Internet Copyright Infringer May be Hauled into Plaintiff’s Local Court

In the case of Penguin Group (USA) Inc. v. American Buddha, the New York Court of Appeals held that in internet copyright infringement cases, the “situs of injury” is the principal place of business of the copyright holder.  This ruling potentially subjects alleged copyright infringers to the plaintiff’s home court regardless of where the alleged infringement occurred or where the defendant resides.

In the case, Penguin Group brought a copyright infringement action against Defendant American Buddha.  The defendant is an Oregon not-for-profit corporation that according to its website, “makes available selected artistic and literary works under a system of voluntary, free online lending, under the fair use exclusion from copyright liability accorded to libraries and archives pursuant to 17 U.S.C. Section 108.” By contrast, Penguin Group alleges that American Buddha encourages and facilitates the downloading of unauthorized copies of copyrighted works by the general public.

On April 21, 2009, the United States District Court for the Southern District of New York dismissed the lawsuit for lack of personal jurisdiction.  The basis of that ruling included the fact that American Buddha conducts no activities in New York, even though its website The Ralph Nadar Library is accessible in New York.  (Despite the website name, Ralph Nadar is apparently not affiliated with the defendant or its website.)

Penguin Group Appealed to the Second Circuit Court of Appeals.  The Second Circuit thereafter sent the following certified question to the New York Court of Appeals for determination under New York Law:

“In copyright infringement cases, is the situs of injury for purposes of determining long-arm jurisdiction under N.Y. CPLR 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?”

The New York Court of Appeals responded that the situs of injury is the principal place of business of the copyright holder.

The New York Court of Appeals held that,

[I]t is undisputed that American Buddha’s Web sites are accessible by any New Yorker with an Internet connection and, as discussed, an injury allegedly inflicted by digital piracy is felt throughout the United States, which necessarily includes New York.

. . .

In sum, the role of the Internet in cases alleging the uploading of copyrighted books distinguishes them from traditional commercial tort cases where courts have generally linked the injury to the place where sales or customers are lost. The location of the infringement in online cases is of little import inasmuch as the primary aim of the infringer is to make the works available to anyone with access to an Internet
connection, including computer users in New York.

The New York Court of Appeals emphasized that this decision does not mean that every far flung alleged copyright infringer is automatically subject to jurisdiction in the plaintiff’s home court.  Nonetheless, this decision is another step in that direction.

The Second Circuit will now use this information to make a final determination regarding personal jurisdiction.  The real issue in this case, whether lending digital works as conducted by American Buddha is copyright infringement, has not yet been addressed.