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applying the Calder effects test in a copyright infringement action
Summary of this case from Amini Innovation Corp. v. JS Imports, Inc.Opinion
No. C 03-5286 MHP
April 19, 2004
MEMORANDUM AND ORDER RE: Motion to Dismiss
On November 26, 2003, IO Group, Inc. d/b/a Titan Media filed this action against defendants Michael Warwick, Craig Conley, and Pivotal, Inc., for copyright infringement, contributory copyright infringement, vicarious copyright infringement, and unauthorized use of a photograph. Now before the court is defendants' motion to dismiss for lack of personal jurisdiction. The court has considered the parties' arguments fully, and for the reasons set forth below, the court rules as follows.
Plaintiff erroneously spelled Warwick's name as "Warewick" in its complaint.
Unless otherwise specified, facts are taken from the parties' moving papers.
Plaintiff IO Group d/b/a Titan Media ("IO Group") produces and distributes adult entertainment products, including audiovisual works, photographs, and other content. IO Group alleges that defendants displayed at least 170 of Titan Media's copyrighted gay adult — oriented images on three websites: www.keepstill.com, www.nicehole.com, and www.guystogether.com. Defendants Michael Warwick and Craig Conley reside in North Carolina and are the sole shareholders of Pivotal, Inc. ("Pivotal"), a North Carolina corporation. Warwick Decl. ¶ 1, 14; Conley Decl. ¶ l. Warwick owns the three websites, and Conley allegedly served as a webmaster for one or more of the websites. Warwick Decl. ¶ 2; Webb Decl. ¶ 4. The domain names for the websites are registered to a North Carolina address. Webb Decl. ¶¶ 7, 10, 11, 13.
Defendants concede that the copyrighted images appeared on their websites, but they argue that they are not subject to the personal jurisdiction of this court. In response, IO Group alleges that IO Group's copyrighted images have appeared on the webpages of www.keepstill.com, and that a substantial portion of the viewers of www.keepstill.com are California residents. Webb Decl. ¶¶ 2, 4, 8, Exh. C. These viewers can also purchase various items on www.keepstill.com, including DVDs, CD — Roms, and books. Id. ¶¶ 4, 5, Exhs. A, C. IO Group further alleges that the servers for all three websites are maintained by NHI Networks, a California corporation, and that the servers for at least two of the websites physically reside in Los Angeles, California. Id. ¶¶ 7, 10, 11.
While defendants contend that the servers were never located in Los Angeles, California, Warwick Decl. In Support of Reply Brief ¶ 20, 21, for purposes of a motion to dismiss for lack of personal jurisdiction, contested facts must be resolved in favor of the plaintiff. Gator.com Corp, v. L.L. Bean. Inc., 341 F.3d 1072, 1076-77 (9th Cir. 2003) (citations omitted).
Defendants also operate two additional websites. Defendants sell postcards, gifts and novelties on www.manfriends.com, an adult — oriented subscription — based website. Id. ¶ 13. They also sells books, gifts and greeting cards on www.mindfulgreetings.com, a non — adult website. Id ¶ 14. Customers purchasing items from any of defendants' websites or entering into a subscription on www.manfriends.com make payments through PayPal, Inc., a California corporation. Id. ¶¶ 12-15. Exh. G. Between January 1, 2001, and December 31, 2003, purchases from persons or entities located in California comprised $754.42 of the $4871.51 in total purchases received through Paypal, Inc. Warwick Supp. Decl. ¶ 3.
Warwick stated in his original declaration that "Nothing is sold on or from the Pages." Warwick Decl. ¶ 4. Following a purchase by plaintiff, Warwick submitted a supplemental declaration. Warwick Supp. Decl. ¶ 1. Warwick now claims that he realized that his previous declaration had "failed to identify a `donation' feature present on two of the Pages that allows viewers to make donations to help offset the costs of maintaining the site on highspeed broadband so that the site can remain free." Warwick Supp. Decl. ¶ 1. A variety of items, including DVDs, books and magazines, could be purchased on defendants' websites for a specified "donation." Webb Decl., Exhs. A, C, J. These items were clearly for sale, and Warwick's characterization of such sales as "donations" rather than "purchases" is misleading. This type of outright dishonesty will not be tolerated by this court.
Defendants' websites also provide links to fourteen companies, at least five of which are located in California. Warwick Decl. ¶ 5. When consumers click on the links, they are directed to company websites from which they can purchase various items. Id. ¶¶ 5, 6. Defendants, in turn, receive commissions from the companies for purchases made by these consumers. Id. ¶¶ 5, 6. According to defendants, between January 1, 2001, and December 31, 2003, approximately ten percent of defendants' total commissions were derived from California companies. Id. ¶ 5. While the majority of these companies use intermediate payors not located in California, one California — based company pays commissions directly to defendants. Id. ¶¶ 5, 6.
On November 26, 2003, IO Group filed a complaint alleging that defendants' posting of the copyrighted images constituted direct copyright infringement, contributory copyright infringement, and vicarious infringement under section 501 of Title 17 of the United States Code; and unauthorized use of a photograph under section 3344 of the California Civil Code. See 17 U.S.C. § 501; Cal. Civil Code § 3344. On February 1, 2004, defendants filed this motion to dismiss for lack o f personal jurisdiction.
LEGAL STANDARD
Federal courts sitting in California may exercise personal jurisdiction over any nonresident to the extent permitted by due process. Harris Rutsky Co. Ind. Serv., Inc., 328 F.3d at 1129 (citing Cal. Civ. Proc. Code § 410.10). To comport with due process, the defendant must have sufficient minimum contacts with the forum state, and maintenance of the suit must not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington. 326 U.S. 310, 316 (1945).
Personal jurisdiction may be based on either general or specific jurisdiction. Gator.com Corp, v. L.L. Bean. Inc., 341 F.3d 1072, 1076 (9th Cir. 2003). General jurisdiction exists when the defendants' contacts with the state are "substantial" or "continuous and systematic," and it requires that the defendants' contacts approximate physical presence within the state. Bancroft Masters. Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (citing Helicopteros Nacionales de Columbia, SA v. Hall, 466 U.S. 408, 415 (1984)). When determining if general jurisdiction exists, courts look to "whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Id.
By contrast, specific jurisdiction exists where (1) the nonresident performs some act or consummates some transaction which purposefully avails her of the privilege of conducting activities in the forum so as to invoke the benefits and protections of the state's laws; (2) the claim arises out of or relates to the defendant's forum — related activities; and (3) the exercise of jurisdiction is reasonable. Cybersell v. Cybersell, 130 F.3d 414, 416 (9th Cir. 1997) (citations omitted). The purposeful availment requirement is satisfied if the defendant takes some deliberate action within the forum state or creates continuing obligations to forum residents. Id. at 417. The defendant need not be physically present in the forum state, "provided that his efforts are purposefully directed toward forum residents." Id (quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)). When evaluating websites, courts have typically looked to the "level of interactivity and commercial nature of the exchange of information that occurs on the website to determine if sufficient contacts exist to warrant the exercise of jurisdiction." Id. (internal quotation marks omitted) (citing Zippo Mfg. Co. v. Zippo Dot Com. Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997); Maritz v. Cybereold, Inc., 947 F. Supp. 1328, 1332-33 (E.D. Mo. 1996)).
If a plaintiff wishes to establish that her claim arises out of or relates to the defendants' forum — related activities, the plaintiff must demonstrate that the contacts constituting purposeful availment gave rise to the current suit. Bancroft Masters. 223 F.3d at 1088, In order to satisfy the requirement, the plaintiff must show that "but for" the defendants' forum — related conduct, the injury would not have occurred.Myers v. Bennett Law Offices. 238 F.3d 1068, 1075 (9th Cir. 2000); seealso Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316, 1322 (9th Cir. 1998). The contacts must also be "sufficiently related to the underlying causes of action" and "have some degree of proximate causation to be considered for purposes of jurisdiction." Metro — Goldwyn — Mayer Studios Inc, v. Grokster, Ltd., 423 F. Supp.2d 1073, 1085 (C.D. Cal. 2003) (citing Doe v. American Nat'l Red Cross. 112 F.3d 1048, 1051-52 (9th Cir. 1997)).
In all cases, the defendant bears the burden of demonstrating unreasonableness and must put on a "compelling case." Bancroft Masters. Inc., 223 F.3d at 1088 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985)). To determine reasonableness, the court must consider (1) the extent of the defendant's purposeful interjection into the forum state, (2) the burden on the defendant of defending in the forum state, (3) the extent of the conflict with the sovereignty of the defendant's state, (4) the forum state's interest in adjudicating the dispute, (5) the most efficient resolution of the controversy, (6) the importance of the forum to the plaintiff's interest in convenient and effective relief, and (7) the existence of an alternative forum. Id.
The plaintiff bears the burden of demonstrating that the court possesses personal jurisdiction. Dole Food Co. Inc. v. Watts. 303 F.3d 1104, 1108 (9th Cir. 2002). Where no evidentiary hearing is held, the plaintiff must make only a prima facie showing of jurisdiction. Harris Rutsky Co. Ins. Services, Inc. v. Bell Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003). While the plaintiff cannot rely solely on the complaint to establish personal jurisdiction, the court must take uncontroverted allegations as true and resolve conflicts between the facts contained in the parties' affidavits in favor of the plaintiff. Gator.com Corp., 341 F.3d at 1075-76 (quoting ATT v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)).
DISCUSSION
I. General Jurisdiction
Defendants' contacts with California are insufficient to confer general jurisdiction on this court. Warwick and Conley do not reside in California. Warwick Decl. ¶ 1; Conley Decl. ¶ 1. Pivotal, Inc. is a North Carolina corporation with its principal place of business located in that state. Warwick Decl. ¶ 13. The domain names for defendants' websites are registered to an address located in North Carolina. Webb Decl. ¶¶ 7, 10, 11, 13. Furthermore, defendants have not designated an agent in California, do not pay taxes in the state, do not hold licenses within the state, and are not incorporated in the state. Warwick Decl. ¶ 7; Conley Decl. ¶ 2. While defendants entered into contracts with several California corporations, received $754.42 from purchases made by California residents, and used a server located in California, I0 Group has not alleged sufficient facts to demonstrate that these contacts were either "substantial" or "continuous and systematic." See Bancroft Masters, 223 F.3d at 1086. Absent such a showing, IO Group has failed to present a prima facie case that defendants are subject to the general jurisdiction of this court.
II. Specific Jurisdiction
IO Group also contends that defendants have sufficient minimum contacts with California to subject defendants to the specific jurisdiction of this court. First, IO Group notes that the vice president of Titan Media made several purchases from defendants websites while residing in California. Webb Decl, ¶ 13, 16, 17; Exhs. I, L. But "[d]efendants cannot be said to have purposely availed themselves of the protections of this forum when it was an act of someone associated with plaintiff . . . that brought defendants' product into this forum." Millennium Enterprises. Inc, v. Millennium Music. LP. 33 F. Supp.2d 907, 911 (D. Or. 1999). Webb, as vice president of Titan Media, is directly associated with the plaintiff in this action. IO Group's attempt to manufacture jurisdiction through Webb's purchases cannot demonstrate that defendants purposefully availed themselves of the forum state.
IO Group also contends that defendants purposefully availed themselves of forum state by entering into contracts with other companies wherein defendants agreed to submit to the personal jurisdiction of the United States District Court for the Northern District of California. IO Group does not allege that it entered into a similar contract with defendants. While this argument may be relevant in a dispute involving one of these companies, it is unavailing for purposes of this dispute.See Grokster. 243 F.3d at 1085 ("[T]he fact that [defendant] may have executed or assumed contracts containing California forum selection or choice of law provision is immaterial on this point with respect to contracts that are essentially unrelated to Plaintiffs' claims.").
Defendants' other contacts with California are sufficient, however, to satisfy the minimum contacts analysis. In particular, defendants' websites were interactive, not passive, and defendants' contacts with California via the websites were commercial in nature. See Cybersell, 130 F.3d at 417. The fact that consumers can purchase products directly from defendants' websites through a California — based third — party payor, PayPal, Inc, indicates a relatively high level of interactivity. Id. ¶¶ 12, 13, 15; Exh. G. Defendants also have sufficient commercial contacts with California to warrant the exercise of jurisdiction. Between January 1, 2001, and December 31, 2003, defendants received $754.42 from purchases made by California residents. Warwick Supp. Decl. ¶ 3. Defendants have also entered into commission — based contracts with at least five California — based corporations, and they receive approximately ten percent of their total commissions from these companies. Warwick Decl. ¶ 5. Finally, defendants' servers were allegedly located in California. Webb Decl. ¶ 7, 10, 11. Based on these facts, I0 Group has alleged sufficient minimum contacts with California to demonstrate that defendants purposefully availed themselves of the benefits and protections of California's laws.
In addition, IO Group's copyright infringement claims arose out of defendants' forum — related contacts. See Bancroft Masters, 223 F.3d at 1088. Defendants' forum — related activities included sales to California residents. Warwick Supp. Decl. ¶ 3. Viewers can purchase various items, including DVDs, CD — Roms and books, from the same website, www.keepstill.com, upon which IO Group's copyrighted images were allegedly displayed. Webb Decl. ¶¶ 2, 4, Exh. D. Based on this evidence, California purchasers could have viewed and made purchases in connection with the viewing of IO Group's copyrighted images. Thus, IO Group has made a prima facie case that these purchases were sufficiently related to the use of IO Group's copyrighted images to satisfy the relatedness requirement. See Harris Rutsky Co., Ins. Services Inc., 328 F.3d at 1129.
The courts' exercise of jurisdiction in this case is also reasonable. First, the extent of defendants' contacts with California are sufficient to warrant jurisdiction. Defendants made sales to California residents and entered into contracts with California corporations. Second, the burden on the defendants in defending the suit in California would not be so great an inconvenience as to constitute a deprivation of due process.See Panavision Int'l L.P., 141 F.3d at 1323 ("[I]n this era of fax machines and discount air travel, requiring [the defendant] to litigate in California is not constitutionally unreasonable.") (citations omitted). Third, the exercise of jurisdiction in California does not implicate sovereignty concerns in North Carolina, especially where, as here, the claims are primarily based upon federal law. Id., see also Colt Studio. Inc. v. Badpuppy Enterprise, 75 F. Supp.2d 1104, 1110 (C.D. Cal. 1999). Fourth, California maintains a strong interest in "protecting its citizens from the wrongful acts of nonresident defendants." Figi Graphics, Inc, v. Dollar General Corp., 33 F. Supp.2d 1263, 1268 (S.D. Cal. 1998) (citing Ziegler v. Indian River County, 64 F.3d 470, 475 (9th Cir. 1995)). That interest is sufficiently strong in this case because IO Group is a California corporation. Fifth, evidence and witnesses are located in both California and North Carolina, so there would be no particular advantage to litigating this case in North Carolina. See Panavision Int'l L.P.. 141 F.3d at 1323 (holding that this factor is "no longer weighed heavily given the modern advances in communication and transportation."). Sixth, while IO Group argues that resolving this dispute in North Carolina would impinge on its interests in convenient and effective relief because it would have to hire outside counsel, the court finds this factor to be neutral. Seventh, despite the fact that plaintiff concedes that the federal courts of North Carolina would present an alternative forum, defendant has not made out a "compelling case" that the exercise of jurisdiction would "offend traditional notions of fair play and substantial justice." See Bancroft Masters. 223 F.3d at 1088. The exercise of personal jurisdiction over defendants in this case is reasonable.
Finally, this court may also exercise specific jurisdiction over defendants under the Calder effects test. See Panavision v. Int'l. LP v. Toeppen. 141 F.3d 1316, 1321 (9th Cir. 1998) (citing Calder v. Jones. 465 U.S. 783 (1984)). Under Calder, personal jurisdiction can be based upon "(1) intentional actions, (2) expressly aimed at the forum state, (3) causing harm, the brunt of which is suffered — and which the defendant knows would likely be suffered — in the forum state." Id. (citing Core — Vent Corp, v. Nobel Ind. AB. 11 F.3d 1482, 1486 (9th Cir. 1993)). Copyright infringement may be characterized as an intentional tort. See Columbia Pictures Television v. Krypton Broad, of Birmingham. Inc., 106 F.3d 284, 289 (9th Cir. 19971. overruled on other grounds by Feltner v. Columbia Pictures Television. 523 U.S. 340 (1998); Janel Russel Designs, Inc. v. Mendelson Assoc., Inc., 114 F. Supp.2d 856, 862 (D. Minn. 2000).
In this case, defendants intentionally placed IO Group's copyrighted images on one or more of their websites, attempting to profit from sales to California residents. IO Group d/b/a Titan Media, a corporation with its principal place of business located in California, suffered the brunt of the harm resulting from defendants' infringement. See Panavision, 141 F.3d at 1322, n. 2 (citing Core — Vent, 11 F.3d at 1487). Defendants argue that they did not know Titan Media was located in California prior to receiving a cease and desist letter from the company's attorney. Warwick Decl. ¶ 12, Exh. A, Following the receipt of the cease and desist letter, however, defendants allegedly continued to display plaintiff's copyrighted images on their websites. Warwick Decl., Exhs. C, D. In response to the letter, defendants argued not that they did not intentionally place the copyrighted images on their websites, but rather that the placement of the images with links to websites where consumers could purchase Titan Media's products constituted fair use under copyright law. See Sperlein Decl., Exh. A. IO Group also alleges that all of the studios in the gay adult entertainment industry are located in California. Webb Decl. ¶ 21. As a result, defendants knew that the brunt of the harm resulting from their infringement would likely be felt in California. Based on this evidence, IO Group has adequately demonstrated that defendants published images belonging to a California company, affecting an industry primarily centered in California, knowing that harm would likely be felt in that state. Construing these facts in a light most favorable to the plaintiff, IO Group has made a prima facie case that defendants are subject to the personal jurisdiction of this court under Calder. CONCLUSION
For the foregoing reasons, the court DENIES defendants' motion to dismiss IO Group's claims for lack of personal jurisdiction.
IT IS SO ORDERED.