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The Copyright Cow Blog focuses on the untold stories of the second largest export of the United States – intellectual property and technology – through the lenses of law, economics (freaky-economics) and society. Intellectual property is comic books, cartoon characters, the “Book of Life” embodied in the Human Genome, medicine, technology, movies, websites, and, for example, the business of producing and distributing milk (a Copyright Cow favorite). The Copyright Cow BLOG is not only for your local dairy farmer / rancher in Washington state. It is also for the CEOs of Microsoft, Boeing and Getty Images. Although Copyright Cow is a great read for any business owner, it is also good for mothers and fathers, teachers and students and anyone who wants to know more about the legal and economic forces shaping 21st century America. The law can decide, who lives and who dies; who eats and who starves. Who gets the latest HIV medication and who does not? Who owns the critical intellectual property that, literally, holds the key to life and death for over 50 million people? What about the economic and social forces that help to shape the law and also result in both prosperity and misfortune? With the help of Copyright Cow, we will all be better prepared to answer these questions, shape a better future and hopefully be a little happier! With your help, the reader, Copyright Cow can continue to help defend the American Dream!
A Journey Of A Thousand Miles Begins With The Right Pair Of Shoes
FROM INTERNATIONAL SHOE TO WASHINGTON SHOE, THE CHANGING LANDSCAPE OF PERSONAL JURISDICTION IN COPYRIGHT CLAIMS.
Yes, you can sue the infringing party. But where will you sue them? Can you sue them in Seattle, Portland, or New York? The answer to that question depended the seminal case of International Shoe Co. v. State of Washington (2) decided almost sev-
For years, intellectual property holders have been fighting a losing battle against infringement both at home and abroad. Intellectual property is the second largest export in the United States and a major contributor to the U.S. economy as a whole. Many people are familiar with names such as Microsoft, Amazon, Corbis Images, Getty Images, Adobe, and Google, all of which have offices here in Washington State, but few people know what happens when their copyrights are infringed outside Washington State. In the digital realm where many items are intangible, the A 50 year change: Copyright Holders Can Sue in Their choice of where to file a lawsuit to protect this property is Home State complicated and turns on where the infringing defendant company is located and where the infringing company has sold the goods. This means that the copyright holder plaintiff may have to travel thousands of miles to the infringing company’s home enty years ago. Seventy years ago few homes had television state to protect its intellectual property rights. Better put on sets, the first computer covered 1,800 feet of floor space,(3) your walking shoes for that journey. and cellular phones were something only seen in science fiction movies. Intellectual property existed in tangible items, A recent Ninth Circuit decision, Washington Shoe Co. v. A-Z such as books, paintings, photographs, and the like. Sporting Goods Inc.,(1) has changed the jurisdictional landscape to be more friendly to copyright holder Nowadays all of these items are sold online plaintiffs. using portable computers. Books and photoNow copyright holders can file infringement lawsuits in their home state, rather than the location of the infringing company. This is excellent news for companies trading in intellectual property, including those with intangible goods where it is hard to track exactly where the item was sold. It is likely the most important personal jurisdiction case in over 50 years. A Rocky Landscape: Personal Jurisdiction Under International Shoe
Intellectual property is the second largest export in the United States
Common sense tells us that: 1) if you own a copyright or a patent and you ask someone who is using your property without permission to stop: and 2) they don’t stop, that you should be able to start a lawsuit to stop them. Well that is true to a point.
graphs have entered the digital realm. As some legal commentators point out, International Shoe fails to fully consider the technology and business needs of our 21st century. Under International Shoe, the copyright holder might need to sue the infringer in a foreign state based on what the court called “minimum contacts.” “Minimum contacts” says it’s not fair to sue a company from a different state if they: 1) don’t own property; or 2) do some “minimum” amount of business in the state where the rights holder plaintiff is located.
In other words, if you own a copyright and are located in Se- the sudden growth of the Internet, we have increased comattle and a company in Arkansas makes unauthorized use of merce across state lines but a seventy-year-old analysis to your copyrights and you asked them to stop and they refuse, “lead” us through it. you might need to travel to Arkansas to sue them. It has been a rocky and expensive road, resulting variances in Interestingly, the International Shoe case, like the recent Wash- jurisdictional determinations from state to state, that created ington Shoe case, involved the sale of shoes and disputed juris- expense and uncertainty for American businesses and individudiction in Washington State. International Shoe was a Delaware als. corporation with its principal place of business in Missouri that Looking Over The Horizon: Washington Shoe Looks To Redemanufactured and distributed its shoes in several states, not fine Personal Jurisdiction including Washington. International Shoe, however, had several employees that lived in Washington State but were super- Companies and individuals alike have shaped the personal juvised by sales managers in Missouri. Within the state of Wash- risdiction landscape since International Shoe in cases such as ington, these Washington salesmen rented rooms to display World-Wide Volkswagen Corp. v. Woodson,(6) Calder v. Jones, the shoes, exhibit samples, and solicit orders from buyers. (7) Schwarzenegger v. Fred Martin Motor Co.,(8) and Brayton These orders were transmitted to Missouri and shipped from Purcell v. Recordon & Recordon.(9) Personal jurisdiction turned Missouri to the purchasers in Washington. The state of Wash- on multiple factors, each broken up into its own sub-factor. ington sought to recover unpaid contributions to the state un- Even with a map and a good pair of hiking boots, a plaintiff employment compensation fund and thought that Internation- could get lost in determining where to file its complaint. Washal Shoe’s regular and systematic solicitation of orders within ington Shoe, a footwear manufacturer, encountered the same the state was sufficient for jurisdiction. International Shoe disa- problem when attempting to cease infringing activity by an greed and claimed it did not have enough of a presence to be Arkansas company, A-Z Sporting Goods. called into a Washington court because it was not present there.(4) The Supreme Court agreed with the State of WashingIn revisiting International Shoe’s test, the Ninth Circuit Court of ton and found that International Shoe was subject to personal Appeals found that it was fair or at least made sense that a jurisdiction in Washington due to the systematic and continushoe company from Washington can sue in a federal court ous contacts within the state that resulted in a “large volume sitting in Washington state a defendant retailer in Arkansas of interstate business.” (5) who sells their copyrighted shoe designs after they were asked to stop and refused. This decision seems obvious right? Under The fundamental rule emanating from International Shoe was International Shoe and its progeny, it was not obvious. Even that to have jurisdiction in the forum state the court’s power one of the appeals court judges asked at oral argument why over the defendant could not impinge of the “fundamental the court should not use this case to “modernize” the jurisdicnotions of fair play and justice.” But this consideration was in tional analysis? The Ninth Circuit took this opportunity to do light of the rights of the defendant. Protecting fair play sounds exactly that, modernize the personal jurisdiction analysis. good right? It was for the most part, at least until 1997. With
Pattern 1: WA Shoe Company Copyrighted Boot Pattern 2: Knock-off Infringing Boot
In Washington Shoe Company v. A-Z Sporting Goods, Inc.(10) the defendant, A-Z Sporting Goods (“A-Z”), knowingly sold knock-off rain boots that had been manufactured in China (see photos below). Located in Arkansas, A-Z sold its footwear in the Mid-West market, but not directly within Washington State. Washington Shoe Company’s (“Washington Shoe”) sales representatives, however, had visited AZ’s offices and provided them with catalogs of the Washington Shoe footwear. Upon discovery of infringing activity, the boot designer and valid copyright holder, Washington Shoe, notified A-Z of its rights and asked A-Z to stop selling the infringing boots because it was in violation of their copyright, known as a cease and desist request. After receiving the cease and desist request, A-Z sold their remaining knock-off rain boots to a discount store. This sale after notification of the claim is considered willful infringement of Washington Shoe’s copyrighted design. Washington Shoe then initiated a lawsuit against A-Z in federal district court in Washington State. A-Z moved to dismiss the case claiming the court lacked personal jurisdiction because it did not do business in Washington State. Although it originally denied the motion, the district court revisited the issue after another Ninth Circuit case was decided and granted A-Z’s motion and dismissed the case. (11) Washington Shoe then appealed the district court’s decision to dismiss the case. On appeal, Washington Shoe argued that willfully infringing a copyright creates the minimum contacts needed for personal jurisdiction (i.e. that willfully infringing a copyright equates to doing business in the forum state). If Washington Shoe was wrong, copyright infringers would be completely immune from litigation in the copyright holder’s home state. The stakes couldn’t be higher for persons wishing to protect their intellectual property and not wanting to litigate in a foreign state. The Ninth Circuit Court of Appeals agreed with Washington Shoe finding there was personal jurisdiction over A-Z and reversed the district court. The Ninth Circuit’s finding of jurisdiction hinged on whether A-Z’s actions were expressly aimed at the forum state of Washington, which in turn depended on the allegations of a willful copyright violation. The Ninth Circuit
“express aiming” means willfully infringing copyrights
recognized that the impact of a copyright infringement can be felt outside the defendant’s state, at least in the place where the copyright is held. Since the right to control the copyright is exercised by the corporation owning the copyright, the impact of an intentional violation will be directed at the location of the copyright holder. In other words, Washington Shoe as a Washington corporation felt the impact here in Washington. This finding was based on several facts. First, the parties had an ongoing relationship whereby A-Z received Washington Shoe’s catalogs and brochures, including photographs of the infringed boots. Based on the catalogs, A-Z was aware of the boot designs and Washington Shoe’s copyright. Second, the infringing boots and the Washington Shoe boots were both sold side-by-side at the same store Arkansas store, which placed the boots in direct competition with each other. Finally, Washington Shoe notified AZ of its copyright infringement claim and requested confirmation that A-Z ceased sales of the infringing boots. Subsequent to receipt of those letters, A-Z sold the infringing boots to a thrift store. The Ninth Circuit focused on A-Z’s willful activities, specifically that the sales subsequent to the cease and desist “were expressly aimed at the copyright held by Washington Shoe because A-Z knew that its intentional acts would impact Washington Shoe’s copyright by virtue of the cease-anddesist letters it had received.”(12) A-Z knew, or should have known, that Washington Shoe was a Washington company, thereby expressly aiming its intentional acts at Washington State. Also relevant was that A-Z caused harm known to affect the forum state of Washington based on the economic loss to the copyright holder at its principal place of business in Washington. Based on these facts, A-Z could reasonably anticipate being called to defend itself in the forum state and jurisdiction within Washington was proper. By overruling the trial court, the Ninth Circuit has issued a groundbreaking opinion whereby intentional copyright infringers can be hauled into foreign states by virtue of willful activities if they have knowledge the effect will be
felt outside their home state. Now a plaintiff corporation information sufficient to identify the location of the intelcan take off its hiking boots and file suit in its home state lectual property, especially if the property is intangible, wearing only its bedroom slippers. such as information on the copyright holder, including the location of their business so as to provide proper notice of the effect on the forum state. If the infringing activities conA New Frontier: Personal Jurisdiction In A Digital Age With the advent of more and more intellectual property tinue subsequent to this notice, the defendant may be becoming intangible and sold over the Internet, the Wash- called into the forum state based on knowledge of where ington Shoe v. A-Z Sporting Goods case becomes the lead- the intellectual property resides. ing decision for companies in determining where and how to pursue infringement claims. Companies such as Mi- Under Washington Shoe, intellectual property holders can crosoft and Apple deal in infringement of new technologies. more easily police their intellectual property rights in their Image licensing companies, such as Corbis Images and home state. This creates certainty for both intellectual Getty Images, can consider lawsuits within their home state property holders and defendants because a personal jurisfor unlicensed use of digital photographs. diction determination is based on notice of the location of the intellectual property that is static. Unlike under International Shoe where the determination was based on where the sales occurred, which can be variable and intangible, especially in a digital age where servers reside in warehouses nationwide and information is transmitted in seconds. Companies such as Microsoft, Apple, Getty Images, and others can now adequately protect their interests on their own terms, not those of the infringing company â€” now, that is really in accordance with notions of fair play and substantial justice. â–
A company doing business on Amazon or eBay can consider filing suit for infringement in its home state. All of this is dependent on where the intellectual property resides and if the infringement continues after notification of the unauthorized use. Understanding what is sufficient to create minimum contacts with a forum state is highly important for Seattle businesses that are considering litigation in Washington as a remedy to stop copyright infringers. Before Washington Shoe, it was difficult for plaintiffs to file suit in their home state unless they could show a company purposefully directed its activities to the forum state to create minimum contacts. Now, personal jurisdiction exists if the plaintiff notified the defendant of his infringing activities yet the defendant continued to sell the infringing products, which is willful infringement. This new reading of personal jurisdiction considers the location of the intellectual property and the defendantâ€™s knowledge of that location and his infringing activities. In pursuing an intellectual property infringement cause of action, a plaintiff must plan to secure personal jurisdiction in its home state before he even files a complaint. A plaintiff should ensure that their cease and desist notice includes
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