Willful Copyright Infringement is Enough Contact for Personal Jurisdiction

Washington Shoe is a Washington State corporation that manufactures footwear for men, women and children.  Through one of its sales representatives, Washington Shoe had an ongoing relationship with A-Z Sporting Goods, a single retail store located in Alma, Arkansas.  A-Z is an Arkansas corporation.  A-Z does not sell products over the Internet.  Washington Shoe’s sales representative discovered that A-Z was selling infringing copies of two of Washington Shoe’s copyrighted children’s rain boot designs.  Washington Shoe’s attorney sent A-Z two cease and desist letters.  After receiving the second letter, A-Z moved the boots out of its store, but sold its remaining supply of the boots to a thrift store.

Washington Shoe sued A-Z for copyright infringement in the Western District of Washington.  The district court granted A-Z’s motion to dismiss for lack of personal jurisdiction, but denied A-Z’s request for attorneys’ fees.  Washington Shoe appealed the dismissal of its case.  A-Z cross-appealed the denial of its motion for attorneys’ fees.  The Ninth Circuit Court of Appeals reversed the order dismissing the case.  The Ninth Circuit ruled that A-Z, whose only relevant contact with Washington State was its alleged willful copyright infringement, was subject to personal jurisdiction in Washington State.

Personal Jurisdiction and Due Process

Personal jurisdiction is the power of the court to decide a dispute involving a particular party.  A long-arm statute gives a state court jurisdiction over an out-of-state defendant.  The Ninth Circuit applied the Washington State long-arm statute, as there was no applicable federal law addressing personal jurisdiction in this case.  Under the Washington State long-arm statute, personal jurisdiction extends to the limit permitted by the Fourteenth Amendment’s Due Process Clause.  The defendant must have certain minimum contacts with the state in which she is being sued, consistent with “traditional notions of fair play and substantial justice.”  (Opinion pdf page 6).

Minimum contacts test.

Personal jurisdiction is determined by applying a series of tests and subtests.  The first test is the three-part minimum contacts test:

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;

(2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and

(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

(Opinion pdf page 7).

Purposeful direction.

The first prong of this minimum contacts test is the only prong at issue in this case.  The plaintiff must demonstrate that the defendant “either purposefully availed itself of the privilege of conducting activities in the forum, or purposefully directed its activities at the forum.”  (Opinion pdf page 8).  The purposeful availment analysis is generally used in contracts cases, while the purposeful direction analysis is used in tort cases.  The Ninth Circuit applied the purposeful direction analysis, as copyright infringement is a tort.

The purposeful direction analysis has three parts, requiring that the defendant

(1) committed an intentional act,

(2) expressly aimed at the forum state,

(3) causing harm that the defendant knows is likely to be suffered in the forum state.

Thus, courts may exercise personal jurisdiction over a defendant who engages in an intentional act that causes harm in the forum state, even if that act takes place outside of the forum state.

(Opinion pdf pages 8-9).

The Ninth Circuit limited its discussion of these elements to Washington Shoe’s willful infringement claim, reasoning that if the court in Washington State has jurisdiction over this claim, then it may exercise jurisdiction over the remaining related claims.

A-Z committed an intentional act when it allegedly willfully infringed Washington Shoe’s copyright.  The phrase “intentional act” has a specialized meaning under this test.  It means that the actor intended to perform the physical act.  “Intentional act” does not include the actual or intended results of the act.  In shooting a gun at a target, pulling the trigger is the act, not hitting the target with the bullet.  The Ninth Circuit determined that A-Z’s intentional acts were purchasing the allegedly infringing boots from China and selling them to a thrift store.  The Ninth Circuit did not indicate which of the exclusive copyright rights A-Z violated by purchasing the allegedly infringing boots.

A-Z’s conduct was expressly aimed at Washington State.  The Ninth Circuit examined proving willful infringement under the Copyright Act.  “The plaintiff must show that the defendant was actually aware of the infringing activity, or (2) that the defendant’s actions were the result of reckless disregard for, or willful blindness to, the copyright holder’s rights….  Evidence that notice had been accorded to the alleged infringer is perhaps the most persuasive evidence of willfulness.”  (Opinion pdf page 11). 

The court is more likely to find express aiming when the tort is an intentional tort, such as willful copyright infringement. 

Because the harm caused by an infringement of the copyright laws must be felt at least at the place where the copyright is held, we think that the impact of a willful infringement is necessarily directed there as well.

(Opinion pdf page 18).

The Ninth Circuit focused on A-Z’s sale of the boots after having received two cease and desist letters from Washington Shoe’s attorney informing A-Z that the boots were knock-offs and infringed Washington Shoe’s copyrights. 

A-Z’s intentional acts were expressly aimed at the copyright held by Washington Shoe because A-Z knew that its intentional acts would impact Washington Shoe’s copyright by virtue of the cease-and-desist letters it had received. Where A-Z knew or should have known that Washington Shoe is a Washington company, A-Z’s intentional acts were expressly aimed at the state of Washington.

(Opinion pdf page 19).

“Something more” than an act in another state creating foreseeable effects in the forum state is necessary for specific personal jurisdiction.  The Ninth Circuit ruled that A-Z’s alleged willful infringement, A-Z’s knowledge of the existence of the copyright and A-Z’s knowledge of the state in which the copyright holder is located, provided the “something more” necessary for the express aiming requirement.

A-Z caused harm that it knew would likely be suffered in Washington State

A-Z knew that its intentional acts would have an impact on Washington Shoe and it knew that Washington Shoe had its headquarters in the state of Washington. A-Z knew or should have known that the impact of its willful infringement of Washington Shoe’s copyright would cause harm likely to be suffered in the forum. As a consequence, A-Z can reasonably anticipate being haled into court in Washington.

(Opinion pdf page 20).

The Ninth Circuit ruled that A-Z’s appeal of the district court’s ruling denying A-Z attorney’s fees was moot.

The Ninth Circuit’s ruling in this case is contrary to a recent district court ruling concerning personal jurisdiction in an allegedly willful copyright infringement case, discussed in my post Personal Jurisdiction for Internet Copyright Infringement Clarified

This case is Washington Shoe Company v. A-Z Sporting Goods Inc., Nos. 11-35166 and 11-35206, Ninth Circuit Court of Appeals.

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