Tenth Stretches Personal Jurisdiction in eBay Infringement Case
Tuesday, January 29th by Robert LoblawDudnikov v. Chalk & Vermillion Fine Arts, Inc., 06-1458 (10th Cir., Jan. 28, 2008)
Late yesterday, the Tenth Circuit issued a very interesting decision showing how far the internet has stretched the concept of personal jurisdiction. The plaintiffs are Colorado-based eBay sellers who decided to make some money with an awkward variation on the elegantly dressed women drawn by the Art Deco artist Erte. Compare an original with a copy.
When the companies that own Erte’s images learned of this sacrilege, they contacted eBay, claiming that the sellers’ wares infringed their copyrights. eBay responded by suspending the relevant auctions. The companies then emailed the sellers, threatening to sue them if they tried to repost their auctions.
So the sellers fired back by filing a pro se suit in Colorado, seeking a declaratory judgment that their wares constituted fair use.
The defendants are a Connecticut company and a British company with no ties to Colorado, so they moved to dismiss on the ground that the court lacked jurisdiction over them. Although a magistrate judge disagreed, the district judge overrode his recommendation and dismissed the suit for lack of personal jurisdiction.
On appeal, the Tenth Circuit reverses, adapting the standard test for personal jurisdiction to the internet age. In particular, the Court focuses on two allegations made by the plaintiffs. First, they alleged that the defendants knew that the plaintiffs were based in Colorado, as their auction pages prominently display their location. Second, the plaintiffs allege that the defendants acted tortiously in contacting eBay to have their auctions removed.
Accepting these two allegations at the pleading stage, the Court concludes that the defendants engaged in wrongful acts that were purposefully directed at the state of Colorado. The harm to the plaintiffs was foreseeable, and the claims in this litigation arise out of that harm. Finally, the Court concludes that requiring the defendants to appear in Colorado District Court does not offend traditional notions of fair play and substantial justice. Accordingly, at least at this stage, the law suit may continue.
The outcome is a harsh lesson for copyright holders who send cease and desist letters willy-nilly, but it’s also a lesson for district court judges: listen to your magistrates! Many of them actually know what they are talking about.
January 29th, 2008 at 11:49 am
The Tenth explicitly did not decide whether just sending “cease and desist letters willy-nilly” will lead to personal jurisdiction, see the bottom of p. 34. (”Assuming without deciding that it would be unreasonable to found jurisdiction solely on a cease-and-desist letter, this case is readily distinguishable.”)
January 29th, 2008 at 6:06 pm
Could some civil procedure buffs take a stab at distinguishing this case from DVD-CCA v. Bunner, in which the California Supreme Court found that another defendant, Matthew Pavolvich of Texas, was not subject to California jurisdiction for posting information about DVD encryption, allegedly in violation of DVD-CCA’s trade secrets?
Here’s the Electronic Frontier Foundation’s summary of the decision.
January 29th, 2008 at 7:45 pm
[…] Tenth Stretches Personal Jurisdiction in eBay Infringement Case […]
January 30th, 2008 at 8:15 am
Branden,
These are good questions that may ultimately need to be resolved by the Supreme Court. But I’ll take a stab at distinguishing the cases.
The plaintiff in DVD CCA is a licensing company for DVD encyption software, and it sued Pavlovich for posting circumvention techniques on the internet.
The lower court found that Pavlovich was not aware of DVD CCA at the time he committed the wrongful act (the posting), and he did not know that the plaintiff was a California company. So instead, the plaintiff argued that Pavlovich’s knowledge that he was harming California industries should be enough for jurisdiction.
This is one step removed from the Tenth’s analysis, which is based on what the defendants allegedly knew about the plaintiff.
Note that the defendants in the Tenth Circuit case will have the opportunity to try to prove that they had the same lack of knowledge of the plaintiff as Pavlovich did. But this will likely be harder for them to prove.
February 3rd, 2008 at 1:25 pm
[…] Decision of the Day » Blog Archive » Tenth Stretches Personal Jurisdiction in eBay Infringement C… […]
February 14th, 2008 at 7:39 pm
[…] into my backyard […]