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Sex and the Law

The Ends of the Earth – How Far Can U.S. IP Rights Holders Pursue Foreign Infringers?

I.  Introduction.

We all witnessed the uproar over PIPA and SOPA at the beginning of the year.  Internet free speech advocates took to cyberspace in a call for action against these proposed laws.  Advocating for the broad principle of intellectual property protection, lobbyists for the mainstream film industry argued for the enhanced ability to go after foreign “rogue” websites involved in infringing activity.  While the underlying motivations for enacting PIPA/SOPA may have been well-intentioned, they impacted personal freedoms to the point that made many Americans uncomfortable, and the legislation soon stalled in response to the public pressure.  A major concern with PIPA/SOPA was that the bills granted the U.S government legal authority over any website domain, wherever hosted or operated, even in the absence of a domestic jurisdictional connection.  While the legislative efforts continue, the courts have recently expressed concern, through a series of legal decisions, with enforcement of intellectual property rights against foreign website operators.  These decisions may have a substantial impact on the ability of U.S. content producers to pursue foreign websites for copyright and trademark infringement.

U.S. courts primarily gain personal jurisdiction over the parties by the physical presence of the defendants in the location where the lawsuit was filed.   However, when the defendant is a foreign entity or individual operating a website, U.S. courts have been increasingly hesitant to find the existence of jurisdiction, merely based on web presence.  A U.S. district court can exercise personal jurisdiction over a defendant if the party is “subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.”  Fed.R.Civ.P. 4(k)(1)(A).  This means that personal jurisdiction over a non-resident defendant may be acquired by: (a) the defendant’s physical presence in the subject state; or (b) the state’s long-arm statute.  A “long-arm” statute allows a court to assert jurisdiction over an out-of-state (or foreign) defendant based on injury suffered by the plaintiff in the state, or some other activity creating a relevant connection.  Most long-arm statutes permit this type of extraterritorial jurisdiction so long as doing so constitutes ‘fair play,’ and otherwise comports with Due Process notions.

II.  Recent Judicial Decisions.

In the earlier days of the Internet, U.S. courts seem to have had no qualms about imposing American law on websites maintaining any form of customer base within the U.S., regardless of where the site was operated.  However, in recent times, as the world has gotten smaller and foreign online presence more established, judges are starting to realize that the U.S. may have previously attempted to exert a little too much control over the Internet.  With seemingly endless cyberspace growth fostering a more “global marketplace,” U.S. courts may be starting to pay more heed to other countries’ laws and sovereignty.  Concerns such as diplomacy and comity have come to the forefront, as all nations compete for a seat at the Internet table.

This struggle has played out in the attempt to enforce U.S. copyright and trademark law abroad.  Over the last few months, several courts have addressed the issue of whether foreign websites can be held liable for intellectual property violations asserted by U.S. plaintiffs.  These courts have all dismissed the cases for lack of jurisdiction.  In Fraserside IP L.L.C. v. Hammy Media, Ltd., 2012 WL 124378 (N.D. Iowa Jan. 17, 2012), a federal judge found that the adult entertainment power house, Private Media Group (through its IP holding company), could not establish personal jurisdiction to sue operators of the adult tube site, xHamster.com, in the state of Iowa.  Finding that the Cyprus-based tube site lacked sufficient minimum contacts in Iowa, the court rattled off a laundry list of reasons for its decision: “xHamster has no offices in Iowa, no employees in Iowa, no telephone number in Iowa, and no agent for service of process in Iowa.  xHamster does not advertise in Iowa.  No xHamster officer or director has ever visited Iowa.  xHamster does not maintain any of its servers within Iowa.  All of xHamster’s servers are located outside of the United States.”  This ruling is consistent with the general principle that the mere availability of a website in the U.S. will not be sufficient to establish personal jurisdiction over the site operators.  The same ruling occurred with Private’s case in Iowa against another foreign tube site, DrTuber.com.  Fraserside v. Moniker, et al., Case No.: 11-cv-03040 (N.D. Iowa 2012).

A few months after the xHamster.com decision, a California district court protected another adult entertainment website by denying the plaintiff’s motion for a default judgment in the “faceporn.com case,” Facebook v. Pedersen, 10-Cv-04673 (N.D. Cal. March 2, 2012).  Relying on a relatively broad jurisdictional argument, Facebook claimed that the defendant intended to compete directly with Facebook and given Facebook’s global notoriety, anyone infringing on Facebook’s intellectual property would know such infringement is harming a California entity.  According to the district court ruling, plaintiff’s argument failed two-fold as Facebook lacked any evidence that the defendant purposefully directed its activities at California and further, was unable to prove that the defendant’s conduct successfully redirected traffic away from Facebook.  Notably, the court essentially made the arguments for faceporn.com, since the decision was based on a motion for default judgment.

Coming out of Nevada just over a week later, another off-shore website dodged the jurisdictional bullet in the case of Stevo Design, Inc. v. SBR Marketing, Ltd., 2:11-CV-0304 (D. Nev. March 13, 2012).   The Nevada district court ignored any potential personal jurisdiction issues, instead dismissing the case based on lack of “subject matter” jurisdiction – an issue that had not even been argued by the defendant.  Subject matter jurisdiction involves the underlying authority of the court to consider the case, in the first instance.   Often seen as a relatively simple hurdle, U.S. law gives the federal courts subject matter jurisdiction in when the suit is based on a violation of a federal statute, or when the resident of one state sues a defendant of a different state (or another country).   Claiming that several of its sports betting reports were unlawfully uploaded and published via the defendant’s website, SBRforum.com, plaintiff’s sued forum site for various violations arising under the Lanham Act and the U.S. Copyright Act. The court noted that all of the alleged infringement occurred entirely on SBRforum.com.  Because the defendant’s website was operated in Costa Rica, the court found that it lacked subject matter jurisdiction to even consider the case since federal statutes provide no relief for infringement that occurs solely in a foreign nation.

III.  Conclusion.

What may have been taken as a ‘given’ in the past is now being questioned by this new line of cases, imposing what appears to be a higher burden on those seeking to hold foreign website operators responsible for U.S. intellectual property violations.  The mere fact that the site is globally available and happens to maintain a U.S. customer-base may no longer be sufficient as a basis for bringing foreign defendants into U.S. courts, under recent judicial rulings.  Whether these rulings are a brief respite for foreign website operators, or the beginning of a new judicial trend, remains to be seen.  But adult content producers become more aggressive in pursuing theft of their content by foreign website operators, these legal issues are sure to gain significant attention in the coming months.