Penguin Group (USA) Inc. v. American Buddha
16 N.Y.3d 295, 946 N.E.2d 159 (2011)
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Rule of Law:
For the purpose of establishing long-arm jurisdiction under New York's CPLR 302(a)(3)(ii), the injury in an online copyright infringement case is located at the copyright holder's principal place of business, not where the infringing act of uploading occurred.
Facts:
- Penguin Group (USA) is a trade book publisher with its principal place of business in New York City.
- American Buddha is an Oregon not-for-profit corporation with its principal place of business in Arizona.
- American Buddha operated two websites hosted on servers located in Oregon and Arizona.
- American Buddha published complete, copyrighted copies of four books to which Penguin held the copyrights on its websites.
- The books were made available free of charge to anyone with an internet connection for reading and downloading.
- The electronic copying and uploading of the books occurred in either Oregon or Arizona.
Procedural Posture:
- Penguin Group (USA) sued American Buddha for copyright infringement in the United States District Court for the Southern District of New York (a federal trial court).
- American Buddha filed a motion to dismiss the complaint for lack of personal jurisdiction.
- The District Court granted American Buddha's motion, holding that the injury occurred in Oregon or Arizona where the uploading took place, not in New York.
- Penguin Group appealed the dismissal to the U.S. Court of Appeals for the Second Circuit (an intermediate federal appellate court).
- The Second Circuit certified a question of law to the New York Court of Appeals (New York's highest court) to clarify the location of injury under New York's long-arm statute.
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Issue:
Under New York's long-arm statute, CPLR 302(a)(3)(ii), for a copyright infringement claim involving the unauthorized uploading of a literary work to the internet, is the situs of the injury the principal place of business of the copyright holder?
Opinions:
Majority - Graffeo, J.
Yes. In copyright infringement cases involving the uploading of a copyrighted printed literary work onto the Internet, the situs of injury for purposes of determining long-arm jurisdiction under N.Y. C.P.L.R § 302(a)(3)(ii) is the location of the copyright holder. The court reasoned that traditional commercial tort rules, which locate injury where business is lost, are ill-suited for online infringement. The convergence of two factors—the ubiquitous nature of the internet and the unique bundle of rights granted to copyright owners—means the out-of-state location of the infringing act is less important. Unlike a physical tort, online infringement creates a dispersed injury felt wherever the rights holder is located, and the harm is to the intangible property rights themselves, which are situated with their owner in New York.
Analysis:
This decision significantly adapts traditional jurisdictional principles to the realities of the digital age. By locating the injury of online copyright infringement at the copyright holder's domicile, the court makes it easier for New York-based content creators to sue out-of-state infringers in New York courts. This ruling establishes a key precedent for intellectual property cases involving the internet, shifting the jurisdictional focus from the location of the defendant's actions to the location of the plaintiff's intangible rights. It provides a clearer path for establishing personal jurisdiction over defendants who cause harm within a state via the internet, without ever physically entering it.
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