China Esquire

Finally, part 3 of my series.  One way that plaintiffs often try to get their international copyright violations heard in U.S. courts is by alleging that a U.S. based defendant aided the infringement.  To my knowledge, there are two types of contributory infringment: vicarious and contributory.  I have not seen any cases on point within my Circuit as to vicarious. However, it appears that Subafilms (which was the basis for part 1 of this series) directly addresses contributory infringement in a way that severely limits what plaintiffs may actually get away with.

The Ninth Circuit held that it is axiomatic that activity outside the United States, “not constituting an infringement cognizable under the Copyright Act, cannot serve as the basis for holding liable under the Copyright Act one who is merely related to that activity within the United States.”  Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1093 (9th Cir. 1994) (en banc).  A party cannot be held liable for contributory infringement unless the authorized or encouraged activity itself amounted to copyright infringement.  Id. at 1092.

The Subafilms court held that a movie studio that “licensed” infringing DVD’s to international markets could not be held liable under U.S. Copyright Act.  Why?  Because the violation occurred abroad…  and not in the United States.  So even if a U.S. based defendant contributed to what would amount to infringment in China, Japan, Russia, etc., that is not sufficient to be held liable in the U.S.  The only way to get a third party on the hook is in a situation where the infringement took place in America.

Practically speaking, if there is infringement that happens abroad, Subafilms knocks out liability against the primary infringer and any contributing third parties or additional defendants.

Bottom line: unless a plaintiff can demonstrate that authorized activity fell under the Copyright Act in America, then parties may not be held liable for contributory infringement… because there is simply no copyright infringement.

For plaintiffs: You have to demonstrate that copyright infringement happened in the United States if you want to use the Federal Copyright Act.  Otherwise, you need to take the case to international courts or U.S. state courts.  The former may not yield you much because damages are low…  but then again, so are damages in the latter without statutory damages under the FCA.  Your best bet is an injunction in international court.

So if you can’t show infringement in the U.S., its a business decision: do you want to spend that much money for that little in damages?

For defendants: This is your lucky day if this happens to match your facts.  You can argue that the court has no subject matter jurisdiction over federal copyright claims, and thus, likely knock this case into international courts or U.S. state courts.  And in the state courts, plaintiffs don’t get ridiculously high statutory damage, so its a win for you.

For those of you who missed parts 1 and 2, they are here:

• part 1 (general overview of Subafilms)
• part 2 (why you cannot vest jurisdiction by EULA or shrinkwrap license)

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