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IP/Entertainment Case Law Updates

Will Co., Ltd. v. Lee

Ninth Circuit holds operators of Hong Kong-based video-hosting website are subject to personal jurisdiction in United States in copyright infringement action, based on their hosting of website and purchasing content delivery network services in U.S., and their posting legal compliance information relevant almost exclusively to viewers in the U.S.

Will Co. Ltd., a producer of Japanese adult entertainment, sued the foreign-based owners of a video-hosting site based in Hong Kong named for copyright infringement, alleging that ThisAV hosted several of Will’s copyrighted videos without its permission. Defendants used several American web-hosting companies to operate ThisAV, and the website states that it complies with United States law and that its content is governed by copyright and other intellectual property laws of the United States. ThisAV has a significant U.S. audience, though the majority of its audience is abroad. 

The district court granted defendants’ motion to dismiss for lack of personal jurisdiction, holding that Will Co. failed to establish that the content on ThisAV was “expressly aimed” at the U.S. and that defendants caused “jurisdictionally significant harm” in the U.S. by operating ThisAV. Will Co. appealed. 

The issue before the Ninth Circuit was whether exercising jurisdiction comports with due process pursuant to Federal Rule of Civil Procedure 4(k), which requires that the defendant have “minimum contacts” with the forum such that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. In order to determine whether the defendant has minimum contacts with the forum, courts consider the defendant “purposefully directed” its activities there.  

The court first found that both defendants committed at least one “intentional act” by operating a passive website, purchasing a domain name and purchasing domain privacy services in the United States. The court next considered whether defendants “expressly aimed” ThisAV at the United States. Noting that an operator of a website must have actively appealed to and profited from the audience in a forum to satisfy this standard, the court held that defendants profited from the viewers in the U.S. market by selling advertising space to third-party advertisers in the U.S.  

The court noted that whether defendants intentionally appealed to U.S. consumers was a “closer question” but ultimately found that defendants had done so by hosting ThisAV in Utah and purchasing CDN services for North America, thereby making the site load faster for U.S. viewers. Defendants’ webpages also specifically address legal compliance in the United States. 

Finally, the court concluded that the conduct at issue caused “foreseeable harm” in the United States, because ThisAV received 1.3 million visits from the U.S., a substantial number, even though the majority of visits came from users in other countries. Because defendants appeal to an audience in the United States, the court also held that the harm was foreseeable.

Summary prepared by Tal Dickstein and Ava Badiee.

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