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Warner Bros. Entertainment, Inc. and Twentieth Century Fox Film Corp. v. Ideal World Direct, et al., S.D. New York

Movie studios filed a copyright infringement suit against several web site operators who made pirating software and technical support available to users. The out-of-state defendants moved to dismiss for lack of personal jurisdiction and failure to state a claim. A New York court can exercise jurisdiction over an out-of-state defendant when the defendant transacts any business within the state or contracts anywhere to supply goods or services within the state. Courts have fashioned a “sliding scale” approach for applying this rule to internet activity. “Passive” web sites that merely provide information are usually not within the jurisdictional reach of a state, while interactive sites through which business transactions are conducted are usually deemed to be doing business in the state for purposes of jurisdiction. In this case, two web sites were clearly doing business in New York, two other web sites may have been doing business in New York but the plaintiffs did not provide any evidence of transactions with New York residents, and another web site was deemed to be a “passive” site not subject to jurisdiction. and are two affiliated web sites that provided software for the illegal copo_ying of movies, linked customers to other sites where users could download and view pirated movies, and provided their members with user guides and technical support. The sites sold memberships for fees between $23.95 and $49.95. Payment processing records showed that Flixs had sold 379 memberships to users in New York. The court found that this satisfied the requirements for exercising jurisdiction over the owner of these web sites.

The web sites and also sold memberships and provided links to third-party sites where users could watch or download television shows. However, the plaintiffs did not provide any payment processing records or other specific information that showed that these web sites had conducted business with users in New York. Therefore, the court granted a motion to dismiss in favor of the owner of these web sites.

The web site was a portal which directed users to another site where users could buy pirated content. However, did not sell memberships, did not communicate with customers and did not engage in any form of transaction other than redirecting users to another web site. The court held that was a passive site and was not subject to the court’s jurisdiction.

The court also denied the defendants’ motions to dismiss for failure to state a claim for copyright infringement and violation of the Lanham Act and for failure to comply with federal pleadings requirements. The court held that plaintiffs had adequately pled a claim for copyright infringement against the commercially active web sites because those sites induced and caused copyright infringement by offering access to pirated films and facilitated copyright infringement by providing technical support to members that were having trouble illegally downloading those films.