December 28, 2011
Why Are Korean Copyright Owners Suing an Australian Infringer in San Jose, California?
By Eric Goldman
DFSB Kollective Co., Ltd. v. Tran, 2011 WL 6730678 (N.D. Cal. Dec. 21, 2011)
In light of SOPA, I am paying closer attention to transborder copyright and trademark enforcement actions. After all, SOPA is designed to redress foreign rogue websites, so the results being obtained in court today are highly relevant to the policy debates. As we've previously shown, a lot of SOPA remedies are already being awarded by judges--for better or worse (mostly the latter)--and some of those rulings are raising some of the same due process concerns we have about SOPA.
Today's ruling baffles me, and I'm hoping you'll help me understand the case and the issues. The plaintiffs own copyrights in Korean pop music and are based in Seoul. The defendant is Kenny Tran, who runs ihoneyjoo.com and ihoneydew.com (both offline--more on that later) and is peripatetic on social media. Tran allegedly posted infringing music files and album covers to cyberlockers and other sites and then linked to the uploads from his social media accounts. The plaintiffs claim Tran is "one of the biggest illegal uploaders (and free download link providers) of Korean music in the world" and his site generated more traffic than the top 3 legitimate Korean music sites combined. (If true, this crucial information about consumer behavior made me think of this meme). Tran allegedly profited from his actions by showing ads and soliciting PayPal donations.
The plaintiffs claim they repeatedly sent takedown notices to Tran's service providers, but Tran allegedly evaded enforcement by opening new accounts or switching vendors. So they sued Tran in San Jose, California, where they happened to draw Judge Koh, the only federal district court judge of Korean descent. They claim to have served him in Australia, but Tran hasn't responded to the lawsuit at all.
As usual in default judgments, the judge basically rubber-stamps the plaintiffs' arguments. She finds personal jurisdiction over Tran, a result that's become almost pro forma in copyright infringement cases (see the multiple Righthaven jurisdictional wins). As for Tran's ties to California, Judge Koh says:
it appears as though Defendant has specifically used several California companies to further his scheme of perpetrating illegal downloads. Tran uses California companies Facebook, Twitter, and YouTube to promote the websites he operates, and to allow users access to the pirated copies of the copyrighted music and artwork. Additionally, it appears as though Defendant uses a privacy service located in California to shield his identity....In light of the nature of the websites run by Defendant, it appears that Defendant's activities are expressly aimed at California.
Similarly, with respect to how Tran caused harm in California, the opinion says:
Tran relied on several California companies to further his scheme of providing copyrighted music to a world-wide audience of users. Additionally, given the evidence provided by Plaintiffs of the reach of Defendant's activities, Tran likely knew that harm—in the form of distribution and download of copyright protected material—would be suffered in the forum state.
Completely missing from this discussion is how the plaintiffs suffered any harm in California or, for that matter, had any ties themselves to California. The opinion offers nothing on that point, leaving open the possibility that the plaintiffs are engaged in strategic forum-shopping. The opinion also does some serious arm-waving about the other factors in the personal jurisdiction tests that evaluate the forum's appropriateness--because the plaintiffs apparently didn't provide anything to show their interest in California, the opinion just says a lot of factors are "neutral" when in fact she's working with no information at all. This is typical of default judgments; we usually wouldn't see such corner-cutting in an adversarial proceeding. Similarly, the conclusion that using Twitter or Facebook makes defendants subject to California jurisdiction would not survive properly adversarial proceedings.
The opinion finds direct copyright infringement of 11 albums/129 songs. It also finds contributory copyright infringement, although it never says who the direct infringer is given that Tran allegedly uploaded the files himself (the failure to identify a direct infringer in a contributory copyright infringement analysis is a common error on my Internet Law exam, a mistake that my students usually regret when they get their grade). The opinion punts on the inducement question, saying "there is some doubt as to whether [inducement] is a separate cause of action or more properly considered a species of contributory infringement."
Based on the copyright infringement, Judge Koh approves $5k statutory damages per infringement, for a total of $645k. She also grants the following injunction:
Defendant Kenny Tran, and his officers, agents, servants, employees, and attorneys, are permanently enjoined from copying, displaying, or distributing Plaintiffs' works without permission, and from providing internet links or instructions enabling others to access infringing copies of Plaintiffs' works.
In light of recent injunctions involving foreign rogue websites, this injunction is quite restrained.
This ruling leaves open the big unanswered question: why the plaintiffs didn't sue Tran in Australia? If they really wanted to shut him down, they are more likely to get the desired enforceability from an Australian court.
One possibility is that the plaintiffs knew Tran would default in a US action but feared he would fight in Australia, so suing in San Jose was a quick way to get a default judgment. But is the default judgment actually worth more than the paper it's printed on? I assume they will have some difficulty enforcing their damages award and even more difficulty enforcing the injunction given Tran is in Australia. If Tran breaches the injunction and is held in contempt by a US court, then what? Getting a quick but unenforceable win seems like an odd move.
Another possibility is that the plaintiffs will use the ruling to cut off Tran from US service providers, like kicking Tran off Facebook, Twitter, etc. Interestingly, the injunction doesn't specifically reference any remedies against these third-party service providers, unlike some of the other troubling rogue website enforcements we've blogged about recently. Furthermore, many of those service providers already are willing to kick Tran off as a repeat infringer, but they won't set up the screens required to proactively prevent Tran from setting up new accounts, so I don't see how this injunction helps.
Nevertheless, Tran's two domain names are already down. Did the domain hosts cut off the domain names only because of this ruling? Or would they have done the same with an Australian ruling of infringement? Or, especially in the case of GoDaddy, merely at the copyright owner's request without any judicial adjudication at all?
A third possibility is that the plaintiffs had copyright registrations in the United States but didn't have the requisite copyright standing in Australia. I haven't researched this, but it seems doubtful.
As you can see, I have a lot of questions about this case and not a lot of answers. I'd welcome your thoughts about what's going on here and what it might mean. (As usual, let me know if it's OK to post your email to the blog).
One thing I do know: our judicial system depends on adversarial proceedings, and it frequently breaks down quickly when judges are asked to make rulings based on hearing only one side of the story. In this case, Judge Koh--a shining light in our federal judiciary who normally issues rock-solid opinions--totally sidestepped a deeper inquiry into the plaintiffs' interests in California. I can't imagine she missed this glaring hole in the plaintiffs' case (the opinion unmistakably arm-waves on the factors that would prompt that inquiry), so perhaps she just wanted to quickly move this uncontentious case off her docket. However we get there, it's clear that judges won't aggressively protect defendants in default judgments on their own accord without any help from defendants. Any legislative solution that relies on ex parte or non-adversarial proceedings before a judge superficially appears to bake in due process but instead will suffer the same defect, even when we have great federal judges who try to do the right thing. This has a lot of implications for SOPA, but it's also relevant to OPEN.
For more on the case, see Mike Masnick's post.
UPDATE: Leanne O'Donnell, an Australian IP lawyer, emailed me some comments:
[Further update: Leanne subsequently qualified that the copyright owners could seek common law enforcement of the California judgment even if they can't take advantage of the Foreign Judgments Act, but it's more expensive and complicated. See, e.g., Stern v National Australia Bank at 133. It's also subject to public policy limits.]
2) She speculated on the reasons why the copyright owners didn't sue in Australia, including the lack of statutory damages in Australian copyright law and potential issues with the injunction. She pointed to Cooper v Universal Music  FCAFC 187 as a case that discusses relevant topics. The Roadshow v. iiNet case, currently on appeal, is also possibly relevant.
3) I asked her about any potential issues with extraterritorial downloads, as we saw in the Shropshire case. She replied: "If the claim for infringement against Tran was for both primary infringement and authorisation he could be found to have infringed copyright in Australia if the plaintiffs could establish that Australians (primary infringers) downloaded songs from his site." If Tran was really running the largest Korean music site on the Web, proving Australian downloads seems plausible.
Posted by Eric at December 28, 2011 12:34 PM | Copyright
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