Prof. Jane C. Ginsburg, Columbia University School of Law
June 18, 2013

In an earlier column, I addressed a recent ruling of the Court of Justice of the European Union (CJEU) bearing on the place of “making available” protected content over the Internet.  The CJEU determined that, for purposes of personal jurisdiction over a foreign defendant whose website allegedly made available over the Internet data copied from the plaintiff football (soccer) clubs, the courts of the country to which the website directed its services were competent to hear claims arising out of communications to the forum.  That column addressed neither judicial competence in the case of communications targeting multiple fora, nor the law applicable to determine infringement in those cases.  This column will turn to both topics.

Judicial competence when the communication seeks customers in multiple fora:

United States

In Penguin Group (USA) Inc. v. American Buddha, 946 N.E. 2d 159 (N.Y. Ct. App. 2011), the New York Court of Appeals applied NYCPLR Sec. 302(a)(3), establishing personal jurisdiction over an out-of-state actor whose conduct “causes an injury to a person or property within the state, provided that the party … expects or reasonably should expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce” to rule that “injury within the state” included the cumulative economic impact on the in-state plaintiff from Internet infringements of plaintiff’s copyrighted works.  Thus, New York courts would be competent to hear claims arising not only out of defendant’s Oregon-based website’s communications to New York users, but also to users throughout the United States, assuming the other criteria of NYCPLR Sec. 302(a)(3) were met.  On remand, however, the Southern District of New York held that defendant did not derive substantial revenue from interstate commerce “because it ‘operates on a strictly eleemosynary model’ and has no revenue whatsoever.”  Penguin Group (USA) Inc. v. American Buddha, 106 U.S.P.Q.2D (BNA), 1306 (SDNY 2013).  The court acknowledged that:

It is true that Internet companies can operate without any costs or even revenue.  It is also true that an online library such as American Buddha’s is indeed far from an industry with a “local character;” and that its reach, like that of other Internet sites, is inherently global in nature.  Nonetheless, the statutory language remains the same, requiring proof of “substantial” revenue to apply New York’s long-arm statute.

Thus, while the New York Court of Appeals interpreted the statutory criterion of “injury within the state” flexibly in light of the characteristics of the Internet, the Southern District of New York did not find the New York long-arm statute permitted a lower threshold of revenue substantiality, even though the Internet enables a nonprofit (or unprofitable) defendant to wreak substantial injury on New York businesses.  Unless the SDNY’s reading of the NYCPLR is reversed, the Court of Appeals’ expansive interpretation will apply only to commercial actors on the Internet, and perhaps only to commercial actors whose for-profit endeavors prove successful.

European Union

The earlier column discussed the Court of Justice for the European Union’s decision in Football Dataco, Ltd. v. Sportradar, GmbH (C-173/11, CJEU 18 October 2012), holding that the courts of the member State targeted by another member State’s Internet service were competent to determine infringement of the right to “reutilize” information from a protected database because the illicit act of “reutilization” (equivalent to “making available” of copyrighted works) occurred “at least” in the targeted country.  The court thus left open the possibility of finding that the act of making available occurred as well in the country from which the work was communicated.  The facts of Football Dataco involved a German website’s provision of information concerning soccer matches played by British teams; the targeted audience was British, so the German defendant’s actions were directed to a single national forum.  The CJEU has not yet ruled on where the act of making available occurs when the defendant is offering copyright-infringing content to Internet users in multiple national fora.  Football Dataco and other European caselaw nonetheless indicate that in that instance there may be multiple makings-available, in each of the countries whose audiences the Internet service seeks, as well as in the country of the service’s residence (or of the location of its server – if this can be ascertained and is in the EU).

Football Dataco does not appear to provide authority for the competence of any of the fora to which the work is made available to rule on the violation of the making available right in other fora to which the work will also have been communicated.  Joint decisions from the Court of Justice concerning Internet violations of privacy rights, C-509/09 (eDate Advertising) and C-161/10 (Martinez) (25 October 2011) however, recognize that the particular characteristics of the Internet justify localizing worldwide damage at the residence of the plaintiff.  But in a subsequent decision concerning trademark infringement and Ad Words the court declined to extend the eDate/Martinez reasoning to intellectual property rights (Wintersteiger AG v. Products 4U Sondermaschinenbau GmbH, case C-523/10 (19 April 2012)).  As a result, it would be unduly bold at this point to assert that the EU would follow a Penguin Books approach to centralize at plaintiff’s residence the impact of the “making available” of infringing copies.

For now, it seems, the forum competent to hear the full territorial extent of a copyright infringement claim remains the forum from which the work was made available (a forum that may coincide with the defendant’s residence, which under the Brussels Regulation, Art. 2, has general competence in any event).

Legislative competence

Assuming a forum competent to ascertain a multi-territorial infringement of the making-available right can be found, what law applies?  Conflict-of-laws rules in the EU and the United States generally look to the law of the place where the harm from the wrongful act occurred.  Under a Penguin Books approach, that forum, as the place where the injury impacted, would be the plaintiff’s residence.  (Although the Denver-based server could be accessed worldwide, Penguin Books concerned only copyright infringement in the United States).  If world-wide harm can be centralized in a single forum, does it follow that the forum’s law applies to extraterritorial infringements?  By the same token, if the forum is the country from which a work is made available (the alternative point of attachment of the country of origin of the wrongful act), does it follow that its law applies to determine infringement in each country to which the work was communicated?  While applying a single law to multi-territorial infringements has the merit of simplicity, it also presents dangers of under- and over-protection: under-protection because the defendant may opportunistically locate its operations in the least-protective country; over-protection because the plaintiff may establish itself in the most-protective country.

Consider the following: New Zealand’s copyright term is 50 years post mortem auctoris.  The copyright term in the United States and the EU is 70 years pma.  Suppose an entrepreneur makes available from a NZ-based website works whose authors died between 50 and 70 years ago.  The entrepreneur is perfectly free to distribute these works in NZ.  Is it also free to disseminate them in countries where the copyright is still in force?  Application of the law of the country from which the communication emanates would lead to that result.

Or consider the opposite situation: Spain’s copyright term, for authors who died before 1987, is 80 years pma.  Under a recent ruling of the Madrid Court of Appeals involving the works of GK Chesterton, Audiencia provinciál de Madrid, Section 28, Decision No. 160/2013, 27 May 2013 (Royal Literary Fund v. Enokia S.L.), works from other EU countries (as well, perhaps, as countries toward which Spain has obligations of national treatment or most-favored-nation) also enjoy the extended period of protection.  As a result, in Spain, until 2066, a work whose author died before 1987 will enjoy a copyright term 10 years longer than most countries provide.  Now suppose our New Zealand service ceases its worldwide offering of works whose authors died between 50 and 70 years ago, but does make available to Internet users everywhere works whose authors died between 70 and 80 years ago.  If the rightholder resides in Spain, will Spanish law apply not only to communications to Spanish users, but (notwithstanding current CJEU caselaw on judicial competence) also to users worldwide, on the ground that the injury should be localized where the plaintiff’s economic interests are centralized, i.e. at its residence?

While centralizing the litigation in a single forum promotes efficient adjudication of Internet infringement claims, these hypotheticals indicate that it does not always follow that a single law (the forum’s or otherwise) should apply to a multi-territorial infringement.  The American Law Institute’s Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes, Sec. 321, recognizes that the Internet may spawn “ubiquitous infringements” properly adjudicated under the single law of a country with a “close connection” to the dispute.  But the Principles also allow the parties to “prove that, with respect to particular States covered by the action, the solution provided by any of those States’ laws differs from that obtained under the law(s) chosen to apply to the case as a whole.”  As our Hispano-New Zealand example shows, when works are made available over the Internet, the concepts of “place of the injury” and “place of the wrongful act” can be manipulated to simplify both jurisdiction and choice of law, but courts should take care to avoid outlier solutions.