A Deliberate Orientation in a Forum Activates the Long Arm of the Law | McDermott Will & Emery

The United States Court of Appeals for the Ninth Circuit again overturned the United States District Court for the Central District of California’s dismissal of a case for lack of personal jurisdiction, applying the Fed. A. Civil. proc. 4(k)(2) and concluding that the copyright infringement claims involving a foreign defendant were properly litigated in the United States. Lang Van, Inc. v. VNG CorporationCase No. 19-56452 (9th Cir. July 21, 2022) (Bybee, Bennett, JJ.; Battalion, Dist. J., sitting by designation).

Lang Van, Inc. (LVI) is a California-based company that produces and distributes Vietnamese music and entertainment and owns the copyrights to over 12,600 original songs and programs. LVI sued VNG Corporation, a Vietnamese company that makes copyrighted music available for download worldwide through its Zing MP3 website and mobile apps. LVI served discovery requests on VNG, but instead of providing background information or documentation, VNG decided to reject them for lack of personal competence. The district court granted the motion and LVI appealed to the Ninth Circuit, which vacated and returned the case to the district court with directions that LVI be allowed to undertake jurisdictional discovery.

On remand, LVI conducted third-party discovery and argued that the evidence showed that VNG intentionally chose to distribute its apps in the United States; consent to the jurisdiction, choice of law and venue in California; and has enabled hundreds of thousands of iOS downloads and tens of thousands of Android downloads.

VNG filed a renewed motion to dismiss LVI’s complaint (now amended), arguing lack of personal jurisdiction, forum not conveniens (that there is another, more appropriate forum) and failure to make a complaint. The district court granted VNG’s motion after finding that there was no specific personal jurisdiction over VNG in California under the Ninth Circuit’s specific personal jurisdiction test. The District Court did not consider the second and third arguments (forum not conveniens and failure to report a claim) and failed to address the issue of long arm jurisdiction over VNG under Rule 4(k)(2). Again, LVI appealed.

The Ninth Circuit assessed jurisdiction under Rule 4(k)(2), which provides jurisdiction over foreign defendants who have many contacts in the United States as a whole, but whose contacts are so scattered among the States that no state would have jurisdiction. The test requires proof that (1) the claim at issue arises under federal law and (2) the defendant is not subject to the courts of general jurisdiction of any state, such that (3) the invocation of the jurisdiction follows due process, with the onus shifting to the respondent to demonstrate that the application of jurisdiction under the third branch would be unreasonable.

The Ninth Circuit found that the first prong was completed because the case involved allegations of copyright infringement under federal law, and that the second prong was completed because VNG asserted that it did not was not subject to the personal jurisdiction of a state court of general jurisdiction in the United States.

With respect to the third prong, the Ninth Circuit explained that when jurisdiction is challenged, the plaintiff must demonstrate (1) intentional activities or dealings with the United States (as a whole, rather than with a specific state ), (2) an act which shows that the defendant deliberately availed himself of the privileges of doing business in the United States, (3) that the claim arose out of activities connected with the United States, and (4) that the exercise of jurisdiction is consistent with notions of fair play and substantial justice. Due to copyright infringement claims, the committee enforced the 1984 Supreme Court ruling Calder effects test, which requires an “intentional instruction” by the defendant to commit an intentional act directed at the forum that causes harm that the defendant knew would occur in the forum.

VNG argued that Vietnam is its target market and that LVI provided no evidence (1) of an internal strategy to target California or the United States (2) that VNG generated revenue outside the Vietnam, (3) evidence of California advertising contracts, and (4) no California-specific cases of infringement. However, consistent with previous cases, the panel concluded that VNG deliberately targeted U.S. companies and their intellectual property since VNG had taken the following actions:

  • Zing MP3 release in English in the United States
  • Contract with American companies in collaboration with Zing MP3
  • Has not applied any geo-blocking or location restrictions to LVI’s content on Zing MP3 that impacts its use in the United States or outside of Vietnam, demonstrating an intent to serve US customers
  • Sent a letter to the US Trade Representative asking to remove an international list of internet pirates, stating that it had “signed licensing agreements with US studios. . . for copyrighting music streaming on Zing.MP3 sites,” and affirmed his understanding of “the importance of working with US content owners.”

The Ninth Circuit also credited a former employee’s testimony that VNG had specifically sought out LVI’s music for Zing MP3. The Court found substantial contacts in the United States and substantial evidence of intentional direction into the United States market, satisfying personal jurisdiction under Rule 4(k)(2).

VNG’s alternative argument was that Vietnam is a more appropriate forum with the majority of witnesses and evidence, and that copyright claims would be better decided there. LVI countered that because it was a California-based company with its principal establishment in California, Vietnam was not a convenient place to litigate. LVI also pointed to the 2018 statements by the International Intellectual Property Alliance that Vietnamese civil and criminal courts are not appropriate for copyright infringement cases, in light of complicated procedures, delays and delays. a lack of certainty about the expected outcome. The Ninth Circuit ultimately concluded that the venue was not appropriate in Vietnam since the case involved alleged illegal activities deliberately directed at the United States, which were more likely to be prosecuted in the United States.

The court remanded the case for further processing.

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