Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. The Fourth Circuit Court of Appeals recently issued a decision on personal jurisdiction in a copyright infringement case where the alleged infringement was taking place on the internet. Since the early days of the World Wide Web, most courts have followed, or at least relied upon, the Zippo case in assessing whether jurisdiction existed in the internet context. While not an internet jurisdiction case, the Supreme Court made some significant alterations to the personal jurisdiction analysis in 2014 in Walden v. Fiore. In a case considering a pair of websites that allowed for music piracy from streaming videos with music in which the defendant was apparently based in Russia, the Fourth Circuit did not strictly follow Zippo’s “passive” versus “interactive” website distinction. Instead, taking Walden v. Fiore into account, the Court engaged in a more holistic personal jurisdiction analysis than merely “passive” versus “interactive” and considered in which it diminished its reliance on the money-generating and advertising activities of the defendant via his websites. Specifically, the Court found persuasive for establishing personal jurisdiction the facts that the defendant had numerous users of the sites in the forum state, and engaged in geo-targeted advertising into the forum (via third-party brokers). The Court also noted that the Internet had significantly changed since Zippo, which was decided in 1997. The key takeaway here is that for analysis of personal jurisdiction where a website forms the crux of the basis for jurisdiction, additional arguments beyond a mere Zippo analysis are available and should be considered.
2. Notably, however, a decision out of the Eastern District of Michigan (which is in the Sixth Circuit), followed Zippo to find the existence of personal jurisdiction over a non-resident defendant that did not have a presence in Michigan. The plaintiff and defendant formerly did business together in connection with disposable vaping devices. That business relationship ended, and the plaintiff learned that the defendant was allegedly continuing to sell over the internet devices that appeared to be the plaintiff’s, but which allegedly were not, to customers in Michigan. The defendant filed a motion to dismiss for lack of personal jurisdiction arguing that it had no presence in Michigan, and its website was passive. The Court found otherwise, determining under Zippo that the website was interactive because a buyer had to confirm he or she was over the age of 21, enter credit card details, and enter a delivery address for the products. The Court added that, “[t]he defendant’s conduct of taking orders online and knowingly selling products directly to Michigan customers through its website clearly constitutes, ‘an action of the defendant purposefully directed toward the forum.’” The takeaway here is that, at least in the Sixth Circuit, Zippo remains alive and well. It behoove plaintiffs to allege Zippo and non-Zippo-related facts in their complaints and oppositions to motions to dismiss in order to try to hold the case in the forum of choice.
3. In a case involving Buzzfeed’s alleged removal of copyright management information (CMI) from a photograph taken by a freelance photographer, the Second Circuit construed the so-called “double scienter” language of Section 1202(b) of the DMCA and found that it requires, among other things, that the defendant distributed works or copies of works knowing that copyright management information (CMI) had been altered or removed without authorization from the copyright owner. As to the second scienter element, the question is the extent of knowledge required and knowledge of what? The statute states that a defendant “knowing, or, … having reasonable grounds to know that [the alteration or removal of CMI] will induce, enable, facilitate, or conceal an infringement …, the Second Circuit found that in the case of Buzzfeed here, that it knew or had reasonable grounds to know that the removal of CMI in this case would conceal an infringement – its own. Thus, actual knowledge that the alteration or removal of CMI would induce, enable, facilitate, or conceal an infringement was not required, but merely that one had reasonable grounds to know. The opinion is here.