The US Court of Appeals for the Ninth Circuit focused on the first point of the minimum contact test (whether the foreign defendant intentionally directed his activities to the United States), overturning a district court that ruled that there was no specific personal jurisdiction over operators of a Japanese has -language video hosting website and referred the case back to the Fed for further analysis. R.Civ. S. 4(k)(2), the Federal Long Arm Act. Will Co. vs. LeeCase #21-35617 (9th Circuit, Aug 31, 2022) (WardlawGould, Bennett, JJ.)
Will is a Japanese adult entertainment producer with more than 50,000 videos registered with the US Copyright Office. Will sells access to its content on its website, where it makes more than $1 million a year from US consumers. Defendants Youhaha Marketing and Promotion (YMP) and Lee own and operate ThisAV.com, a Japanese-language video hosting website similar to YouTube. ThisAV.com allows users to upload and view videos for free along with advertisements posted by third parties.
After discovering 13 of his videos on ThisAV.com, Will sent the defendants takedown notices under the Digital Millennium Copyright Act (DMCA). When the defendants failed to comply with the takedown notices, Will sued for copyright infringement. Defendants moved to dismiss the suit for lack of personal jurisdiction because Lee is a permanent resident of Hong Kong and currently resides in Canada and YMP is registered in Hong Kong (where it operates ThisAV.com). Will countered that the lower court had special personal jurisdiction over the defendants because their viewing of the copyrighted videos was sufficiently connected to the United States. The district court granted the defendants’ motion to dismiss, concluding that the content on ThisAV.com was not “specifically targeted to the United States” and that the defendants did not cause “substantial court damage” as only 4.6% of the Website was affected Viewers came from the USA. Will appealed.
The main question on appeal was whether the defendants “intentionally” directed the content of ThisAV.com under the minimum contacts to the United States calendar Test asking whether the defendant (1) committed an intentional act (2) specifically directed at the jurisdiction, (3) caused harm that the defendant knows is likely to be suffered in the jurisdiction.
The Ninth Court summarily concluded that YMP and Lee committed willful acts by operating ThisAV.com and purchasing the domain name and domain privacy services. However, whether Lee and YMP had ThisAV.com “specifically aimed at the United States” was a closer question. The Court held that “the mere passive operation of a website” is not sufficient to demonstrate an explicit objective. Instead, the operator must have “addressed and benefited from an audience in that forum.” The court first found that the defendants had “benefited” from the US market because US consumers viewed the ads posted on the site more than 1.3 million times and the defendants were paid by third-party advertisers based on views. The court further concluded that the defendants had intentionally “phoned” the US market by allowing the website to be quickly accessible to US consumers with reduced latency (aka load times). Reduced latency is critical to attracting and maintaining user attention and can be achieved by hosting the website on servers close to the desired audience or by purchasing access to a Content Delivery Network (CDN) that supports the desired geographic area. The court reasoned that the defendants wanted to “target” US consumers because they chose to host the site in Utah and purchased CDN services in North America.
The Ninth Circuit also noted that the site’s regulatory compliance pages were only relevant to US viewers. The Privacy Policy page only guarantees that the website was lawful for users in the United States, and the website provided pages that specifically comply with US law, including DMCA and 18 USC § 2257. These facts are in addition to the host server and CDN in North America, stated that the defendants had “prepared for US visitors to the exclusion of all others” and specifically targeted the website to the United States.
Eventually, the Ninth Circuit concluded that ThisAV.com caused foreseeable harm in the United States. While only 4.6% of the site’s views came from US customers, that small percentage still totaled more than 1.3 million views. Because the defendants “deliberately” targeted ThisAV.com to US users, the court found these views to be predictable. Therefore, the court reversed the circuit court’s lack of personal jurisdiction dismissal and remanded for further consideration under rule 4(k).
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