Metal Bulletin Limited v. Scepter, Inc., No. 15-CV-4364 (S.D.N.Y. June 21, 2016) [click for opinion]

Plaintiff Metal Bulletin is an English corporation that publishes works related to metals and steel and makes those copyrighted works available to paid subscribers on a website. Defendant Scepter, a company that engages in metal recycling and trading, purchased a subscription to Metal Bulletin's website. Scepter thereby accepted certain Terms and Conditions, one of which limited use of the user name and password that Metal Bulletin provided. Metal Bulletin alleged that, contrary to that limitation, Scepter provided the user name and password to multiple personnel, who improperly accessed Metal Bulletin's copyrighted materials. Based on that alleged conduct, Metal Bulletin brought two claims: one for copyright infringement under United States law and a second for breach of contract.

Scepter moved, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss Metal Bulletin's claim for copyright infringement under U.S. law on the ground that it was barred by a clause in the Terms and Conditions mandating application of English law. The choice-of-law term in question, titled "Law and Jurisdiction," provided:  

Where you visit, register and/or subscribe to a [Metal Bulletin] Site . . . these Terms (and any dispute or claim arising out of or in connection with these terms, including non-contractual disputes or claims), to the maximum extent permissible under the law of the territory that you are located in, will be governed by the laws of England and Wales and will be subject to the non-exclusive jurisdiction of the English courts.

As an initial matter, the court concluded that there was "no question" that Metal Bulletin's copyright claim fell within the scope of the parties' choice-of-law clause. The court reasoned that the clause provides broadly that English law applies to the Terms and, significantly, to "any dispute or claim arising out of or in connection with these terms, including non-contractual disputes or claims." Under copyright precedent, the question whether Scepter infringed Metal Bulletin's copyrights necessarily turned, at least in part, on the Terms. It followed that Metal Bulletin's copyright claim arose "in connection with" the Terms and thus fell within the scope of the choice-of-law clause. Therefore, English law applied to the parties' copyright dispute and precluded Metal Bulletin from pursuing its claim under United States copyright law.

The court also analyzed the enforceability of the choice-of-law clause. The court cited precedent that "choice-of-law clauses are presumptively valid where," as here, the underlying transaction involves international commerce. To overcome that presumption a party must demonstrate that application of the choice-of-law clause would be "unreasonable or unjust" by showing that "(1) its incorporation was the result of fraud or overreaching; (2) the law to be applied in the selected forum is fundamentally unfair; (3) enforcement contravenes a strong public policy of the forum in which suit is brought; or (4) trial in the selected forum will be so difficult and inconvenient that the plaintiff effectively will be deprived of his day in court." Notably, however, it is not enough to show that application of a choice-of-law clause will result in "the forfeiture of some claims," or "that the foreign law or procedure merely be different or less favorable than that of the United States."

The court thus rejected Metal Bulletin's argument that enforcement of the choice-of-law clause would contravene public policy given the importance of copyright protections, or that English law would be fundamentally unfair because it lacks the remedies available under United States copyright law. Metal Bulletin had failed to show that the remedies available to it under English law were inadequate to vindicate the public policy interests underlying United States copyright law or that there was a danger that it would be deprived of any remedy or treated unfairly.

The court therefore found the choice-of-law clause enforceable and granted Scepter's motion to dismiss the copyright claim under U.S. law.