China Esquire

I’ve been wanting to do this series of posts for some time now.  In fact, I’ve been sitting on the materials for this for months…  as you can tell, I’d more or less taken a brief blogging hiatus, just posting stuff here and there.  I don’t believe I can return to the sort of posting that I used to do–pretty much 1 article every day–but I will attempt to keep my posts here interesting and relevant.

That being said, one thing that often happens in representing international companies in lawsuits is that you will inevitably sue or be sued for international copyright violations.  (think of your clients’ employees downloading pirated mp3s, pirated software, or whatever else)  Now there are plenty of methods to seek redress. If those happen in the United States, of course, you can use federal copyright law.  But what if the copyright violation ultimately happens in China or Japan?  (or whatever country you can pick)  Even if the plaintiff is a U.S. based company, and the method of copyright violation occurs by broadcast signal or internet coming from the U.S., my personal take is that the plaintiff is out of luck… at least, it is in the 9th Circuit.

Violations of the Copyright Act must occur within the United States.  In general, “United States copyright laws do not have extraterritorial effect, and therefore, infringing actions that take place entirely outside the United States are not actionable.”  Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1091 (9th Cir. 1994) (en banc); Peter Starr Prod. Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442-1443 (9th Cir. 1986).  The en banc panel reiterated that the Copyright Act’s extraterritorial limitations are an “undisputed axiom”.  Id. at 1095.  “At least one alleged infringement must be completed entirely within the United States.”  Allarcom Pay Television, Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995); see also Danjac, LLC v. Sony Corp., 1998 U.S. Dist. LEXIS 22231, at *22 (C.D. Cal. 1998) (scope of injunction limited to domestic activities).  A plain reading of Subafilms ends up being fatal to would-be plaintiffs.

Further, my take is that Allarcom is pretty instructive too.  There, the plaintiff was authorized by the Canadian government to be the exclusive provider of English subscription television, which included exclusive rights to movie producers such as Paramount and Touchstone.  Allarcom, 69 F.3d at 383.  Defendant Showtime had the right to exhibit many of the same movies in the United States.  Id. at 384.  Defendant General Instrument manufactured a device that descrambled satellite television signals, which allowed unauthorized users to receive protected content, including Showtime.  Users in Canada purchased General Instrument’s device and used it to unscramble Showtime content.  Allarcom filed a complaint in federal district court against defendants for copyright infringement.  The court held that the Copyright Act did not apply to infringement in Canada.  Id. at 387.  Because the signal that was transmitted by Showtime from the United States was received and decoded in Canada, the Ninth Circuit held that “the potential infringement was only completed in Canada once the signal was received and viewed.”  Id.

Bottom line: the alleged infringment must take place in America, on American soil.  At least, that’s how I read the law to be.

So, what does this all mean for you?  For plaintiff’s counsel: do your homework.  And if you have a client who is going ballistic, wanting to sue in the U.S. in federal court even if the violation wasn’t here, then you need to tell them firmly that it won’t fly in court.  See if you can somehow tie the activities to the U.S., because you will have to do that later.

For defense counsel: It means if your client is being threatened with a federal copyright case, do your investigation.  Make sure that you know where the violation happened.  If it’s a broadcast or download situation, you may need an expert to discuss why the violation wasn’t U.S. based.  But don’t sweat it too much unless plaintiff’s attorneys are just patently unreasonable.

2 more parts coming on this shortly!

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