IP Law Daily, COPYRIGHT—S.D.N.Y.: Artist cannot sue e-commerce operators for infringement in New York, (Oct 2, 2024)

By Karen Servidea, J.D.

The artist failed to establish that his claim arose from transactions in New York or, alternatively, that the situs of his alleged injury was New York.

A federal district court in New York City has dismissed for lack of personal jurisdiction a copyright infringement suit brought by an artist against a group of companies that operated an e-commerce business. The operators were organized and had their principal places of business outside of New York. Although the operators transacted business in New York, the artist failed to show that the alleged infringement arose from that activity. Even if the arising-from prong was expansive enough to include the availability of the operators’ website in New York and its access by New Yorkers (for which proposition, the artist failed to provide authority), the artist provided no evidence that any New Yorkers actually accessed the website and viewed his work. Further, the alleged infringement did not cause injury in New York because the artist was not located there (Giana v. Shein Distribution Corp., No. 1:24-cv-02599-JSR (S.D.N.Y. Oct. 1, 2024)).

Alan Giana is an artist and designer, who, during the time relevant to the case, lived first in Connecticut and then in Florida. Giana filed a complaint in the U.S. District Court for the Southern District of New York against Shein Distribution Corp. and its corporate affiliates, alleging that they infringed his copyrighted digital image by copying it onto one of the defendants’ products. Shein Distribution Corp. is a Delaware corporation with its principal place of business in California and is the United States operating company of a global fashion and lifestyle e-commerce platform based in China. The operators transact business in New York through websites and mobile apps and have previously operated physical “pop-up” stores in New York. Giana also alleged that the operators infringed the copyrighted works of numerous putative class members. The operators moved to dismiss the complaint for lack of personal jurisdiction. On August 14, 2024, the court issued a “bottom-line” order granting the motion to dismiss. On October 1, 2024, it issued a memorandum order reconfirming that order and setting forth the reasons for that ruling.

Personal jurisdiction. The court first set out the legal framework for its analysis. It explained that in a federal question case where the defendant resides outside the forum state, a federal court applies the forum state’s personal jurisdiction rules if the federal statute does not specifically provide for national service of process. Since the Copyright Act does not so provide, the court would apply New York’s long-arm statute to determine whether it was statutorily authorized to exercise personal jurisdiction over the operators. If it was, then the court would determine whether the exercise of that jurisdiction comported with due process.

Thus, the court began by considering whether New York’s long-arm statute authorized the exercise of personal jurisdiction in the case. The artist contended that two different provisions of that statute authorized the exercise of such jurisdiction. The court concluded that the artist failed to show that specific jurisdiction was proper under either provision. (The artist conceded that the operators were not subject to general personal jurisdiction in New York). The court thus dismissed the complaint without reaching the issue of due process.

With respect to the first provision of New York’s long-arm statute upon which the artist relied, the court began by reciting its two requirements as annunciated by the Second Circuit: (1) that the defendant must have transacted business within the state and (2) that the claim asserted must arise from that business activity. The court held that the first requirement was amply satisfied. It noted that the operators’ declaration stated that the operators’ website sells their branded products and third-party branded products to U.S. consumers throughout the United States; that the operators did not dispute that the website is both available to, and processes transactions by, New Yorkers; and that the operators’ declaration described their pop-up stores located in New York City.

Instead, it was the second requirement that the court found to be unmet. Citing Second Circuit authority, the court explained that, under that requirement, there must be “an articulable nexus or substantial relationship between the business transaction and the claim asserted.” The artist failed to point to evidence that would suggest that his claim arose from the operators’ business activity in New York, the court stated, noting that the operators’ sales records showed that the allegedly infringing product had just three sales, none of which occurred in New York. The court went on to reject the artist’s argument that the mere display of his work on the operators’ website is enough to satisfy the requirement because the website is available to New Yorkers and it is statistically likely that it was accessed by New Yorkers. The artist cited no authority for such an expansive conception of the second prong. And even if such an expansive conception were accurate, the court explained, the artist failed to show that any New Yorkers actually accessed the website and viewed the artist’s work.

The court then turned to the second provision of New York’s long-arm statute cited by the artist, which requires, among other things, that the non-domiciliary commit a tortious act within the state causing injury to person or property within the state. The court explained that the New York Court of Appeals has established a bright-line rule that in copyright infringement cases involving the uploading of a copyrighted printed literary work onto the Internet, the situs of injury for purposes of the long-arm statute is the location of the copyright holder. In that regard, the artist did not dispute that he was at all relevant times located in Connecticut and Florida, not New York. The artist argued, however, that the statute refers to injury to property as well as to person and that the operators’ alleged infringement diminished the value of his original works and their licensing value in New York. The court rejected that argument, citing Second Circuit authority that the suffering of economic damages in New York is insufficient alone to establish a direct injury in New York, and noting that the New York Court of Appeals had specifically considered and rejected a similar argument in another case.

The Case is No. 1:24-cv-02599-JSR.

Judge: Rakoff, J.

Attorneys: Justin Solomon Nematzadeh (Nematzadeh PLLC) for Alan Giana. Andrew H. Schapiro (Quinn Emanuel Urquhart & Sullivan, LLP) for Shein Distribution Corp.

Companies: Shein Distribution Corp.

Cases: Copyright TechnologyInternet NewYorkNews