The World in U.S. Courts: Winter 2016 - Intellectual Property – Copyright | November.10.2016
Cloud b, a US corporation, develops sound- and light-emitting products for children that are intended to promote sleep. Sound N Light (SNL), is a Hong Kong-based manufacturer with which Cloud b contracted to manufacture the products. Cloud b came to suspect that SNL had misappropriated its designs and other intellectual property and was selling counterfeit versions of Cloud b’s products directly to customers in Asia. As relevant here, Cloud b sued SNL for patent, trademark, and copyright infringement.
Cloud b’s copyright claims were based on allegations that SNL had offered to sell products covered by Cloud b copyrights in the US, with the most significant allegation that the products had been offered for sale on Alibaba and other eCommerce websites available to consumers in the US. The District Court in California noted that controlling law in the Ninth Circuit required that an act of infringement occur “entirely” within the US for a violation of the Copyright Act to occur. In concluding that no such act had been alleged, the Court referred to the analysis it conducted for the claimed violation of the Patent Act by the same conduct: A non-US website could be the source of an infringing US sale, but in such case a claimant must show that (i) the products are accessible in the US, (ii) the website accepts US currency, (iii) the website provides for US delivery, and (iv) a “significant portion” of the website’s sales were made to US customers. Finding no such allegations in the complaint, Cloud b’s copyright claim was dismissed.
[Editor’s Note: The Sound N Light Animatronics case is also discussed in the Intellectual Property-Patent and –Trademark sections of this report.]