Will Co. v. Lee

47 F.4th 917

WILL CO., LTD., a limited liability company organized under the laws of Japan, Plaintiff-Appellant,

v.Ka Yeung LEE, an individual; Youhaha Marketing And Promotion Limited, a foreign company; Does, 1–20, doing business as ThisAV.com, Defendants-Appellees.

No. 21-35617

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 18, 2022 Seattle, Washington

Filed August 31, 2022

Spencer D. Freeman (argued), Freeman Law Firm Inc., Tacoma, Washington, for Plaintiff-Appellant.

Evan Fray-Witzer (argued), Ciampa Fray-Witzer LLP, Boston, Massachusetts; Valentin Gurvits and Frank Scardino, Boston Law Group PC, Newton, Massachusetts; Philip P. Mann, Mann Law Group PLLC, Seattle, Washington; for Defendants-Appellees.

Before: Kim McLane Wardlaw, Ronald M. Gould, and Mark J. Bennett, Circuit Judges.

WARDLAW, Circuit Judge:

Will Co. Ltd., a Japanese adult entertainment producer, brought this copyright infringement action against the owners and operators of ThisAV.com, a video-hosting site based in Hong Kong, alleging that the site was displaying without authorization several of its copyrighted works. The district court dismissed the suit, finding that it lacked specific personal jurisdiction over ThisAV.com's owners and operators because Will Co. could not establish that they "expressly aimed" ThisAV.com's content at the United States market, or that it was foreseeable that operating the site would cause jurisdictionally significant harm in the United States. We disagree, and reverse and remand for further proceedings.

I.

A.

Will Co. Ltd. is a Japanese entertainment company that produces adult videos featuring Japanese models in Japanese environments. The firm has produced more than 50,000 full-length videos and has registered in the United States for copyright protection for all of them. It sells access to its videos exclusively on R18.com, and makes over one million dollars a year selling its content to consumers in the United States.

To protect its market share, Will Co. actively investigates and reviews sites that display Japanese erotica for free looking for instances of copyright infringement. In June 2020, the firm discovered that one of those sites, "ThisAV.com," was displaying thirteen of its videos without permission. It sent ThisAV.com take-down notices pursuant to the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 512(c). When the works were not removed, Will Co. brought this suit against Does 1–20 under the Copyright Act, 17 U.S.C. § 101 et. seq. After limited discovery, revealing that Youhaha Marketing and Promotion Limited ("YMP") owns ThisAV.com, and Ka Yeung Lee ("Lee") serves as a Director of YMP, Will Co. named them as Defendants.

Shortly thereafter, Defendants moved to dismiss this lawsuit under Rule 12(b)(2) for lack of personal jurisdiction. Will Co. conceded that the district court lacked general personal jurisdiction over either defendant. Lee is a permanent resident of Hong Kong and currently resides in Canada, and YMP is registered in Hong Kong and operates ThisAV.com exclusively out of its offices there. However, Will Co. asserted that the district court had specific personal jurisdiction over both defendants because the tortious conduct in which they allegedly engaged, running ThisAV.com, which unlawfully displayed copyrighted videos, was sufficiently connected to the United States.

In their briefing before the district court, the parties asserted the following relevant facts about the operation of the site. ThisAV.com is a Japanese-language video-hosting website. Like YouTube, it allows users to upload and view videos for free and makes its money by displaying ads alongside those videos. As of February 2021, there were a total of 221,541 user-uploaded videos on the site. The majority of those videos had titles written in the Japanese alphabet and were in Japanese.

Defendants Lee and YMP created the site and purchased its domain name (ThisAV.com). They acquired hosting services from an American company, Gorilla Servers, with servers in Utah. They purchased content delivery network (CDN) services from Cloudflare, another American company, and utilized Cloudflare's network of servers in North America and Asia. And they purchased a website template with some pre-existing text and images, which they modified to suit their needs.

Most of the website's text is in Japanese. However, all of the pages focused on legal compliance are in English and are geared toward compliance with United States law. The "Privacy Policy" page states that it is legal to access the site in the United States, but makes no guarantees about the legality of access from other nations:

[ThisAV.com] is a website available from its location in the United States of America. We at ThisAV.com do not warrant or make any discretion about its appropriate use and availability outside the aforementioned country. If the ThisAV.com website is accessed outside of the relevant location, those users must comply with their local jurisdiction regarding website access and usage.

The "Terms and Conditions" page states that the content on the site is "subject to copyright and other intellectual copyright under United States, Canada and other foreign laws and international conventions." And finally, two related pages entitled "DMCA" and "2257" provide the site's procedures for compliance with two United States laws, the Digital Millennium Copyright Act,¹ 17 U.S.C. § 512(c), which implements international agreements regarding copyright protection, and 18 U.S.C. § 2257,² which requires that producers of adult content keep records of all performers' dates of birth and other information.

While YMP and Lee set up the site, they have a relatively limited role in operating it on a day-to-day basis. They do not themselves post any content, as all of the videos on the site are uploaded by users. Nor do they place any ads; rather, they sell all of the advertising space on the site to third-party vendors.³ Several of those third-party ad vendors use geo-targeting to place their ads, which means that viewers in a particular location are served ads relevant to that location. So, for example, a person visiting the site from China might receive an ad in Chinese for a hotel in Beijing, while a person visiting the site from the United States might receive an ad in English for a hotel in Chicago.

Most of ThisAV.com's viewers are located in Asia. However, the site has a significant audience in the United States. During the period the allegedly infringing videos were on display, April 1, 2020 to June 30, 2020, the site was viewed approximately 28 million times. Nearly 85% of those views came from three countries: Japan (52.5%), Taiwan (15.7%), and Hong Kong (15.4%). Although only 4.6% of the views came from within the Unites States, that percentage amounted to more than 1.3 million views.

B.

On June 30, 2021, the district court granted Defendants' motion to dismiss for lack of personal jurisdiction. It held that Will Co. failed to establish two necessary elements for specific personal jurisdiction: that the content on ThisAV.com was "expressly aimed" at the United States, and that by operating ThisAV.com Defendants caused "jurisdictionally significant harm." The district court determined that Will Co. failed to establish the Defendants had expressly aimed the site's contents at the United States, reasoning that the jurisdictional facts here are indistinguishable from those of a recent Ninth Circuit case, AMA Multimedia, LLC v. Wanat , 970 F.3d 1201 (9th Cir. 2020), in which we found against jurisdiction because the defendant had not expressly aimed the operation of his website at the United States. And the district court held that there was no jurisdictionally significant harm because during the relevant period only 4.6% of the site's viewers were in the United States, so the "brunt of the harm" had occurred elsewhere. This timely appeal followed.

II.

We review the district court's dismissal for lack of personal jurisdiction de novo. See Picot v. Weston , 780 F.3d 1206, 1211 (9th Cir. 2015). When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that jurisdiction is appropriate. See Schwarzenegger v. Fred Martin Motor Co. , 374 F.3d 797, 800 (9th Cir. 2004). When the Defendant's motion is based on written materials rather than an evidentiary hearing, as is the case here, "we only inquire into whether [the plaintiff's] pleadings and affidavits make a prima facie showing of personal jurisdiction." Id. (alteration in original) (quoting Caruth v. Int'l Psychoanalytical Ass'n , 59 F.3d 126, 128 (9th Cir. 1995) ). Uncontroverted allegations in the complaint must be taken as true, and conflicts between parties over statements contained in affidavits must be resolved in the plaintiff's favor. Id.

III.

Federal Rule of Civil Procedure 4(k) governs personal jurisdiction in federal court. In this case, Will Co. contends the district court erred by dismissing this action because it has specific personal jurisdiction⁴ under Rule 4(k)(2), often referred to as the federal long-arm statute.

A.

Under Rule 4(k)(2), a federal court may exercise jurisdiction over a foreign defendant if: (1) the claim arises under federal law, (2) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction, and (3) exercising jurisdiction comports with due process. See Pebble Beach Co. v. Caddy , 453 F.3d 1151, 1159 (9th Cir. 2006). Defendants concede that Will Co.'s claim arises under federal law and that they are not subject to jurisdiction in any state court of general jurisdiction, so the determinative question here is whether the exercise of jurisdiction over them comports with due process.

The exercise of personal jurisdiction over a defendant comports with due process if a defendant has "minimum contacts" with the relevant forum such that the exercise of jurisdiction "does not...