Intellectual Property Technology Law Journal

Intellectual Property& Technology Law Journal Edited by the Technology and Proprietary Rights Group of Weil, Gotshal & Manges LLP

ELECTRONICALLY REPRINTED FROM VOLUME 29 • NUMBER 6 • JUNE 2017

Chinese Website Operator Dismissed from Copyright Infringement Suit in United States

By Perry J. Viscounty, Jennifer L. Barry, Allison S. Blanco, and Melanie J. Grindle

nited States law governing whether a court Youku does not market itself in the United States, Uhas personal jurisdiction over foreign internet nor does it have any offices or employees in the companies is imprecise. However, a recent opinion United States.5 from the U.S. District Court for the District Triple Up Limited (Triple Up), a Seychelles of Columbia, Triple Up Ltd. v. Youku Tudou Inc., corporation, brought a copyright infringement suit sheds new light on how courts analyze personal in the District Court for the District of Columbia jurisdiction over foreign entities pursuant to the alleging that Youku violated Triple Up’s exclusive U.S. Constitution’s due process requirements.1 At rights to broadcast three Taiwanese movies over the very least, courts require that plaintiffs plead the internet in the United States.6 Youku claimed facts sufficient to show that the foreign entity’s that it uploaded the movies “pursuant to an express contacts with the United States in general, and license to display the films in China, and that it the forum state in particular, go beyond mere implemented geoblocking to prevent the Youku- accessibility to and basic interactivity with the uploaded versions from being displayed in the entity’s website in the United States. US.” 7 Youku maintained that any non-geoblocked versions of the films on its websites must have been Background of Triple Up Ltd. v. uploaded by Youku’s users.8 Youku Tudou Inc. Youku Tudou Inc. (Youku) is a China-based Personal Jurisdiction and Due Cayman Islands corporation.2 Youku provides Process online platforms for consumers to view both user- Prior to addressing the merits of a case, a court generated and professionally-produced content.3 must determine that it has jurisdiction over the With over 400 million unique visitors to Youku’s parties.9 To comport with due process, for a court websites each month, less than one percent of to exercise jurisdiction over a foreign defendant, those views originate from the United States.4 the foreign defendant must have sufficient contacts with the United States such that it should “reasonably anticipate being haled into court Perry J. Viscounty ([email protected]) and Jennifer L. [h]ere.”10 Courts often refer to this requirement as Barry ([email protected]) are partners and Allison S. 11 Blanco ([email protected]) and Melanie J. Grindle “purposeful availment.” When a plaintiff alleges ([email protected]) are associates in the Intellectual a theory of specific jurisdiction, as Triple Up Property Litigation Practice at Latham & Watkins LLP. did here, the plaintiff’s claims must arise out of

1 Intellectual Property & Technology Law Journal Volume 29 • Number 6 • June 2017 or relate to the defendant’s contacts with the The court first addressed Youku’s geoblocking jurisdiction.12 capabilities—calling it Triple Up’s “most novel While the U.S. Supreme Court has not yet argument.”19 Geoblocking allows a website weighed in on the question of personal jurisdiction provider to restrict access to content based on a over foreign defendants in the context of online user’s location.20 Youku employs geoblocking for activity, the Youku court held that a website’s professionally produced content, but not for user- “mere accessibility” within the United States is uploaded videos.21 Triple Up argued that because insufficient to assert jurisdiction over a foreign Youku could block U.S. viewers from seeing operator.13 However, courts have found “internet- certain videos, by failing to do so, it “ ‘purposefully based” personal jurisdiction over foreign entities transmitted specific broadcasts’ … ‘with full where the website functions as a storefront in the knowledge that they would be viewed’ ” in the forum or where the foreign entities’ conduct is United States.22 The court rejected this theory “aimed at or has an effect in the forum state.”14 outright, noting that such a rule “would invite When a claim against a foreign entity arises under a sea change in the law of internet personal federal law, as Triple Up’s copyright claims did, “if jurisdiction” and “effectively mandate geoblocking a summons has been served, and if the defendant for any website operator wishing to avoid suit in is beyond the jurisdiction of any one state’s courts, the United States.”23 Further, the court stated then federal courts may exercise jurisdiction— that it was “unaware of any authority suggesting without regard to the forum’s long-arm statute—so that a failure to act might constitute purposeful long as due process requirements are met.”15 Thus, availment.”24 the Youku court faced a single, dispositive question: Triple Up’s allegations regarding interactivity “[We]re Youku’s contacts with the United States as suffered a similar fate. Within the D.C. Circuit, a whole constitutionally sufficient to justify the interactivity of a website is only relevant to exercise of specific personal jurisdiction over it a jurisdictional analysis “insofar as it illustrates with respect to Triple Up’s asserted claims?”16 whether the website allows its operator ‘to engage in real-time transactions with District of Columbia The Court’s Analysis of residents.’ ”25 Users’ abilities to make personal Triple Up’s Arguments accounts and to upload videos to Youku’s website Triple Up advanced five main arguments to did not fall under this umbrella.26 The court opined establish contacts beyond the mere accessibility of that Youku’s subscription service was the only Youku’s website in the United States. Triple Up sufficiently transactional evidence of interactivity to identified three internet-based contacts and two even warrant consideration.27 However, Triple Up non-internet based contacts between Youku and did not raise the subscription service as a basis for the United States: jurisdiction, and the court indicated that such an argument, if raised, would likely have failed because 1. Youku’s use of geoblocking technology; the subscription service was unrelated to the claims at issue.28 2. The third-party, English-language video The other factors alleged by Triple Up—third- advertisements that occasionally preceded party ads, listing on the NYSE and contracts with Youku’s videos when viewed in certain regions; U.S. companies—were not sufficiently related to Triple Up’s copyright infringement claims to provide 3. The purported “interactivity” of Youku’s site; a jurisdictional hook.29 For example, regarding the occasional presence of English-speaking ads for 4. The listing of Youku stock on the New York U.S. products before videos, the court agreed with Stock Exchange; and Youku’s argument that “even if Youku’s websites featured only Chinese-language ads for Chinese 5. Youku’s contracts with certain U.S. advertising, products aimed at Chinese consumers—or if they software and entertainment firms.17 featured no advertisements at all—Triple Up’s allegations would remain the same.”30 The court rejected each of Triple Up’s attempted jurisdictional hooks.18

Volume 29 • Number 6 • June 2017 Intellectual Property & Technology Law Journal 2 Room for Improvement Notes The D.C. District Court flagged two main areas 1. See Triple Up Ltd. v. Youku Tudou Inc., No. where Triple Up, given further factual development, 1:16-CV-00159-RDM, 2017 WL 354093 (D.D.C. Jan. 24, may have been able to make a stronger showing 2017), appeal filed, No. 17-7033 (D.C. Cir. Feb. 22, for the exercise of personal jurisdiction over 2017). Youku. First, the court pointed out in a footnote 2. Id. at *1. that Youku has an agent for service of process in 3. Id. New York, so “arguably [Youku] consented to 4. Id. jurisdiction in New York when it designated an 5. Id. at *2. agent for service of process there … and accepted 6. Id. at *1. 7. Id. at *2. service of process through that agent in this case.”31 8. Id. However, the court did not go into detail on this 9. Sinochem Int’l Co. Ltd. v. Malay. Int’l Shipping Corp., point, noting that the parties did not raise the 549 U.S. 422, 430–31 (2007). issue and that recent jurisprudence had called that 10. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 32 doctrine into question. 286, 297 (1980). Second, the court noted that Triple Up had 11. Triple Up, 2017 WL 354093, at *5, *7. failed to make an argument under the “effects 12. Id. at *5 (citing Daimler AG v. Bauman, 134 S. Ct. 746, test,” whereby jurisdiction can be established if a 754 (2014)). nonresident’s intentional acts are “expressly aimed” 13. Id. at the forum, and, as a result, “the brunt of the 14. Id. at *6. harm” is felt there.33 The court indicated that 15. Id. at *4 (citing Fed. R. Civ. P. 4(k)(2); Mwani v. bin even if Triple Up had argued that the effects test Laden, 417 F.3d 1, 10 (D.C. Cir. 2005)). applied, it likely would not have provided a basis for 16. Triple Up, at *5. jurisdiction in light of certain facts.34 Specifically, 17. Id. at *6. Youku’s websites were written entirely in Mandarin 18. Id. Chinese, the films at issue were Taiwanese with 19. Id. at *7. Mandarin captions, the alleged copyright holder 20. Id. at *1. was unconnected to the United States, and scant 21. Id. evidence of U.S. viewership existed.35 22. Id. at *7. On February 22, 2017, Triple Up appealed the 23. Id. final order entered by the D.C. District Court 24. Id. (emphasis in original). to the U.S. Court of Appeals for the District of 25. Id. at *9 (quoting Gorman v. Ameritrade Holding Corp., Columbia Circuit.36 293 F.3d 506, 513 (D.C. Cir. 2002)). 26. Id. 27. Id. Conclusion 28. Id. The D.C. District Court’s opinion in Youku 29. Id. at *8–10. makes clear that, at least for now, mere accessibility 30. Id. at *9 (internal quotation marks omitted). of a website is insufficient to establish the minimum 31. Id. at *4 n. 2. contacts required for purposes of exercising personal 32. Id. jurisdiction over a foreign entity based solely on 33. Id. at *6, *10 (citing Calder v. Jones, 465 U.S. 783, 789 that entity’s virtual presence in the United States. (1984)). Prospective plaintiffs must assert strong factual bases 34. Id. at *10. specifically related to the alleged claims that support 35. Id. the foreign entity’s contacts within the United 36. See Triple Up Ltd. v. Youku Tudou Inc., No. 17-7033 States as a whole and/or the “effects” of the foreign (D.C. Cir. appeal filed Feb. 22, 2017). entity’s actions within the United States. Finally, in light of these jurisdictional hurdles, prospective plaintiffs also should consider employing strategies within the foreign entity’s home country to stop the potentially infringing conduct.

3 Intellectual Property & Technology Law Journal Volume 29 • Number 6 • June 2017 Posted from Intellectual Property & Technology Law Journal, June 2017, with permission from Aspen Publishers, a WoltersKluwer Company, New York, NY1-800-638-8437, www.aspenpublishers.com. For more information on the use of this content, contact Wright’s Media at 877-652-5295. 129816