ORDER ADOPTING MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION AND DENYING MOTION FOR DEFAULT JUDGMENT
The court has reviewed Magistrate Judge Corley’s Report and Recommendation (“report”) re plaintiffs’ motion for default judgment, as well as plaintiffs’ objections to the report. In their objections, plaintiffs DFSB Kollective Co. Ltd., Nega Network, Jungle Entertainment, Woolim Entertainment, Aftermoon Music Entertainment, Inc., and Drug Records (collectively, “plaintiffs”) argue that defendant Yousuf Bourne (“defendant”) should be subject to personal jurisdiction in this court because his actions were “expressly aimed” at California. Judge Corley addressed this argument in the report, stating that “there is no indication that Defendant knew of a California user base or that he exploited that base,” and ultimately concluding that plaintiffs had not met their burden of making a prima facie showing of personal jurisdiction. Dkt. 48 at 13, 17. Importantly, the report explained that “[t]he Court is not holding that a foreign plaintiff can never demonstrate that a California court has specific personal jurisdiction of a foreign defendant for making illegal downloads available on the Internet,” but instead was merely holding that plaintiffs in this case had not adequately shown “that the Calder purposeful direction test is satisfied.” Id. at 17 (referring to Calder v. Jones,
The Ninth Circuit addressed a similar personal jurisdiction issue in Mavrix v. Brand Technologies,
If plaintiffs were able to show that defendant Bourne “either actually or constructively” knew about his California user base, Mavrix would control and personal jurisdiction would be proper in this case. But plaintiffs have not done so. Plaintiffs have not shown that a substantial number of hits to defendant’s websites came from California, nor have they shown that defendant’s websites displayed advertisements targeted to California residents, nor have they provided any other evidence that defendant “anticipated, desired, and achieved a substantial California viewer base.” The best that plaintiffs have done is claim that “California is one of the largest markets for Korean music” and that “defendant’s websites were frequently mentioned as a place to download music on the San Francisco-based Asian-American community site crunchyroll.com.” See Dkt. 47 at 5. This is not enough to make a prima facie showing that defendant expressly aimed his conduct at California.
Thus, the court OVERRULES plaintiffs’ objections to Judge Corley’s report and ADOPTS it in every respect. The court finds the report correct, well-reasoned, and thorough, and adopts it in every respect. Accordingly, plaintiffs’ motion for default judgment is DENIED for lack of personal jurisdiction.
The court is inclined to dismiss this case without prejudice in light of the denial of this motion, however before doing so, the court will afford plaintiffs an opportunity to request another disposition. Accordingly, plaintiffs shall file a status statement indicating how they would like to proceed with this case no later than September 24, 2012.
IT IS SO ORDERED.
REPORT AND RECOMMENDATION TO DENY PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT (Dkt. No. 30)
This Order addresses whether Korean plaintiffs can pursue a lawsuit in California against an Australian defendant for contributing to the illegal downloading of Korean songs over the Internet. Now before the Court is Plaintiffs’ Motion for Default Judgment against Defendant Yousuf Bourne. (Dkt. No. 30.) Korean corporations DFSB Kollective Co. Ltd. (“DFSB”), Nega Network, Jungle Entertainment, Woolim Entertainment, Aftermoon Music Entertainment, Inc., and Drug Records (collectively “Plaintiffs”) allege Defendant, who is a resident of Australia, made Plaintiffs’ copyrighted music available for unauthorized download through his websites bww2.com and forums.bww2.com/index.
On June 22, 2012,
BACKGROUND
A. Plaintiffs ’ Allegations
Plaintiffs are Korean companies with their principal places of business in Seoul, Korea. (Dkt. No. 1 ¶ 7-12.) They are the owners, distributors, and licensees of Korean pop music recordings to which they own exclusive rights under the United States Copyright Act. (Dkt. No. 1 ¶ 7-13.)
Defendant Yousuf Bourne (“Bourne”), an individual, is a resident of Australia. (Dkt. No. 1 ¶ 17.) He operated websites located at bww2.com ' and forums.bww2.com/index (“Websites”). He also operated accounts through numerous social networking and online video websites using a number of identities and aliases. These accounts include Facebook, hi5.com,
Defendant “is one of the biggest illegal uploaders (and free download link providers) of Korean music in the world.” (Dkt. No. 30 at 29.) Defendant’s Accounts and Websites provide links to infringing content available on third-party websites. (Dkt. No. 1 f 19-23.) This infringing content includes, but is not limited to, Plaintiffs’ registered copyrighted works. (Id. ¶ 20.) Upon visiting Defendant’s Websites, Internet users were able to click on a link next to an image of the copyrighted album they wished to listen to or download, and they were then directed to a third-party website. (Dkt. No. 1 ¶ 22-23.) Once there, users were given the option to download all or part of the album from the third-party website. (Dkt. No. 1 ¶ 23.)
Plaintiffs have submitted a list of their copyrighted works which were allegedly infringed through links provided on Defendant’s Accounts and Websites. (Dkt. No. 1, Ex. A, ¶¶ 13, 35.) Plaintiffs’ allegations, though not entirely clear, suggest that Internet users are not able to download Plaintiffs’ copyrighted works directly from Defendant’s Websites; instead, Defendant contributes to copyright infringement by providing a map for Internet users to locate and download copyrighted songs located in storage lockers or other third-party websites. (Dkt. No. 1 ¶¶ 19-24, 35; Dkt. No. 30 at 18 ¶ 5.)
bww2.com “is often mentioned and referred to by users on the forum section” of the website crunchyroll.com as a source of Korean music. (Dkt. No. 45 ¶ 4.) crunchy-roll.com is a California-based Asian-American content/community site with a high concentration of users in California. (Id.) Based on this information, Plaintiffs have a good faith belief that California users accessed Defendant’s Websites and Accounts. (Id.)
Defendant derives revenue from his illegal activity “by driving traffic to advertisers who have paid to be included on Defendant’s Websites and/or accounts.” (Dkt. No. 1 ¶ 22; see also Dkt. No. 30 at 19 ¶ 5.) Plaintiffs’ Exhibits include two advertisements that appear on Defendant’s Websites: one advertises Full Sail University, which is located in Florida, and the other advertises KoreanCupid.com, an online dating website operated by a company based in Australia.
In 2010, Plaintiffs contacted SoftLayer, Inc., the operator of Defendant’s website located at bww2.com, to report Defendant’s alleged infringing conduct. (Dkt. No. 30 at 30 ¶ 2.) The operator responded by removing the infringing content from the website and by identifying Yousuf Bourne as the registrant and operator of the website. (Id.) On March 7, 2011, Plaintiffs filed a complaint against Defendant alleging copyright infringement and subsequently filed a Proof of Service with the Court. Prior to filing this lawsuit, DFSB sent numerous notices to Defendant regarding his copyright infringement. (Dkt. No. 30 at 19 ¶ 6.) However, Defendant has never contacted DFSB or “anyone associated with the DFSB Plaintiffs in response to any of these notices.” (Id.) Defendant’s only communication was a letter he sent to the Court on April 5, 2011 denying any involvement with bww2.com and all claims made against him. (Dkt. No. 11.) The district court thereafter entered Defendant’s default, and Plaintiffs filed the pending motion for default judgment, which was referred to this Court for a Report and Recommendation. (Dkt. No. 31.)
This Court subsequently ordered Plaintiffs to show cause as to whether Plaintiffs had properly served Defendant and met their burden to show that this Court has personal jurisdiction of the Australian Defendant. (Dkt. Nos. 37, 40.) After Plaintiffs responded, and following oral argument on June 7, 2012, Plaintiffs filed a supplemental declaration to support their Motion for Default Judgment. (Dkt. No. 45.) On June 22, 2012, having considered oral argument and the supplemental declaration, the Court issued a Tentative Report and Recommendation to deny Plaintiffs’ motion for default judgment. (Dkt. No. 46.) Plaintiffs responded with additional points and authorities. (Dkt. No. 47.)
DISCUSSION
“A defendant’s default does not automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans,
A. Service of Process
“A federal court does not have jurisdiction over a defendant unless the defendant has been served properly under Fed.R.Civ.P. 4.” Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc.,
Where a writ of summons or an equivalent document had to be transmitted abroad for the purpose of service, under the provisions of the present Convention, and the defendant has not appeared, judgment shall not be given until it is established that a) the document was served by a method prescribed by the internal law of the State addressed for service of document in domestic actions upon persons who are within its territory, or b) the document was actually delivered to the defendant or to his residence by another method provided by this Convention, and that in either of these cases the service or the delivery was effected in sufficient time to enable the defendant to defend.
Here, Defendant is a resident of Australia. Both the United States and Australia are parties to the Hague Convention.
B. Personal Jurisdiction
Plaintiffs contend that this Court has specific jurisdiction of Defendant. “Where, as here, no federal statute authorizes personal jurisdiction, the district court applies the law of the state in which the court sits.” Mavrix Photo, Inc. v. Brand Techs., Inc.,
1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum, or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; 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.
Schwarzenegger,
The plaintiff bears the burden of satisfying the first two prongs of this test. Id. If the plaintiff satisfies this burden, the burden shifts to the defendant to make a “compelling case” that the third prong— the exercise of jurisdiction is reasonable— is not met. Burger King Corp.,
1. Purposeful Direction/Purposeful Availment
The first prong of the minimum contact test “ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or a third person.” Burger King Corp. v. Rudzewicz,
Plaintiffs allege that “[w]hile purposeful direction is typically’ used in tort cases, it is not the exclusive analysis for personal jurisdiction in tort cases.” (Dkt. No. 47 at 2.) To support their view, they cite the recent Supreme Court case J. McIntyre Machinery, Ltd. v. Nicastro,—U.S.-,--,
The Ninth Circuit uses the three-part test outlined in Calder v. Jones,
a. Intentional Act
An intentional act refers to “an intent to perform an actual, physical act in the real world, rather than an intent to accomplish a result or consequence of that act.” Schwarzenegger,
b. Expressly Aimed at Forum State
Plaintiffs maintain that Defendant expressly aimed his infringing conduct at California because he operated commercial and interactive websites that “targeted California residents indiscriminately.” (Dkt. No. 40 at 3.) The Ninth Circuit has “struggled with the question whether tortious conduct on a nationally accessible website is expressly aimed at any, or all, of the forums in which the website can be viewed.” Mavrix Photo, Inc.,
Plaintiffs argue that Defendant’s “website, on its own, is enough to confer personal jurisdiction.” (Dkt. No. 47 at 4.) They contend that because Defendant’s websites are commercial — that is, he profits from them — and because users had to register with the Websites to fully access the Websites’ features, they have satisfied their burden of making a prima facie showing that Defendant directed his unlawful activities at California.
While Defendant’s Websites are certainly interactive, their alleged level of interactivity is insufficient in and of itself to support a finding of purposeful direction. The operation of an interactive, commercial website helps determine the likelihood that personal jurisdiction can be exercised. Cybersell, Inc. v. Cybersell, Inc.,
The cases upon which Plaintiffs rely demonstrate why the facts alleged here are insufficient to show Defendant targeted California. In Quigley v. Guvera IP Pty Ltd.,
Similarly, in American Auto. Ass’n, Inc. v. Darba Enterprises, Inc.,
Plaintiffs’ lament that they are unable to make any allegation as to how Defendant utilized the registration information because he defaulted and therefore deprived Plaintiffs of discovery (Dkt. No. 47 at 4 n. 1) is unavailing. Plaintiffs have not cited any case — and the Court is aware of none — which holds that on a motion for default the Court may assume as true necessary facts that the plaintiff does not even allege (and apparently believes it cannot in good faith allege). Further, Plaintiffs do not explain why they could not
At bottom then, Plaintiffs’ assertion is that any defendant that operates a commercial website with infringing content which requires users to register with the site can be haled into court in any state in the United States because the defendant has directed its activities at each state, regardless of whether or how that registration information is used. Indeed, at oral argument Plaintiffs asserted that specific jurisdiction of Defendant for the claims in this lawsuit would be proper in any state, even Wyoming. This position, however, ignores the constitutional requirement that the defendant engage in activity expressly aimed at the forum state. Mavrix,
The Ninth Circuit’s recent decision in Mavrix Photo, Inc. is apposite. There, the plaintiff Florida corporation brought suit in California against the defendant Brand, an Ohio corporation, for posting the plaintiffs copyrighted celebrity photos on Brand’s popular website, www.celebritygossip.net. A critical issue on appeal was whether the plaintiff had met its “purposeful direction” burden and, in particular, whether Brand had expressly aimed its conduct at California. The Ninth Circuit held that it had met its burden because Brand had “used [the plaintiffs] copyrighted photos as part of its exploitation of the California market for its own gain.” Id. at 1229. In particular, Brand made money by selling advertising space on its website to third-party advertisers, and a substantial number of “hits” to Brand’s website came from California residents. The court concluded that it could infer that Brand was making money through these California resident hits because “some of the third-party advertisers on Brand’s website had advertisements directed to Californians.” Id. These included advertisements for jobs, hotels, and vacations in California. Id. at 1222. Thus, concluded the court, “[t]he fact that the advertisements targeted California residents indicates that Brand knows — either actually or constructively — about its California user base, and that it exploits that base for commercial gain by selling space on its website for advertisements.” Id. Further, although Brand did not market its website to California local media, “Brand operated a very popular website with a specific focus on the California-centered celebrity and entertainment industries.” Id. The court concluded: “[b]ased on the website’s subject matter, as well as the size and commercial value of the California market, ... Brand anticipated, desired and achieved a substantial California viewer base.” Id. at 1230.
Here, Plaintiffs do not allege that any of the advertisements on Defendant’s Websites targeted Californians.' Their exhibits include two advertisements, one for an Australian dating site and the other regarding a Florida university. Neither can reasonably be interpreted as related to or directed at California.
Moreover, advertisements were not the only factor considered in Mavrix: the “most salient” fact was “that Brand used Mavrix’s copyrighted photos as part of its exploitation of the California market for its own commercial gain.”
Further, the website at issue in Mavrix allowed for interactivity similar to that alleged here: visitors could post comments on articles, vote in polls, subscribe to an email newsletter, join a membership club, and submit news tips and photos.
While the commercial and interactive aspects of Defendants’ Websites are insufficient in and of themselves to make a prima facie showing of personal jurisdiction — at least based on the record before the Court — the Websites themselves plus “something more” may be sufficient to support a finding that Defendant expressly aimed his conduct at California. Plaintiffs contend that the “something more” is that Defendant utilized accounts on California-headquartered Internet companies Face-book, M5.com, DeviantArt, and 4Shared to direct' traffic to his Websites. While the location of these companies is relevant for lawsuits directly involving the companies, the Court is unpersuaded that the headquarters of these Internet companies establishes that Defendant expressly aimed his infringing activities at the California market. To adopt Plaintiffs’ reasoning would render the “expressly aimed” prong of the Calder test essentially meaningless as it has become ubiquitous for businesses — large and small — to maintain Facebook and/or other similar accounts for marketing purposes and would subject millions of persons around the globe to personal jurisdiction in California. See Nubo-Nau, Inc. v. NB Labs, Ltd,
The Court recognizes that in DFSB Kollective Co., Ltd. v. Jervpoo,
Finally, Plaintiffs argue that the Court should also consider that Defendant’s Websites took revenue away from Plaintiffs’ California-based partner, Apple iTunes. Plaintiffs allege that “Defendant knew that his offering of illegal downloads of the DFSB Plaintiffs’ Properties would hurt the entities who would otherwise be entitled to the revenue received from legitimate music downloads, including not only DFSB Plaintiffs but also Apple iTunes.” (Dkt. No. 47 at 5.) This argument, too, would lead to an unprecedented expansion of personal jurisdiction in California; if accepted, the California courts would have personal jurisdiction of virtually any person who illegally offers copyrighted songs on the Internet for commercial gain.
c. Causing Harm Likely to be Suffered in the Forum State
The third requirement of the Calder test is satisfied where the defendant has “caused harm that it knows is likely to be suffered in the forum state.” Mavrix Photo, Inc.,
Here, there is no question Plaintiffs were harmed in Korea, their home country. The issue is whether they have demonstrated that they were also sufficiently harmed in California. Plaintiffs first contend that Californians who would have bought copies of Plaintiffs’ works from legitimate sources “have been harmed through the downloading of illegal and infringing materials.” (Dkt. No. 47 at 6.) There are two problems with this contention. First, Plaintiffs do not explain how California residents were harmed by getting for free what they should have paid for. Second, and more importantly, they also do not explain why it matters whether California residents were harmed. In a copyright case, it is usually the plaintiff— who owns the copyright and thus has
Plaintiffs also posit that by offering unauthorized copies of Plaintiffs’ works, Defendant has affected Plaintiffs’ large California market by “decreasing the volume of sales and corresponding revenue there appreciably.” (Dkt. No. 47 at 6.) In Mavrix, the Florida plaintiff was harmed because the defendant destroyed the market value of the plaintiffs copyrighted photos of the celebrity couple by publishing infringing photos; in other words, there was no market for the plaintiffs photos once they were already available on the Internet. The court held further that it was foreseeable that this harm would occur in California as well as Florida because “[a] substantial part of the photos’ value was based on the fact that a significant number of Californians would have bought publications such as People and Us Weekly in order to see the photos.” Id. at 1231-32.
Plaintiffs likewise intimate that a significant number of Californians would have bought copies of Plaintiffs’ works from California-based Apple iTunes given that the United States is Plaintiffs’ number one market for Korean music exports, and California has a large Asian-American population. (Dkt. No. 47 at 6,10 ¶ 3.) Regardless of the location of Apple’s headquarters, the Court finds that this allegation is sufficient to satisfy the harm requirement of' the Calder test.
2. The Remaining Factors: Relatedness and Reasonableness
Since the Court has determined that Plaintiffs have not satisfied the “purposeful direction” requirement of the minimum contacts test, the Northern District of California does not have personal jurisdiction of Defendant. See Pebble Beach,
CONCLUSION
Plaintiffs have more than sufficiently alleged that Defendant willfully infringed Plaintiffs’ copyrights. And the Court recognizes that the illegal downloading of music has had a significant negative impact on the music industry. The personal jurisdiction inquiry, however, does not depend on whether the Court is convinced the defendant engaged in unlawful and undesirable conduct; instead, under Ninth Circuit law, the plaintiff must make a prima facie showing that the Calder purposeful direction test is satisfied. Plaintiffs have not done so here. The Court is not holding that a foreign plaintiff can never demonstrate that a California court has specific personal jurisdiction of a foreign defendant for making illegal downloads available on the Internet. Rather, before filing suit (and perhaps having the unlawful websites taken down), the plaintiff should conduct sufficient investigation to make a prima facie showing of personal jurisdiction.
Accordingly, the Court RECOMMENDS that Plaintiffs’ motion for default judgment be DENIED for lack of personal jurisdiction. Plaintiffs may file objections to this Report and Recommendation under Federal Rule of Civil Procedure 72(b) within 14 days of the filing of this Order.
IT IS SO ORDERED.
Dated: August 3, 2012.
Notes
. Facebook and hi5 are social networking websites.
. DeviantART is "a platform that allows emerging and established artists to exhibit, promote, and share their works within a peer
. 4shared.com is an online file sharing and storage website.
. Filestube is a "search engine designed to search files in various file sharing and uploading sites.” About Filestube.com, Filestube (June 15, 2012, 1:31 PM), www.filestube.com/ about.html.
. "KoreanCupid.com is operated by Cupid Media Pty. Ltd., a company that specializes in the development of database-driven dating sites. Cupid Media was founded in 1999 and is based on the Gold Coast, Australia.” Who Owns KoreanCupid.com, KoreanCupid.com (June 14, 2012, 3:34 PM), http://www. koreancupid.com/About.cfm.
. The Court is uncertain of the basis for this allegation. The Complaint very specifically alleges that Defendant infringes by posting the copyrighted album covers on his Websites and then providing links to third-party websites where the user can illegally download the copyrighted material. (Dkt. No. 1 ¶¶ 19-20.) It also alleges that Defendant derives revenue from his Website through advertisements. (Id. ¶ 22.) There is no allegation that users of his Website pay Defendant directly. This new allegation appears to be based solely on the vague declaration statement of Plaintiff's CEO that Defendant "often receives funds for his illegally available downloads.”
. Status Table — 14: Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, http://www.hcch.net/index_en. php?act=conventions.status&cid= 17 (last visited June 20, 2012).
. Plaintiffs' assertion that this Court's tentative ruling was based on the finding that Defendant’s websites are merely passive (Dkt. No. 47 at 4) is wrong. The question is not whether the Websites are passive or interactive and, if they were interactive (whatever that means), there is personal jurisdiction. The question is what is the nature and quality of the interactivity, if any, and is it sufficient to support a finding of purposeful direction. Cybersell, Inc.,
. Plaintiffs note that the dating site promotes itself as "a leading Korean dating network connecting Korean women and men internationally’ and include[s] success stories from individuals around the globe, including the United States.” (Dkt. No. 47 at 4 n. 2.) They do not allege, however, that the dating site has any particular connection to California, the state where Plaintiffs chose to file this lawsuit.