CHAPTER 7 COPYRIGHT JURISDICTION: PART 1 Common sense tells us that: 1) if you own a copyright or a patent and you ask someone who is using your property without permission to stop: and 2) they don’t stop, that P a g e | 404
you should be able to start a lawsuit to stop them. Well that is true to a point. Yes, you can sue the infringing party. But where will you sue them? Can you sue them in Seattle, Portland, or New York? The answer to that question depended the seminal case of International Shoe Co. v. State of Washington, 326 U.S. 310 (1945) decided almost seventy years ago. Seventy years ago few homes had television sets, the first computer covered 1,800 feet of floor space, and cellular phones were something only seen in science fiction movies.
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Intellectual property existed in tangible items, such as books, paintings, photographs, and the like. We will next look at how this old “shoe� case acted as our unwary legal guide for over 70 years!
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ON-LINE REFERENCES Trade Secrets Video (Jusisdiction in Copyright Cases) Trade Secrets Video (A New Frontier) Trade Secrets Video (Cease & Desist Letters) Seattle PI (The Right Pair of Shoes)
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http://thetradesecretsofintellectualproperty.com/
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CHAPTER 7 COPYRIGHT JURISDICTION: PART 2: THE CHANGING LANDSCAPE Under International Shoe, the copyright holder might need to sue the infringer in a foreign state based on what the court called “minimum contacts.” “Minimum contacts” says it’s not fair to sue a company from a different P a g e | 408
state if they: 1) don’t own property; or 2) do some “minimum” amount of business in the state where the rights holder plaintiff is located. In other words, if you own a copyright and are located in Seattle and a company in Arkansas makes unauthorized use of your copyrights and you asked them to stop and they refuse, you might need to travel to Arkansas to sue them. The fundamental rule emanating from International Shoe was that to have jurisdiction in the forum state the court’s power over the defendant could not impinge of the “fundamental notions of fair play and justice.” But this consideration was in light of the rights of the defendant. Protecting fair play sounds good right? It was for the most part, at least until 1997. P a g e | 409
With the sudden growth of the Internet, we have increased commerce across state lines but a seventy-year-old analysis to “lead� us through it. It has been a rocky and expensive road, resulting variances in jurisdictional determinations from state to state, that created expense and uncertainly for American businesses and individuals.
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ON-LINE REFERENCES Trade Secrets Video (Cease & Desist Letters) Trade Secrets Video (A New Frontier) Trade Secrets Video (Cease & Desist Letters) Seattle PI (The Right Pair of Shoes)
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http://thetradesecretsofintellectualproperty.com/
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CHAPTER 7 COPYRIGHT JURISDICTION: PART 3: REDEFINING JURISDICTION A recent Ninth Circuit decision, Washington Shoe Co. v. A-Z Sporting Goods Inc., WL 6582345 (9th Cir., December 17, 2012). has changed the jurisdictional landscape to be more friendly to copyright holder plaintiffs.
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Now copyright holders can file infringement lawsuits in their home state, rather than the location of the infringing company. This is excellent news for companies trading in intellectual property, including those with intangible goods where it is hard to track exactly where the item was sold. It is likely the most important personal jurisdiction case in over 50 years. In revisiting International Shoe’s test, the Ninth Circuit Court of Appeals found that it was fair or at least made sense that a shoe company from Washington can sue in a federal court sitting in Washington state a defendant retailer in Arkansas who sells their copyrighted shoe designs after they were asked to stop and refused. This decision seems obvious right? P a g e | 413
Under International Shoe and its progeny, it was not obvious. Even one of the appeals court judges asked at oral argument why the court should not use this case to “modernize� the jurisdictional analysis? The Ninth Circuit took this opportunity to do exactly that, modernize the personal jurisdiction analysis.
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ON-LINE REFERENCES Trade Secrets Video (A New Frontier) Trade Secrets Video (Cease & Desist Letters) Seattle PI (I Didn’t Know!) Seattle PI (Infringement Letters)
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http://thetradesecretsofintellectualproperty.com/
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CHAPTER 7 COPYRIGHT JURISDICTION: PART 4: WASHINGTON SHOE CHANGING THE WORLD In Washington Shoe Company v. A-Z Sporting Goods, Inc. the defendant, A-Z Sporting Goods (“A-Z”), knowingly sold knockP a g e | 416
off rain boots that had been manufactured in China (see photos below). Located in Arkansas, A-Z sold its footwear in the Mid-West market, but not directly within Washington State. Washington Shoe Company’s (“Washington Shoe”) sales representatives, however, had visited A-Z’s offices and provided them with catalogs of the Washington Shoe footwear. Upon discovery of infringing activity, the boot designer and valid copyright holder, Washington Shoe, notified A-Z of its rights and asked A-Z to stop selling the infringing boots because it was in violation of their copyright, known as a cease and desist request.
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After receiving the cease and desist request, A-Z sold their remaining knock-off rain boots to a discount store.
Copyrighted Pattern
A-Z Knock-off
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This sale after notification of the claim is considered willful infringement of Washington Shoe’s copyrighted design. Washington Shoe then initiated a lawsuit against A-Z in federal district court in Washington State. A-Z moved to dismiss the case claiming the court lacked personal jurisdiction because it did not do business in Washington State. Although it originally denied the motion, the district court revisited the issue after another Ninth Circuit case Brayton Purcell v. Recordon & Recordon, 606 F.3d 1124 (9th Cir. 2010) was decided and granted A-Z’s motion and dismissed the case. Washington Shoe then appealed the district court’s decision to dismiss the case. P a g e | 421
ON-LINE REFERENCES Trade Secrets Video (Jurisdiction in Copyright Cases) Seattle PI
(Right Pair of Shoes) Seattle PI (“Post Greed” /”Pro IP)
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http://thetradesecretsofintellectualproperty.com/
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CHAPTER 7 COPYRIGHT JURISDICTION: PART 5: WASHINGTON SHOE THE APPEAL On appeal, Washington Shoe argued that willfully infringing a copyright creates the minimum contacts needed for personal jurisdiction (i.e. that willfully infringing a copyright equates to doing business in the forum state). P a g e | 423
If Washington Shoe was wrong, copyright infringers would be completely immune from litigation in the copyright holder’s home state. The stakes couldn’t be higher for persons wishing to protect their intellectual property and not wanting to litigate in a foreign state. The Ninth Circuit Court of Appeals agreed with Washington Shoe finding there was personal jurisdiction over A-Z and reversed the district court. The Ninth Circuit’s finding of jurisdiction hinged on whether A-Z’s actions were expressly aimed at the forum state of Washington, which in turn depended on the allegations of a willful copyright violation. P a g e | 424
The Ninth Circuit recognized that the impact of a copyright infringement can be felt outside the defendant’s state, at least in the place where the copyright is held. Since the right to control the copyright is exercised by the corporation owning the copyright, the impact of an intentional violation will be directed at the location of the copyright holder. In other words, Washington Shoe as a Washington corporation felt the impact here in Washington. The Ninth Circuit focused on A-Z’s willful activities, specifically that the sales subsequent to the cease and desist “were expressly aimed at the copyright held by P a g e | 425
Washington Shoe because A-Z knew that its intentional acts would impact Washington Shoe’s copyright by virtue of the cease-anddesist letters it had received.� A-Z knew, or should have known, that Washington Shoe was a Washington company, thereby expressly aiming its intentional acts at Washington State. Also relevant was that A-Z caused harm known to affect the forum state of Washington based on the economic loss to the copyright holder at its principal place of business in Washington. Based on these facts, A-Z could reasonably anticipate being called to defend itself in the forum state and jurisdiction within Washington was proper.
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By overruling the trial court, the Ninth Circuit has issued a groundbreaking opinion whereby intentional copyright infringers can be hauled into foreign states by virtue of willful activities if they have knowledge the effect will be felt outside their home state.
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ON-LINE REFERENCES Trade Secrets Video (Cease & Desist Letters) Trade Secrets Video (Cease & Desist Letters) Seattle PI (Infringement Letters) Seattle PI
(Right Pair of Shoes)
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http://thetradesecretsofintellectualproperty.com/
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CHAPTER 7 COPYRIGHT JURISDICTION: PART 6: PRACTICAL ADVICE FOR CEASE AND DESIST LETTERS
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With the advent of more and more intellectual property becoming intangible and sold over the Internet, the Washington Shoe v. AZ Sporting Goods case becomes the leading decision for companies in determining where and how to pursue infringement claims. Companies such as Microsoft and Apple deal in infringement of new technologies. Image licensing companies, such as Corbis Images and Getty Images, can consider lawsuits within their home state for unlicensed use of digital photographs. A company doing business on Amazon or eBay can consider filing suit for infringement in its home state. All of this is dependent on where the intellectual property resides and if the P a g e | 430
infringement continues after notification of the unauthorized use. Understanding what is sufficient to create minimum contacts with a forum state is highly important for Seattle businesses that are considering litigation in Washington as a remedy to stop copyright infringers. Before Washington Shoe, it was difficult for plaintiffs to file suit in their home state unless they could show a company purposefully directed its activities to the forum state to create minimum contacts. Now, personal jurisdiction exists if the plaintiff notified the defendant of his infringing activities yet the defendant continued to P a g e | 431
sell the infringing products, which is willful infringement. This new reading of personal jurisdiction considers the location of the intellectual property and the defendant’s knowledge of that location and his infringing activities. In pursuing an intellectual property infringement cause of action, a plaintiff must plan to secure personal jurisdiction in its home state before he even files a complaint. A plaintiff should ensure that their cease and desist notice includes information sufficient to identify the location of the intellectual property, especially if the property is intangible, such as information on the copyright holder, including the location of their business so as to P a g e | 432
provide proper notice of the effect on the forum state. If the infringing activities continue subsequent to this notice, the defendant may be called into the forum state based on knowledge of where the intellectual property resides. Under Washington Shoe, intellectual property holders can more easily police their intellectual property rights in their home state. This creates certainty for both intellectual property holders and defendants because a personal jurisdiction determination is based on notice of the location of the intellectual property that is static. Unlike under International Shoe where the determination was based on where the sales P a g e | 433
occurred, which can be variable and intangible, especially in a digital age where servers reside in warehouses nationwide and information is transmitted in seconds. Companies such as Microsoft, Apple, Getty Images, and others can now adequately protect their interests on their own terms, not those of the infringing company -- now, that is really in accordance with notions of fair play and substantial justice.
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ON-LINE REFERENCES Trade Secrets Video (Trade Secrets Main Page) Seattle PI
(Right Pair of Shoes) Seattle PI (“Post Greed” /”Pro IP)
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http://thetradesecretsofintellectualproperty.com/
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CHAPTER 7 COPYRIGHT JURISDICTION: PART 7: MYTHS Here are some of the myths of Copyright Jurisdiction de-bunked. P a g e | 436
Myth Busters No. 25
“I’m in Arkansas so I can’t be sued in Washington State”. Wrong. The newest cases show if you use someone’s
copyrighted
property
without
permission you might be subject to being sued in the copyright owners home state (especially if you were warned and ignored it).
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Myth Busters No. 26
“I can ignore Cease & Desist and/or copyright demand letters�. Wrong. Ignoring these letters and sticking your head in the sand will likely increase costs & liability for you. Be professional and just deal with it.
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ON-LINE REFERENCES Trade Secrets Video (Cease & Desist Letters)
Seattle PI (Infringement Letters)
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http://thetradesecretsofintellectualproperty.com/
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CHAPTER 7 COPYRIGHT JURISDICTION: PART 8: JUST THE ESSENTIALS Here are the “essentials” of Copyright Jurisdiction.
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Just the Essentials
Copyright Jurisdiction: “Bite Sized”
Copyright
Jurisdiction is
changing.
It’s
moving toward protecting the rights holder. It’s not a good time to Be careful! to
avoid
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be a copyright infringer.
Resolve disputes when you can costly
jurisdiction
battles.
Just the Essentials
Copyright Jurisdiction: “Bite Sized�
With internet almost
business
anywhere.
you can be
Avoid
costly
sued
lawsuits
whenever
you can.
Act reasonable and
hope for
the same
from your opponents.
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ON-LINE REFERENCES Trade Secrets Video (Trade Secrets Main Page) Seattle PI (Infringement Letters) Seattle PI (I Didn’t Know!) Seattle PI (“Post Greed” /”Pro IP)
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http://thetradesecretsofintellectualproperty.com/
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