IP Law Daily, COPYRIGHT—S.D.N.Y.: Tip your server: Dow Jones has domestic cloud servers to thank for its lawsuit against a Chinese company, (Mar 20, 2023)

By Matthew Hersh, J.D.

The Hong Kong-based publication used servers in Chicago and Seattle to allegedly commit copyright infringement abroad.

Author and journalist Nuri Vittachi once wrote: “You can leave Hong Kong, but it will never leave you.” A federal court in Manhattan apparently disagrees. The court, refusing to dismiss a copyright claim by Dow Jones against a Chinese publisher based in the bustling Asian city, found that the claim was within the territorial scope of U.S. copyright because the publication was served to its readers, in part, on computers based on the United States (Dow Jones & Co., Inc. v. Juwai Ltd., March 17, 2023, Castel, P.).

The lawsuit is aimed at Juwai Ltd., a publisher based in China and operating primarily out of Hong Kong. According to the complaint, the Chinese publisher has been regularly scooping up articles from The Wall Street Journal, Barron’s and other business publications and reproducing them, in Chinese, on its website Juwai.com. The website, according the complaint, is targeted to a Chinese-speaking audience and is particularly specialized in connecting Chinese buyers living outside of mainland China who are looking at domestic properties in New York and other locations around the country.

Dow Jones sued the Chinese publisher for copyright infringement under U.S. and Hong Kong law, violations of the Digital Millennium Copyright Act, or DMCA, and breach of contract. The Chinese publisher moved to dismiss, leading to this opinion.

Territorial reach of the Copyright Act. The court declined to dismiss the claims arising under the Copyright Act. The central question was whether the lawsuit fell within the territorial reach of the Act. The Copyright Act, by its terms, applies only to acts of infringement taking place in the United States. But precedents teach an important caveat to that rule: If a defendant commits an infringing act within the United States, and that act leads to “further reproduction abroad,” the court observed, then liability could attach to those overseas acts as well. But did the Chinese publication commit an infringement act in the United States that led to further reproduction abroad? The complaint adequately alleged that it did, the court held.

The complaint adequately alleged an act of infringement in the United States, the court found, because it alleged that the Chinese company used servers within the United States—specifically servers in Seattle and Chicago owned by the company CloudFront—to serve up content to viewers in the U.S. and abroad. To be sure, the court noted, it would not have been enough if the overseas website were merely viewed by viewers in the United States, even if their computers temporarily “cached” those files locally. But the fact that the Chinese company made use of servers located in the United States, the court found, was enough to find the territorial requirements of the copyright law satisfied.

Forum nonconveniens. Although the claim under the Copyright Act left Hong Kong, the claim under Hong Kong law returned. Under the doctrine of foreign nonconveniens, a court can dismiss a claim in favor of an overseas forum if that forum would be a more convenient place to try the case. To be sure, the court noted, it would pose no particular difficulty for the New York court to try a case based on foreign law—courts in the commercial capital of the United States do so regularly. But here, the court noted, the main witnesses and evidence were located in Hong Kong, not the United States. Hong Kong would therefore be the proper jurisdiction for this claim.

Preemption. The court also gave another modest win to the Chinese publisher, dismissing the breach of contract claim on the basis of preemption. Dow Jones argued that the preemption doctrine should not apply here because the contract breach contained an extra element beyond that of a traditional copyright claim, namely the fact that the parties exchanged a promise for consideration. But that would essentially preclude preemption for all copyright claims, the court found. The court would not go that far.

The Case is No. 1:21-cv-07284-PKC.

Attorneys: David Kleban (Patterson, Belknap, Webb & Tyler LLP) for Dow Jones & Co., Inc. Eugene David Kublanovsky (Kublanovsky Law LLC) for Juwai Ltd.

Companies: Dow Jones & Co., Inc.; Juwai Ltd.

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