More Foreigners Find Themselves Targets Of US Copyright Law

All the experts agree: US copyright law doesn’t apply outside US borders. But try telling that to Kim Dotcom, Aubrey Canning, or the growing number of other foreigners whose activities outside the United States have resulted in sanctions under US copyright law.

The US government has asserted, and its courts have repeated held, that a foreigner’s activities outside the US can infringe US copyright law, so long the activity has some nexus with the United States. As a result, US copyright law is being used with increasing frequency against online activities that occur far beyond American borders.

In January, for instance, US authorities indicted Kim Dotcom for criminal copyright infringement and arranged for his arrest by New Zealand authorities. Yet Dotcom was not a US citizen, didn’t reside in the US, and the vast bulk of his allegedly infringing activities occurred outside the US.

Dotcom was a citizen of both Finland and Germany, and he resided in Hong Kong and New Zealand. As the head of an extremely popular Hong Kong-based website, Megaupload, he presided over a profitable internet business that enabled users throughout the globe to share unauthorised copies of US movies, TV shows and other copyrighted works, according to US authorities.

The US asserted it had a right to prosecute Dotcom and Megaupload because of their contacts with the United States. Specifically, the indictment alleged Megaupload leased some servers in the US and used them to host some copies of infringing works. Megaupload allegedly used US-based PayPal to receive payments from some US customers and make payments to some US residents who uploaded files to Megaupload. And a US-based online ad network supposedly posted ads on Megaupload’s website and paid ad revenue to Megaupload.

“Put all of those together, and there is a pretty good argument that the US has jurisdiction here for criminal infringement of its copyright law,” said Stefan Mentzer, a partner in the New York office of White & Case. “The indictment indicates that Megaupload had enough contact with the US to be subject to US courts.”

Not Meant for America

Dotcom and Megaupload may have knowingly availed themselves of contacts with the US, but Aubrey Canning did not. That, however, didn’t protect Canning from the long reach of US copyright law.

Canning is a Canadian who put a US copyrighted song in a homemade video. He uploaded the video from a computer in Ontario to YouTube.ca, so it could be viewed by other Canadians. Unbeknownst to Canning, however, the video was allegedly stored on YouTube’s servers in California and the video could be seen on YouTube.com, the company’s US-oriented website. That was enough for a US district court judge to hold, in August 2011, that Canning could be sued for violating US copyright law.

Canning didn’t know his uploaded video would have any connection to the US, but his lack of knowledge was irrelevant, according to the US court in Shropshire v. Canning. “Direct infringement does not require intent or any particular state of mind,” the court stated.

And although only part of Canning’s supposedly infringing act occurred in the US, that was enough to justify the application of US copyright law, the court held. Canning uploaded the video in Canada and it allegedly went to servers in California. The infringing act began outside the US but was completed inside the US. If any part of an infringing act occurs in the US, American copyright law applies, the court held.

US courts have not always applied US copyright law so expansively. For example, in L.A. News Service v. Reuters Television Int’l (9th Cir. 1998) and Allarcom Pay Television Ltd. v. General Instrument Corp. (9th Cir. 1995), the 9th Circuit Court of Appeals ruled that US copyright law reaches a foreign defendant only if the defendant commits an infringing act entirely in the United States.

But other rulings have agreed with the Canning court. For instance, in Litecubes, LLC v. Northern Light Products, Inc. (Fed. Cir. 2008) and Subafilms, Ltd. v. MGM-Pathe Communications Co. (9th Cir. 1994), the Federal and 9th Circuit Courts of Appeals, respectively, held that a foreign defendant is subject to US copyright law if any part of an infringing act occurs in the United States.

Many experts believe that this more expansive interpretation of US copyright law will win out. “It is where all the [US] courts are headed,” said Canning’s legal counsel, Christopher Banys of The Lanier Law Firm.

US law enforcement officials certainly have been applying US copyright law expansively. Aside from the Megaupload prosecution, for instance, US officials have repeatedly, over the last two years, gone after foreign websites that allegedly sell or distribute works that infringe US copyrights or trademarks. The government has seized hundreds of domain names used by these supposedly infringing foreign websites.

Going Too Far?

How far might the United States extend its copyright law? Would the country apply it to a foreign citizen who posts material to a website hosted in his own country, but which is accessed by one individual in the United States? “Probably not,” according to Mentzer, so long as the website isn’t directed to US users. But Canning indicates that US law might well apply, according to other experts. “The ruling seems to indicate if you put something on the internet and it winds up on a US server, tough luck,” Banys said.

Some experts are troubled by the United States’ willingness to apply its copyright law to foreigners whose supposedly infringing online activities take place largely outside US borders. “If the US does this, other countries will do this,” said Prof. Neil Netanel of the UCLA School of Law. “Do you want every country to apply its own law to everything that happens on the internet? That raises all sorts of problems.”

Some other countries, however, also seem to apply their copyright law to actions taken outside their borders. Canada’s Supreme Court held, in Canadian Association of Internet Providers v. Society of Composers, Authors and Music Publishers of Canada, that the country’s copyright law applies to online activities done by foreigners outside Canada, so long as those activities have “a real and substantial connection” to Canada. Such a connection generally exists, the court ruled, if the online activity originates outside Canada but is received in Canada. To buttress its holding, the court noted that France and Australia would likely apply their copyright laws to online infringements received in their countries.

Such expansive application of national copyright laws is necessary to deal with the unique challenges of the internet, some experts assert. “The internet has created issues in copyright law that have never existed before. It allows perfect copies to be easily made and quickly disseminated worldwide. So extending the reach of copyright law as far as possible is a good thing. It is needed to protect copyright owners,” said Peter Toren, a partner in the law firm of Weisbrod Matteis & Copley.

But this issue, Toren added, is far from resolved. “It will come up more and more in today’s world without borders.”