AMA Multimedia LLC v. Sagan Ltd., No. 16-cv-1269 (D. Ariz. Oct. 13, 2016) [click for opinion]
AMA Multimedia ("AMA") is a Nevada-based producer of pornographic material. Sagan Ltd. ("Sagan"), a Seychelles corporation, commercially distributes AMA's material through Porn.com and related sites owned by Sagan. In November 2015, AMA became aware that Porn.com had displayed certain of its copyright registered works in violation of the license agreement between the parties and sued defendants, including Sagan, in Arizona. Sagan moved to dismiss for lack of personal jurisdiction.
Under Federal Rule of Civil Procedure 4(k)(2), when an international corporation moves to dismiss for lack of personal jurisdiction, the burden is on the plaintiff to provide a prima facie showing of jurisdictional facts. While plaintiffs cannot rest on the bare allegations of their complaints, uncontroverted allegations are taken as true, and factual disputes are resolved in the plaintiff's favor. Under Rule 4(k)(2), three criteria must be satisfied: (1) the claim must arise under federal law; (2) the defendant cannot be subject to jurisdiction in any state court of general jurisdiction; and (3) jurisdiction must be constitutional.
The first element was met in that AMA asserted federal copyright claims. The second element was also met, as Sagan did not claim that it was subject to personal jurisdiction in any state courts. That left the third element, which focuses on due process. As in an ordinary personal jurisdiction analysis, the court must examine whether there are sufficient minimum contacts, so that maintaining the suit does not offend traditional notions of fair play and substantial justice. Under Rule 4(k)(2), however, rather than assess contacts between the defendant and the forum state, the court looks at contacts between the defendant and the entire United States. Three factors shape this analysis.
First, the court examines whether the defendant purposely directed contact at the forum. Purposeful direction is satisfied when the defendant commits an intentional act, expressly aimed at the forum, which causes foreseeable harm there. Despite Sagan's claim that it lacked any contacts with the United States (the relevant forum in this case), AMA alleged that Sagan owns and operates a website in the United States. The plaintiff further alleged that Sagan actively pirated material that is copyrighted by AMA. Because Sagan did not deny any of these allegations, but merely claimed that none of these activities "specifically address Sagan," the court found that Sagan engaged in an intentional act. Next, while courts have struggled to define expressly aimed activity, the court had little problem finding this test satisfied here. Sagan's activities in the United States were extensive: it earned commercial revenue in the U.S., which accounted for nearly one-quarter of its international views; Porn.com was hosted by a Massachusetts company; it had servers in Arizona and throughout the United States; it had at least 11 American content producers; it geo-targeted advertisements in the United States; and it retained a Digital Millennium Copyright Act agent in the United States. These acts added up to activity expressly aimed at the United States.
Second, courts must ask whether the claim arises out of the defendant's forum-related activities. The court concluded that the AMA copyright violations would not have occurred but for Porn.com's deliberate business practices, including its substantial contacts with the United States. With little discussion, therefore, the court concluded that this second factor also favored finding jurisdiction.
Third, courts must determine whether exercising personal jurisdiction comports with fair play and substantial justice. Seven factors govern this discussion: (1) the extent of a defendant's purposeful interjection; (2) the burden on the defendant in defending in the forum; (3) the extent of conflict with the sovereignty of the defendant's state; (4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum. Given all the facts discussed above, and because there was no advantage to litigating this copyright case in another forum, the court concluded that these factors overall favored a finding that personal jurisdiction in the United States was reasonable. Thus, the motion to dismiss was denied.