IP Law Daily, COPYRIGHT—9th Cir.: California federal court had personal jurisdiction over Hong Kong porn site in infringement case, (Sep 1, 2022)

By Robert B. Barnett Jr., J.D.

The Ninth Circuit reversed a district court’s finding that a Hong Kong porn site had insufficient contacts with the U.S. to be subject to a copyright infringement suit in California.

The U.S. Court of Appeals for the Ninth Circuit has reversed the dismissal of a Japanese porn producer’s copyright infringement suit against a Hong Kong porn site for lack of specific personal jurisdiction because the appellate court concluded that the Hong Kong porn site purposefully directed its activities to the United States by cultivating a U.S. audience for its videos. As a result, the Ninth Circuit ruled, the Japanese plaintiff could sue the Hong Kong defendant in California federal district court for copyright infringement because the Hong Kong defendant had sufficient minimum contacts with the U.S. satisfy the requirements of personal jurisdiction (Will Co., Ltd. v. Lee, August 31, 2022, Wardlaw, K.).

Background. Will Co., Ltd. is a Japanese porn producer with U.S. copyright registrations in more than 50,000 full-length videos. It sells access to those videos exclusively through its site, R18.com. It earns more than $1 million annually from U.S. sales.

Will discovered in 2020 that ThisAV.com, a porn site owned in Hong Kong, was displaying 13 of Will’s videos without permission. It served a take-down notice to the site pursuant to the Digital Millennium Copyright Act (DMCA). When the site refused to comply, Will sued ThisAv.com, its owner, Youhaha Marketing and Promotion Limited, and its director, Ka Yeung Lee, in California federal court for copyright infringement.

ThisAV.com filed a motion to dismiss for lack of specific personal jurisdiction, which the district court granted, ruling that the defendants had insufficient contacts with the U.S to justify exercising jurisdiction. More specifically, the court ruled that (1) ThisAV.com did not “expressly aim” its content at the U.S. and (2) operation of the site did not cause “jurisdictionally significant harm” in the U.S. Will appealed the decision to the Ninth Circuit in San Francisco.

Personal jurisdiction. Under Federal Rule of Civil Procedure 4(k)(2), a federal court may exercise jurisdiction over a foreign defendant if three condition exist: (1) the claim arose under federal law, (2) the defendant was not subject to any state court’s general jurisdiction, and (3) exercising jurisdiction comports with due process. The first two conditions were conceded, leaving the appeal to hinge upon whether the third condition was satisfied.

Due process. In looking at whether a foreign defendant had sufficient minimum contact with the U.S. forum, the court will look to see if (1) the defendant purposefully directed its activities at the forum, (2) the lawsuit arose out of forum-related activities, and (3) exercise of jurisdiction was reasonable (Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1227-28 (9th Cir. 2011)). This appeal, the appellate court noted, would be determined by the first prong, whether the defendant purposefully directed its activities at the U.S.

Purposefully directing. To determine whether a foreign defendant purposefully directed its activities at the forum, the Ninth Circuit applies the Calder test, which asks whether the defendant (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knew was likely to be suffered in the forum state (Calder v. Jones, 465 U.S. 783 (1984); see also Dole Foods Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)). A. claim could be said to have been purposefully directed at the forum (in this case, the U.S.), only if all three prongs were satisfied.

Intentional acts. In the Ninth Circuit, operating a passive site, purchasing a domain name, and purchasing domain privacy services, all of which occurred here, have all been considered to be intentional acts (AMA Multimedia, LLC v. Wanat, 970 F.3d 1201 (9th Cir. 2020)). Thus, the first prong was satisfied.

Expressly aiming. But more is required than an intentional act, the appellate court noted. The site must “expressly aim” the content at the U.S., which, the court acknowledged, was a closer question. “Mere passive operation of a website is insufficient to demonstrate express aiming,” the court said. The site must have both appealed to and profited from an audience in that forum.

Will met its burden of showing “something more,” the court ruled, by demonstrating that the site earned considerable ad revenue from the 1.3 million U.S. viewings of the site’s content. That fact established the “profited from” requirement.

Turning to the “appealed to” requirement, the court concluded that the intent to appeal directly to U.S. consumers was found in two key choices that the site made.

First, the site chose to be hosted in Utah and to purchase content delivery network services for North America (which sped up load times). The closer a viewer is located physically or geographically to the host server, the faster the page will load. By choosing to locate the site in Utah and to purchase the North American services, the site opted to provide load times for U.S. viewers that were shorter than for viewers located elsewhere.

Second, when the site was created, it posted notices of legal compliance with U.S. laws. The Terms and Conditions page, for example, stated that the site was “subject to copyright and other intellectual copyright under United States, Canada and other foreign laws and international conventions.” It also noted compliance with the DMCA. In addition, although most of the site was in Japanese, the legal compliance pages were in English.

While it was true that simply anticipating that people from the U.S. might access the site was insufficient by itself to establish personal jurisdiction, the site, the court noted, “did significantly more than that.” The site actually “prepared for U.S. visitors to the exclusion of all others.” As a result, the Ninth Circuit concluded that the site both “appealed to” and “profited from” a U.S. audience, which meant that it expressly aimed the site at the U.S. With that ruling, it was two prongs down, one to go.

U.S. harm. The final prong required proof that the conduct cause foreseeable U.S. harm. The rule is that when actions cause harm in multiple forums, 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 (Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1207 (9th Cir. 2006)). The evidence showed that U.S. views constituted only 4.6% of the total number of views during the relevant period. That relatively low percentage, however, amounted to more than 1.3 million visits, which was “an undeniably ‘substantial’ number,” the court ruled.

Furthermore, the court said, the harm was foreseeable because the site operators knew that they actively appealed to a U.S. audience and that a significant number of people in the U.S. were viewing the site. They also knew that they were hosting infringing content because they received the takedown notice. For all of those reasons, the site should have anticipated harm in the forum.

The Ninth Circuit, therefore, reversed the district court’s decision to dismiss the case. It ruled that the site “purposefully directed” its operation of ThisAV.com at viewers in the U.S. The court then remanded the case to the district court to conduct the remainder of the personal jurisdiction analysis.

The case is No. 21-356170.

Attorneys: Spencer D. Freeman (Freeman Law Firm, Inc.) for Will Co., Ltd. Evan Fray-Witzer (Ciampa Fray Witzer LLP) for Ka Yeung Lee, .

Companies: Will Co., Ltd.;Youhaha Marketing and Promotion Ltd

Cases: Copyright TechnologyInternet GCNNews AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews