Foreign-Based Infringers Beware: You May Be Within Reach of The Federal Long-Arm Statute

Written by Sofia Castillo

Last week, the Court of Appeals for the Ninth Circuit issued another opinion on when U.S. federal courts may exercise specific personal jurisdiction over foreign-based sites sued for copyright infringement. Will Co. Ltd. v. Ka Yeung Lee, No. 21-35617 (Aug. 31, 2022), was published a few weeks after Lang Van, Inc. v. VNG Corporation, 40 F.4th 1034 (9th Cir. 2022) and two years after AMA Multimedia, LLC v. Wanat, 970 F.3d 1201 (9th Cir. 2020), two opinions where the Ninth Circuit also addressed this question. Read together, these three decisions shed light on the circumstances under which copyright owners may successfully bring foreign-based copyright infringer sites into federal court.

In Will Co., a Japanese adult entertainment producer sued the operators of ThisAV.com, a Hong Kong-based user-generated video-hosting site, for the unauthorized display of 13 of the plaintiff’s copyrighted videos after the defendants failed to disable access to the videos upon receipt of takedown notices from Will Co. The District Court for the Western District of Washington granted defendant’s motion to dismiss for lack of specific personal jurisdiction under Federal Rule of Civil Procedure 4(k)(2) because Will Co. could not establish that the defendant “expressly aimed” ThisAV.com’s content at the United States market, or that it was foreseeable that operating the site would cause jurisdictionally significant harm in the United States. On appeal, the Ninth Circuit reversed and remanded for further proceedings.

Rule 4(k)(2), the federal long-arm statute, allows a court to exercise jurisdiction over persons who do not reside in the United States, and have ample contacts with the nation as a whole, but whose contacts are so scattered among states that none of them would have jurisdiction. To obtain personal jurisdiction under Rule 4(k)(2), the plaintiff must prove: (1) the claim at issue arises from federal law; (2) the defendants are not subject to any state’s courts of general jurisdiction; and (3) invoking jurisdiction upholds due process—in other words, that invoking jurisdiction is not unreasonable. Defendants conceded the first two conditions of Rule 4(k)(2) jurisdiction.

In analyzing the third condition—due process—the Ninth Circuit in Will Co. first set forth the three factors necessary for invoking jurisdiction: (i) the defendant purposefully directs its activities at the forum; (ii) the lawsuit arises out of or relates to the defendant’s forum related activities; and (iii) the exercise of jurisdiction is reasonable. In deciding the first factor—purposeful direction—the Court applied the so-called “effects test” set forth in Calder v. Jones, 465 U.S. 783, 787–89 (1984), which applies to issues like copyright infringement. To exercise personal jurisdiction the Effects Test mandates a court to ask whether a defendant “(1) committed an intentional act (2) expressly aimed at the forum (3) causing harm that defendant knows is likely to be suffered in the forum state.” Under Rule 4(k)(2), the “forum” is the entire United States.

The Court easily found that the defendant met the first factor of the Calder Effects Test. However, the panel found that the second factor – whether Lee expressly aimed ThisAV.com at the United States – was a much closer question. The Court examined the actions of the operators of the site and clarified that “mere passive operation of a website is insufficient to demonstrate express aiming” and “the operator must have both actively appealed to and profited from an audience in that forum.”   

The Court distinguished Wanat, which held that the court lacked person jurisdiction, and found that Will Co. met its burden of providing evidence to show that Lee was doing more than passively operating ThisAV.com. Defendants profited from selling advertising to third parties, and since there were more than 1.3 million visits from the U.S. in the three-month period at hand, the site earned considerable revenue from a U.S. audience.  On whether the defendants actively appealed to the U.S. market, the Court found that they made at least two key choices that, in combination, demonstrated their intent to cultivate an audience in the U.S.  First, the defendants hosted their website on servers located in Utah and purchased content delivery services from Cloudflare, a U.S. company with servers in the U.S. and Asia that reduce the site’s loading time in the U.S. over other jurisdictions.  Second, the defendant’s webpages addressing legal compliance were relevant “almost exclusively” to a U.S. audience.  For instance, although the website was predominantly in Japanese, the legal compliance pages were in English. The site’s Privacy Policy expressly indicated that ThisAV.com did not make any warranties about the appropriateness of the use of their site outside of the U.S. and that users accessing the site from outside the U.S. must comply with their local jurisdiction regarding website access and use. Moreover, the site provided pages exclusively addressing compliance with U.S. laws such as the Digital Millennium Copyright Act and 18 U.S.C. § 2257, which requires that producers of adult content keep records of dates of birth of all performers and other information. The Court concluded this language indicated the defendants prepared for a U.S. audience to the exclusion of all others.

On the third factor of the Calder Effects Test – whether Lee’s act caused harm in the U.S. and that such harm was foreseeable – the Court explained that “if a Defendant’s actions cause harm in multiple fora, jurisdiction is proper in any forum where a ‘sufficient’ amount of harm occurs, even if that amounts to only a small percentage of the overall harm caused.” The Court then found that 1.3 million U.S. views was a substantial number, even though these constituted only 4.6% of the total visits to ThisAV.com. The Court also found that the harm was foreseeable because the site actively appealed to a U.S. audience, its operators knew a significant number of people in the United States viewed the site, and the operators were put on notice that they were hosting infringing content when they received Will Co.’s takedown notice.

When the Court decided Wanat, it appeared that courts might apply Rule 4(k)(2) narrowly. However, in light of Lang Van and Will, the Ninth Circuit might effectively be limiting Wanat to its facts.

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