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American Buddha-What's Next

American Buddha-What's Next

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Published by: title17 on Oct 20, 2011
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10/20/2011

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 NYC/618572.1
 Penguin v. American Buddha
: What’s Next?
Paul FaklerArent Fox LLPIn
Penguin Group (USA) v. American Buddha
, the plaintiff book publisher sued theowner/operator of a website for posting complete copies of several books on thatwebsite without Penguin’s authorization. The defendant, American Buddha, is anOregon not-for-profit corporation with one employee, Tara Lyn Carreon. AmericanBuddha operates the Ralph Nader Library (no association with the actual Ralph Nader,apparently) at a physical location in Tucson, Arizona. As noted above, AmericanBuddha also makes certain books, motion picture screenplays (annotated with screencaptures of the actual movies) and even sound recordings publicly available on thewww.naderlibrary.comwebsite. American Buddha claims that the materials madeavailable on its website are effectively a digital library, provided for the purpose offurthering criticism and scholarship. Penguin claims that it is garden variety copyrightinfringement.Penguin chose to sue American Buddha in the Southern District of New York.American Buddha moved to dismiss for lack of personal jurisdiction. Penguin assertedpersonal jurisdiction based upon one particular provision of New York’s long-arm jurisdiction statute, N.Y. C.P.L.R. § 302(a)(3)(ii), which provides, in pertinent part:
[A] court may exercise personal jurisdiction over any non-domiciliary . . . who . . . commits a tortious act without the statecausing injury to person or property within the state, . . . if he . . .expects or should reasonably expect the act to have consequencesin the state and derives substantial revenue from interstate or international commerce . . .
 
 2The district court granted American Buddha’s motion to dismiss on the narrow ground that, inlight of the fact that Penguin had not claimed any actual infringement took place within NewYork, the site of Penguin’s injury was where the alleged infringement took place, in Arizona or Oregon (the locations of American Buddha’s servers).
 Penguin Group (USA) Inc. v. American Buddha
, No. 09 Civ. 528 (GEL), 2009 WL 1069158 at *4 (S.D.N.Y. April 21, 2009). Becausethis ground was sufficient to deny the court of personal jurisdiction, the district court did notreach the other requirements of C.P.L.R 302(a)(3)(ii) or the independent Due Processrequirements for personal jurisdiction.
 Id 
.Rather than simply sue the defendant in Arizona or Oregon or request a transfer to one of those venues, Penguin appealed the dismissal. Noting a split of authority, the Second Circuitreferred the following question to the New York Court of Appeals: In copyright infringementcases, is the situs of injury for purposes of determining long-arm jurisdiction under N.Y.C.P.L.R. § 302(a)(3)(ii) the location of the infringing actions or the residence or location of the principal place of business of the copyright holder?
 Penguin Group (USA) Inc. v. American Buddha
, 609 F.3d 30, 42 (2d Cir. 2010). The New York Court of Appeals narrowed the referredquestion to the following: In copyright infringement cases involving the uploading of acopyrighted printed literary work onto the Internet, is the situs of injury for purposes of determining long-arm jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) the location of theinfringing action or the residence or location of the principal place of business of the copyrightholder? The court, based upon its view of the unique nature of harm from copyrightinfringement on the Internet (as compared to typical commercial torts), answered that the situs of injury in such cases is the location of the copyright owner.
 Penguin Group (USA) Inc. v. American Buddha
, 16 N.Y.3d 295, 306-07 (N.Y. 2011).
 
 3Based upon the answer from the New York Court of Appeals, the Second Circuitreversed the district court’s decision, and remanded the case for further consideration of the other factors required to support long-arm jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) and the DueProcess clause.
 Penguin Group (USA) Inc. v. American Buddha
, 640 F.3d 497, 500-501 (2d Cir.2011). So, even though Penguin won the appeal it is not out of the woods yet. The interestingquestion remaining is whether any of these other analyses will preclude the exercise of personal jurisdiction over American Buddha.
The Remaining Section 302(a)(3)(ii) Factors
Reasonable Expectation of Consequences in New YorkOne of the requirements of N.Y. C.P.L.R. § 302(a)(3)(ii) is that Penguindemonstrate that American Buddha expects or should reasonably expect their acts tohave consequences in New York. American Buddha argues that the mere availability ofits website throughout the world does not make it foreseeable that there would beconsequences in New York, particularly where Penguin did not allege that anyone inNew York (other than counsel) had actually accessed the website. Penguin, on the otherhand, notes that its books each list Penguin’s New York address on the copyright pageand argues that this put American Buddha on at least constructive notice that itsunauthorized copying and display of the books would have an impact in New York.Substantial Revenue From Interstate or International CommerceAnother requirement of N.Y. C.P.L.R. § 302(a)(3)(ii) is that Penguin demonstratethat American Buddha has generated substantial revenue from interstate orinternational commerce. The New York Court of Appeals has noted that this

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