Copyright Infringement and Personal Jurisdiction Over Foreign Defendants
Published: August 25, 2022
In Lang Van, Inc. v. VNG Corporation (decided July 21, 2022), the Ninth Circuit addressed the issue of how to evaluate whether a U.S. District Court can exercise personal jurisdiction over a foreign defendant with regard to a copyright infringement suit. Lang Van is a California corporation that produces and distributes Vietnamese music and entertainment, owning the copyrights to thousands of songs and programs. VNG is Vietnamese corporation that created the Zing MP3 website that makes copyrighted music available for download. In 2011-2012, VNG released Zing MP3 apps with Apple and Google.
In 2014, Lang Van sued VNG for copyright infringement. The district court dismissed the lawsuit finding that it did not have personal jurisdiction over VNG. In 2016, the Ninth Circuit reversed that decision and ordered the district court to allow Lang Van to conduct discovery directed at jurisdictional issues. After such discovery, the district court again dismissed the claims against VNG on the grounds that it lacked personal jurisdiction over VNG. The matter was again appealed to the Ninth Circuit.
The Ninth Circuit began by recognizing that the burden is on a plaintiff to show that jurisdiction over a defendant is proper; however, a plaintiff “need only make a prima facie showing of jurisdiction.” The Ninth Circuit focused its analysis on whether there was jurisdiction over VNG under the long-arm jurisdictional statute set forth in Federal Rules of Civil Procedure, Rule 4(k)(2). In essence, VNG argued there was no personal jurisdiction over it by a district court in California because there was “no evidence of intentional acts directed at California or the United States.” VNG also relied on the recent Ninth Circuit case, AMA Multimedia, LLC v. Wanat, 970 F.3d 1201 (9th Cir. 2020), to argue that there had been no evidence showing that there had been any illegal downloading, streaming or other active infringement within California.
The Ninth Circuit noted that Rule 4(k)(2) was enacted by Congress as a “response to the Supreme Court’s suggestion that the rules [of Civil Procedure] be extended to cover persons who did not reside in the United States, and have ample contacts with the nation as a whole, but whose contacts are so scattered among states that none of them would have jurisdiction” over that person. Thus, under Rule 4(k)(2), a plaintiff must establish: “(1) [T]he claim at issue arises from federal law; (2) the defendants are not subject to any state’s courts of general jurisdiction; and (3) invoking jurisdiction upholds due process (namely, that jurisdiction is not unreasonable).” The Ninth Circuit further observed that while the burden is on the plaintiff to show the first two prongs above, that burden shifts to the defendant to show that application of jurisdiction would be unreasonable.
As to the first prong, the Ninth Circuit readily concluded that because the claim was one for copyright infringement, it was clearly a claim under federal law. Likewise, as to prong two, VNG had taken the position throughout the litigation that it was not “subject to the personal jurisdiction of any state court of general jurisdiction in the United States.” The Ninth Circuit decided to accept this representation (without determining whether it was actually true), thereby finding that the second prong of Rule 4(k)(2) had been satisfied as well. As a result, this shifted the burden to VNG to show that jurisdiction over it by a district court sitting in California would violate traditional notions of due process.
The Ninth Circuit noted that “[t]he due process analysis under Rule 4(k)(2) is nearly identical to the traditional personal jurisdiction analysis with one significant difference: rather than considering contacts between the … [defendants] and the forum state, [a court should] consider contacts with the nation as a whole.” That is, in order for there to be personal jurisdiction “there must be purposeful activities or transactions with the United States, with an act that shows defendant purposefully availing itself of the privileges of doing business in the United States, and thereby invoking the benefits and protections of” the laws of the U.S. Next, the claim must arise out of these activities that are related to the United States. Finally, the exercise of jurisdiction “must comport with notions of fair play and substantial justice.” The Ninth Circuit noted that “there must also be `intentional conduct by the defendant that creates the necessary contacts with the forum’.”
Turning to the specifics of Lang Van’s claim for copyright infringement, the Ninth Circuit observed that there must be “purposeful direction” under the “effects test” such that a “defendant must have committed an intentional act that is aimed at the forum, and caused harm that defendant knew would occur in the forum.” The Ninth Circuit concluded that the facts of the case demonstrated that jurisdiction over VNG would be reasonable.
First, the Ninth Circuit found it significant that VNG had “purposefully targeted American companies and their intellectual property.” A former VNG employee testified that he was tasked with sourcing and distributing content through Zing MP3 “without regard to authorization from content owners,” such as Lang Van. The Court likewise rejected VNG’s argument that its primary audience was in Vietnam, finding that VNG released its Zing MP3 in English directed to an audience in the U.S. The Court found that VNG’s making Zing MP3 “accessible to those living in the United States was purposeful” for purposes of a personal jurisdiction analysis. Furthermore, the app had been downloaded more than 320,000 times in the U.S.
The Court also found it significant that VNG had “contracted with U.S. businesses in conjunction with Zing MP3.” Furthermore, VNG did not enable any geo-blocking access to Lang Van’s content, which could have restricted the infringing activities within the U.S. or other places outside Vietnam. The Ninth Circuit relied on a case from the First Circuit that found “if a defendant tries to limit U.S. users’ ability to access its websites … that is surely relevant to its intent not to serve the United States” and that the “converse is [also] true.” There was evidence before the Court that VNG had the ability to geo-block users as early as 2013 (if not earlier) but chose not to. The Ninth Circuit found that this fact distinguished it from the issues in the AMA Multimedia, LLC case, upon which VNG relied.
The Court also noted that VNG “was well aware that its practice might violate U.S. law and, at the very least, affect U.S. interests.” VNG had corresponded with the U.S. Trade Representative regarding its contacts with the U.S. and noted that it had signed license contracts with various U.S. studios. It further stated in its correspondence that it understood “the importance of working with U.S. content owners.” Finally, as part of trademarking its IP within the U.S., VNG had represented that it had used its brand name in commerce in the U.S. for a number of years.
The fact that VNG also distributed its app through Apple and Google was likewise significant. At least two other California district courts have found personal jurisdiction over a defendant after concluding that the defendant had “purposefully availed itself of the privilege of conducting business in the United States by distributing the infringing [content] on platforms such as the Google Play store and Microsoft App store.” The Ninth Circuit concluded that all of the above evidence showed “that there is substantial evidence of intentional direction into the [U.S.] market” by VNG. The Ninth Circuit concluded that the district court had improperly dismissed the claim against VNG and ordered that the matter be remanded so that Lang Van could proceed with its copyright infringement claim against VNG in the U.S. District Court in California.
The Lang Van decision is a reminder to practitioners dealing with foreign defendants that the focus of the analysis to establish personal jurisdiction is the amount of contacts that the foreign defendant may have with the U.S. as a whole as opposed to merely with the forum state.