by Mike Masnick

Filed Under:
copyright, internet, jurisdiction, long arm, new york


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.

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  1. identicon
    CarlWeathersForPres, 25 Mar 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.

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