Pearson Education, Inc. v. Shi

• Citation: 525 F.Supp.2d 551
• Decision Date: 11 December 2007
• Docket Number: No. 06 CV 11504(VM).,06 CV 11504(VM).
• Parties: PEARSON EDUCATION, INC., John Wiley & Sons, Inc., Thomson Learning, Inc., and the McGraw-Hill Companies, Inc., Plaintiffs, v. Yi SHI d/b/a Collegesolutions.tripod.com d/b/a Economical Books d/b/a Cheapest Books d/b/a Central Books and John Doe Nos. 2-5, Defendants.
• Court: U.S. District Court — Southern District of New York

525 F.Supp.2d 551

PEARSON EDUCATION, INC., John Wiley & Sons, Inc., Thomson Learning, Inc., and the McGraw-Hill Companies, Inc., Plaintiffs, v. Yi SHI d/b/a Collegesolutions.tripod.com d/b/a Economical Books d/b/a Cheapest Books d/b/a Central Books and John Doe Nos. 2-5, Defendants.

No. 06 CV 11504(VM).

United States District Court, S.D. New York.

December 11, 2007.

COPYRIGHT MATERIAL OMITTED

William Irvin Dunnegan, Perkins & Dunnegan, Megan Leigh Martin, New York City, for Plaintiffs.

Richard Allen Altman, Richard A. Altman, New York City, for Defendants.

DECISION AND ORDER

VICTOR MARRERO, District Judge.

Plaintiffs Pearson Education, Inc., Thomson Learning, Inc., John Wiley & Sons, Inc. and The McGraw-Hill Companies, Inc. § collectively, ("Plaintiffs") brought this action against defendant Yi Shi ("Yi Shi"), a resident of Missouri, doing business under several names, and defendants John Doe Nos. 2-5, associates of Yi Shi, (collectively, "Defendants"). Plaintiffs allege that Defendants violated the Copyright Act, 17 U.S.C. § 101 et seq. (the "Copyright Act"), the Lanham Act, 15 U.S.C. § 1051 et seq. (the "Lanham Act"), and New York State unfair competition law. Yi Shi moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) ("Rule 12(b)(2)") for lack of personal jurisdiction. For the reasons stated below, Yi Shi's motion is DENIED.

I. BACKGROUND¹

Plaintiffs are United States publishers of a variety of works, including educational textbooks and instructors' solutions manuals. Plaintiffs hold the registered copyright and exclusive rights of reproduction for each work that they distribute, and are the exclusive licensees of the various trademarked corporate symbols stamped on their works to distinguish them from other brands.

Plaintiffs create several versions of each textbook, including a high-quality United States version, which typically includes supplementary computer discs, study guides, and other materials; and at least one cheaper, lower-quality foreign edition, visually distinguishable from the United States version and typically lacking the supplemental materials. Plaintiffs print the foreign editions overseas, which are generally marked by a legend indicating their lower prices and prohibitions on their distribution outside particular geographic areas. Plaintiffs also produce and distribute instructors' solution manuals for each textbook title.

Plaintiffs allege that Defendants, without permission, (1) purchased foreign editions of Plaintiffs' textbooks manufactured outside of the United States and resold them to purchasers in the United States, and (2) reproduced and sold electronic copies of Plaintiffs' instructors' solution manuals, through online sales at www.college solutions.tripod.com and www.abebooks. com, under the usernames Economical Books, Cheapest Books, Central Books, and Book Deals. Plaintiffs also claim that in connection with these sales, Defendants used counterfeits of Plaintiffs' various trademarks. Plaintiffs contend that Defendants transacted nineteen sales of copyrighted works with purchasers in New York.

Yi Shi argues that most of the works that Plaintiffs allege were sold to purchasers in. New York over the Internet were not copyrighted works but compilations of students' homework assignments, which Yi Shi compiled, scanned, and sold in Portable Document Format ("PDF") transmitted by way of hyperlink, and, although one of those works was a physical textbook, Yi Shi claims that he did not send, mail or deliver it into New York. (See Reply Declaration of Yi Shi, dated November 16, 2007 ("Reply Decl."), ¶¶ 2-5.)

II. DISCUSSION

A. STANDARD OF REVIEW

"On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996) (citing Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994)). "[P]rior to discovery, a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith ... legally sufficient allegations of jurisdiction, i.e., by making a prima facie showing of jurisdiction." Jazini Nissan Motor Co., 148 F.3d 181, 184 (2d Cir.1998) (citations and quotation marks omitted). In reviewing a motion to dismiss for lack of personal jurisdiction, "all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor, notwithstanding a controverting presentation by the moving party." See A.I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir.1993) (citations omitted).

B. PERSONAL JURISDICTION

Plaintiffs' claims arise out of nineteen alleged Internet sales by. Defendants of Plaintiffs' copyrighted and trademarked materials to residents of New York. Yi Shi argues that the court lacks personal jurisdiction because Plaintiffs have not established sufficient contacts by Defendants with New York to justify the Court's exercise of long-arm jurisdiction over Yi Shi.

As a threshold matter, "[i]n a federal question case, where the defendant resides outside the forum state, federal courts apply the forum state's personal jurisdiction rules if the applicable federal statute does not provide for national service of process." Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22 (2d Cir.2004) (citation omitted). Because the Lanham Act and Copyright Act do not provide for national service, of process, New York's long-arm statute, New York Civil Practice Law and Rules ("CPLR") § 302(a) (1), governs the instant action. See id.; Fort Knox Music Inc. v. Baptiste, 203 F.3d 193, 196 (2d Cir.2000).

1. CPLR § 302(a)(1)

Under CPLR § 302(a)(1), "a court may exercise personal jurisdiction over any non-domiciliary [defendant]" if that defendant "transacts any business within the state or contracts anywhere to supply goods or services in the state." N.Y. C.P.L.R. § 302(a) (2006). The statute authorizes personal jurisdiction over a nondomiciliary only when the "cause of action aris[es] from" the "[a]cts which are the basis of jurisdiction." Id.

To establish personal jurisdiction under this provision, the plaintiff must demonstrate that the defendant engaged in a purposeful business transaction in or directed to New York and that such contacts with the state had a "substantial relationship" to the claim asserted in the underlying litigation. Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 103 (2d Cir.2006) ("To establish personal jurisdiction under section 302(a) (1), two requirements must be met; (1) The defendant must have transacted business within the state; and (2) the claim asserted must arise from that business activity.") (citing McGowan v. Smith, 52 N.Y.2d 268, 437 N.Y.S.2d 643, 419 N.E.2d 321, 323 (1981)).

CPLR. § 302(a)(1) is a "single act" statute, under which "proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted." Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195, 522 N.E.2d 40, 43 (1988) (citations omitted); see also Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 787 (2d Cir.1999) (finding jurisdiction based on a single transaction where defendant was not physically present in state). Jurisdiction may also be founded on the totality of the defendant's conduct rather than any single act. See, e.g., CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986) ("No single event or contact connecting defendant to the forum state need be demonstrated; rather, the totality of all defendant's contacts with the forum state must indicate that the exercise of jurisdiction would be proper") (citations omitted).

In the instant case, the sales into New York allegedly engaged in by Defendants occurred via the Internet. Simply maintaining a web site in a distant state that residents of New York visit does not, by itself, subject a defendant to jurisdiction in New York. See, e.g., Bensusan Rest. Corp. v. King, 126 F.3d 25 (2d Cir. 1997). However, one who makes sales to New York customers through an interactive web site may be subject to the jurisdiction of courts in this state. See, e.g., National Football League v. Miller, No. 99 Civ. 11846, 2000 WL 335566, at *1 (S.D.N.Y. March 30, 2000) (citations omitted).

Personal jurisdiction has been found when out-of-state defendants allegedly have sold copyright-infringing merchandise over the Internet to customers in New York. See Rubin v. City of New York, No. 06 Civ. 6524, 2007 WL 950088, at *2 (S.D.N.Y. Mar. 29, 2007) (finding "an `articulable nexus' between [plaintiff's] request for declaratory relief, [defendants'] counterclaim for trademark infringement, and [plaintiff's] online Internet business because [plaintiff] transacted business with New York residents over an `active' web site where customers from New York purchased allegedly infringing merchandise"); New Angle Pet Prods. v. MacWillie's Golf Prods., No. 06 Civ. 1171, 2007 WL 1871345, at *2-3 (E.D.N.Y. June 28, 2007) (finding jurisdiction premised on sales into New York of allegedly copyright-infringing products, including two Internet sales to New York residents through an interactive web site with national reach and advertising); but see Mattel, Inc. v. Anderson, No. 04 Civ. 5275, 2005 WL 1690528, at *2 (S.D.N.Y. July 18, 2005) (holding that defendant was not subject to personal jurisdiction in. New York where defendant's only contact with New York was arranged by plaintiff through a sale to plaintiff's private investigator).

Yi Shi, relying primarily on ISI Brands, Inc. v. KCC Int'l, Inc., 458 F.Supp.2d 81 (E.D.N.Y.2006), argues that Plaintiffs' allegations are insufficient to establish...