Penguin Group Inc v. Am. Buddha, Docket No. 09-1739-cv.

Citation609 F.3d 30
Decision Date15 June 2010
Docket NumberDocket No. 09-1739-cv.
PartiesPENGUIN GROUP (USA) INC., Plaintiff-Appellant,v.AMERICAN BUDDHA, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Richard Dannay, Cowan Liebowitz & Latman, P.C. (Thomas Kjellberg, of counsel), New York, NY, for Plaintiff-Appellant.

Charles Carreon, Online Media Law, PLLC, Tucson, AZ, for Defendant-Appellee.

Before SACK, KATZMANN, and CHIN,* Circuit Judges.

SACK, Circuit Judge:

Plaintiff Penguin Group (USA) (“Penguin”) appeals from an order of the United States District Court for the Southern District of New York (Gerard E. Lynch Judge ) granting defendant American Buddha's motion pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss Penguin's copyright infringement action for lack of personal jurisdiction. Penguin Group (USA) Inc. v. Am. Buddha, No. 09 Civ. 528, 2009 WL 1069158, 2009 U.S. Dist. LEXIS 34032 (S.D.N.Y. April 21, 2009). Penguin alleges in its complaint that American Buddha unlawfully uploaded to servers an unauthorized copy of four of Penguin's copyrighted works for downloading, via the Internet and free of charge, by any of the 50,000 members of what American Buddha terms its “online library.”

The sole issue on appeal is whether there is a basis for personal jurisdiction over American Buddha in New York enabling the district court to decide this dispute. Penguin asserted that the court has such jurisdiction under a provision of New York's Long-Arm Statute, N.Y. C.P.L.R. § 302(a)(3)(ii), that allows for jurisdiction over an out-of-state defendant with no contacts with New York, if inter alia, the defendant is alleged to have committed a tortious act outside the State that caused, and reasonably should have been expected by the putative defendant to cause, injury to a person or property within the State.

The district court recognized two competing lines of authority interpreting section 302(a)(3)(ii), one that views the situs of injury as the location of the infringing conduct and one that views the situs of injury as the location of the plaintiff and, in some cases, the location of its intellectual property. Relying on the first line of authority and rejecting the second, the court concluded that the situs of the injury allegedly resulting from the asserted infringement of Penguin's copyrights would be where the book was electronically copied-presumably in Arizona or Oregon, where American Buddha and its computer servers were located-and not New York, where Penguin was headquartered. Accordingly, the court dismissed the case for failure adequately to plead injury in New York. Penguin, 2009 WL 1069158, at *4, 2009 U.S. Dist. LEXIS 34032, at *13.

Determining the situs of injury for the purposes of N.Y. C.P.L.R. § 302(a)(3)(ii) in a copyright case requires analysis of state law and policy considerations that this Court is ill-suited to make. Specifically, it requires a determination of how the New York State Legislature intended to weigh the breadth of protection to New Yorkers whose copyrights have allegedly been infringed against the burden on non-resident alleged infringers whose connection to New York may be remote and who may reasonably have failed to foresee that their actions would have consequences in New York.

We therefore certify the following question to the New York Court of Appeals: In copyright infringement cases, is the situs of injury for purposes of determining long-arm jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) the location of the infringing action or the residence or location of the principal place of business of the copyright holder? Although Penguin has not effectively pleaded that the situs of injury is affected by the fact that the infringement here occurred through the media of the Internet and an online library, we recognize that this factor may be relevant to the considerations underlying the definition of the situs of injury due to the speed and ease with which the Internet may allow out of state behavior to cause injury to copyright holders resident in New York.


The plaintiff, Penguin Group USA, describes itself as “the U.S. arm of the internationally renowned Penguin Group, a leading United States trade book publisher and the second-largest English-language trade book publisher in the world, with its principal place of business” in New York City. Appellant's Br. at 5. American Buddha describes itself as “an Oregon nonprofit corporation that, through its operation of a “passive website” known as the Ralph Nader Library but unaffiliated in any way with Ralph Nader, “operates an online library that provides access to classical literature and other works through the website, including three works published in print format by Plaintiff-Appellant Penguin Group (USA) Inc.” Appellee's Br. at 3 (footnotes omitted).

Penguin brought this copyright infringement action against American Buddha under 17 U.S.C. § 501, alleging that American Buddha infringed on Penguin's copyrights in four works 1 by publishing complete copies of them on coordinated websites-together comprising “online libraries”-that it operates called the American Buddha Online Library and the Ralph Nader Library. American Buddha has made these works available to its 50,000 members free of charge. It has also provided its members with assurances that American Buddha's uploading of these works and the users' downloading of the works do not constitute copyright infringement because they are protected under Sections 107 and 108 of the Copyright Act, 17 U.S.C. § 101 et seq., which govern fair use and reproduction by libraries and archives, respectively. Penguin disputes that any exception to the Copyright Act applies to American Buddha's conduct.

American Buddha, as noted, is an Oregon not-for-profit corporation whose principal place of business is in Arizona and whose websites are hosted on servers located in Arizona and Oregon. Aside from the accessibility of its sites in New York, American Buddha conducts no business in, and has no other contacts with, the State. The infringing conduct was not alleged to have occurred in New York.

American Buddha filed a motion in the district court to dismiss Penguin's complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. Penguin asserted personal jurisdiction under New York's Long-Arm Statute, N.Y. C.P.L.R. § 302. American Buddha was not subject to the jurisdiction of courts in New York under N.Y. C.P.L.R. § 302(a)(1) (conferring jurisdiction over a party that “transacts any business within the state or contracts anywhere to supply goods or services in the state) or N.Y. C.P.L.R. § 302(a)(2) (conferring jurisdiction over a party that “commits a tortious act within the state). Penguin therefore premised its claim of jurisdiction on N.Y. C.P.L.R. § 302(a)(3)(ii), which, under specified circumstances, allows for long-arm jurisdiction over out-of-state residents who commit tortious acts outside of the State if the resulting injury occurs in, and it was foreseeable to the prospective defendant that the injury would occur in, New York.2 The central question for the district court, in deciding whether it had personal jurisdiction over the defendant with respect to the claims made in the complaint, was whether the injury from the alleged infringement by American Buddha occurred in New York.

The district court granted American Buddha's motion to dismiss because it found the situs of injury to be where the electronic copying of the works was made-presumably, although this was not explicitly stated by the court, in Arizona or Oregon, where the servers to which American Buddha uploaded the works were located-and not in New York, where Penguin's headquarters is located. Penguin, 2009 WL 1069158, at *3-4, 2009 U.S. Dist. LEXIS 34032, at *12-13. The court recognized a division of authority as to how to determine the situs of injury for the purposes of N.Y. C.P.L.R. § 302(a)(3)(ii). It was ultimately persuaded by a line of cases recognizing “the well-established principle requiring a direct injury in New York” and rejecting jurisdiction based on “purely derivative economic injury” suffered in-state solely because of the location of the plaintiff's business in-state. Id., 2009 WL 1069158, at *3-4, 2009 U.S. Dist. LEXIS 34032, at *9.

The court recognized that the Internet was a complicating factor for personal jurisdiction analysis. It nonetheless concluded that in this case, the Internet “plays no role in determining the situs of plaintiff's alleged injury” because a single incident of copyright infringement that occurred in Oregon or Arizona was alleged; downloading of that copied material by users in other locations, including hypothetically New York, was not. Id., 2009 WL 1069158, at *4, 2009 U.S. Dist. LEXIS 34032, at *12.

Penguin appeals.

I. Introduction

There is only one issue presented on appeal: whether, for the purposes of New York's Long-Arm Statute, the situs of injury in copyright infringement cases is the location of the infringing conduct or the location of the plaintiff and, perhaps, the copyright. The language of the statute provides insufficient guidance to allow us to answer that question based on the statute's plain meaning. And while Penguin has not specifically pleaded that the situs of injury is influenced by the fact that the alleged infringement here was conducted by means of the Internet and online libraries, we recognize that this fact may affect the analysis.

We find insufficient guidance to answer the question of where the situs of injury is located in the text of the statute, the statute's legislative history, or the jurisprudence of New York state courts. The district court did not have the ability to ask the New York Court of Appeals for guidance. We do. We therefore certify to the New York Court of Appeals this question: In copyright infringement cases, is the situs of...

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