Rhapsody Solutions, LLC v. Cryogenic Vessel Alternatives, Inc. (US District Court, S.D. Tex., Mar. 5, 2013)

If a part of an act of copyright infringement occurs within the United States, a party that contributes to the act may be liable even if the act is completed in a foreign jurisdiction. A federal court in Houston asserted jurisdiction over the foreign defendant’s accessing of infringing software stored on a server located within the United States.

Facts

In its claim for copyright infringement, plaintiff alleged that it granted the defendant a non-transferable license to use its software program. The defendant and its parent company, which was also sued, allegedly developed an infringing derivative copy and were using it to manage their business. The parent is a foreign company based in India. The plaintiff alleged that the parent regularly logged into its subsidiary’s Texas server in order to access the software, which was stored there. The parent moved to dismiss for lack of personal jurisdiction and for failure to state a claim.

Analysis

The court first asked whether the parent had the “minimum contacts” with the US necessary to support jurisdiction. Copying for purposes of copyright law occurs when a software program is transferred from permanent storage to a computer’s random access memory (“RAM”). Here, the plaintiff’s claims, once properly alleged, would arise out of or relate to the parent’s contacts with the state where the suit was filed: the parent knew that the software was located on its subsidiary’s server in Texas, and regularly logged into that server in order to use it. The copyrighted content was available long enough for the parent’s employees to view and evaluate displayed data.

The court held that, because copyright infringement is considered an intentional tort, these purposeful actions would constitute sufficient minimum contacts to establish jurisdiction. Other discretionary factors would also support a finding of jurisdiction: Texas has a strong interest in protecting its citizens from copyright infringement, which interest was not reduced by the fact that the parent’s remote accessing was from India does not diminish this interest. Additionally, in light of the parent’s employees’ repeated travels to Texas, the parent failed to show that litigating this case in Texas would be materially burdensome. The court thus concluded that the parent could be sued. If a part of an act of copyright infringement occurs within the US, those parties who contributed to that act may be liable even if the act is completed in a foreign jurisdiction.