Personal Jurisdiction Over Canadian Defendants In A Copyright Infringement Action Rejected Under California Law But Upheld Under Rule 4(k)(2)

The World in U.S. Courts: Winter 2018 - Intellectual Property – Copyrights | December.06.2017

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L.A. Gem & Jewelry Design, Inc. v. An & Associates Co. Inc., US District Court for the Central District of California, December 6, 2017

The plaintiff designs, manufactures, and sells jewelry having US copyright protection. It sued the defendants, all Canadian residents and citizens, for copyright infringement and contributory copyright infringement arising from the sale of their jewelry in the US through various websites. The defendants moved to dismiss the case on grounds that the District Court in California could not assert personal jurisdiction over them.

The Court observed that personal jurisdiction was to be judged under the standards of the forum State of California, which permits jurisdiction to the full extent of the Due Process Clause of the US Constitution. As applicable to a copyright infringement case, Due Process may be satisfied under the “effects” test, requiring that the defendant have allegedly “(1) committed an intentional act; (2) expressly aimed at the forum state; (3) causing harm that the defendant knows is likely to be suffered in the forum state.” The Court added that remote acts merely having a “foreseeable” effect in the forum State are not sufficient to establish jurisdiction; “express aiming” at or “individual targeting” of the forum must also be shown.

The Court found that the defendants’ allegedly intentional violation of copyrights held by a California corporation was insufficient by itself to establish jurisdiction in that State. It further found no evidence that the defendants’ promotional activity—through social media sites including Facebook—had focused on California in any way, and that the relatively few sales to California residents (10 out of allegedly 2400 infringing sales) were “simply too attenuated and isolated to suggest that California was the focal point of the sales and the harm suffered.” The small number of California sales also meant that the plaintiff could not show that its claim arose from contacts with the forum State.

Alternatively, the Court considered whether personal jurisdiction could be established under Federal Rule of Civil Procedure 4(k)(2), which applies where a federal claim is involved, the defendant must not be subject to the personal jurisdiction of any one State court based on its contacts with the State, and Due Process requirements of fundamental fairness are satisfied. Notably, the Due Process test under Rule 4(k)(2) is applied to the defendants’ contacts with the US as a whole, not their contacts with the forum State. This focus required the Court to consider whether the defendants had “expressly aimed” their sales and marketing efforts at the US. The Court “easily” found that the defendants targeted the US, citing principally the following:

  • The defendants maintained “fully interactive” websites specifically referring to deals available to US and Canadian customers, handling transactions in US dollars, and addressing US shipping restrictions;
  • The defendants’ marketing employed Facebook’s “global targeting” feature to focus promotions on different countries, and that the US would have been one of these countries;
  • The defendants shipped products directly from Canada to the US, avoiding middlemen and therefore escaping the “stream of commerce” theory that can complicate efforts to establish personal jurisdiction; and
  • Jurisdiction over individual defendants was upheld where they were alleged to be principal figures in the operation of their employers.    

Finally, the Court found that the defendants had not made the required “compelling case” that jurisdiction based on adequate contacts might otherwise be “unfair.” It rejected their argument that their recordkeeping system was not adequately automated and that litigation would be burdensome, noting that this burden was the consequence of the record-keeping system and not the product of having to litigate in a different country.

[Editor’s note: The L.A. Gem & Jewelry Design case is also addressed in the Personal Jurisdiction/Forum non Conveniens section of this report.]

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