Dish Network L.L.C. v. Vicxon Corp., Case No. 12–cv–9–L(WVG).

• Decision Date: 12 February 2013
• Docket Number: Case No. 12–cv–9–L(WVG).
• Citation: 923 F.Supp.2d 1259
• Parties: DISH NETWORK L.L.C., et al., Plaintiffs, v. VICXON CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of California

923 F.Supp.2d 1259

DISH NETWORK L.L.C., et al., Plaintiffs,

v.VICXON CORPORATION, et al., Defendants.

Case No. 12–cv–9–L(WVG).

United States District Court, S.D. California.

Feb. 12, 2013.

Chad M. Hagan, Timothy M. Frank, Hagan Noll & Boyle LLC, Houston, TX, Mark John Hattam, Michael J. Holmes, Allen Matkins Leck Gamble Mallory & Natsis LLP, San Diego, CA, for Plaintiff.

Vadim Alan Arshansky, Lee Anav Chung LLP, Los Angeles, CA, for Defendant.

ORDER:

(1) DENYING YEO'S MOTION TO DISMISS [DOC. 33], AND

(2) DENYING DEFENDANTS' MOTION TO DISMISS [DOC. 32]

M. JAMES LORENZ, District Judge.

On January 3, 2012, Plaintiffs DISH Network L.L.C., Echostar Technologies L.L.C. (“Echostar”), and Nagrastar LLC commenced this action against Defendants Vicxon Corporation and Soo Jong Yeo. Plaintiffs allege violations of the Digital Millennium Copyright Act, CommunicationsAct, and Electronic Communications Privacy Act based on the manufacturing and trafficking of hardware and software allegedly used to circumvent Plaintiffs' security system and intercept copyrighted satellite television programming. Yeo now moves to dismiss for lack of personal jurisdiction, and Defendants collectively move to dismiss two of Plaintiffs' claims. Plaintiffs oppose both motions.

The Court found these motions suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 40.) For the following reasons, the Court DENIES Yeo's motion to dismiss and DENIES Defendants' motion to dismiss.

I. BACKGROUND

Plaintiffs operate various elements of the DISH Network satellite television distribution system. DISH Network is a multi-channel video provider that delivers audio, video, and data services to subscribing customers throughout the United States. (Compl. ¶ 10.) A DISH Network satellite television system consists of a compatible dish antenna, receiver, smart card, television, and cabling components. ( Id. ¶ 15.) Echostar provides receivers, dish antenna, and other digital equipment for the DISH Network system. ( Id.) And Nagrastar provides smart cards and other security technologies that allow paying customers to access decrypted programming while preventing unauthorized reception and viewing of DISH Network programming. ( Id. ¶¶ 15–17.)

Various devices have appeared in the black market over the years for the purpose of illegally decrypting or “pirating” DISH Network programming. (Compl. ¶ 21.) One method developed to circumvent the DISH Network security system and intercept satellite broadcasts is through the use of “free-to-air” (or “FTA”) receivers. ( Id. ¶ 22.) Circumvention was achieved by loading software that contains the proprietary data and keys to the DISH Network security system onto circuit chips in the FTA receivers, which mimic a legitimate NagraStar smart card. ( Id.)

In response to countermeasures initiated by Plaintiffs, a new form of satellite piracy emerged, going by names such as “control word sharing,” “Internet key sharing,” or “IKS.” (Compl. ¶ 24.) By using various unauthorized devices and software, a computer server—called an “IKS server”—with subscribed NagraStar smart cards allow the distribution of control words through the Internet. ( Id. ¶ 26.) Those control words are then used to decrypt DISH Network's signal to view programming without paying a subscription fee. ( Id.)

Vicxon is a Korean Corporation with its principal place of business in Korea. (Compl. ¶ 4.) Yeo, a Korean resident, is the president and chief executive officer (“CEO”) of Vicxon. ( Id. ¶ 5.) Plaintiffs allege that Defendants “manufacture and traffic in several DISH Network piracy devices,” the primary purchaser being a California company based in Escondido called Sonicview USA, Inc. ( Id. ¶ 28.) “Defendants contracted with Sonicview USA, Inc. to supply the products, and then delivered them to Sonicview USA, Inc., and related entities in the United States.” Plaintiffs further allege that “[t]he relationship between Vicxon and Sonicview USA, Inc. was managed by Defendant Yeo.” ( Id.)

Plaintiffs add that “Sonicview” brand receivers are among the products manufactured and distributed by Defendants. (Compl. ¶ 29.) These receivers are capable of circumventing the DISH Network security system and intercepting satellite television programming using IKS. ( Id.) Defendants also allegedly manufacture and traffic an adapter for Sonicview receivers, known as the “iHub,” “New Link,” “SV Lan,” or “WizHub,” which are collectively referred to as the “Sonicview dongle.” ( Id. ¶ 31.) These dongles enable Sonicview receivers to access an IKS server and obtain control words used to decrypt DISH Network programming without authorization. ( Id.)

Sonicview high-definition receivers are also configured to accommodate an add-on module known generally as an “8PSK module,” and more specifically known as the “A–1 module.” (Compl. ¶ 32.) The A–1 module enables Sonicview receivers to pirate DISH Network's high-definition programming, which is broadcast using a “unique combination of 8PSK modulation and Turbo forward error correction.” ( Id.) “Defendants manufacture and traffic in piracy software that is specifically tailored for Sonicview receivers,” which is freely available on numerous websites. ( Id. ¶ 33.)

Plaintiffs allege that Defendants directly, or working at their direction or under their control, test the piracy capabilities of Sonicview receivers, dongles, and piracy software prior to distribution. (Compl. ¶ 34.) They also “performed live demonstrations of their products for customers such as Sonicview USA, Inc. in order to entice customers to purchase them,” where the “piracy capabilities of the products were among the features demonstrated.” ( Id. ¶ 35.)

On January 3, 2012, Plaintiffs commenced this action in federal court alleging violations of the Digital Millennium Copyright Act, Communications Act, and Electronic Communications Privacy Act. Yeo now moves to dismiss for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(2), and Defendants collectively move to dismiss two claims under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs oppose both motions.

II. JURISDICTION

When the parties dispute whether personal jurisdiction over a foreign defendant is proper, “the plaintiff bears the burden of establishing that jurisdiction exists.” Rio Props., Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1019 (9th Cir.2002). In ruling on the motion, the “court may consider evidence presented in affidavits to assist in its determination and may order discovery on the jurisdictional issues.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir.2001). Where the motion is based on written materials rather than an evidentiary hearing, the plaintiff need only make “a prima facie showing of jurisdictional facts to withstand the motion to dismiss.” Brayton Purcell LLP v. Recordon & Recordon, 575 F.3d 981, 985 (9th Cir.2009). “In determining whether the plaintiff has met this burden, the Court must take the allegations in the plaintiff's complaint as true and resolve the disputed jurisdictional facts in the plaintiff's favor.” Nissan Motor Co., Ltd. v. Nissan Computer Corp., 89 F.Supp.2d 1154, 1158 (C.D.Cal.2000) (citing Ziegler v. Indian River Cnty., 64 F.3d 470, 473 (9th Cir.1995)). A prima facie showing means that “the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant.” Unocal, 248 F.3d at 922.

“The general rule is that personal jurisdiction over a defendant is proper if it is permitted by a long-arm statute and if the exercise of that jurisdiction does not violate federal due process.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir.2006). Both the California and federal long-arm statutes require compliance with due-process requirements. Fed.R.Civ.P. 4(k)(2); Pebble Beach, 453 F.3d at 1155;see Holland Am. Line Inc. v. Wärtsilä N. Am., Inc., 485 F.3d 450, 461 (9th Cir.2007).

There are two types of personal jurisdiction: general and specific. General jurisdiction“enables a court to hear cases unrelated to the defendant's forum activities[.]” Fields v. Sedgwick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir.1986). Specific jurisdiction allows the court to exercise jurisdiction over a defendant whose forum-related activities gave rise to the action before the court. See Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir.2000).

The Ninth Circuit employs a three-part test to determine whether the defendant's contacts with the forum state are sufficient to subject it to specific jurisdiction. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir.1995). Under the three-part inquiry, specific jurisdiction exists only if: (1) the out-of-state defendant purposefully availed itself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of the forum's laws; (2) the cause of action arose out of the defendant's forum-related activities; and (3) the exercise of jurisdiction is reasonable. Myers v. Bennett Law Offices, 238 F.3d 1068, 1072 (9th Cir.2001). The plaintiff bears the burden of satisfying the first two prongs of this specific jurisdiction test. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir.2004). “If the plaintiff succeeds in satisfying both of the first two prongs, the burden then shifts to the defendant to ‘present a compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. “If any of the three requirements is not satisfied, jurisdiction in the forum would deprive the defendant of due process of law.” Pebble Beach, 453 F.3d at 1155.

Yeo argues that the Court does not have either general or specific jurisdiction over him. Specifically, in addressing specific jurisdiction, Yeo challenges the first and third prongs of the specific jurisdiction test. (Yeo's Mot. 7:3–11:25; Yeo's Reply 2:21–5:9.) He contends that “Plaintiffs cannot establish that Yeo deliberately engaged...