American Buddha, an Oregon not-for-profit corporation with a principal place of business in Arizona, digitally published copies of four books on two websites. (The electronic copying and uploading took place in Arizona or Oregon.)
When the owner of the book's copyrights--Penguin Group (USA) Inc.--filed suit here in New York alleging copyright infringement, American Buddha sought to dismiss the claim for lack of personal jurisdiction.
Penguin, a New York corporation, countered that our state law--CPLR 302(a)(3)(ii)--gave the court "long-arm jurisdiction" over American Buddha because the latter had committed a tortious act that resulted in injury.
After the Southern District Court granted American Buddha's dismissal request, on the grounds that Penguin suffered a "purely derivative economic injury" in New York, the Second Circuit certified the question to the New York State Court of Appeals, and that court found that in "cases involving the uploading of a copyrighted printed literary work onto the Internet ... the situs of injury...[is] the principal place of business of the copyright holder[.]"
Our state's highest court based its decision on two factors. First, American Buddha's intention to use the Internet to distribute the copyrighted material "throughout the country and perhaps the world" made the actual location of the infringement immaterial. And, second, the copyright owner's "broad spectrum of rights" made the loss a more substantial injury than a "derivative" one.
That's the rub!
To view a copy of the Appellate Division's decision, please use this link: Penguin Group (USA) Inc., v. American Buddha