Dangerous Internet Jurisdiction Ruling Lets Penguin Bring Suit In NY, Despite No Evidence Of Harm In NY

from the this-is-a-problem dept

There have been plenty of legal jurisdiction questions raised by the internet over the years. Since the internet is available effectively anywhere, under whose jurisdiction do legal actions take place? To date, courts have come up with a mishmash of different rulings on the issue, and the rules are anything but clear. Unfortunately, a new ruling, in NY State's Court of Appeals seems to go against wider precedent and suggest that because something is on the internet, you can pretty much bring a case where the company is located, rather than where any actual harm takes place. This seems to directly contradict the court's own earlier ruling in Fantis Foods v Standard Importing Co., in which the court clearly stated that the plaintiff's location is not enough to say that it qualifies for jurisdiction in NY, if the "harm" is happening elsewhere:
In final analysis the only possible connection between the claimed conversion and any injury or foreseeable consequence in New York is the fact that Standard is incorporated and maintains offices there. It has, however, long been held that the residence or domicile of the injured party within a State is not a sufficient predicate for jurisdiction, which must be based upon a more direct injury within the State and a closer expectation of consequences within the State than the indirect financial loss resulting from the fact that the injured person resides or is domiciled there
So how does the court get around this? It basically waves its arms around and says "but... but... the internet!" Because, suddenly, the internet makes everything different. It then follows that up with a simply incorrect (and troubling) analysis of copyright law. As for the internet changing everything, the court basically throws its hands in the air and says "well, on the internet, we have no idea where anything happens, so rather than requiring proof, we'll just say it's okay to sue in NY."
As a result, although it may make sense in traditional commercial tort cases to equate a plaintiff's injury with the place where its business is lost or threatened, it is illogical to extend that concept to online copyright infringement cases where the place of uploading is inconsequential and it is difficult, if not impossible, to correlate lost sales to a particular geographic area. In short, the out-of-state location of the infringing conduct carries less weight in the jurisdictional inquiry in circumstances alleging digital piracy and is therefore not dispositive.
I don't think that's either reasonable or accurate. It is, in fact, possible to show geographically where harm has occurred. Just because things might occur on the internet, it still involves actual people who live in an actual location. The court's decision to basically give up because it's on the internet suggests it is mystified by technology it does not fully understand.

As for the copyright claims, to further support the idea that it's okay to bring the suit in NY, despite the lack of evidence of harm in NY, the court relies on a bunch of copyright myths, including the idea that any harm to copyright means fewer works will be produced:
Based on the multifaceted nature of these rights, a New York copyright holder whose copyright is infringed suffers something more than the indirect financial loss we deemed inadequate in Fantis Foods. For instance, one of the harms arising from copyright infringement is the loss or diminishment of the incentive to publish or write (see Twentieth Century Music Corp. v Aiken, 422 US 151, 156 [1975]; see also Princeton Univ. Press v Michigan Document Servs., Inc., 99 F3d 1381, 1391 [6th Cir 1996], cert denied 520 US 1156 [1997] ["[P]ublishers obviously need economic incentives to publish scholarly works . . . If publishers cannot look forward to receiving permission fees, why should they continue publishing marginally profitable books at all? And how will artistic creativity be stimulated if the diminution of economic incentives for publishers to publish academic works means that fewer academic works will be published?"]).
That's a nice quote. Too bad the evidence suggests that it's plainly wrong. The first sentence of the quote that "publishers obviously need economic incentives to publish scholarly works..." may be true, but the implication that the only such economic incentive comes from copyright protection is false. This is a myth that we hear too often, where people say that without copyright there is no incentive. That's plainly wrong, yet courts and defenders of stronger copyright too frequently rely on such a claim. But, further to this point, there's a growing body of research that has shown that as copyright has become less respected as things like online infringement have grown, so has the production of new works. So the claim that he court relies on here, that if copyright is not enforced to the utmost degree, fewer works will be published, has simply not been supported by reality. And, honestly, shouldn't courts be making judgments based on reality, rather than disproved theory?

Either way, this ruling is troubling in any number of ways. While it's specific to NY, whose "long arm" statute is pretty aggressive, this should raise serious concerns in the various copyright "trolling" cases we've seen, where the jurisdiction issue has been successfully challenged when the defendants are far away from where the suit is being brought. A ruling like this, that effectively says that a case can be brought far, far away from where the accused lives/works, could put an undue burden on those being sued. That's especially troubling in the lawsuits where the entire goal is clearly to get defendants to settle. Based on this ruling, I wouldn't be surprised to see more copyright trolls start looking for ways to file cases in New York.


Reader Comments (rss)

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  1.  
    icon
    Steven (profile), Mar 25th, 2011 @ 2:52pm

    Joinder

    Now all we need is a NY judge to allow for the joinder of mass infringement lawsuits and we'll have a holy mecca for the recording industry.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Anonymous Coward, Mar 25th, 2011 @ 3:55pm

    I bet it took forever for the penguin to type that document.

     

    reply to this | link to this | view in thread ]

  3.  
    icon
    Mike42 (profile), Mar 25th, 2011 @ 4:09pm

    Not to worry...

    This is just the NY STATE court's opinion on a FEDERAL case. It's not binding to anything yet. Hopefully it won't be. Gotta wait for appeal.

    It does show how thoroughly the RIAA got to state governments, though.

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    CarlWeathersForPres, Mar 25th, 2011 @ 4:24pm

    What the article actually states:

    "Agreeing with Penguin and the American Association of Publishers, the state court said that the site of the injury for determining jurisdiction is the copyright holder's place of business, not the place where the alleged violation occurred. The judges said that applies even without evidence of any readers downloading the copyright material in New York, that it was undisputed that websites are available to New Yorkers. The judges added that courts often will issue injunctions to stop infringement without determining actual losses."

    Not really sure why it's a tenuous claim to say that a company incorporated or located in a state, and is harmed by copyright infringement, doesn't have enough of a claim of injury in that state.

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    CarlWeathersForPres, Mar 25th, 2011 @ 4:35pm

    Re:

    Excerpt from the case:

    "Consequently, a plaintiff relying on this statute mustshow that (1) the defendant committed a tortious act outside NewYork; (2) the cause of action arose from that act; (3) the tortious act caused an injury to a person or property in NewYork; (4) the defendant expected or should reasonably have expected the act to have consequences in New York; and (5) the defendant derived substantial revenue from interstate or international commerce (see LaMarca v Pak-Mor Mfg. Co., 95 NY2d210, 214 [2000])"

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    PlagueSD, Mar 25th, 2011 @ 4:47pm

    Holy jurasdiction, Batman!!! We can't let Penguin get away with this!!!


    Sorry...I couldn't resist!!

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    abc gum, Mar 25th, 2011 @ 4:51pm

    Re:

    You think the little guy used its beak or flippers?

     

    reply to this | link to this | view in thread ]

  8.  
    icon
    Capitalist Lion Tamer (profile), Mar 25th, 2011 @ 5:11pm

    Sorry. I'm still stuck in the headline.

    "Dangerous Internet Jurisdiction Ruling Lets Penguin Bring Suit In NY..."

    ...which, before this ruling, all penguins had to enter NY completely naked, presumably as some sort of anti-terrorist action. Or something.

    Naked.

    Like without their little tuxedos.

    And then this ruling changed all that, leaving New Yorkers exposed to unexposed penguins sporting suits and, presumably, weapons of some sort. Some kind of device adapted for flippers... Or maybe strapped to their bellies...

    We could have been safe... but then... this thing... with the suits...

    ...

    It's because they look like they're wearing tuxedos and a tuxedo is a suit. More or less.

    ...

    Um...

    I'll go and read the article now.

    Sorry.

     

    reply to this | link to this | view in thread ]

  9.  
    icon
    Christopher (profile), Mar 25th, 2011 @ 5:43pm

    Re: Not to worry...

    No. Even without 'getting to' anyone, some judges are simply this damned clueless about technology and this stupid.

     

    reply to this | link to this | view in thread ]

  10.  
    icon
    Capitalist Lion Tamer (profile), Mar 25th, 2011 @ 6:11pm

    Seriously, though...

    At what point does this sort of judicial ridiculousness become dangerous? Between this and a thousand other cases discussed on this site (having to pay $60,000 for telling the truth springs to mind), how much longer do we have before there's some sort of tipping point?

    This is going to sound just completely crazy, but as more and more decisions are rendered without any semblance of logic or reality, the citizens' hope of any sort of proper redress through the legal system shrinks exponentially.

    You can only push so much before people push back. And if the legal system is going to continue to screw them over, they're going to look to illegal ways to get some satisfaction. I'm not suggesting some sort of mass movement to anarchy or pistols and coffee at dawn, but I don't find it completely farfetched that a person or person(s) (especially in person v. person lawsuits) is going to resort to violence or theft or something equally as ugly, knowing that a court appearance is going to cost them a whole lot of money and time with little hope of a plausible resolution.

    (You are now free to call me insane or whatever. It just seems like this kind of repetitive frustration is going to result in spectacular ugliness at some point.)

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    Anonymous Coward, Mar 25th, 2011 @ 7:05pm

    Re: Seriously, though...

    They followed the statute and case law as it was set out before them, how is that ridiculous?

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Anonymous Coward, Mar 25th, 2011 @ 9:13pm

    This seems to directly contradict the court's own earlier ruling in Fantis Foods v Standard Importing Co., in which the court clearly stated that the plaintiff's location is not enough to say that it qualifies for jurisdiction in NY, if the "harm" is happening elsewhere:

    The Court of Appeals explained that the injury at issue in this case is not as remote as the purely indirect financial loss at issue in Fantis. Fantis doesn't apply.

    I don't think that's either reasonable or accurate. It is, in fact, possible to show geographically where harm has occurred. Just because things might occur on the internet, it still involves actual people who live in an actual location. The court's decision to basically give up because it's on the internet suggests it is mystified by technology it does not fully understand.

    If a defendant, with servers in Arizona and Oregon, offers for downloading on the internet the copyrighted works of the plaintiff, who is in New York, then where is the situs of the injury for the lost sales that result? That's what the court is trying to answer. This has nothing to do with the court being "mystified by technology," as you so smugly put it.

    That's a nice quote. Too bad the evidence suggests that it's plainly wrong. The first sentence of the quote that "publishers obviously need economic incentives to publish scholarly works..." may be true, but the implication that the only such economic incentive comes from copyright protection is false. This is a myth that we hear too often, where people say that without copyright there is no incentive. That's plainly wrong, yet courts and defenders of stronger copyright too frequently rely on such a claim. But, further to this point, there's a growing body of research that has shown that as copyright has become less respected as things like online infringement have grown, so has the production of new works. So the claim that he court relies on here, that if copyright is not enforced to the utmost degree, fewer works will be published, has simply not been supported by reality. And, honestly, shouldn't courts be making judgments based on reality, rather than disproved theory?

    You're missing the whole point which is that Penguin is in fact incentivized to publish by copyright. That there are perhaps other ways to incentivize them is completely irrelevant. The court is making their judgment based on the reality that copyright does actually provide incentives, and copyright is the law.

    Either way, this ruling is troubling in any number of ways. While it's specific to NY, whose "long arm" statute is pretty aggressive, this should raise serious concerns in the various copyright "trolling" cases we've seen, where the jurisdiction issue has been successfully challenged when the defendants are far away from where the suit is being brought. A ruling like this, that effectively says that a case can be brought far, far away from where the accused lives/works, could put an undue burden on those being sued. That's especially troubling in the lawsuits where the entire goal is clearly to get defendants to settle. Based on this ruling, I wouldn't be surprised to see more copyright trolls start looking for ways to file cases in New York.

    That makes no sense to me at all, since this ruling would only allow New York to be the situs of the injury if the rights holder is located in New York. And even then, there is still the rest of the jurisdictional analysis that must take place (the situs is only one element).

    The court does a nice job busting FUD of the kind you're trying to spread here:
    Finally, contrary to American Buddha's assertion, our decision today does not open a Pandora's box allowing any nondomiciliary accused of digital copyright infringement to be haled into a New York court when the plaintiff is a New York copyright owner of a printed literary work. Rather, CPLR 302(a)(3)(ii) incorporates built-in safeguards against such exposure by requiring a plaintiff to show that the nondomiciliary both “expects or should reasonably expect the act to have consequences in the state” and, importantly, “derives substantial revenue from interstate or international commerce.” There must also be proof that the out-of-state defendant has the requisite “minimum contacts” with the forum state and that the prospect of defending a suit here comports with “traditional notions of fair play and substantial justice,” as required by the Federal Due Process Clause (International Shoe Co. v. Washington, 326 U.S. 310, 316 [1945] [internal quotation marks and citation omitted]; see also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-292 [1980] ). These issues are beyond the scope of this certified question and their resolution awaits further briefing before the federal courts.
    Like all jurisdictional analysis, it is circumscribed by due process.

     

    reply to this | link to this | view in thread ]

  13.  
    icon
    Atkray (profile), Mar 26th, 2011 @ 8:33am

    Re: Sorry. I'm still stuck in the headline.

    "Sorry."

    You should be. :P

     

    reply to this | link to this | view in thread ]


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