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Triple Up Ltd. v. Youku Tudou Inc.

United States District Court, District of Columbia

January 24, 2017

TRIPLE UP LIMITED, Plaintiff,
v.
YOUKU TUDOU INC., Defendant.

          MEMORANDUM OPINION

          RANDOLPH D. MOSS United States District Judge

         This copyright infringement action is before the Court on Defendant's motion to dismiss for lack of personal jurisdiction, or, in the alternative, for failure to state a claim. See Dkt. 7. Defendant is Youku Tudou Inc. (“Youku”), a Chinese internet television company. Plaintiff is Triple Up Limited (“Triple Up”), a Seychelles corporation. The suit concerns the performance rights to three Taiwanese movies, which were allegedly viewable on Youku's websites from within the United States. Beyond the websites' mere accessibility, however, neither Youku, Triple Up, nor the contested works bears any case-relevant connections to the United States. Although the law governing personal jurisdiction in the context of the internet is admittedly unsettled, the contacts in this case are plainly insufficient and do not test the boundaries of that evolving doctrine. The Court, accordingly, will grant Youku's motion to dismiss for lack of personal jurisdiction and will deny Triple Up's request for jurisdictional discovery.

         I.BACKGROUND

         Plaintiff Triple Up is a corporation located in and organized under the laws of Seychelles, an archipelago nation off the coast of East Africa. Dkt. 1 at 4 (Compl. ¶ 15). It claims to own “the exclusive internet broadcasting rights . . . in the United States” for three Taiwanese movies: (IMAGE OMITTED) (“Sleeping Youth”); (IMAGE OMITTED) (“Sorry, I Love You”); and (IMAGE OMITTED) (“Squirrel Suicide Incident”). Id. at 1 (Compl. ¶ 1); see also Dkt. 11-1 (Hsu Decl.).

         Defendant Youku is a Cayman Islands corporation with its principal place of business in China, where it “is the leading [i]nternet television company.” Dkt. 7-1 at 2-3 (Tang Decl. ¶¶ 4, 5, 9). Youku operates two website platforms on which “[u]sers can view and publish high-quality video content, ” and an internet search engine that allows users to search for videos. Id. at 2 (Tang Decl. ¶ 5). Most videos on Youku's websites have been placed there by Youku itself. See Id. (Tang Decl. ¶ 6). Those videos consist of “professionally-produced content that Youku has licensed from third parties, ” as well as Youku's own “in-house productions.” Id. In addition, however, Youku's users can upload videos of their own choosing. Id. Together, Youku's websites receive about 400 million unique visitors each month. Id. at 3 (Tang Decl. ¶ 12). Less than one percent of the websites' views come from the United States, id., although the exact number of U.S. viewers is not reflected in the record. The text on Youku's websites is written entirely in Mandarin Chinese. Id. at 2 (Tang Decl. ¶ 5); see also Dkt. 1 at 7-14 (Compl. ¶¶ 29-41) (website screenshots); Dkt. 11-2 (Zhang Decl.) (same).

         With respect to videos that Youku itself has uploaded, Youku employs “geoblocking” technology. Dkt. 7-1 at 2 (Tang Decl. ¶ 7). This means that Youku restricts access to those videos based on the viewer's geographic location, thus ensuring that the videos are accessible only “in locations for which Youku is authorized to display” them. Id. When users attempt to access restricted content from a geoblocked location, they receive an error message or are redirected to the website's main page. Id. (Tang Decl. ¶ 8). Youku “does not implement geoblocking” for videos uploaded by users, however. Id. at 4 (Tang Decl. ¶ 20).

         Youku generates revenue “primarily from online advertising services and, to a lesser extent, subscription or pay-per-view-based online video services.” Dkt. 11-4 at 12; accord Dkt. 7-1 at 3 (Tang Decl. ¶ 13). The company sells “a great majority” of its internet ad space to third-party advertising agencies, including advertising agencies in the United States. Dkt. 11-4 at 8, 12-13. Those ads are then distributed using “[i]nnovative [t]argeting” strategies to “reach targeted users based on” certain demographic markers, including “the geographic location of the user.” Id. at 12. Thus, although Youku's websites appear in Mandarin Chinese, when accessed from the United States, Youku's videos are sometimes preceded by English-language advertisements for American products. See Dkt. 11-2 at 3, 12 (Zhang Decl. ¶¶ 5(e), 8) (attesting to accessing Youku's websites from the District of Columbia and seeing English-language video advertisements for, among other things, the University of Phoenix, Allstate Insurance, and Quicken Loans). Youku also earns revenue by selling subscriptions to its ad-free content service called “Youku VIP.” Dkt. 11-4 at 13. Youku “is not aware of any Youku VIP subscribers that reside in the District of Columbia, ” Dkt. 7-1 at 4 (Tang Decl. ¶ 14), but the record is silent as to whether any subscribers may reside elsewhere in the United States.

         Although Youku has no offices or employees in the United States and does not market its products or services there, id. at 3-4 (Tang Decl. ¶¶ 9, 17), it has at least some U.S. business connections. For example, Youku stock has been traded on the New York Stock Exchange, and Youku has maintained an agent for service of process in New York. Dkt. 11-4 at 6-7 (Youku's “Form 20-F” filed with the Securities Exchange Commission for the fiscal year 2014). Youku has also partnered with a U.S. software firm to develop “video fingerprint” technology for removing videos with “piracy issues.” Id. at 15. And Youku has entered into “digital distribution agreement[s]” with U.S. production studios to bring American content to Youku's platforms, id. at 13, and may be partnering with “U.S. entertainment companies to produce original content, ” Dkt. 11-9 at 2 (Lulu Yilun Chen & Stephen Engle, Youku Looks to U.S. for Videos to Stream to Chinese Users, Bloomberg (Oct. 27, 2014)).

         In August and December 2015, Jiwei Zhang, one of Triple Up's attorneys in the District of Columbia, was able to stream copies of “Sleeping Youth, ” “Sorry, I Love You, ” and “Squirrel Suicide Incident” from Youku's websites. See Dkt. 11-2 at 1-12 (Zhang Decl. ¶¶ 5-7). One of the videos was preceded by an English-language video advertisement for the University of Phoenix. Id. at 3 (Zhang Decl. ¶ 5(e).) The others were preceded by advertisements for Chinese-language video games containing Mandarin Chinese text. Id. at 7, 10 (Zhang Decl. ¶¶ 6(e), 7(e)); see also Dkt. 11 at 13. There is no indication that the latter advertisements included any English-language voice-overs. See Dkt. 11-2 at 7, 10 (Zhang Decl. ¶¶ 6(e), 7(e)). Based on a comparison of user-uploaded content and Youku-uploaded content, Zhang infers that the three videos had been uploaded by Youku itself, and not by Youku's users. Id. at 13-14 (Zhang Decl. ¶ 9). Triple Up has not alleged that anyone other than Zhang has used Youku's websites to view the films at issue from within the United States.

         In response, Youku maintains that it uploaded “Sleeping Youth” and “Sorry, I Love You” pursuant to an express license to display those films in China, and that it implemented geoblocking to prevent the Youku-uploaded versions from being displayed in the United States. Dkt. 7-1 at 4 (Tang Decl. ¶ 19). It says that any non-geoblocked versions of those films on its websites, as well as any versions of “Squirrel Suicide Incident, ” must have been uploaded by Youku's users. Id. (Tang Decl. ¶ 20); see also Dkt. 12 at 16 n.9. Youku also declares-and Triple Up does not dispute-that Triple Up notified Youku of the allegedly infringing content on January 17, 2016, and that Youku then “removed all versions of the films” from its websites “within 24 hours.” Dkt. 7-1 at 6 (Tang Decl. ¶¶ 24-25). There is no allegation that any of the three films have been available on Youku's websites in any form since January 18, 2016.

         On February 1, 2016, Triple Up filed the instant complaint. Dkt. 1. It alleges that Youku itself (as opposed to its users) uploaded each of the three films to Youku's websites, where they could be viewed throughout the United States. Id. at 2, 6-12, 14 (Compl. ¶¶ 4, 29-37, 43-44). It also alleges more broadly that Youku's “entire business model . . . relies upon systematic, widespread, and willful copyright infringement.” Id. at 2 (Compl. ¶ 7); see also Id. at 4, 15-16 (Compl. ¶¶ 12, 45-47, 53-54).

         Triple Up asserts four causes of action against Youku regarding each of the three films. Count One alleges infringement of the right of public performance in violation of 17 U.S.C. §§ 106(4) and 501 (including direct, vicarious, contributory, and inducement-based theories of liability). Id. at 17-19 (Compl. ¶¶ 57-67). Count Two alleges infringement of the rights of reproduction and distribution in violation of 17 U.S.C. §§ 106(1), 106(3), and 501 (again including direct, vicarious, contributory, and inducement-based theories of liability). Id. at 19- 21 (Compl. ¶¶ 68-80). Count Three alleges false designation of origin, false descriptions and representations, and unfair competition under the Lanham Act, 15 U.S.C. § 1125. Id. at 21-22 (Compl. ¶¶ 81-87). And the last count alleges unfair competition under D.C. common law. Id. at 23-24 (Compl. ¶¶ 98-104). Triple Up has withdrawn its causes of action for infringement of the right to prepare derivative works under 17 U.S.C. § 106(2) and for violation of the D.C. Consumer Protection Procedures Act. Dkt. 11 at 7 n.2.

         Youku has now moved to dismiss the complaint for lack of personal jurisdiction, or, in the alternative, for failure to state a claim on which relief can be granted. Dkt. 7.

         II. LEGAL STANDARD

         The Court must begin-and, in this case, end-with the motion to dismiss for lack of personal jurisdiction. See Sinochem Int'l Co. v. Malay. Int'l Shipping Corp., 549 U.S. 422, 430- 31 (2007) (“[A] federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over . . . the parties . . . .”). On such a motion, the plaintiff bears the burden of “establishing a factual basis for the exercise of personal jurisdiction” over each defendant. Crane v. N.Y. Zoological Soc., 894 F.2d 454, 456 (D.C. Cir. 1990). It must do so by “alleg[ing] specific acts connecting [the] defendant with the forum” and “cannot rely on conclusory allegations.” Clay v. Blue Hackle N. Am., LLC, 907 F.Supp.2d 85, 87 (D.D.C. 2012). The Court “need not treat all of plaintiffs' allegations as true, ” moreover, and “may receive and weigh affidavits and any other relevant matter to assist it in determining the jurisdictional facts.” Id. Ultimately, the Court must “satisfy itself that it has jurisdiction to hear the suit, ” and, to the extent necessary, “may look beyond the allegations of the complaint” to do so. Achagzai v. Broad. Bd. of Governors, 170 F.Supp.3d 164, 173 (D.D.C. 2016).

         III. ANALYSIS

         In the usual case, establishing personal jurisdiction over a non-resident defendant requires “a two-part inquiry.” GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000). The exercise of jurisdiction must comport with both the long-arm statute of the forum and the Constitution's due process requirements. Id. As explained in more detail below, the due process inquiry examines the defendant's “contacts, ties, or relations” with the forum state, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985), and, in the case of “specific” or “case-linked” jurisdiction, those contacts must give rise to the specific claims at issue, Goodyear Dunlop Tires Operations, SA v. Brown, 564 U.S. 915, 923-24 (2011).

         Alternatively, Rule 4(k)(2) of the Federal Rules of Civil Procedure provides that, if the claim arises under federal law, if a summons has been served, and if the defendant is beyond the jurisdiction of any one state's courts, then federal courts may exercise jurisdiction-without regard to the forum's long-arm statute-so long as due process requirements are met. See Fed. R. Civ. P. 4(k)(2); Mwani v. bin Laden, 417 F.3d 1, 10 (D.C. Cir. 2005). For this purpose, the Court may assume that the defendant is outside the long-arm jurisdiction of any one state's courts unless the defendant “concede[s] to the jurisdiction of any state.” Mwani, 417 F.3d at 11. And, although the “forum” for purposes of Rule 4(k)(2) is not a single state but “the United States as a whole, ” id., the constitutional inquiry is “otherwise the same, ” Safra v. Palestinian Auth., 82 F.Supp.3d 37, 47 (D.D.C. 2015).

         Here, Triple Up argues only for the exercise of specific jurisdiction under the “transacting business” prong of the District's long-arm statute, D.C. Code § 13-423(a)(1), or, in the alternative, under Rule 4(k)(2). Dkt. 11 at 14-24 & nn.3 & 7. Although Youku disputes whether the “transacting business” prong properly applies to these facts, [1] see Dkt. 7 at 21; Dkt. 12 at 7-9, Youku does not dispute for purposes of Rule 4(k)(2) that three of the claims against it arise under federal law or that it was properly served. See Dkt. 12 at 7-16. Nor does Youku concede to personal jurisdiction in the courts of any state.[2] See id.

         As a result, whether or not the D.C. long-arm statute authorizes the exercise of personal jurisdiction here, the Court must still address the constitutional questions. The logic is as follows: If the D.C. long-arm statute allows for jurisdiction, then, under the ordinary framework, the Court must go on to consider whether the exercise of jurisdiction would satisfy due process. But if the D.C. long-arm statute does not apply, then Rule 4(k)(2) governs, and, because the non-constitutional predicates to the use of 4(k)(2) are met, the Court must consider the due process inquiry regardless. The constitutional issues in this case are therefore unavoidable.[3]

         The Court, accordingly, will address a single, dispositive question: Are Youku's contacts with the United States as a whole constitutionally sufficient to justify the exercise of specific personal jurisdiction over it with respect to Triple Up's asserted claims? See Mwani, 417 F.3d at 11. Because the Court finds that they are not, personal jurisdiction is unavailable under either of Triple Up's theories.

         A. Due Process Requirements for Specific Jurisdiction ...


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