minimum contacts Archives

Foreign Video-Hosting Website Can’t Escape Long Arm of the Law

Focusing on the first prong of the minimum contacts test (whether the foreign defendant purposefully directed its activities at the United States) the US Court of Appeals for the Ninth Circuit reversed a district court holding that it lacked specific personal jurisdiction over the operators of a Japanese-language video-hosting website and remanded the case for further analysis under Fed. R. Civ. P. 4(k)(2), the federal long-arm statute. Will Co. v. Lee, Case No. 21-35617 (9th Cir. Aug. 31, 2022) (Wardlaw, Gould, Bennett, JJ.)

Will is a Japanese adult entertainment producer with more than 50,000 videos registered with the US Copyright Office. Will sells access to its content on its website, where it makes more than $1 million per year from US consumers. Defendants Youhaha Marketing and Promotion (YMP) and Lee own and operate ThisAV.com, a Japanese-language video-hosting website similar to YouTube. ThisAV.com allows users to upload and view videos for free alongside advertisements posted by third-party vendors.

After discovering 13 of its videos on ThisAV.com, Will sent the defendants take-down notices pursuant to the Digital Millennium Copyright Act (DMCA). When the defendants failed to honor the takedown notices, Will sued for copyright infringement. The defendants moved to dismiss the lawsuit for lack of personal jurisdiction because Lee is a permanent resident of Hong Kong currently residing in Canada, and YMP is registered in Hong Kong (where it operates ThisAV.com). Will countered that the lower court had specific personal jurisdiction over the defendants because their display of the copyrighted videos was sufficiently connected to the United States. The district court granted the defendants’ motion to dismiss, concluding that the content on ThisAV.com was not “expressly aimed” at the United States, and that the defendants had not caused “jurisdictionally significant harm,” since only 4.6% of the site’s viewers were from the United States. Will appealed.

The principal issue on appeal was whether the defendants had “purposefully directed” the content of ThisAV.com at the United States under the minimum contacts Calder test, which asks whether the defendant (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.

The Ninth Circuit summarily concluded that YMP and Lee had committed intentional acts by operating ThisAV.com and purchasing the domain name and domain privacy services. However, whether Lee and YMP had “expressly aimed” ThisAV.com at the United States was a closer question. The Court noted that “mere passive operation of a website” is insufficient to show express aiming. Instead, the operator must have “appealed to and profited from an audience in that forum.” The Court first determined that the defendants had “profited from” the US market because US consumers viewed advertisements posted on the website more than 1.3 million times, and the defendants were paid by third-party advertisers based on views. The Court further concluded that the defendants had intentionally “appealed to” the US market by enabling the website to be quickly accessible to US consumers with reduced [...]

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Yes, and It Counts! Single Purchase in Forum Establishes Personal Jurisdiction over Infringer

The US Court of Appeals for the Seventh Circuit affirmed exercise of personal jurisdiction over a foreign online retailer for a trademark infringement claim where the trademark owner purchased the only allegedly infringing article sold in the forum. NBA Properties, Inc. v. HANWJH, Case No. 21-2909 (7th Cir. Aug. 16, 2022) (Ripple, Scudder, JJ.)

NBA Properties owns the trademarks for the National Basketball Association (NBA) and NBA teams. HANWJH is a China-based online retailer that sells allegedly infringing NBA branded products on a well-known e-commerce site. HANWJH offered 205 allegedly infringing products that were available for purchase in Illinois, the forum state. HANWJH’s only online order in Illinois was made by an investigator for NBA Properties who purchased a pair of basketball shorts for delivery to an Illinois address. The shorts were delivered to the Illinois address before NBA Properties filed suit against HANWJH.

NBA Properties sued HANWJH for trademark infringement and counterfeiting under 15 U.S.C. § 1114 and false designation of origin under 15 U.S.C. § 1125(a) in the Northern District of Illinois. NBA Properties sought and received a temporary restraining order and preliminary injunction, including a temporary asset restraint on HANWJH’s bank account. After HANWJH failed to timely answer the complaint, NBA Properties moved for default judgment. HANWJH moved to dismiss the case for lack of personal jurisdiction, arguing the following:

Operating a website is not sufficient on its own to establish personal jurisdiction.
A single transaction by the plaintiff cannot support the exercise of personal jurisdiction.
Even if the exercise of personal jurisdiction were otherwise appropriate, such exercise would offend the traditional notions of fair play and substantial justice.

The district court denied HANWJH’s motion to dismiss and entered a default. HANWJH failed to object to the motion for default judgment, and the district court entered a final judgment. HANWJH appealed.

The Seventh Circuit reviewed the “minimum contacts” International Shoe criterion before turning to a more recent line of cases applying this standard to online retailers. Citing its 2020 decision in Curry v. Revolution Laboratories, the Court noted that the minimum contacts requirement is satisfied if “the defendant reasonably could foresee that its product would be sold in the forum.” The Court reasoned that allowing customers to order products from a website to the forum and then fulfilling an order to the forum can form the basis of personal jurisdiction—even when the only orders to the forum were made by the plaintiff, as long as the orders were made before filing suit. Applying these principles, the Court found that HANWJH had purposefully directed conduct at Illinois by establishing an online store, demonstrating a willingness and capacity to ship goods to Illinois and intentionally shipping an infringing product to an Illinois address. The Court explained that it was irrelevant that only a single allegedly infringing article was sold in Illinois and that it was purchased by the plaintiff, because the proper focus of the analysis was on HANWJH’s purposeful conduct. The Court also concluded that HANWJH’s [...]

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