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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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New Perspective on Specific Personal Jurisdiction in Patent DJ Venue

The US Court of Appeals for the Federal Circuit concluded that the minimum contacts or purposeful availment test for specific personal jurisdiction was satisfied where a patent owner sent multiple infringement notice letters and other communications to a resident of California who then filed for declaratory judgment of non-infringement in federal district court in California. Trimble Inc. v. PerDiemCo LLC, Case No. 19-2164 (Fed. Cir. May 12, 2021) (Dyk, J.)

PerDiem accused Trimble of infringing several of PerDiem’s patents. PerDiem exchanged 22 communications with Trimble in California over a period of three months, some through Trimble’s subsidiary ISE in Iowa and other communications through its chief IP counsel in Colorado. The communications started with a letter (sent to ISE in Iowa) that had attached an unfiled complaint and which PerDiem used to try to launch license negotiations. This unfiled complaint asserted nine of PerDiem’s patents. After ISE brought Trimble, its parent, into the discussion, PerDiem accused Trimble’s products of infringing 11 patents and sought to enter into binding mediation on its infringement allegations. PerDiem also threatened to sue Trimble in the Eastern District of Texas and identified the counsel it planned to use for this purpose. Trimble filed for a declaratory judgment of non-infringement in the Northern District of California. The district court dismissed the complaint, relying on the Federal Circuit’s 1998 decision in Red Wing Shoe v. Hockerson-Halberstadt, concluding that it would be unreasonable to assert personal jurisdiction over PerDiem based on its communications. Trimble appealed.

The sole issue in the appeal was whether the district court erred in holding that there was no specific personal jurisdiction over PerDiem in the Northern District of California. The Federal Circuit explained that PerDiem’s contacts with California were far more extensive than those in Red Wing, noting the manner in which PerDiem amplified its threats of infringement as the communications continued, asserted more patents, and accused more of Trimble and ISE’s products of infringement. The Court noted that PerDiem even identified the counsel it retained to sue Trimble and the venue in which it planned to file suit. Overall, the Court found that PerDiem’s 22 communications over the course of about three months fell well outside the “sufficient latitude” the Court sought to grant patentees “to inform others of [their] patent rights without subjecting [themselves] to jurisdiction in a foreign forum” on the basis of three letters sent over a similar time period in Red Wing.

Practice Note: It remains to be seen how useful this case may be in the context of obtaining specific personal jurisdiction over non-practicing entities (or other patent owners) based on sending demand letters into a potential declaratory judgment venue viewed as less hospitable to patent owners.




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