).
The three classes of Internet activity may be described as follows:
(a) active use of cyberspace for conducting commercial business
(b) interactive sites where consumers may exchange information with the
defendant’s computers
(c) passive web-sites and BBS.
While this formulaic approach to in personam jurisdiction problems has
understandably found its adherents among those courts addressing the issue,
one must remember that the issue arises under the due process clauses
of the United States Constitution and therefore must be analyzed in accordance
with the prevailing Supreme Court precedent in non-Internet settings.
E.g., Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408 (1984).
The principle underlying the Due Process Clause guarantees in the area
of personal jurisdiction is that a non-resident "party cannot be
bound to the 'judgments of a forum with which he has established no meaningful
contacts, ties or relations.'" Burger King Corp. v. Rudzewicz, 471
U.S. 462, 471-72 (1985). Constitutional analysis under the due process
clause in most jurisdictions usually involves a two-tier analysis. Under
the first tier the court must determine based on competent evidence that
the non-resident defendant purposefully availed itself of the benefits
and protections of the forum state by establishing “minimum contacts”
therewith, such that the non-resident defendant could reasonably anticipate
being sued in the courts of the state. Under the second tier, once minimum
contacts have been found, the court must consider whether the exercise
of jurisdiction by the forum court would comport with "fair play
and substantial justice."
The first objective of analysis under minimum contacts prong is to determine
whether the non-resident defendant has purposely availed herself of the
privilege of conducting activities in the forum state, thus invoking the
benefits and protections of its laws. Burger King v. Rudzewicz, supra,
471 U.S. at 474- 75. The concept of "purposeful availment" protects
non-residents against being hauled into state court solely on account
of random, fortuitous or attenuated contacts with the forum or because
of the "unilateral activity of another party or a third person."
Based on the well-established constitutional doctrine, when looking at
the emerging Internet case law, we may generalize by saying that the likelihood
that personal jurisdiction can be constitutionally exercised by the courts
is directly proportionate to the nature and quality of the activity conducted
by the defendant over the Internet. Thus, the greater the quality of the
of contacts the defendant has with the forum via the Internet, the greater
the likelihood that personal jurisdiction will be found. See, e.g., Zippo
Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997).
The categorization approach being used by the courts is, therefore, a
convenient means of evaluating the “quality” of a defendant’s
contacts with the forum.
a) Active Commercial Exploitation of Cyberspace
This category includes defendants who actively do business on the Internet
by entering into contracts and repeatedly and knowingly transmitting files
over the Internet.
The majority of the courts ruling in this area have held that if the
non-resident defendant is doing business with the forum state or has contractual
relationships with plaintiffs or with state residents, the court has personal
jurisdiction over the defendant.
In the leading case of CompuServe Inc. v. Patterson, 89 F.3d 1257 (6th
Cir. 1996), one of the few appellate decisions in this area, the court
found personal jurisdiction (in Ohio) over a Texas Internet user who subscribed
to plaintiff’s network service and advertised his product via plaintiff’s
computer information service which was located in Ohio. The defendant
subscribed to CompuServe, loaded his software onto the system for others
to use and advertised his software on the system. The court ruled that
the Texas resident had taken direct actions that created a connection
with Ohio and found a basis for personal jurisdiction based on the “contractual”
relationship that existed between the parties.
One commentator who has proposed an analytical approach to Internet copyright
infringement jurisdiction, relies on this line of cases to support the
exercise of long-arm jurisdiction over non-resident WWW content providers
who make copyrighted works available to a substantial number of commercial
subscribers in the forum. Rieder & Pappas, Personal Jurisdiction for
Copyright Infringement on the Internet, 38 Santa Clara L. Rev. 367, 392
(1998).
We would note that there is some case law (which would appear to represent
a minority view) holding that use of an Internet Organization to advertise
a commercial product is in an of itself sufficient to confer jurisdiction
in any forum state under what appears to be a theory of “general
jurisdiction.” Thus, in Inset Sys., Inc. v. Instruction Set, Inc.,
937 F. Supp. 161 (D. Conn. 1996) the court held specifically that “advertising
via the Internet is solicitation of a sufficient repetitive nature”
as to allow the exercise of jurisdiction over a non-resident. Accord,
Heroes, Inc. v. Heroes Foundation, 958 F. Supp. 1 (D.D.C. 1996). These
cases have been criticized as being far too broad-sweeping. Most courts
today will require some purposeful activity by the defendant directed
at the forum. E.g., Hasbro, Inc. v. Clue Computing, Inc., 994 F. Supp.
34 (D. Mass 1997); Smith v. Hobby Lobby Stores, 968 F. Supp. 1356 (D.
Ark. 1997).
A somewhat different approach has recently been taken by the Ninth Circuit
Court of Appeals in a domain name trademark infringement suit. In Panavision
International, L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998), the court
applied the so-called “effects doctrine” from tort personal
jurisdiction case law to uphold the exercise of jurisdiction over a non-resident
trademark infringer who had no contractual contacts with the forum. The
court held that personal jurisdiction can be based upon intentional actions
expressly aimed at the forum state causing harm, the brunt of which is
suffered and which the defendant knows is likely to be suffered in the
forum state. Id. at 1321; Calder v. Jones, 465 U.S. 783 (1984). The Ninth
Circuit likened trademark infringement to a tort and stated that the defendant’s
purposeful registration of the plaintiff’s trademarks as a domain
name on the Internet to force the plaintiff to pay money was sufficient
to render him amenable to suit in California when the defendant knew the
plaintiff’s principal place of business was in California.
Just the other month, a California federal court declined to apply the
Panavision effects doctrine in a domain name trademark infringement case
brought against a non-profit organization which used the plaintiff’s
trademark on its Organization. In No Mayo – San Francisco v. Memminger,
1998 U.S. Dist. LEXIS 13154 (N. D. Cal. Aug. 21, 1998), the court held
that unlike the defendant in Panavision the defendant Memminger was no
“cyber-pirate.” Memminger had a historical connection to the
trademark and used it regularly on his newsletters before registering
the domain name. Here the purposeful availment for activity within the
forum was lacking. “Something more” was required. Lacking those
additional contacts with the forum, personal jurisdiction could not be
constitutionally exercised over the non-resident.
Applying the “effects doctrine” to the facts set forth in this
Memorandum would militate against finding jurisdiction over the Association
in the United States for the simple reason that the copyright owners are
either governmental bodies or persons resident in certain foreign countries
with no connection to the United States or any subdivision thereof.
b) Defendants Who Permit Consumers to Exchange Information with the Defendant’s
Host Computer
This category includes a limited number of fact specific cases in which
defendants which maintain web-sites permit consumer to exchange information
with the host computer.
In these cases, “the exercise of jurisdiction is determined by examining
the level of interactivity and commercial nature of the exchange of information
that occurs on the Web site.” Zippo Manufacturing Co. v. Zippo Dot
Com, Inc., 952 F. Supp 1119, 1124 (W.D. Pa. 1997) citing Maritz, Inc.
v. Cybergold Inc., 947 F.Supp 1328 (E.D. Mo. 1996). In Zippo, for example,
the defendant used its Organization to advertise and supply applications
for its Internet news service. While the defendant’s contacts were
almost exclusively by way of the Internet, the court found them sufficient
for the exercise of jurisdiction, noting that the defendant had sold passwords
to some 3,000 subscribers in the forum. In addition, the defendant had
entered into contracts with seven ISPs in the forum.
c) Passive Web Sites which Merely Provide Information or Advertising
The third category of cases involve the use of so-called passive Organization
communication only without additional connecting factors. In these cases
the courts usually will not exercise personal jurisdiction unless there
are other elements connecting the defendant to the forum state.
In Hearst Corp. v. Goldberger, 1997 U.S. Dist. LEXIS 2065, at 20 (S.D.N.Y.
Feb. 26, 1997), one of the leading cases in this area of the law, the
court held that allowing jurisdiction based merely on an Internet web-site
“would be tantamount to a declaration that this Court, and every
other court throughout the world, may assert jurisdiction over all information
providers on the global World Wide Web. Such a holding would have a devastating
impact on those who use this global service.”
In McDonough v. McEilligott, Inc., U.S. Dist. LEXIS 15139, (S.D. Cal,
Aug 6, 1996), Naxos Resources Ltd. v. Southam Inc., WL 635387 at 1 (C.D.
Cal. June 3, 1996) and Bensusan Restaurant Corp. v. King, 937 F. Supp.
295 (S.D.N.Y. 1996) the courts also expressly denied personal jurisdiction
based on the mere maintenance of a Organization.
In McDonough the court stated that “Plaintiff has alleged that [defendant]
maintains a World Wide Web (“Web”) site. Because the Web enables
easy world-wide access, allowing computer interaction via the web to supply
sufficient contacts to establish jurisdiction would eviscerate the personal
jurisdiction requirement as it currently exists; the Court is not willing
to take this step. Thus, the fact that [defendant] has a Organization
used by Californians cannot establish jurisdiction by itself.”
As noted earlier, there is a minority line of cases which hold that maintenance
of a Organization is sufficient to justify the exercise of personal jurisdiction
even without further contacts with the forum.
2. The Federal Long-Arm Rule (Rule 4(k)(2) of the Federal Rules of Civil
Procedure)
A recent amendment to Rule 4 of the Federal Rules of Civil Procedure
permits the exercise of personal jurisdiction by the federal courts in
federal question cases (like copyright actions), where personal jurisdiction
may not be available under a state long-arm statute. Fed. R. Civ. P. 4(k)(2)
provides that “[i]f the exercise of jurisdiction is consistent with
the Constitution and laws of the United States, serving a summons or filing
a waiver of service is also effective, with respect to claims arising
under federal law, to establish personal jurisdiction over the person
of any defendant who is not subject to the jurisdiction of the courts
of general jurisdiction of any state.”
Under this rule, in certain limited circumstances a federal court will
have personal jurisdiction over a defendant who is not a resident of the
U.S. but who has “sufficient contacts with the U.S. as a nation to
warrant the application of federal law, yet who lack sufficient contacts
with any single, particular State to support personal jurisdiction under
State law long-arm statutes.” S. Baicker-McFee, W. Janssen &
J. Corr, Federal Civil Rules Handbook 128 (1998).
While Rule 4(k)(2) does appear to relax jurisdictional requirements for
certain foreign defendants, the basic requirements of constitutional (Fifth
Amendment) due process apply. In other words there must be both minimum
contacts (with the requisite purposeful availment) with the United States
as a whole and reasonableness, before a foreign defendant may be haled
into federal court in federal question cases. See, e.g., Chew v. Dietrich,
143 F.3d 24 (2d Cir. 1998); S.E.C. v. Carillo, 115 F.3d 1540 (11th Cir.
1997). Since most of the Internet jurisdiction cases decided to date have
approached the problem in terms of the constitutional minimal, the analysis
discussed in the previous section would likely be pertinent in Rule 4(k)(2)
cases as well.
3. Analyzing Personal Jurisdiction in Internet Copyright Infringement
Cases.
In general, the cases indicate that the mere existence of a defendant’s
presence in the forum state through a Web Site is not a sufficient basis
to find personal jurisdiction over that defendant. There must be “something
more” which demonstrates that the defendant has directed his activities
toward the forums state, such as the conducting of business or contractual
relationships.
Rieder and Pappas have suggested the following matrix for analyzing personal
jurisdiction issues in potential Internet copyright infringement actions.
“At one end of the sliding scale is a situation where a defendant
clearly does business over the Internet with the forum state’s residents.
If the defendant enters into a contract with residents of a foreign jurisdiction
over the Internet, personal jurisdiction is proper. Courts should be able
to exercise personal jurisdiction if a contract exists and copyrighted
works are accessible on-line.
At the opposite end of the scale is a situation where a defendant has
simply posted copyrighted works on a BBS that is accessible to users in
foreign jurisdiction. The passive Organization (a site that does little
more than make information available to anyone interested) should not
be considered sufficient for the exercise of personal jurisdiction.
Finally, in the middle of the scale exists a very fact specific scenario
pertaining to an interactive remote server. When the user can do more
than merely accessing content, such as exchanging information with the
host computer, the exercise of jurisdiction should be determined by an
examination of several factors, such as the level of interactivity, the
commercial nature of the service, and the amount of (illicit) information
available. Under this analysis, the operator of the remote server offering
interactive services faces personal jurisdiction if the server provides
information that allegedly contains copyrighted works that can be accessed
from the forum state.” 38 Santa Clara L. Rev. at 416-417.
In light of the foregoing, it seems unlikely that were any action for
infringement of the foreign copyright to be brought against the Association,
a United States court could properly assert jurisdiction over the Association
or its principals by virtue of the maintenance of the Web Site in the
United States, absent additional contacts with the United States. While
a small number of courts have held that mere maintenance of a Web Site
in a commercial context is sufficient to support the exercise of personal
jurisdiction over the content provider, these decisions would not appear
to reflect the current state of the law. Even if they did apply, they
would likely be distinguishable on the grounds that the Association’s
Web Site is to be established strictly for non-profit, educational purposes
in which the use of the copyrighted materials may well amount to fair
use under United States and international copyright law. Under the main
line of authority, the maintenance of a passive site such as the Web Site
could not sustain the assertion of personal jurisdiction absent “something
more.” The only additional contacts that may be relevant would be
the Association’s proposed agreement with the Organization and its
contract with the ISP to establish and operate the Web Site. These isolated
contacts would not appear to rise to the level of activity found sufficient
in Zippo, for example. Nor would they likely be deemed sufficient to constitute
purposeful availment sufficient to satisfy the minimum contacts requirements
of the due process clause. Since no commercial or profit motive is involved
the kind of commercial exploitation that was found to support personal
jurisdiction in the Compuserve litigation does not exist, nor is there
the decree of consumer interactivity that would bring the present case
within the rule in the Maritz case. Finally, since the Association’s
conduct is clearly not aimed at causing harm to any United States person,
the effects doctrine invoked in the Panavision case would not support
jurisdiction here.
Still, while the likelihood of establishing jurisdiction over the Association
under the facts assumed seems remote, one cannot discount the possibility
entirely particularly in view of the uncertain state of the law in most
of the federal appeal circuits and generally in international copyright
law. For example, a court in New York might conceivably hold that the
relationship between the Association and the Organization (which is located
in New York) constitutes “doing business” or is a “contractual
relationship” in the state which permits the court to rule that there
is personal jurisdiction. Moreover, jurisdiction over the Organization
would seem to be uncontestable in view of the Organization’s residence
in the United States and in New York in particular. However, even such
a suit may be subject to dismissal on the grounds of forum non conveniens
which is beyond the scope of the current Memorandum.
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