District Court finds no Jurisdiction where the Defendant’s Website had inadequate Presence in the US, and its US Contacts were Unrelated to its Lanham Act Unfair Competition Claim

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Triple Up Ltd. v. Youku Tudou Inc., US District Court for the District of Columbia, January 24, 2017

Plaintiff Triple Up is a Seychelles corporation that claimed to own the US Internet broadcasting rights to three Taiwanese movies that could be streamed from a website operated by defendant Youku.  Youku is a Cayman Islands corporation whose principal place of business is in China but whose ADRs are traded on the New York Stock Exchange.  The movies could be streamed by viewers in the US accessing the defendant’s website, and Triple up claimed that this constituted copyright infringement under US law and unfair competition under the Lanham Act.

Youku “geoblocked” videos that it posted from being viewed in the US, but did not so limit videos posted by users.  Its website was written in Mandarin Chinese, although it contracted with US companies for the placement of English-language ads on videos streamed by US viewers.

The District Court in the District of Columbia addressed but did not resolve the question whether the assertion of specific personal jurisdiction would require that Youku’s contacts with the forum alone, as opposed to the US as a whole, satisfy constitutional requirements, as the contacts were insufficient even as to the whole country.  In reaching this conclusion the Court identified two alternative standards by which jurisdiction might be established:  First, it asked whether Youku “purposefully availed” itself of the District of Columbia more than other jurisdictions, which the Court analogized to the situation where a website “functions as the defendant’s storefront in the forum.”  The Court found the following contacts inadequate:

• Youku’s failure to “geoblock” all US users, because personal jurisdiction requires an affirmative act, not a failure.
• English-language third-party ads that may accompany movies streamed to US users, because Triple Up’s claims were not “related” to those contacts, as must be the case for specific personal jurisdiction to attach.  In reaching this conclusion, the Court noted that three different standards of “relatedness” could be found in the case law, and concluded that that  Youku’s contacts failed to satisfy the most permissive of the tests the Court considered potentially correct—that Triple Up’s claims would not have existed “but for” the occurrence of the contacts.
• The Youku website’s “interactivity, because the functions a potential viewer could engage in—including searching for and accessing videos—were features common to most websites and “not the virtual equivalent of being present in the District of Columbia.”
• The listing of Youku’s securities on the New York Stock Exchange and the US Securities and Exchange Commission’s corresponding jurisdiction, because those facts were unrelated to the claims at issue, and also had been found by New York courts to be of only limited relevance for conferring jurisdiction in that State.
• Youku’s contractual relationships with US companies regarding the placement of advertising, because they were not relevant to a potential tort claim, and in any event were unrelated to claims based on the specific copyright infringement alleged.

Second, as an alternative basis for jurisdiction, the Court addressed the “effects test,” under which jurisdiction could be premised on “(1) intentional actions (2) expressly aimed at the forum state (3) causing harm, the brunt of which is suffered—and which the defendant knows is likely to be suffered—in the forum state.”  The Court determined that it need not consider this argument because Triple Up had not raised it, but nonetheless noted in dictum that the argument was unlikely to be successful.  In reaching this conclusion, the Court noted that a Chinese-language website was unlikely to be found to have targeted or caused harm in the US and that no evidence to the contrary appeared in the record, and that the copyright holder—whose location had been found relevant in some cases for jurisdictional purposes—was not in the US.

The Court also rejected Triple Up’s request for jurisdictional discovery, finding some of the requested discovery irrelevant.  The remaining discovery focused on whether Youku’s website was hosted on US servers—a fact the Court acknowledged might be relevant.  But the likelihood that would be the case was considered small in light of the absence of Youku employees in the US or any public record of US-hosting; the request for discovery was rejected as unduly based only on “conjecture.”

 [Editor’s Note:  The Triple Up case is also listed under the Copyright section of this report.]

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