Court denies California defendants’ motion to dismiss for lack of personal jurisdiction, holding that defendants transacted business in New York for jurisdictional purposes when they mailed termination notices to plaintiffs’ office in New York.
Court denies California defendants’ motion to dismiss for lack of personal jurisdiction, holding that defendants transacted business in New York for jurisdictional purposes when they mailed termination notices to plaintiffs’ office in New York.Defendants are heirs of Jack Kirby, a comic book illustrator, who collaborated with other individuals engaged by Marvel and its predecessors-in-interest to contribute to comic books featuring the Fantastic Four, the Incredible Hulk, and the X-Men. Defendants, two of whom live in New York and two of whom live in California, mailed 45 termination letters to Marvel and other entities, which purported to terminate these entities’ copyright interests in Jack Kirby’s works. Plaintiffs filed suit against defendants seeking a declaration that Jack Kirby’s works were works made for hire, that plaintiffs own the copyrights in these works, and that the defendants’ termination notices are invalid.
The two defendants who live in California moved to dismiss for lack of personal jurisdiction. The court denied the motion. The court applied New York’s long arm jurisdiction statute which provides that a non-domiciliary is subject to jurisdiction in New York if he or she transacts any business within the state or contracts anywhere to supply goods or services in the state, and if the cause of action arises from any of these transactions.
The court held that the termination notices, unlike cease and desist letters, are self-executing documents that, if valid, terminate Marvel’s copyright interests on the dates specified in the notices. “By virtue of having mailed the termination notices to Marvel, all four Kirbys – the two who live in New York and the two who live in California – projected themselves into New York and into the local commerce” (internal quotations omitted). The court also noted that the defendants sent the termination notices with the intention of disrupting Marvel’s New York-based publishing business so that they could divert any royalties associated with licensing Jack Kirby’s work from Marvel to themselves. The court stated that the Second Circuit has held that letters sent into New York aimed in part at negotiating royalty agreements with alleged violators of a party’s intellectual property rights have been considered to be a transaction of business for jurisdictional purposes (citing PDK Labs, Inc. v. Friedlander, 102 F.3d at 1109 (2d Cir. 1997)).
The court rejected the defendants’ argument that because the notices were required by the Copyright Act they could not trigger jurisdiction. According to the court, the U.S. Supreme Court and the Second Circuit have held that the fact that a communication is required to be sent into the forum state actually counsels in favor of a court’s exercise of personal jurisdiction. “The relevant question is not whether defendants’ contacts with New York were voluntary, but whether defendants purposefully projected their interests into the state. Here, they plainly did just that.”
The court also stated that the termination notices are fundamentally different from cease and desist letters, which have been found not to confer jurisdiction over a non-domiciliary. The court explained that when a communication constitutes the transaction at issue, it provides a basis for asserting jurisdiction. According to the court, the termination notices purported to end a course of New York-based business that the parties engaged in since 1958 when Jack Kirby began working for Marvel. “Unlike a cease and desist letter, which merely warns a party that he may be infringing upon another’s intellectual property rights, communications like the termination notices confer transactional personal jurisdiction over non-domiciliaries because they alter the status quo between the parties, by requiring the recipient to take legal action or lose his intellectual property.” The court also held that exerting jurisdiction over the California defendants did not violate the U.S. Due Process Clause.