Will Co Ltd v. Lee

[5] UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT TACOMA [7] WILL CO., LTD, CASE NO. C20-5802 BHS [8] Plaintiff, ORDER 9 v. 10 KA YEUNG LEE, et al., 11 Defendants. [12] 13 This matter comes before the Court on Defendants Ka Yeung Lee and Youhaha 14 Marketing and Promotion Limited’s Motion to Dismiss, Dkt. 18, and the Ninth Circuit’s 15 opinion reversing the Court’s order granting that motion and remanding the cause for 16 further proceedings, Dkts. 36, 39. This Court granted Defendants’ motion to dismiss for 17 lack of personal jurisdiction, concluding that Plaintiff Will Co. failed to establish that 18 Defendants purposely directed their activities to the United States. Dkt. 30. The Ninth 19 Circuit reversed that ruling, concluding that Defendants purposely directed their online 20 activities to U.S. consumers, and remanded the cause for the Court to consider the 21 remaining elements of personal jurisdiction. Dkts. 36, 39. [22] 1 I. BACKGROUND 2 Will Co. is a Tokyo, Japan-based adult entertainment company that sells access to 3 its content in the United States. Dkt. 9, ¶ 1. Will Co. alleges that it targets the United 4 States market for the purposes of selling paid memberships to access its content. Id. ¶¶ 6, 5 31. Will Co. has registered copyrights for its videos and photographs in the United States, 6 some of which are the basis of this lawsuit. Id. ¶¶ 34–36. 7 Will Co. alleges that Defendants own and operate ThisAV.com and that, between 8 June and July 2020, it discovered that ThisAV.com displayed thirteen of its copyright 9 registered works. Id. ¶ 61. It alleges that it sent take down notices to ThisAV.com 10 pursuant to the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512 (c), and 11 that receipt was acknowledged but none of Will Co.’s content was removed. Dkt. 9, 12 ¶¶ 62–63. Will Co. thus brings claims for copyright infringement and inducement of 13 copyright infringement pursuant to 17 U.S.C. §§ 101 , et seq. Id. at 11–14. 14 Lee is a director of Youhaha and a permanent resident of Hong Kong. Dkt. 18-1, 15 ¶¶ 3–4, 6–8; see also Dkt. 43-1, ¶ 3. He declares that the allegedly infringing files are 16 user generated content and that he did not upload the files. Dkt. 18-1, ¶¶ 3–4. He also 17 now claims that ThisAV.com is no longer operational. Dkt. 43-1, ¶ 5. 18 Youhaha is a limited company registered in Hong Kong and was the owner and 19 operator of ThisAV.com. Dkt. 18-2, ¶¶ 1–2. Youhaha is operated exclusively out of Hong 20 Kong. Id. ¶ 3 . Like Lee, Youhaha asserts that it did not create or upload any of the 21 allegedly infringing videos and that all videos on ThisAV.com were uploaded by the [22] 1 website’s users. Id. ¶ 4 . Youhaha further asserts that it did not have any commercial 2 relationships with any of the users of ThisAV.com. Id. ¶ 9 . 3 Youhaha asserts that, from April 1, 2020, through June 30, 2020, approximately 4 4.6 percent of the user traffic of ThisAV.com came from the United States. Id. ¶ 56 ; see 5 also Dkt. 18-3. ThisAV.com had nearly 1.3 million website visitors from the United 6 States during this time period. See Dkt. 18-3. Approximately 95.4% of users during the 7 April through June 2020 timeframe were based in Japan, Taiwan, and Hong Kong. Dkt. 8 18-2, ¶¶ 57–58; see also Dkt. 18-3. From March 1, 2020, through February 28, 2021, 9 approximately 3.9 percent of the user traffic of ThisAV.com, amounting to 4.5 million 10 visitors, came from the United States. Dkt. 18-2, ¶ 59; see also Dkt. 18-4. Most users in 11 that time frame were based in Japan, Taiwan, and Hong Kong. Dkt. 18-2, ¶ 59; see also 12 Dkt. 18-4. 13 Youhaha also had some business connections to the United States. ThisAV.com’s 14 servers were hosted by Gorilla Servers, Inc., which is based in Ogden, Utah. Dkt. 18-2, 15 ¶¶ 14–15. ThisAV.com also utilized Cloudflare.com, a U.S.-based company, as a content 16 delivery network. Dkt. 21 at 6. 17 The Court previously granted Defendants Lee and Youhaha’s motion to dismiss 18 the complaint for lack of personal jurisdiction, concluding that Will Co. failed to 19 establish that Lee and Youhaha purposely directed their online activities at the United 20 States. Dkt. 30. Will Co. appealed, Dkt. 32, and the Ninth Circuit reversed this Court’s 21 ruling on purposeful direction and remanded the cause for this Court to consider the 22 remaining elements of specific personal jurisdiction, Dkts. 36, 39; see also Will Co., Ltd. 1 v. Lee, 47 F.4th 917 (9th Cir. 2022). The Ninth Circuit concluded that Defendants 2 purposefully directed their online activities to the United States by intentionally targeting 3 U.S. consumers. The parties filed supplemental briefing only on the third element: 4 reasonableness. Dkts. 43–45. The Court interprets the lack of argument on the second 5 element as a concession that it is met and therefore declines to address it. 6 II. DISCUSSION 7 Personal jurisdiction exists in two forms: general and specific. Dole Food Co. v. 8 Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). For specific jurisdiction, which is at issue 9 here, the Ninth Circuit applies a three-prong test. Schwarzenegger v. Fred Martin Motor 10 Co., 374 F.3d 797, 802 (9th Cir. 2004). First, the defendant “must purposefully direct his 11 activities or consummate some transaction with the forum or resident thereof; or perform 12 some act by which he purposefully avails himself of the privilege of conducting activities 13 in the forum.” Id. Second, “the claim must be one which arises out of or relates to the 14 defendant’s forum-related activities.” Id. Finally, “the exercise of jurisdiction must 15 comport with fair play and substantial justice, i.e. it must be reasonable.” Id. Only the 16 third prong remains at issue in this case. 17 If the plaintiff establishes the first two factors, the defendant “‘must present a 18 compelling case that the presence of some other considerations would render jurisdiction 19 unreasonable’ in order to defeat personal jurisdiction.” Harris Rutsky & Co. Ins. Servs., 20 Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1132 (9th Cir. 2003) (quoting Burger King 21 v. Rudzewicz, 471 U.S. 462, 477 (1985)). To determine whether the exercise of 22 jurisdiction is reasonable, courts consider seven factors: 1 (1) The extent of a defendant’s purposeful interjection; (2) the burden on the defendant in defending in the forum; (3) the extent of conflict with the 2 sovereignty of the defendant’s state; (4) the forum state’s interest in adjudicating the dispute; (5) the most efficient judicial resolution of the 3 controversy; (6) the importance of the forum to the plaintiff’s interest in convenient and effective relief; and (7) the existence of an alternative 4 forum. 5 Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1021 (9th Cir. 2002). The court 6 must balance all seven factors; “no single factor is dispositive.” Id. 7 A. Extent of Interjection 8 Defendants argue that their interjection into the U.S. was “minimal,” relying on 9 the fact that they were never physically present in the U.S. and that neither of them had 10 “substantial continuing contacts with the United States.” Dkt. 43 at 4. Specifically, 11 Defendants assert that their only contacts with the U.S. were contracts with a server 12 company and a content delivery network company which were both located in the U.S. [13] Id. Defendants entered into those contracts from Hong Kong and they no longer use 14 either service or operate ThisAV.com. Id. at 4–5. 15 Will Co.’s argument relies on the Ninth Circuit’s opinion which focused on a few 16 relevant facts. First, that Defendants’ contracts with U.S.-based companies provided 17 better and faster access to U.S. consumers. Dkt. 44 at 6. Second, that Defendants’ intent 18 in targeting the U.S. market was clear because they “expressly state[d] that the lawful 19 viewing of their web site is warranted only in the United States” and because they 20 expressly complied with and referred to U.S. laws on ThisAV.com without referencing 21 any other country’s laws. Id. at 6–7. As to Defendants terminating their relationships with 22 the two U.S.-based companies, Will Co. argues that is “irrelevant when considering 1 whether jurisdiction exists over the infringement of Will Co.’s copyrights” because 2 personal jurisdiction must be assessed at the time of the infringement. Id. at 5–6 n.1. 3 Defendants reply that their lack of ongoing contacts with the U.S. is significant 4 and “counsels against an exercise of personal jurisdiction.” Dkt. 45 at 3. 5 This factor is similar to purposeful direction, but “the degree of interjection is 6 nonetheless a factor in assessing the overall reasonableness of jurisdiction.” Harris 7 Rutsky, 328 F.3d at 1132 . As explained by the Ninth Circuit, ThisAV.com “earned 8 considerable revenue from [the U.S.] market,” the website was hosted on servers in the 9 U.S., and Defendants chose to purchase content delivery network services for North 10 America. Dkt. 36 at 15. The latter two facts reduced the site’s latency for U.S. 11 consumers, suggesting that Defendants intended to target the U.S. Id. at 17. Moreover, 12 ThisAV.com specifically addressed U.S. law and its compliance with that law to the 13 exclusion of other countries’ laws. Id. at 17–18. 14 As to Defendants’ argument that they no longer have any contacts with the U.S., 15 specific personal jurisdiction is “based on the relationship between the defendant’s forum 16 contacts and the plaintiff’s claim.” Yahoo! Inc. v. La Ligue Contre Le Racisme Et 17 L’Antisemitisme, 433 F.3d 1199, 1205 (9th Cir. 2006). While their lack of an ongoing 18 relationship with the U.S. may be relevant to some of the reasonableness factors, such as 19 the burden of litigating in the U.S., that does not diminish their purposeful interjection 20 into the country in relation to these claims. This factor weighs in favor of Will Co. [22] 1 B. Burden on Defendants 2 Defendants argue that litigating the case in the United States would be 3 burdensome because they have no ongoing connection to the U.S.; none of the parties, 4 potential witnesses, or exhibits are located in the U.S.; and Lee does not have a visa that 5 would allow him to travel to the U.S. Dkt. 43 at 6. 6 Will Co. argues that modern technology “significantly reduce[s] the burden of 7 litigating in another country.” Dkt. 44 at 7 (citing Core-Vent Corp. v. Nobel Indus. AB, 11 8 F.3d 1482 , 1489 (9th Cir. 1993)). It asserts that all aspects of litigation, including 9 discovery, depositions, and trial, can be conducted electronically and remotely, as 10 demonstrated during the COVID-19 pandemic. Id. at 7–8. 11 Defendants reply that Will Co.’s argument suggests that this factor should be 12 disregarded because we now have the technology to conduct litigation virtually. Dkt. 45 13 at 3–4. They assert that such a ruling would “overrule all existing precedent and declare 14 the second factor of the Ninth Circuit’s test to be dead law.” Id. at 4 . 15 “The unique burdens placed upon one who must defend oneself in a foreign legal 16 system should have significant weight in assessing the reasonableness of stretching the 17 long arm of personal jurisdiction over national borders.” Asahi Metal Indus. Co., Ltd. v. 18 Super. Ct. of Cal, 480 U.S. 102, 114 (1987). The burden is “particularly great” when the 19 defendants “have no ongoing connection or relationship with the United States.” Core20 Vent Corp., 11 F.3d at 1488. 21 The Court generally agrees with Defendants on this point. Will Co.’s argument 22 would effectively eliminate this factor and the law regarding nonconsensual use of 1 remote trials post-COVID is not well developed. Defendants have no ongoing 2 relationship with the U.S. and the burden of litigating this lawsuit in the U.S. would 3 significantly burden them. This factor weighs slightly in favor of Defendants. 4 C. Extent of Sovereignty Conflict 5 Defendants argue that “sovereignty issues strongly counsel against the exercise of 6 personal jurisdiction” because both defendants are from, located in, and acted from only 7 Hong Kong. Dkt. 43 at 9. 8 Will Co. argues that Defendants fail to acknowledge their relationships with the 9 United States, which include: (1) a contract with a U.S. server company; (2) hosting 10 ThisAV.com in the U.S.; (3) a contract with a U.S. content delivery company; (4) a 11 contract with a U.S. registrar; and (5) directing advertising to the U.S. Dkt. 44 at 8–9. 12 Defendants reiterate that they “lack any significant ties to the United States” and 13 that any ties they did have are not ongoing. Dkt. 45 at 4. 14 “The factor of conflict with the sovereignty of the defendant’s state is not 15 dispositive because, if given controlling weight, it would always prevent suit against a 16 foreign national in a United States court.” Sinatra v. Nat’l Enquirer, Inc., 854 F.2d 1191 , 17 1199 (9th Cir. 1988) (internal quotation omitted). Nevertheless, “litigation against an 18 alien defendant creates a higher jurisdictional barrier than litigation against a citizen from 19 a sister state because important sovereignty concerns exist.” Id. 20 While Defendants have no ongoing relationship with the U.S., they personally 21 targeted U.S. consumers through ThisAV.com and engaged in alleged violations of U.S. 22 copyright law. This is not a run-of-the-mill contract dispute or tort claim; rather, Will Co. 1 alleges violations of United States law. Thus, while Hong Kong “clearly has an interest in 2 resolving disputes that involve its citizens,” Gates Learjet Corp. v. Jensen, 743 F.2d 3 1325, 1333 (9th Cir. 1984), Hong Kong has little, if any, interest in upholding and 4 adjudicating U.S. copyright law. This factor weighs in favor of Will Co. 5 D. Forum State’s Interest 6 Defendants argue that, because no party is located in the United States, the U.S. 7 has little interest in this dispute. Dkt. 43 at 10. 8 Will Co. argues that the United States has a clear and strong interest in addressing 9 U.S. copyright infringement. Dkt. 44 at 9–10. 10 Defendants reply that, while the U.S. may have an interest in adjudicating disputes 11 involving U.S. copyrights, that interest is minimal where all parties are foreign citizens 12 and the defendants operated only in Hong Kong. Dkt. 45 at 5. Further, Defendants argue 13 that any downloading of the subject videos in the U.S. was de minimis. Id. 14 “A forum has only a weak interest in a lawsuit when a nonresident sues in its 15 courts.” Perkumpulan Investor Crisis Center Dressel—WBG v. Danny M.K. Wong, No. 16 09-cv-1786 JCC, 2012 WL 13024801 , at *7 (W.D. Wash. Apr. 6, 2012). Nevertheless, 17 the United States has an interest in deciding the application of its own laws. Cf. Gates, [18] 743 F.2d at 1336 (noting in the context of forum non conveniens that the forum state had 19 “an interest in interpreting its own laws”). 20 Although neither Will Co. nor Defendants reside in the U.S., Will Co. lawfully 21 obtained U.S. copyrights and now alleges Defendants violated those copyrights in the [22] 1 United States. The U.S. has a distinct interest in the adjudication and upholding of its 2 own laws. This factor thus weighs in favor of Will Co. 3 E. Efficiency 4 Defendants argue that the U.S. would be the least efficient possible forum for this 5 dispute because the parties, witnesses, and evidence are all located elsewhere, and the 6 alleged harm did not occur in the U.S. Dkt. 43 at 11. 7 Will Co. argues that, regardless of where the dispute is adjudicated, “most 8 participants will need to deal with litigating from outside the forum” because none of the 9 parties and witnesses are in the same location. Dkt. 44 at 10. Further, Will Co. argues that 10 the evidence is in the U.S. because Defendants used U.S.-based companies for storage 11 and delivery of their website’s content. Id. 12 Defendants reply that, because both defendants are located in Hong Kong,1 their 13 documents are located in Hong Kong, and they took action only in Hong Kong, the most 14 efficient jurisdiction is Hong Kong. Dkt. 45 at 6. 15 In determining the efficiency of the forum, courts look primarily at “where the 16 witnesses and evidence are likely to be located.” Caruth v. Int’l Psychoanalytical Ass’n, [17] 59 F.3d 126, 129 (9th Cir. 1995). Although the Court is somewhat less persuaded by Will 18 Co.’s argument in addressing the burden on Defendants that technology significantly 19 reduces the import of distance on the litigation costs, it can substantially assist in 20 obtaining efficiencies. Moreover, while it is true that no party is located in the U.S., they [21] 1 While Lee was a Canadian resident when Defendants filed their motion to dismiss, he is 22 now living in Hong Kong. See Dkt. 43-1, ¶ 3. 1 are not otherwise in a common location. Some evidence and witnesses are located in 2 Hong Kong, but some evidence and witnesses are also located in the U.S. because 3 ThisAV.com used a U.S.-based server company and a U.S.-based content delivery 4 network company. This factor is therefore largely neutral. 5 F. Importance of the Forum to Plaintiff 6 Defendants argue that “there is no actual convenience to the Plaintiff in litigating 7 in the United States.” Dkt. 43 at 12. They point to the fact that Will Co. is a Japanese 8 company, headquartered in Tokyo. Id. 9 Will Co. argues that “the United States judicial forum is crucial to getting 10 convenient and effective relief” because complex U.S. laws are at issue and because key 11 evidence is located in the U.S. Dkt. 44 at 11. 12 Defendants argue that foreign courts are equipped to apply U.S. law when 13 appropriate and that Will Co. must establish more than just a desire to litigate in the 14 United States to satisfy this factor. Dkt. 45 at 7. 15 This factor has been repeatedly discounted by the Ninth Circuit: “the plaintiff’s 16 convenience is not of paramount importance.” Dole Food Co., 303 F.3d at 1116; see also, 17 e.g., Caruth, 59 F.3d at 129 . Will Co. is not a U.S. resident; its only connection to the 18 U.S. that it has identified are its copyrights. Nevertheless, the United States has an 19 interest in the enforcement of its own intellectual property laws that other jurisdictions 20 lack. This factor is neutral. [22] 1 G. Existence of Alternative Forum 2 Defendants argue that Will Co. failed to prove the unavailability of an alternative 3 forum. Dkt. 43 at 12–13. They assert that they are both located in Hong Kong and “are 4 amenable to service there.” Id. at 13. 5 Will Co. argues, without support, that no other jurisdiction can adjudicate its 6 claims because the alleged tort occurred in the United States. Dkt. 44 at 11–12. 7 Defendants reply that Will Co.’s “unsupported assertions” that the alleged 8 infringement occurred in the U.S. does not satisfy its burden to show the unavailability of 9 Hong Kong as an alternative forum. Dkt. 45 at 7. 10 Will Co. bears the burden of proving the unavailability of an alternative forum and 11 it failed to prove it would be precluded from suing Defendants in Hong Kong. Core-Vent 12 Corp., 11 F.3d at 1490. This factor therefore weighs in favor of Defendants. 13 *** 14 On balance, the reasonableness factors weigh in favor of Will Co. Defendants 15 failed to carry their burden to show that the Court exercising jurisdiction over them in 16 this dispute would be unreasonable and the Court concludes that exercising jurisdiction in 17 this case is reasonable. The motion to dismiss is therefore denied. 18 III. ORDER 19 Therefore, it is hereby ORDERED that Defendants Ka Yeung Lee and Youhaha 20 Marketing and Promotion Limited’s Motion to Dismiss for lack of personal jurisdiction, 21 Dkt. 18, is DENIED. Lee and Youhaha shall be reinstated as Defendants in this action. [22] 1 The parties shall meet and confer and file an updated JOINT STATUS REPORT 2 suggesting a new scheduling order. 3 Dated this 7th day of April, 2023. A [5] BENJAMIN H. SETTLE [6] United States District Judge