IP Law Daily Chinese video streaming website did not have sufficient copyright-related contacts for U.S. jurisdiction
Thursday, July 19, 2018

Chinese video streaming website did not have sufficient copyright-related contacts for U.S. jurisdiction

By Cheryl Beise, J.D.

Popular Chinese video streaming platform provider Youku Tudou did not have sufficient contacts in the United States to be subject to specific personal jurisdiction in a copyright and trademark infringement suit filed by a company that held an exclusive license to display three Taiwanese movies that had been uploaded to Youku Tudou’s website by users, U.S. Court of Appeals for the D.C. Circuit has held. Youku Tudou’s website was in Mandarin Chinese and there was no allegation that it specifically targeted its platform to viewers in the United States. The "minuscule" percentage of monthly views coming from the United States, coupled with English-language advertisements placed by third party ad agencies, did not establish the minimum contacts required for due process (Triple Up Limited v. Youku Tudou, July 17, 2018, per curiam).

Youku Tudou ("Youku") is a subsidiary of Alibaba Group Holding Ltd with its principal place of business in Beijing, China. Youku operates a popular steaming video platform in China that hosts original content, licensed content, and videos uploaded by users. Youku employs geoblocking software to prevent videos it posts from being viewed in the United States, but it does not geographically limit videos posted to its platform by users. Youku’s website is in Mandarin Chinese, but U.S. companies place English-language ads on videos streamed by viewers in the United States.

Triple Up Limited is a Seychelles corporation that claimed to own the U.S. internet broadcasting rights to three Taiwanese movies ("Sleeping Youth," "Sorry, I Love You," and "Squirrel Suicide Incident") that were uploaded to Youku’s platform by users. Triple Up’s exclusive licenses to the movies expired by the end of November 2017. Triple Up’s attorney streamed the movies through Youku’s website on a computer in his office in the District of Columbia. When Triple Up notified Youku that it was violating copyright law, Youku removed "all versions" of the films within 24 hours.

Triple Up sued Youku for copyright infringement and unfair competition under the Lanham Act and District of Columbia law. Triple Up abandoned its claim for statutory damages under the Copyright Act, limiting its requested relief to an injunction and actual damages. In January 2017, the district court dismissed the case for lack of personal jurisdiction, finding that Youku’s isolated Internet-based contacts with the United States were insufficient to support specific personal jurisdiction.

Triple Up appealed and the D.C. Circuit affirmed the dismissal.

Injunctive relief. The court first found that Triple Up failed to demonstrate jurisdiction over its request for injunctive relief. In federal court, a plaintiff must establish jurisdiction "for each claim it seeks to press," the court said. Triple Up admitted that Youku removed all potentially infringing videos promptly and that it had no basis to believe that the videos would be re-posted. In addition, Triple Up conceded that the expiration of its exclusive broadcast license made its request for injunctive relief moot. "Because Triple Up has not plausibly alleged ‘any real or immediate threat that [it] will be wronged again,’" the equitable remedy of an injunction was unavailable, the court explained.

Actual damages. The court next found that personal jurisdiction was lacking over Triple Up’s claim for actual damages because Triple Up failed to allege sufficient minimum contacts with the United States to satisfy constitutional due process. First, Youku lacked a physical presence in the United States. Youku has no offices or employees in the United States. Nor does it have a registered agent with the U.S. Copyright Office. "While Youku does have an agent for service of process in New York and some software development deals with United States companies ... those contacts are wholly unrelated to the copyright infringement and unfair competition claims arising out of its free streaming services that are at issue here," the court said.

Second, Triple Up did not plausibly allege that United States viewers "actually engage in any business transactions with the defendant[]." Triple Up did not allege that its attorney "paid for or otherwise engaged in a business transaction with Youku when viewing the videos," the court noted. Nor was there any plausible allegation that Youku "designed its websites to make them generally usable by viewers in the United States, let alone to purposefully target them." While Youku earned revenue from advertisements that accompanied its videos, Triple Up did not show that Youku was in control of the advertisements’ placement with particular films or "purposefully directed" them toward United States viewers. Triple Up failed to allege facts to plausibly show that Youku played a material role in pairing advertisements with specific videos based on viewership.

In addition, there was no allegation or evidence that Youku acted in bad faith. "Youku’s limited control over the videos streamed from its website is reduced further still because users are free to upload their own content to Youku’s web-based platforms," the court said.

Jurisdictional discovery. The court also found that the district court did not err in denying Triple Up’s request for jurisdictional discovery. Triple Up sought to discover the revenue Youku earned from associated advertisements. "[J]urisdictional discovery is not a fishing expedition," the court said. The "minuscule" percentage of monthly internet views coming from the United States, coupled with English-language advertisements placed by third party ad agencies was not enough to establish the minimum contacts.

Triple Up did not plausibly any connection between Youku’s VIP service or its business dealings in the United States and its free streaming services and user-uploaded video platforms, which was at issue in its claims. A plaintiff’s discovery request "cannot be based on mere conjecture or speculation." Even if Youku used a server in the United States, that fact alone "would not change the jurisdictional bottom line," the court said.

The case is No. 17-7033.

Attorneys: Laurence M. Sandell (Mei & Mark LLP) for Triple Up Ltd. Anthony J. Dreyer (Skadden, Arps, Slate, Meagher & Flom LLP) for Youku Tudou Inc.

Companies: Triple Up Ltd.; Youku Tudou Inc.

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