New York Court of Appeals Rules That “Situs of the Injury” of Digital Piracy Is the Copyright Owner’s Place of Business, Helping New York Content Providers Battle Infringement

On March 24, 2011, the New York Court of Appeals issued a decision which should be a boon to New York publishers and other on-line content providers who seek to sue (and deter) online pirates of their copyrighted works. The Court held in Penguin Group (USA) Inc v. American Buddha, 2011 WL 1044581 (N.Y. Mar. 24, 2011) (American Buddha) that “[i]n copyright infringement cases involving the uploading of a copyrighted printed literary work onto the Internet,” the situs of the injury for purposes of determining personal jurisdiction under N.Y.C.P.L.R. § 302(a)(3)(ii) is the “location of the principal place of business of the copyright holder,” not, as some courts had held in other circumstances, the location of the infringing action. This ruling will make it easier for publishers based in New York State—where the large majority of U.S. publishers are located—to bring actions in New York for online piracy of their published works, whether or not they can allege an infringing download or use within the state. The full opinion can be found here.

Penguin Group v. American Buddha

Courts have struggled with the challenge of applying personal jurisdiction rules developed in geographical space to the internet. Prior to American Buddha, there were two competing lines of authority in New York as to what type of injury within New York was sufficient to confer jurisdiction over a foreign defendant for tortious acts committed outside the state under New York’s long-arm statute, § 302(a)(3)(ii). The Court of Appeals addressed this conflict in the online context in American Buddha.

Penguin Group (USA) (Penguin), based in New York, brought a copyright infringement action against American Buddha, an Oregon not-for-profit with its principal place of business in Arizona, which makes available free of charge to its members or the general public a wide variety of publications, including works published by Penguin. Penguin alleged jurisdiction under § 302(a)(3)(ii), which provides jurisdiction over foreign parties who commit tortious activities outside the state.

The district court granted American Buddha’s motion to dismiss on the grounds that the relevant injury took place where the tortious copying and uploading took place, and any general economic injury to Penguin in New York was not sufficient to confer jurisdiction. On appeal, the Second Circuit reviewed the two contradictory lines of authority and certified the question to the New York Court of Appeals, stressing that the specific impact of the Internet may play an important part in resolving the issue.