Where it hurts most – right in the copyright bundle

Last week the New York Court of Appeals gave an intriguing answer to a jurisdictional question from the Second Circuit Court of Appeals. The case is Penguin v American Buddha (previous post here). The question and its answer are:

‘In copyright infringement cases involving the uploading of a copyrighted 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 the infringing action or the residence or location of the principal place of business of the copyright holder? In answer to this reformulated question and under the circumstances of this case, we conclude it is the location of the copyright holder.’

The New York Civil Practice Law and Rules give NY courts jurisdiction over non-domiciliaries who commit torts in NY and those who commit torts outside NY that cause injury to person or property in NY (the Big Apple’s equivalent of Shevill v Presse Alliance in the EU). Penguin alleges that copyright infringements were committed by the defendant in Arizona or Oregon, by uploading their books on servers there. The question is whether these out-of-state infringements caused injury in NY, where Penguin USA is based. The New York Court of Appeals explained their reasoning as follows:

‘Although it may make sense in traditional commercial tort cases to equate a plaintiff's injury with the place where its business is lost or threatened, it is illogical to extend that concept to online copyright infringement cases where the place of uploading is inconsequential and it is difficult, if not impossible, to correlate lost sales to a particular geographic area. In short, the out-of-state location of the infringing conduct carries less weight in the jurisdictional inquiry in circumstances alleging digital piracy and is therefore not dispositive. The second critical factor that tips the balance in favor of identifying New York as the situs of injury derives from the unique bundle of rights granted to copyright owners.… Based on the multifaceted nature of these rights, a New York copyright holder whose copyright is infringed suffers something more than the indirect financial loss we deemed inadequate in Fantis Foods. For instance, one of the harms arising from copyright infringement is the loss or diminishment of the incentive to publish or write…’

Basically what this appears to mean is since (a) the loss-of-sales injury caused by copyright infringements on the internet could be anywhere, it’s hopeless trying to pin that down but (b) the plaintiff’s rights themselves are injured (devalued) by the copyright infringement, it makes sense to say the injury happened where the plaintiff is located. This has a certain elegance, tidying up the ubiquitousness of internet copyright infringement. On the other hand, the idea that copyrights are located in the offices of a plaintiff’s business and are themselves injured is not only somewhat bizarre but may prove less than straightforward. What if the plaintiff is a licensee or there are several joint copyright owners in different locations?