MetArt Copyright Suit vs Porn.com May Proceed, Says 9th Circuit in Reversal of District Court

MetArt’s copyright infringement case against Porn.com has been granted a new lease on life. A 9th Circuit panel, in an unpublished decision filed August 1st, has ruled that the foreign corporate entities behind Porn.com are within scope of United States jurisdiction.

Plaintiffs Hydentra HLP Int. Ltd. and Hydentra LP HLP General Partner Inc., which do business as adult content providers MetArt and SexArt, are companies organized under the laws of the Republic of Cyprus

Hydentra/MetArt asserted claims of copyright infringement against foreign defendants associated with the website Porn.com. The site’s owners, Sagan Limited (resident of Seychelles), MXN Limited (“Cyberweb”) (resident of Barbados), Netmedia Services, Inc. (resident of Canada), and David Koonar (resident of Canada) (collectively, “Sagan”), moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction.

The trial court dismissed the case and Hydentra/MetArt’s appealed to the Ninth Circuit.

As the video below shows, at a May hearing in the case of Hydentra HLP INT. Limited v. Sagan Limited before a 9th Circuit panel in San Francisco, Hydentra/MetArt argued the issue of “specific jurisdiction”, and recited the applicable three-part analysis:

1) Whether defendants purposely availed themselves of the forum or purposely directed their activities toward the United States’ forum. (In the case of tort claims, such as copyright claims, the issue is one of purposeful direction. Purposeful direction requires a showing of: i) an intentional act; ii) that this intentional act was expressly aimed at the United States; and iii) that there is foreseeable harm in the forum); and

2) Whether the plaintiff’s claims arose from defendant’s forum-related activities;

If the first two elements of this test are met, he argued, the burden then shifts on the third prong of the test, which is reasonableness.

At this stage, the defendants must present a compelling case that jurisdiction in the United States is unreasonable.

Hydentra/MetArt argued that Sagan had failed to show that exercising jurisdiction would be unreasonable and violate due process.

The Ninth Circuit concurred. In a new, unpublished decision, the court wrote:

Federal Rule of Civil Procedure 4(k)(2), the federal long-arm statute, authorizes a district court’s exercise of personal jurisdiction over a defendant if (1) the claim arises under federal law; (2) the defendant is not subject to jurisdiction of any state court of general jurisdiction; and (3) exercising jurisdiction comports with due process. Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 461 (9th Cir. 2007). As the district court noted, Sagan conceded that the first and second factors are satisfied.

The due process analysis under the third part of the federal long-arm statute “is nearly identical to traditional personal jurisdiction analysis,” id. at 462, which requires:

(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof . . .; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.

Mavrix, 647 F.3d at 1227-28 (emphasis in original) (quotation omitted). The key difference under the federal long-arm statute as compared to traditional personal jurisdiction analysis is that, “rather than considering contacts between the [defendant] and the forum state, we consider contacts with the nation as a whole.” Holland Am. Line Inc., 485 F.3d at 462.

We agree with the district court that Hydentra demonstrated that Sagan allegedly committed an intentional act of copyright infringement and expressly aimed at the United States. However, the district court erred in its evaluation of the third part of the effects test. Giving weight to Hydentra’s reasonable version of the facts, we conclude the record supports that Sagan allegedly caused harm that it likely knew would be suffered by Hydentra in the United States. See id. at 1223 . . . .

As the district court correctly determined, Hydentra showed that Sagan committed an intentional act of alleged copyright infringement. We have held that “[t]he economic loss caused by the intentional infringement of a plaintiff’s copyright is foreseeable.” Id. at 1231. Further, “[w]e have repeatedly held that a corporation incurs economic loss, for jurisdictional purposes, in the forum of its principal place of business,” which Hydentra asserts is the United States. CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1079 (9th Cir. 2011). Hydentra alleges that Sagan’s unauthorized display of its copyrighted videos, which Hydentra makes available for a fee, resulted in lost profits and reputational damage, and that the majority of its revenue is generated in the United States. Thus, as we must construe all facts in Hydentra’s favor, it is not unreasonable to infer that the foreseeable economic harm alleged would have been suffered in the United States.

Because the three parts of the purposeful direction “effects” test are met, we reach the other two prongs of the specific jurisdiction analysis. Mavrix, 647 F.3d at 1227-28. We conclude that Hydentra met its burden of showing that its copyright infringement claims arise out of Sagan’s forum-related activities.

Sagan failed to show that exercising jurisdiction would be unreasonable and violate due process. Id. at 1228 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-78 (1985) (commenting that once a plaintiff satisfies the first two prongs of the effects test, the burden shifts to the defendant to demonstrate that the exercise of jurisdiction is improper)). The seven-factor balancing test that we use to “determin[e] whether the exercise of jurisdiction comports with `fair play and substantial justice’ and is therefore reasonable” weighs in Hydentra’s favor. CollegeSource, 653 F.3d at 1079.

REVERSED AND REMANDED.

The Ninth Circuit in Action

Litigious MetArt

Hydentra/MetArt had filed suit against Mindgeek in Florida, in August 2015, claiming that “Pornhub.com has been utilized by Defendants to collect Plaintiffs’ copyrighted works and trademarks for unlawful and unauthorized display on Defendants’ new pay-only membership site Pornhubpremium.com, where Defendants charge a fee to view Plaintiffs’ works,” and that “Plaintiffs discovered numerous copyrighted works on Pornhub.com that were not mere promotional materials, were not provided by Plaintiffs, and were not authorized for display on Pornhub.com.”

However, Hydentra/MetArt dropped the case one month later.

Hydentra/MetArt also sued sex.som in a trademark action against the “Pinterest of porn” that same year.