Copyright Infringement and Personal Jurisdiction
Personal jurisdiction is an issue that a court must typically decide in determining whether it can hear a case brought against a nonresident defendant, for instance, when a resident of Nevada is sued in a California court. Unless a defendant has “continuous and systematic” contacts with a forum state, personal jurisdiction is generally limited to specific jurisdiction, that is, when the defendant has done some act or made some contact with the forum state that gives rise to the claims against it. Last month, the Ninth Circuit considered the issue of personal jurisdiction in the context of a willful copyright infringement claim.
Washington Shoe Company has done business in the state of Washington for more than 100 years. A-Z Sporting Goods, Inc. is an Arkansas company that operates a single retail store in Alma, Arkansas. It does not sell products over the internet and apparently conducts no business in Washington, or even outside of Arkansas for that matter.
Between 2007 and 2009, a Washington Shoe salesman regularly visited A-Z in Arkansas and A-Z would purchase a number of items from Washington Shoe. Washington Shoe later discovered that A-Z was selling two boots that appeared to infringe on Washington Shoe’s copyrights. Washington Shoe’s attorney sent a cease and desist letter to A-Z and in response A-Z sold the offending boots to a thrift store. Washington Shoe then sued A-Z for copyright infringement in a federal district court in Washington. A-Z moved to dismiss the complaint on the grounds that the court lacked personal jurisdiction over it since it did not have any contacts with the state of Washington.
After the district court agreed with A-Z and dismissed the complaint against it, Washington Shoe appealed the decision to the Ninth Circuit arguing that A-Z’s willful copyright infringement justified the exercise of personal jurisdiction over it by a Washington court. The Ninth Circuit began by recognizing that the burden of establishing personal jurisdiction over A-Z was on Washington Shoe as the plaintiff. It noted that Washington Shoe had to make a “prima facie showing of jurisdictional facts to withstand the motion to dismiss.” The Ninth Circuit further recognized that Washington state law allowed a court located in Washington to exercise personal jurisdiction to the full extent of the Fourteenth Amendment of the U.S. Constitution.
The Ninth Circuit continued by recognizing that due process requires that a defendant “have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend `traditional motions of fair play and substantial justice’” to warrant the exercise of jurisdiction over a nonresident defendant. The Ninth Circuit focused on whether A-Z had either “purposefully availed itself of the privilege of conducting activities in [the state of Washington] or purposefully directed its activities at [Washington]”. The Court noted that the second factor was the primary issue given that Washington Shoe’s claims sounded in tort, i.e., copyright infringement.
The Ninth Circuit continued that “purposeful direction” could be established where the defendant has “(1) committed an intentional act; (2) expressly aimed at the forum state; (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Thus, personal jurisdiction could be exercised over a nonresident such as A-Z for an act that takes place outside the forum state if the harm of such act is felt within the forum.
The Court considered whether A-Z had in fact committed an intentional act as a result of the alleged willful copyright infringement. The Court noted that “intentional act” has a specialized meaning for personal jurisdiction purposes and that it “is an external manifestation of the actor’s intent to perform an actual physical act in the real world not including any of its actual or intended results.” The Court concluded that A-Z had purchased the offending boots from China and sold them in the same store in Arkansas as it sold Washington Shoe products. The Court concluded that “by intentionally engaging in the actual physical acts of purchasing and selling the allegedly infringing boots, A-Z has clearly committed an `intentional act’”.
Next, the Ninth Circuit turned to the issue of whether A-Z “expressly aimed” its acts toward the state of Washington. The Court noted that it had previously found that willfulness in the copyright context could be based on either “intentional” or “reckless” behavior. The Court noted that “to prove `willfulness’ under the copyright act, the plaintiff must show: (1) that the defendant was actually aware of the infringing activity; or (2) that the defendant’s actions were the result of `reckless disregard’ for or ‘willful blindness’ to the copyright holders’ rights.” The Court also noted that where the alleged infringer has been provided notice of the alleged infringement, this can constitute pervasive evidence of willfulness.
The Court held that there was an ongoing relationship between A-Z and Washington Shoe during which A-Z received catalogs that included the copyrighted boots. Thus, A-Z was aware of both the boots and Washington Shoe’ copyrights. The Court also found it significant that A-Z sold the infringing boots in the same store as it did the boots it had purchased from Washington Shoe. Finally, when advised of its alleged infringing conduct, A-Z immediately sold the infringing boots to a thrift store despite its actual awareness of the alleged infringement. The Court found that this was sufficient to show that A-Z was aware that its alleged infringing conduct would harm Washington Shoe as the copyright holder in the state of Washington sufficient to allow a Washington court to exercise personal jurisdiction over A-Z.
The Ninth Circuit’s decision in Washington Shoe may give plaintiffs more latitude in selecting a forum in which to bring a copyright infringement suit. Given that the harm as a result of a copyright infringement will almost always be felt in the state where the copyright holder resides, jurisdiction should almost always be proper in that state, even if the defendant does not reside there and has not conducted any business within that state.