Can Korean Copyright Owners Sue Australian Defendants in California? Judges Disagree–DFSB Kollective v. Bourne

By Eric Goldman

DFSB Kollective Co. Ltd. v. Bourne, 2012 WL 2376209 (N.D. Cal. June 22, 2012).

DFSB Kollective is a Korea-based copyright owner and a leading producer of Korean music. It went on a litigation tear on March 7, 2011, filing seven similar copyright enforcement actions in the Northern District of California (against Bourne, Doe (revealed to be Yang), Jenpoo, Kuoch, Ma, Tran and Yew). Rather than assigning the seven cases to the same judge or otherwise relating/consolidating them, the cases were divvied up among district judges.

The Jenpoo, Kuoch and Ma cases appear to have settled. Bourne, Tran, Yang (nee Doe) and Yew all no-showed, leading to entries of default against all of them except Yang (which is still pending).

In September 2011, DFSB got a default judgment against Yew for $325k and an injunction from Judge Alsup. I (and most others) missed the Yew case when it came out, but the issues it raises are subsumed by the Tran opinion.

This post focuses on the Tran and Bourne cases. The cases are virtually identical. Both defendants are located in Australia and allegedly ran linking sites focused on the Korean music community (and may have uploaded infringing files themselves). Both cases raise a fairly fundamental question: why is a Korean copyright owner with no operations in California suing Australian defendants in a California court?

In December, Judge Koh issued a default judgment in the Tran case, awarding DFSB $645k in statutory damages plus an injunction. In contrast, earlier this month, Magistrate Judge Corley denied DFSB a default judgment in the Bourne case. Given how similar the cases are, the dichotomous results is noteworthy. Indeed, Magistrate Judge Corley’s opinion expresses disagrees with Judge Koh’s, creating an apparent intra-district split and setting up a potentially interesting showdown between Judges Koh and Corley.

The judges split on the personal jurisdiction question. Judge Koh found that Tran was subject to personal jurisdiction in California because he had accounts at Facebook, Twitter and YouTube and used a privacy service in California to shield his identity. Magistrate Judge Corley, sua sponte, saw it differently:

this Court disagrees that using the Internet accounts of companies based in California is sufficient to support a finding that a defendant expressly aimed his conduct at California. To adopt Plaintiffs’ reasoning would render the “expressly aimed” prong of the Calder test essentially meaningless as it has become ubiquitous for businesses—large and small—to maintain Facebook or Twitter accounts for marketing purposes and would subject millions of persons around the globe to personal jurisdiction in California.

Corley also points out that the ads on Bourne’s website don’t appear to target or relate to California, and the website’s goal of providing a directory of Korean-language music had nothing to do with California either.

I think Judge Koh’s conclusion on the social media account question was anomalous. Most of the courts who’ve looked at the issue (none cited by either Koh or Corley) have agreed with Corley. [FN1] Having social media accounts with California-based companies doesn’t automatically confer personal jurisdiction in California for every cause of action. See generally the Mavrix case (cited by Corley). In fact, many social media users don’t know—or care—where their service providers are incorporated or headquartered or where they have data centers.

FN1: See, e.g., NuboNau, Inc. v. NB Labs, Ltd, 2012 WL 843503 (S.D. Cal. March 9, 2012) (“the Court doesn’t find that merely engaging Twitter and Facebook to promote one’s business constitutes purposeful direction at California, simply because Twitter and Facebook happen to be based there and require users to litigate all lawsuits arising out of their accounts in California.”); Sweetgreen, Inc. v. Sweet Leaf, Inc., 2012 WL 975415 (D.D.C. March 23, 2012) (“defendants’ passive websites alone do not provide a basis for jurisdiction. Their Facebook pages and Twitter accounts, while interactive, are more like a broad national advertising campaign than a website engaging in e-commerce.”) Cf. Lyons v. Rienzi & Sons, Inc., 2012 WL 1203688 (E.D.N.Y. April 11, 2012): “the movant’s mere possession of an account on Facebook is not, in the context of this case, a sufficient predicate for hauling it into a court in New York.”

The judges also reached different conclusions regarding DFSB’s connections to California. Judge Koh effectively ignored the issue. (In my prior blog post, I wrote “Completely missing from this discussion is how the plaintiffs suffered any harm in California or, for that matter, had any ties themselves to California.”). Magistrate Judge Corley, however, asked the obvious question (again, sua sponte):

Plaintiffs do not explain how California residents were harmed or why that is the proper inquiry. In a copyright case, it is usually the plaintiff—who owns the copyright and thus has standing to bring the lawsuit—who is claiming harm…..Plaintiffs do not allege how they as corporations based in Korea suffered any harm in California.

DFSB may have been engaging in a little copyright litigation “tourism” (analogous to “libel tourism”), picking a US court even though neither litigant had any real ties to the United States. Post-SOPA, we’re on heightened alert for rightsowners’ enforcement actions against “rogue” websites. The DFSB litigation shows that US copyright law already appeals to foreign copyright owners. If SOPA had passed, undoubtedly we would have seen an increase in enforcement actions between two foreign litigants without real ties to the United States. Cf. the increasing number of disputes involving a foreign rightsowner v. a foreign defendant at the ITC, a venue intended to protect US manufacturers.

Among other problems, foreign defendants usually no-show in US litigation, raising real due process concerns. Extra kudos to Magistrate Judge Corley for not rubber-stamping the plaintiffs’ requests in a default action. Most judges are not as careful when the defendant no-shows; even Judges Alsup and Koh—both well-regarded and savvy judges—apparently adopted the plaintiffs’ default judgment arguments largely verbatim without challenging the core deficiency in the plaintiffs’ cases. In contrast, Magistrate Judge Corley raised those issues on her own initiative, without any defense attorney (or the defendant him/herself) encouraging her to do so. This is the way the system is supposed to work if due process means anything.

Corley’s decision isn’t final yet for two reasons. First, because she raised the issues sua sponte, she gave the plaintiffs a chance to rebut her ruling by July 3. Second, Corley’s ruling will go to Judge Hamilton for approval. Corley’s opinion is spot-on, so Judge Hamilton ought to approve the ruling; but I wonder if Judge Hamilton will be spooked by the intra-district split. If so, I could see Judge Hamilton deferring to Judge Koh and eliminating the intra-district split.

Because of these review opportunities, this case seems like an excellent candidate for amicus briefs to explain the social interests at play in no-show default IP cases. Venkat and I have blogged this topic many times before in cases where judges rubber-stamped SOPA-like injunctions because no one was around to object to them. See, e.g., Hermes v. Doe. This case presents a great chance to educate the judiciary about the importance of gatekeeping plaintiffs’ otherwise-unrebutted requests. The turnaround time is short for amicus intervention (and there’s no guarantees the judge will accept them). I can’t lead that charge but I would be happy to work with others.