Court: District Court, S.D. New York; August 12, 2016; Federal District Court
Richard Megna has filed a lawsuit against Biocomp Laboratories, Inc. and Blanche D. Grube, DMD, IMD, for copyright infringement regarding stock photographs he owns and licenses. He alleges that the defendants copied, stored, modified, and displayed one of his photographs on their website, www.shslab.com. Megna asserts multiple claims: copyright infringement under 17 U.S.C. § 501, vicarious copyright infringement, a request for a permanent injunction under 17 U.S.C. § 502, and a request for attorney’s fees and costs under 17 U.S.C. § 505. He seeks statutory damages of up to $150,000 per infringement or actual damages and profits, along with a permanent injunction, attorney's fees, costs, and other relief deemed appropriate by the court.
Defendants are challenging the court's personal jurisdiction over them, asserting that neither resides in New York and that Biocomp does not conduct sales through the website, as the testing kits offered are free. They argue Megna cannot prove systematic and continuous contacts with New York and that jurisdiction over Grube cannot be established based solely on her ownership of Biocomp. Megna counters that customers must pay for additional services through the website, suggesting it is interactive and conducts business. He also requests the dismissal of Grube from the action.
The court interprets the correspondence as a motion to dismiss for lack of personal jurisdiction. Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, the plaintiff must demonstrate that the court has jurisdiction over the defendant. As the court did not hold an evidentiary hearing, Megna only needs to establish a prima facie case for personal jurisdiction through affidavits and supporting materials. The court ultimately grants the defendants' motion to dismiss.
The plaintiff must satisfy the burden of proof regarding personal jurisdiction, with pleadings and affidavits favorably viewed for the plaintiff, and any ambiguities resolved in their favor. However, personal jurisdiction cannot be established through mere conclusory statements; a prima facie showing must be factually supported. To assess personal jurisdiction over a non-domiciliary in federal question cases, courts first apply the forum state's long-arm statute. If permitted, the analysis shifts to whether exercising such jurisdiction aligns with due process protections under the Constitution.
In cases involving federal statutes like the Copyright Act or the Lanham Act, which do not provide for nationwide service, federal courts utilize the personal jurisdiction rules of the forum state—in this instance, New York law. The court will examine New York’s long-arm statute, specifically Civil Practice Law and Rules Section 302, which outlines three bases for personal jurisdiction.
Focusing on Section 302(a)(1), the court can exercise jurisdiction over a non-domiciliary who transacts business in New York or contracts to supply goods/services there. The determination involves assessing if the defendant has engaged in purposeful activity within New York and whether there is a substantial relationship between the claim and the activities in the state. Purposeful activity refers to actions that invoke the benefits and protections of New York law. Jurisdiction under Section 302(a)(1) is legitimate when the cause of action arises from business transactions conducted within New York. The court will analyze the totality of the defendant's interactions within the state, starting with the examination of the defendant's website.
The mere availability of a website to New York users does not constitute transacting business under section 302(a). Courts assess a website's interactivity level, and in this case, the website is positioned between passive and interactive since Biocomp does not sell testing kits but allows users to request paid services. However, there is no indication that customers can purchase these services directly through the website; the listed prices are for informational purposes only. Consequently, a closer evaluation of the website's contact with New York residents is necessary to determine purposeful activity. Previous court rulings indicate that a website not engaging in traditional business over the internet—such as selling goods or charging fees—falls into a middle ground, which requires further scrutiny of its New York interactions.
Upon review, the court concludes that Megna has not sufficiently established a connection between the website and New York residents to demonstrate purposeful activity. The mere existence of the website for New York users is inadequate. Even if transactions occurred, Megna has not shown that any New York residents participated in such transactions nor differentiated Biocomp's commerce in New York from its broader U.S. and global commerce. Courts have ruled that a complaint must identify specific transactions directed at New York to establish jurisdiction. Most interactions by Biocomp with New York users do not exhibit the necessary "purposeful availment" as they are not distinguishable from interactions with users in other jurisdictions. Therefore, Megna has not demonstrated that Biocomp has transacted business in a way that constitutes purposeful activity. Additionally, there is insufficient connection between the claim and Biocomp's actions in New York, as the complaint lacks allegations linking the use of a photograph to Biocomp’s business. Thus, section 302(a)(1) does not provide a basis for personal jurisdiction over Biocomp.
Under Section 302(a)(2) of the New York Civil Practice Law and Rules (C.P.L.R.), a court can exercise personal jurisdiction over a non-domiciliary who commits a tortious act within New York, provided the defendant is physically present in the state at the time of the act. The New York Court of Appeals has affirmed that actual physical presence is a prerequisite for jurisdiction under this section. Since Biocomp is not physically present in New York, Section 302(a)(2) cannot be used to establish personal jurisdiction over it.
Section 302(a)(3) allows for personal jurisdiction over a non-domiciliary who commits a tortious act outside the state that causes injury within New York, provided certain conditions are met. The Complaint successfully alleges that Biocomp committed a tortious act (copyright infringement) in Colorado, resulting in injury to Megna, a New York resident. However, it fails to demonstrate that Biocomp regularly conducts business in New York or derives substantial revenue from activities in the state, nor does it establish that Biocomp should have reasonably expected its actions to have consequences in New York. General assertions about Biocomp's activities directed at New York residents are deemed insufficient to establish jurisdiction. Thus, the court concludes that Section 302(a)(3) does not provide a valid basis for exercising personal jurisdiction over Biocomp.
Megna has failed to establish a sufficient basis for the Court to exercise personal jurisdiction over Biocomp under New York’s long-arm statute, Section 302. Consequently, the Court does not need to analyze whether such jurisdiction aligns with constitutional due process standards. As personal jurisdiction is deemed impermissible under New York law, the Court concludes that Megna has not adequately alleged grounds for jurisdiction over Biocomp. The Court orders the motion by defendants Biocomp Laboratories, Inc. and Blanche D. Grube, DMD, IMD to dismiss the complaint for lack of personal jurisdiction to be granted. Additionally, Megna is permitted to file an amended complaint within thirty days to address the identified jurisdictional deficiencies. Although Megna requests the dismissal of Grube, the Court will focus solely on the personal jurisdiction issue concerning Biocomp. Having determined that Megna has not demonstrated that Biocomp conducts business in New York, the Court finds it unnecessary to consider whether the cause of action arises from such business transactions, though it will briefly address this aspect.
