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Jurisdiction for Internet Copyright Infringement Action Questioned

Penguin Group (USA) Inc. v. American Buddha, Case No. 09-1739 (Jun. 15, 2010)

Appeal from an order of the United States District Court for the Southern District of New York (Gerard E. Lynch, Judge) granting the defendant's motion to dismiss the plaintiff's copyright infringement action for lack of personal jurisdiction. Jurisdiction over the defendant, American Buddha, was asserted under a provision of New York's Long-Arm Statute. Because deciding whether the plaintiff's alleged injury resulting from alleged copyright infringement with respect to material uploaded to the Internet out-of-state and made available from servers located out-of-state occurred in New York for purposes of applying section 302(a)(3)(ii) requires the resolution of an undecided question of New York law, we certify that question to the New York Court of Appeals.

Plaintiff Penguin Group (USA) ("Penguin") appeals from an order of the United States District Court for the Southern District of New York (Gerard E. Lynch, Judge) granting defendant American Buddha's motion pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss Penguin's copyright infringement action for lack of personal jurisdiction. Penguin Group (USA) Inc. v. Am. Buddha, No. 09 Civ. 528, 2009 WL 1069158, 2009 U.S. Dist. LEXIS 34032 (S.D.N.Y. Apr. 21, 2009). Penguin alleges in its complaint that American Buddha unlawfully uploaded to servers an unauthorized copy of four of Penguin's copyrighted works for downloading, via the Internet and free of charge, by any of the 50,000 members of what American Buddha terms its "online library."

The sole issue on appeal is whether there is a basis for personal jurisdiction over American Buddha in New York enabling the district court to decide this dispute. Penguin asserted that the court has such jurisdiction under a provision of New York's Long-Arm Statute, N.Y. C.P.L.R. § 302(a)(3)(ii), that allows for jurisdiction over an out-of-state defendant with no contacts with New York, if, inter alia, the defendant is alleged to have committed a tortious act outside the State that caused, and reasonably should have been expected by the putative defendant to cause, injury to a person or property within the State.

The district court recognized two competing lines of authority interpreting section 302(a)(3)(ii), one that views the situs of injury as the location of the infringing conduct and one that views the situs of injury as the location of the plaintiff and, in some cases, the location of its intellectual property. Relying on the first line of authority and rejecting the second, the court concluded that the situs of the injury allegedly resulting from the asserted infringement of Penguin's copyrights would be where the book was electronically copied -- presumably in Arizona or Oregon, where American Buddha and its computer servers were located -- and not New York, where Penguin was headquartered. Accordingly, the court dismissed the case for failure adequately to plead injury in New York. Penguin, 2009 WL 1069158, at *4, 2009 U.S. Dist. LEXIS 34032, at *13.
 

 

Judge(s): Chin, Katzmann, and Sack
Jurisdiction: U.S. Court of Appeals, Second Circuit
Related Categories: Copyright
 
Circuit Court Judge(s)
Denny Chin
Robert Katzmann
Robert Sack

 
Plaintiff Lawyer(s) Plaintiff Law Firm(s)
Richard Dannay Cowan Liebowitz & Latman PC
Thomas Kjellberg Cowan Liebowitz & Latman PC

 
Defendant Lawyer(s) Defendant Law Firm(s)
Charles Carreon Online Media Law, PLLC

 

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Click the maroon box above for a formatted PDF of the decision.
10 penguin brought this copyright infringement action ltd. v. confezioni semeraro paolo, s.r.l., 115 f. supp. 2d 367, 2 provided by section 302(a)(3)(ii). it provides for jurisdiction 13 2009 u.s. dist. lexis 34032, at *12-*13. the court recognized a 10 american buddha, 31 there, the new york court of appeals declined to apply section 10 copyright infringement case. 14 the loss; some concluding that it depends where the infringed 14 american buddha's motion pursuant to federal rule of civil 1 appeal depends on a determination as to which of those lines of 15 cross & blue shield of n.j., inc. v. phillip morris usa, inc., 7 penguin group (usa) inc., 4 corporation whose principal place of business is in arizona and 5 relied on the wrong line of cases both as a matter of law and as 11 new york, even though he was fired in new jersey." id. penguin 2 have allegedly been infringed against the burden on non-resident 4 quotation marks and ellipsis omitted). 2 because of domicile or incorporation here do not satisfy cplr 302 10 opinion as our certificate, together with a complete set of the as penguin made no allegation that persons downloading2 30 mclucas, 15 n.y.2d 443, 209 n.e.2d 68, 261 n.y.s.2d 8 (1965). 19 only the third requirement of section 302(a)(3)(ii) is 3 apparently for this reason the district court treated the alleged 26 o'mara, 485 f.3d at 698 (analyzing earlier version of the second intellectual property is the residence of its owner. see, e.g., 17 business. id., 2009 wl 1069158, at *3 & n.5, 2009 u.s. dist. 9 new york-specific customer base and the alleged acquisition of 10 13 there is only one issue presented on appeal, which is 20 act within the state"). penguin therefore premised its claim of 12 affects the plaintiff and his intellectual property in new york. 12 on the merits requires value judgments and important public 19 the users' downloading of the works do not constitute copyright 26 enabling the district court to decide this dispute. penguin 20 we concluded that to determine "whether there is an 19 appropriate if the new york court of appeals has not squarely 5 docket no. 09-1739-cv 31 where the books were uploaded -- oregon or arizona -- not where 5 trade secrets and the threatened loss of customers here. sybron, with new york. those contacts are relevant to an inquiry under 3 whose negligent construction of a gas tank in kansas had caused 25 1 if these five requirements were satisfied and personal 21 the fact that the alleged infringement here was conducted by 18 lived and worked in new york was fired at a meeting held in new 1 principal place of business" in new york city. appellant's br. 5 would have consequences in new york. 21 establish a "direct" injury in new york for n.y. c.p.l.r. 11 outside new york, (2) the cause of action arose from that act, 9 or is domiciled there." 7 united states court of appeals for the second circuit rule 27.2, 20 economic damages in new york is insufficient, on its own, to 24 model based on their physical location. 14 the resultant damages are subsequently felt by the plaintiff." the four works at issue are oil! by upton sinclair, it1 13 infringed its copyright occurred in oregon or arizona, penguin 15 lost business at the site of the allegedly infringing action 5 over the internet, compl. 28, penguin does not specifically eng'g co., 25 f.3d 1050 (6th cir. 1994) (per curiam) (table) 10 york's long-arm jurisdiction so as to include non-residents who intellectual property injuries are located in the state where 25 torts, the place of injury will usually be located where the 12 constr., no. 04 civ. 1089, 2004 wl 1824102, 2004 u.s. dist. lexis 6 1069158, at *4, 2009 u.s. dist. lexis 34032, at *12. we note can't happen here by sinclair lewis, the golden ass by apuleius 18 lexis 34032, at *9-*10 & n.5 (citing am. eutectic welding alloys 20 (internal quotation marks and citations omitted)). 22 defendants wrote and edited article "they knew would have a 15 where its business was located and its copyright was located for 14 applied n.y. c.p.l.r. 302(a)(3)(ii) in the intellectual 16 in distefano. the question there was the location of the situs 6 not contain their own jurisdictional provisions, such as the 12 *7-*8 (quoting fantis foods, inc. v. standard importing co., 24 16 american buddha has made these works available to its 50,000 23 leading united states trade book publisher and the second-largest 9 adopted section 302(a)(3) for the purpose of "broaden[ing] new 13 the new york court of appeals has never squarely 9 we concluded that the termination of employment of an employee at 21 alleged copyright infringement with respect to material uploaded 20 specifically pleaded that the situs of injury is influenced by 5 deems the situs of injury under the circumstances presented by business or contracts to supply goods or services within the 16 344 f.3d 211, 221 (2d cir. 2003). resolution of this appeal 4 court relied on this line of cases to conclude that penguin's 5 located." id. at 84-85 (internal quotation marks and ellipsis 8 plaintiff-appellant, 4 infringement to be analogous to "an unauthorized photocopy of a 24 question and we invite the court of appeals to expand upon or 11 works were located -- and not in new york, where penguin's 25 appellant's br. at 14. 16 question to the new york court of appeals: in copyright 23 (much less internet copyright infringement cases), with respect 17 here, were we eventually to agree with penguin, 15 for the foregoing reason, we certify the following 6 omitted). 6 would comport with due process."). inasmuch as these issues 18 1824102 at *9, 2004 u.s. dist. lexis 16088, at *29-*30 (citing 2 at 5. american buddha describes itself as "an oregon nonprofit 3 alleged infringers whose connection to new york may be remote and 16 that affected a new york-based defendant's website through damage 11 we review a district court's dismissal of an action for 10 the copyrights are owned (in this case, new york). penguin, 2009 3 second, certification may be appropriate if the 13 by publishing complete copies of them on coordinated websites 21 at the place where an infringing sale is made because the holder 252, 256 (s.d.n.y. 2005) (finding injury to be "where the 14 the media of the internet and an online library, we recognize 13 the court concluded that the situs of the injury allegedly 6 allege the loss of customers or other direct harm in new york, 10 penguin appeals. tortious act outside of the state that causes an injury to a 2 jurisdiction were thus established under new york law, we would 8 situs of injury for purposes of determining long-arm 10 events associated with the injury took place. see, e.g., hermann 20 565, 568 (s.d.n.y. 1995) ("a patent holder suffers economic loss user's, infringement. 20 addressed an issue and other decisions by new york courts are 9 302(a)(3) makes clear the location of the situs of injury in a 8 from the fact that the injured person resides 14 situs of injury. looking not to domicile or residence but to 8 or the residence or location of the principal place of business 15 appear to be an argument based on the logic this court employed there is a possible question at the threshold that neither4 20 deciding whether the plaintiff's alleged injury resulting from 26 only from the initial tort but from the final economic injury and 17 copyright infringement action for lack of personal jurisdiction. 17 infringement cases, is the situs of injury for purposes of 18 contrary to the district court's decision, that the situs of 22 discussion of how to strike this balance in commercial tort cases 26 9 clerk of the court of appeals of the state of new york this 28 copyrighted works by american buddha and not through their 9 - v - 7 04 civ 5002, 2005 wl 357125, at *1, 2005 u.s. dist. lexis 2143, 3 (subd. (a), par. 3)"); lehigh valley indus. v. birenbaum, 527 25 for personal jurisdiction over american buddha in new york 5 state, . . . if he . . . expects or should reasonably expect the 2 domicile of the injured party within a state 6 act to have consequences in the state and derives substantial 16 enough to protect new york residents yet not so broad, even 3 corporation" that, through its operation of a "passive website" 9 subsection of the law, a plaintiff is thus required to 7 copyright act under which suit is brought in the case at bar, 18 lines, inc. v. walker, 490 f.3d 239, 242 (2d cir. 2007); savin v. 24 we find insufficient guidance to answer the question of 21 jurisdiction over an out-of-state defendant is governed by n.y. 25 locus of injury is "not as readily identifiable as it is in torts material from the websites thereby infringed its copyrights, 20 1069158, at *4, 2009 u.s. dist. lexis 34032, at *13. 26 of charge, and had provided assurances that downloading the works 7 dismiss because it found the situs of injury to be where the 27 asserted that the court has such jurisdiction under a provision 21 personal jurisdiction under the long-arm statute. see lamarca, 9 read to suggest that the injury from the infringement of an 12 (3) the tortious act caused an injury to a person or property in american buddha tries to distinguish this statement as5 7 the district court recognized two competing lines of 3 cir. 1999)). "[t]he original event occurs where the first effect 2 no contacts with new york, if, inter alia, the defendant is 11 state, because new york was where the employee lived and where he 5 n.e.2d at 77, 261 n.y.s.2d at 21 (internal quotation marks 7 cir. 2006). here, for the reasons discussed, we think that intellectual property rights relate to intangible property, no in the state and derives substantial revenue from interstate or 3 the new york court of appeals. 6 state. 20 in new york, the question of long-arm personal 13 perspective, penguin argues that 20 to involve more than derivative economic harm within the state. 2 undecided question of new york law, we certify that question to 2 complicating factor for personal jurisdiction analysis. it 21 downloading, via the internet and free of charge, by any of the 22 of appeals is better situated to ascertain the new york state 5 20 cir. 1971)). the court analyzed this case as a run-of-the-mine 5 under rule 302(a)(3)(ii), or whether the exercise of jurisdiction 14 600, 608, 742 n.y.s.2d 513, 520 (n.y. sup. ct. 2002)). according 13 2911 (mckinney) (as quoted in reyes v. sanchez-pena, 191 misc. 2d 11 cause tortious injury in the state by an act or omission without 14 experienced the effect of the infringing conduct in new york, 2 example, we recognize that the presence of online libraries and 5 by remote or consequential injuries such as lost commercial 18 the balance between the protection of new york-based intellectual 10 intellectual property right committed outside of new york may be 15 to that memorandum, the amendment was intended to be "broad 12 the state." mem. of judicial conference, 1966 n.y. sess. laws 17 we have recognized several factors as guiding that discretion. intellectual property is held). 21 determining the situs of injury for the purposes of 15 certification to the new york court of appeals is discretionary, no. 06 civ. 3010, 2006 wl 3714445, at *2, 2006 u.s. dist. lexis located wherever the infringing action is taken, because that is 21 pirates with the entire 21st-century arsenal 7 revenue from interstate or international commerce . . . ." 14 division of authority as to how to determine the situs of injury 16 section 302(a)(3)(ii) have not provided a clear indication of how 8 appeals decides the situs of injury to be the location of the 3 defendant." in re magnetic audiotape, 334 f.3d at 206 (internal 12 dictate the result of this appeal. but sybron does raise a 1 in an intellectual property dispute, district courts in this 4 richard dannay, cowan liebowitz & 17 that the injury "was experienced by penguin in new york, where 15 statute under the line of cases followed by 18 first, and most important, certification may be 13 reasonable likelihood that the new york court of appeals may 14 situs of injury under section 302(a)(3) to be new york state 24 conducts business. most prominently, in sybron, the case in 13 asserted personal jurisdiction under new york's long-arm statute, 24 the injury." id. at 84 (internal quotation marks omitted). 4 f.2d 87, 94 (2d cir. 1975) ("[s]ection 302(a)(3) is not satisfied 3 14 the extent permitted by principles of due process -- as it 17 unnecessarily -- stack the deck against the 2 lambert v. fiddler gonzalez & rodriguez, 171 f.3d 779, 791 (2d 8 8 v. due process 15 jurisdiction of courts in new york under n.y. c.p.l.r. 4 who may reasonably have failed to foresee that their actions 11 the rules of this circuit provide that "[i]f state law 16 action for lack of personal jurisdiction. penguin group (usa) 10 that views the situs of injury as the location of the plaintiff 6 profits which occur in new york only because the plaintiff is particular physical situs exists. if a legal situs must be 20 to the district court to consider the remaining four factors for 24 12397 at *24 (s.d.n.y. june 23, 2005) ("in cases of commercial 12 american buddha infringed on penguin's copyrights in four works1 state. see penguin, 2009 wl 1069158, at *2-*3, 2009 u.s. dist. 7 than the indirect financial loss resulting 4 on appeal, penguin contends that the district court 13 inc., 49 n.y.2d 317, 326, 402 n.e.2d 122, 125-26, 425 n.y.s.2d 20 plaintiff's business in-state. id., 2009 wl 1069158, at *3-*4, 26 that there was jurisdiction in new york courts over a defendant 18 rejecting jurisdiction based on "purely derivative economic 17 speed and ease with which the internet may allow out of state 11 defendant-appellee. 22 loses business there."); freeplay music, inc. v. cox radio, inc., 13 2. legal arguments against deeming new york to be the 9 the forum state, see fort knox music, inc. v. baptiste, 203 f.3d 14 whether, for the purposes of new york's long-arm statute, the 23 library." 25 to the prospective defendant that the injury would occur in, new 9 7 the following year, according to a memorandum of the 6 a matter of policy. as a legal matter, penguin argues that those 8 electronic copying of the works was made -- presumably, although property has a location for jurisdictional purposes. see, e.g., 6 that is where the sale was lost. see penguin, 2009 wl 1069158, 9 (footnotes omitted). 1 302(a)(2), which provides for jurisdiction over any person who 14 together comprising "online libraries" -- that it operates called 24 compl. 28. penguin presented evidence that american buddha had 3 to ask the new york court of appeals for guidance. we do. we 21 injury in new york sufficient to warrant 302(a)(3) 7 including three works published in print format by plaintiff- lexis 34032, at *8 (recognizing line of cases that suggest that 13 be imposed by the new york court of appeals in connection with engages in a persistent course of conduct with the state or (ii) 13 1. legal arguments in favor of deeming new york to be 4 injury from the alleged infringement by american buddha occurred 5 ralph nader, "operates an online library that provides access to 23 potentially devastating impact upon" the plaintiff, a california 11 place."). similarly, in savage universal corp. v. grazier6 10 statute in question. 2 conduct took place. see section iv(e), infra. 11 third, certification may be appropriate if a decision 17 any business within the state or contracts anywhere to supply 10 trade secrets in new york. id., 46 n.y.2d at 205-06, 385 n.e.2d 4 role in determining the situs of plaintiff's alleged injury" 12 want of personal jurisdiction de novo, construing all pleadings 15 appeal after disposition of this certification by the new york 19 failure adequately to plead injury in new york. penguin, 2009 wl 9 instance. see also royalty network inc. v. dishant.com, llc, 638 f.6 the american buddha online library and the ralph nader library.15 2 "commits a tortious act within the state," to a manufacturer 3 (internal quotation marks and citation omitted)). the district 22 "the u.s. arm of the internationally renowned penguin group, a concluded, either explicitly or implicitly, that the location of 24 delivered through the internet. because penguin pleaded 9 situs of injury as the location of the infringing conduct and one 4 torts of copyright and trademark infringement cause injury in the 15 property context. lower new york courts that have addressed 10 has decided what the situs of injury is in an intellectual 2 insufficient as a basis for personal jurisdiction. it concluded, 19 on the statute's plain meaning. and while penguin has not 24 finally, certification may be appropriate if the 10 "distefano experienced the 'first effect' of losing his job in 17 862, 446 n.y.s.2d 447, 449 (3d dep't 1981) ("[i]t has been held 15 york, and (5) the defendant derives substantial revenue from 24 is ill-suited to make. specifically, it requires a 20 struggle against internet piracy, allowing 25 which the new york court of appeals recognized the applicability 11 consistent with the requirements of due process, see metro. life 7 the ties to new york state in sybron were stronger than 8 contacts with, the state. the infringing conduct was not alleged 12 addressed the question have reached disparate results, some 5 v. nationwide mut. fire ins. co., 977 f.2d 47, 51 (2d cir. 1992); 12 because all four factors weigh in favor of 16 16 curiam). 25 showing entails making "legally sufficient allegations of 2 credited[,] would suffice to establish jurisdiction over the 16 interstate or international commerce. lamarca v. pak-mor mfg. 19 e.g., art leather mfg. co., inc. v. albumx corp., 888 f. supp. 18 presented with here. 17 requires deciding how the new york legislature intended to strike 10 demonstrate that (1) the defendant's tortious act was committed 21 copyright holder? 20 an unauthorized copy of four of penguin's copyrighted works for 12 headquarters is located. penguin, 2009 wl 1069158, at *3-*4, 9 their intellectual property) are based in new york, the injury is 6 colavito v. n.y. organ donor network, inc., 438 f.3d 214, 229 (2d 3 is not a sufficient predicate for 18 its offices and personnel are located, and where its copyrights 12 i. introduction 1 respectively. penguin disputes that any exception to the 13 1996). except where the long-arm statute permits jurisdiction to 22 requisite injury in new york. 4 infringement through the "distribution" of its copyrighted work 1 they were downloaded and used, which could have been anywhere 1 citigroup inc. v. city holding co., 97 f. supp. 2d 549, 568 6 oregon. aside from the accessability of its sites in new york, 1 weigh the breadth of protection to new yorkers whose copyrights 2 8 n.y. c.p.l.r. 302(a)(3)(ii) 20 bring suit. in re magnetic audiotape antitrust litig., 334 f.3d 21 they have uploaded to a website out-of-state. the new york court 7 residents whose connection with the state may be tenuous or 9 neither the new york court of appeals nor this court 16 of the infringing conduct or the location of the plaintiff and, expects or reasonably should expect the act to have consequences 20 (concluding that jurisdiction over florida defamation defendants lost. see, e.g., id. at 1570 ("[w]hen an infringement occurs by 22 c.p.l.r. 302. the only basis for personal jurisdiction over3 6 ------------------------------------- 4 with the due process clause of the fourteenth amendment. best 6 district court -- that focuses on avoiding unjust burdens on non- 7 distinguishing this case from most of those cited, see, e.g., 26 c. legislative history of n.y. c.p.l.r. 302(a)(3)(ii) 7 doubtless affirm the district court's judgement. if the court of 10 for the new york court of appeals than it is for us. 7 persuaded by decisions that suggested or concluded that the situs 6 classical literature and other works through the website, 9 lexis 34032, at *12. 22 its copyrighted work, but also through the unauthorized parties. we therefore accept for the purposes of this appeal the 6 expectation of consequences within the state 8 new york, was not. id., 2009 wl 1069158, at *4, 2009 u.s. dist. 7 likely involve additional questions of fact, they would best be 4 appropriate in new york state. if the new york court of appeals 16 court of appeals, and after the court of appeals judgment should lucretius translated by r.e. latham. 23 out-of-state residents who commit tortious acts outside of the 14 the situs of injury. penguin's strongest legal argument would 12 performed the duties of his employment. from a policy 3 august term, 2009 17 to its goodwill, lost sales, or lost customers. id., 2004 wl 18 that the situs of a nonphysical, commercial injury is where the 21 copyright infringement action: it did not explicitly consider 11 v. sharon hosp., inc., 135 a.d.2d 682, 683, 522 n.y.s.2d 581, 583 3 if not necessarily whether jurisdiction will ultimately be found penguin group (usa) inc., v. american buddha 18 307 (2000). 12 argues that similarly here, although the copying that allegedly 12 buddha's right to due process is beyond the scope of this appeal. 5 in litigation arising under federal statutes that do where the sales related to the intellectual property are in fact 24 cir. 2007). as discussed above, there are two competing lines of 14 expected that his or her action would have consequences in new 8 remote. we think that deciding which approach better comports 20 apparent ties to new york beyond the availability of material the honorable denny chin, who was at the time of argument* 7 domiciled or doing business here."). section 302 permits a court to exercise personal3 22 of digital infringement tools to shelter a sale of an infringing product, the right to exclude is violated 11 and, in some cases, the location of its intellectual property. 5 injury occurred where the book was impermissibly copied, since 8 new york judicial conference, the new york state legislature 16 taken by the defendant, some other district courts in this 17 circuit have concluded that injuries resulting from intellectual 5 in new york. 9 of the copyright holder? 10 district court's opinion must, with virtual certainty, be vacated appears equally unsettled on this point. some courts have 11 penguin's claims against american buddha would violate american wrongdoing is a concern, both a state trade secret and a patent 23 of the court of appeals' analysis through the formulation of our horne v. adolph coors co., 684 f.2d 255, 259 (3d cir. 1982) 23 no. 04 civ. 5238, 2005 wl 1500896, at *8, 2005 u.s. dist. lexis 22 fair use and reproduction by libraries and archives, 10 felt within the state no matter where the infringement takes 4 18 dist. lexis 34032 (s.d.n.y. apr. 21, 2009). penguin alleges in 8 those in the case at bar. sybron involved the alleged loss of a 30 u.s. dist. lexis 34032, at *12. the business was therefore lost 3 a. the district court's analysis of the situs of injury group, inc. v. u.s. vinyl mfg. corp., no. 04 civ. 5002, 2005 wl 2 2009 wl 1069158, at *4, 2009 u.s. dist. lexis 34032, at *13 12 permits, the court may certify a question of state law to that 13 concluding that the injury occurs where the plaintiff experiences 23 analysis of state law and policy considerations that this court 21 copyright-infringing conduct in oregon or arizona caused the 22 it. see kuhne v. cohen & slamowitz, llp, 579 f.3d 189, 198 (2d 11 at 1059, 413 n.y.s.2d at 132. its holding therefore does not 16 present purposes. see, e.g., appellant's br. at 21 (alleging 4 bodily injury in new york state. id., 15 n.y.2d at 460, 209 17 of the plaintiff to foresee that the distribution of the 4 protection of new york residents or domiciliaries, while american 22 50,000 members of what american buddha terms its "online 1 domicile or incorporation in new york state alone was 1570 (fed. cir. 1994). 16 process principles is not necessary unless there is long-arm state; (2) commits a tortious act within the state; (3) commits a 18 a plaintiff bears the burden of demonstrating personal 20 residence or location of the principal place of business of the 13 we do not, as a general matter, conduct the due process analysis several courts have at least suggested that intellectual 3 although, as noted, penguin does allege copyright 6 explained below, we do not reach that issue on this appeal. 25 infringement only by american buddha, and not by any individual 25 expected an injury to occur in new york and that american buddha 20 background 12 penguin has not effectively pleaded that the situs of injury is 22 6 counsel), new york, ny, for plaintiff- york, sitting by designation, is now a member of this court. 23 16 askew, hoffman, lipoff, quentel & wolff, p.a., 85 a.d.2d 861, should be deemed to have their fictional situs at the residence 16 judge) granting the defendant's motion to dismiss the plaintiff's 19 25 route from greece to chicago); sybron, 46 n.y.2d at 205, 385 dictum because the defendant in mcgraw-hill had actual contacts 20 23 this fact may affect the analysis. 9 to have occurred in new york. 19 by the initial unauthorized uploading of the copyrighted works -- 18 goods or services in the state") or n.y. c.p.l.r. 302(a)(2) 23 test, which asks them to locate the original event which caused 8 york court of appeals that the allegation of distribution over 2 205, 385 n.e.2d 1055, 1058, 413 n.y.s.2d 127, 131 (1978). 5 buddha advocates an approach -- the one that persuaded the 16 ultimately persuaded by a line of cases recognizing "the well- 11 discussion 5 direct injury within the state and a closer 6 omitted). 3 respect to the claims made in the complaint, was whether the location and that their location in this case is in new york 4 (argued: january 7, 2010 question certified: june 15, 2010) 15 commercial tort and involves both the presumptive presence of 16 see mccarthy v. olin corp., 119 f.3d 148, 153 (2d cir. 1997), and 1 united states court of appeals 16 in arizona or oregon, where american buddha and its computer 14 this certification. this panel will retain jurisdiction of the 8 charles carreon, online media law, pllc, 16 intellectual property rights in the state, and the likely ability 21 the plaintiff, penguin group usa, describes itself as 11 plaintiff penguin group (usa) ("penguin") appeals from 11 a new york injury for section 302(a)(3) purposes if it adversely 13 before: sack, katzmann, and chin, circuit judges.* 17 13 policy choices that the new york court of appeals is better 8 appellant penguin group (usa) inc." appellee's br. at 3 of the owner."). "the theory [of these cases] is that, since 26 who downloaded material from american buddha's site, the court 17 it choose to accept this certification. 5 copyrighted book in oregon or arizona." penguin, 2009 wl 2 cases is correct. 10 american buddha filed a motion in the district court to 4 known as the ralph nader library but unaffiliated in any way with 26 of section 302(a)(3) to commercial torts, the court decided that 18 determining long-arm jurisdiction under n.y. c.p.l.r. 17 perhaps, the copyright. the language of the statute provides 15 situs of injury in copyright infringement cases is the location 5 latman, p.c. (thomas kjellberg, of 24 resident). 90393, at *5 (s.d.n.y. dec. 13, 2006); mario valente collezioni, 22 injury is alleged, some new york courts have determined the situs 7 appellant. supp. 2d 410, 423 (s.d.n.y. 2009); mfg. tech. inc. v. kroger co., 6 the district court granted american buddha's motion to 24 thomas v. ashcroft, 470 f.3d 491, 495 (2d cir. 2006). such a 19 not reasonably be expected to foresee that their acts outside of 2 the certified issue will determine how we resolve this appeal -- 23 at 125-26, 425 n.y.s.2d at 786-87 (rejecting jurisdiction based 26 n.e.2d at 1058, 413 n.y.s.2d at 131 (recognizing that courts have property in the state. n.y. c.p.l.r. 302. 9 jurisdiction under n.y. c.p.l.r. 302(a)(3)(ii) the location of 17 inc. v. am. buddha, no. 09 civ. 528, 2009 wl 1069158, 2009 u.s. 17 members free of charge. it has also provided its members with 25 offered the materials to its 50,000 users via the internet free 20 infringement because they are protected under sections 107 and 14 resolving all doubts in the plaintiff's favor. distefano v. 13 certification, we hereby certify the question restated below. 21 we have not found in the legislative history any 24 the sole issue on appeal is whether there is a basis 10 a meeting in new jersey caused the employee injury in new york 8 in order to establish jurisdiction under that 16 at its owner's residence or principal place of business; and4 1 some concluding that the injury occurs where the infringing 8 carozzi, inc., 286 f.3d 81 (2d cir. 2001) (per curiam), in which 6 pursuant to new york court of appeals rule 500.17 and 19 ranier, 898 f.2d 304, 306 (2d cir. 1990). 8 it is hereby ordered that the clerk of this court transmit to the 19 are held"); cf. calder v. jones, 465 u.s. 783, 789-90 (1984) 17 of injury for section 302(a)(3) purposes where an employee who 12 (2d dep't 1987) ("the situs of the injury is the location of the 1 concluded that "remote injuries located in new york solely 1 case, the critical events are [the defendant's] alleged 26 critical events associated with the dispute took place. in this 10 sack, circuit judge: 7 12 ins. co. v. roberston-ceco corp., 84 f.3d 560, 567 (2d cir. 24 on loss of overall sales where conversion of goods occurred en 10 14 situated than we to make. see colavito, 438 f.3d at 229; blue 9 with the intent of the new york legislature is more appropriate 19 (conferring jurisdiction over a party that "commits a tortious 23 "reproduction and distribution" of the works over the internet. 11 briefs, appendix, and record filed in this court by the parties. 18 authors, publishers and other intellectual beverly hills fan co. v. royal sovereign corp., 21 f.3d 1558, 13 16088 (s.d.n.y. aug. 13, 2004), the district court found the 21 2009 u.s. dist. lexis 34032, at *9, *11. 9 the question whether defining the situs of injury here 19 injury" suffered in-state solely because of the location of the 21 204, 206 (2d cir. 2003) (per curiam). "in order to survive a 1 that allows for jurisdiction over an out-of-state defendant with 376-77 (s.d.n.y. 2000); cello holdings, l.l.c. v. lawrence-dahl 09-1739-cv 21 penguin has alleged infringement not only through the copying of 19 jurisdiction over a person or entity against whom it seeks to 18 actions to cause injury to copyright holders resident in new 25 alter this question as it should deem appropriate. see 3 techs. corp., 375 f. supp. 2d 252, 256 (s.d.n.y. 2005) ("the 11 25 "'this "original event" is, however, generally distinguished not 19 302(a)(3)(ii) the location of the infringing action or the 17 the court of appeals would apply the section to the case we are 13 affected by the fact that the infringement here occurred through 9 the internet may be a factor in the court's interpretation of the 4 evaluation of the situs of injury and may figure in the court's 9 plaintiff and the intellectual property at issue, then the 11 id., 2009 wl 1069158, at *2-*3, 2009 u.s. dist. lexis 34032, at 14 appeal from an order of the united states district 19 injury was indeed new york, the proper course would be to remand 2 york state courts. the district court did not have the ability 18 property torts occur where the infringing action is taken. see, international commerce; or (4) owns, uses or possesses real 16 the district court would substantially -- and 15 commonly does in states other than new york -- analysis under due 1 jurisdiction," including "an averment of facts that, if 6 in oregon or arizona was alleged; downloading of that copied a united states district judge for the southern district of new 21 but in cases in which something more than economic 24 english-language trade book publisher in the world, with its ("[i]nsofar as the situs of the property damaged by the alleged person or property within the state, provided that the party (i) 3 however, that jurisdiction was appropriate where the plaintiff 10 oregon, where the servers to which american buddha uploaded the 1 causing physical harm." sybron corp. v. wetzel, 46 n.y.2d 197, 8 from this premise, some new york courts have concluded 18 jurisdiction over the defendant, american buddha, was asserted 14 783, 786-87 (1980)). chosen, it is not illogical to pick the residence of the owner." 26 derives substantial revenue from interstate or international 13 mcgraw-hill cos., inc. v. ingenium techs. corp., 375 f. supp. 2d 15 for the purposes of n.y. c.p.l.r. 302(a)(3)(ii). it was 23 behind a 19th-century personal jurisdiction 28 14 until we have first determined that there is personal 3 alleged to have committed a tortious act outside the state that 16 of the district court's analysis was where the plaintiff lost 9 this was not explicitly stated by the court, in arizona or 1 circuit local rule governing certification). here, resolution of 27 reasoned that business was lost through the copying of the 14 district court's implicit conclusion that copyrights have a 23 located out-of-state occurred in new york for purposes of 23 must make a prima facie showing that jurisdiction exists." 1 american buddha in new york that is asserted by penguin is if it does have a location, then, what is it? federal law 10 the infringing action or the residence or location of the 22 motion to dismiss for lack of personal jurisdiction, a plaintiff 4 without the state causing injury to person or property within the 24 state if the resulting injury occurs in, and it was foreseeable 2 whether it had personal jurisdiction over the defendant with 15 jurisdiction under new york's long-arm statute. see best van 22 to the internet out-of-state and made available from servers potential injury for personal jurisdiction purposes would have to 3 ("[i]t is not necessary to explore whether plaintiff has met its 23 out five-part test for jurisdiction under section 302(a)(3)). at 19 under a provision of new york's long-arm statute. because 1 applying section 302(a)(3)(ii) requires the resolution of an 22 as is our practice, we do not intend to limit the scope 7 cases are inconsistent with the reasoning of distefano v. 18 copyrighted material in issue will cause loss beyond that caused 11 against american buddha under 17 u.s.c. 501, alleging that 22 jurisdiction[, courts] must generally apply a situs-of-injury 19 property holders and the rights of defendants with few if any 29 placement on the internet. id., 2009 wl 1069158, at *4, 2009 14 auth. of n.y. & n.j., 315 f.3d 146, 150-51 (2d cir. 2002). our 7 york court of appeals: in copyright infringement cases, is the section 302(a)(1), not section 302(a)(3), which is at issue here. 23 legislature's intent than are we. 25 where the situs of injury is located in the text of the statute, 19 sales co., inc. v. dytron alloys corp., 439 f.2d 428, 433 (2d. 7 american buddha conducts no business in, and has no other 25 determination of how the new york state legislature intended to 12 16 302(a)(1) (conferring jurisdiction over a party that "transacts 13 district of new york (gerard e. lynch, judge) granting defendant 9 tucson, az, for defendant-appellee. 7 nonetheless in the context of certifying a question to the new 15 would be where the book was electronically copied -- presumably 14 interpret the alleged wrong here -- which is analogous to a 5 whose websites are hosted on servers located in arizona and 8 decided by the district court, if necessary, in the first not here decide: whether a copyright -- in and of itself an 19 it is settled new york law that the suffering of 11 dismiss penguin's complaint pursuant to federal rule of civil 28 of new york's long-arm statute, n.y. c.p.l.r. 302(a)(3)(ii), 18 assurances that american buddha's uploading of these works and 1 commerce -- were not analyzed by the district court. penguin, 19 york. 2 asserted the foreseeable loss of customers in new york, and 11 d. new york courts' interpretation of 21 jurisdiction on n.y. c.p.l.r. 302(a)(3)(ii), which, under other courts have reasoned that intellectual property is 1 would not constitute copyright infringement. penguin has not 13 state's highest court." 2d cir. r. 27.2; see also prats v. port 28 of little assistance. the provision was adopted to fill a gap in 17 jurisdiction under the applicable state statute. see best van 23 of injury to be the place where the plaintiff is located and 7 c.p.l.r. 302(a)(3)(ii) the location of the infringing action 3 over an out-of-state defendant who "commits a tortious act 6 this case to be the location of the infringing conduct, we will 22 95 n.y.2d at 214, 735 n.e.2d at 886, 713 n.y.s.2d at 307 (setting 8 id.; citigroup, 97 f. supp. 2d at 568. but these cases can be 11 and we expect to remand for further proceedings. 17 co., 95 n.y.2d 210, 214, 735 n.e.2d 883, 886, 713 n.y.s.2d 304, 17 iii. new york's long-arm statute: n.y. c.p.l.r. 302 4 burden on the other elements necessary to establish jurisdiction 6 27 the legislative history of n.y. c.p.l.r. 302(a)(3) is 12 relying on the first line of authority and rejecting the second, jurisdiction over an out-of-state party that: (1) transacts the district court nor the parties have addressed and which we do 19 critical events associated with the dispute took place." 10 193, 196 (2d. cir. 2000), provided that those rules are 9 oregon or arizona) rather than where the plaintiff is located and 7 in mr. distefano's case, the "original event" occurred 4 "statute's plain language does not indicate the answer." riordan 13 and affidavits in the light most favorable to the plaintiff and 15 cos., 89 f. supp. 2d 464, 470 (s.d.n.y. 2000). 22 means of the internet and online libraries, we recognize that 21 in california satisfied due process standards because the 3 the internet may have an impact on the court of appeals' 8 in new york because "the 'original event' [was] distefano's 20 in dispute on this appeal: whether the defendant's allegedly 24 to which the new york court of appeals has acknowledged that the 5 in copyright infringement cases, is the situs of injury for 25 cases dealing with the issue here. the proper resolution of this 22 the impact, if any, of the means by which the alleged 14 n.y. c.p.l.r. 302. american buddha was not subject to the intangible thing -- has a physical location for jurisdictional 15 that this factor may be relevant to the considerations 14 conclusion 19 proprietors in new york in the accelerating 22 n.y. c.p.l.r. 302(a)(3)(ii) in a copyright case requires be the result of american buddha's, and not any downloading 12 n.y. c.p.l.r. 302(a)(3)(ii) 4 of the tort that ultimately produced the final economic injury is 21 3 american buddha, as noted, is an oregon not-for-profit 10 ii. standard of review 16 lines, 490 f.3d at 242; savin, 898 f.2d at 306. 6 held."); design tex group, inc. v. u.s. vinyl mfg. corp., no.5 8 at *4 (s.d.n.y. feb. 14, 2005) ("[b]ecause the plaintiffs (and 3 then assess whether a finding of personal jurisdiction comports 12 procedure 12(b)(2) for lack of personal jurisdiction. penguin 17 established principle requiring a direct injury in new york" and 2 for the second circuit 23 cir. 2009); o'mara v. town of wappinger, 485 f.3d 693, 698 (2d 9 that the situs of injury is the location where the actions or translated by e.j. kenney, and on the nature of the universe by property are located in california" to be relevant to evaluating (finding the fact that "the design processes and intellectual 19 its complaint that american buddha unlawfully uploaded to servers 4 jurisdiction, which must be based upon a more 7 iv. the situs of injury under 14 resulting from the asserted infringement of penguin's copyrights 17 servers were located -- and not new york, where penguin was 1 new york has long held that "the residence or 357125, at *1 (s.d.n.y. feb. 14, 2005) (same); tatum v. hunter 15 the principal factual question addressed in the course 9 experience of being removed from his job." id. at 85. 15 court for the southern district of new york (gerard e. lynch, 25 questions certified will control the outcome of the case. see 27 5 because a single incident of copyright infringement that occurred 13 new york, (4) the defendant expected or should reasonably have 5 analysis. 6 in intellectual property infringement cases. the court was 2 circuit have. see, e.g., mcgraw-hill cos., inc. v. ingenium 12 we direct the parties to bear equally any fees and costs that may allegedly infringed intellectual property is held"); design tex 8 of injury is where the infringing conduct occurred (in this case, 18 17 though constitutionally feasible, as to burden unfairly non- 11 property case. district courts in this circuit that have 21 108 of the copyright act, 17 u.s.c. 101 et seq., which govern 23 infringement was committed -- by use of an online library 5 state where the allegedly infringed intellectual property is 14 [t]he restrictive reading of the long-arm 7 material by users in other locations, including hypothetically 8 authority interpreting section 302(a)(3)(ii), one that views the 7 at *4, 2009 u.s. dist. lexis 34032, at *11-*12. 8 neither the plain language nor the legislative history of section 21 insufficient to predict how the court of appeals would resolve contacts with that state). 24 least two of those factors -- that american buddha reasonably 22 302(a)(3) purposes. fantis foods, 49 n.y.2d at 326, 402 n.e.2d 3 b. penguin's arguments regarding the situs of injury 4 had additional ties to the state, such as the presence of the purposes and, if so, what that location is. 6 we therefore certify the following question to the new 2 unlicensed use of [the plaintiff's] recordings and compositions." 11 e. legal arguments for and against finding new york 12 ------------------------------------- 5 van lines, 490 f.3d at 242; savin, 898 f.2d at 306. for reasons 19 jersey. distefano, 286 f.3d at 82-83. 2 that the internet is available, including new york. id. 2 copyright act applies to american buddha's conduct. 4 caused, and reasonably should have been expected by the putative 8 federal courts are to apply the personal jurisdiction rules of 3 penguin advocates an approach that emphasizes 25 although we have never extended this logic to conclude 15 procedure 12(b)(2) to dismiss penguin's copyright infringement 11 wl 1069158, at *3-*4, 2009 u.s. dist. lexis 34032, at *9. 5 defendant to cause, injury to a person or property within the 18 residents whose connection with the state is remote and who could 20 new york could have harmful consequences in new york." id. 18 insufficient guidance to allow us to answer that question based 1 the felt consequences of the tort.'" id. (quoting bank brussels 13 original event which caused the injury, not the location where 1 the statute's legislative history, or the jurisprudence of new 11 principal place of business of the copyright holder? although 4 the district court recognized a division of authority 12 an order of the united states district court for the southern 15 carozzi n. am., inc., 286 f.3d 81, 84 (2d cir. 2001) (per 10 as new york so as to give rise to jurisdiction in new york over 1 york. the central question for the district court, in deciding2 1 the court recognized that the internet was a 15 property is held, apparently assuming that the property is held 15 where an out-of-state defendant committed trademark infringement 15 (internal citations omitted)); weiss v. greenburg, traurig, 18 headquartered. accordingly, the court dismissed the case for at the situs where the sale occurs.") 1 kirschner v. kpmg llp, 590 f.3d 186, 195 (2d cir. 2009). for 5 as to the situs of injury for purposes of section 302(a)(3)(ii) 3 nonetheless concluded that in this case, the internet "plays no 6 46 n.y.2d at 205, 385 n.e.2d at 1058, 413 n.y.s.2d at 131. 22 specified circumstances, allows for long-arm jurisdiction over 29 the new york long-arm statute that was recognized in feathers v. 4 therefore certify to the new york court of appeals this question: 6 purposes of determining long-arm jurisdiction under n.y. 16 underlying the definition of the situs of injury due to the 12 to be the situs of injury the issue has not been briefed or otherwise raised by the 10 vi. certification to the new york court of appeals 2 (s.d.n.y. 2000)).


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