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U.S. Judge Dismisses “Copyright Shakedown” of Foreign Video Sites

Ernesto, 11 Jan 2013

In February 2011, FraserSide IP LLC, a subsidiary of adult entertainment company Private Media Group, filed a complaint against Youngtek Solutions Limited, the owners of two “tube” sites called EmpFlix and TNAflix.

Specializing in adult content, the sites will be familiar to many readers since they were heavily promoted by the now-defunct Empornium and PureTNA BitTorrent trackers several years ago.

Fraserside alleged that both EmpFlix and TNAflix were guilty of contributory, vicarious and the inducing of copyright infringement along with various other trademark and other infringements.

The adult company served a copy of a summons and complaint on Youngtek agent in Cyprus during April 2011 (but not in Greek, the local language), and followed this by initiating the process for default judgment in the United States. Along with argument that Youngtek had not been properly served, the company filed a motion to set aside any default. During July 2011, U.S. District Court Judge Mark W. Bennett sided with Youngtek and denied Fraserside’s motion.

By April 2012 things had switched around somewhat, with Youngtek filing a motion for summary judgment on the basis that it is a not a United States-based company nor does it have connections to Iowa where it was being sued.

In December 2012 Fraserside objected, claiming that Youngtek’s online activities were enough to establish a sufficient basis for specific personal jurisdiction under Iowa’s long-arm statute.

The adult company said it could show that one person with an Iowa IP address had purchased a three-day premium membership for one of Youngtek’s websites for one dollar. The company also said that during a period of two years EmpFlix had 1.248 million visits from Iowa users (0.17% of its total traffic) and TNAflix had 2.197 million (0.14%). Both sites, Fraserside said, also used US-registered .com domains.

But would this be enough to hold a foreign company liable for alleged infringements carried out in the United States? According to the Judge, absolutely not.

Despite accepting that TNAflix, Empflix and Youngtek had “intentionally infringed Fraserside’s registered copyrights and trademarks”, in a ruling handed down yesterday District Court Judge Mark W. Bennett decided in favor of Youngtek and granted the company’s motion to dismiss.

“Youngtek is a Cyprus based company. Youngtek has no offices in Iowa, no employees in Iowa, no telephone number in Iowa, and no agent for service of process in Iowa. No Youngtek officer or director has ever visited Iowa,” the Judge began.

“Youngtek does not maintain any of its servers in Iowa. Youngtek’s complete absence of contacts with the State of Iowa is the antithesis of the type of continuous and systematic contacts necessary for exercising general personal jurisdiction over it,” he added.

Judge Bennett said that the sale of a single three-day pass to one user did not demonstrate “intentional, continuous, and substantial contacts with Iowa”, adding that Fraserside had failed to show that Iowa courts have general jurisdiction over Youngtek.

So what about the millions of visits to the sites from Iowa users? Still no good according to the Court.

“Fraserside has offered no materials whatsoever to support its assertion that visitors to Youngtek’s websites from the United States have uploaded, downloaded, or viewed Fraserside’s films,” Judge Bennett wrote, adding that no evidence had been presented to show that Youngtek bought its domains through a US company either.

“Fraserside’s utter lack of any evidentiary materials to support its assertions is particularly surprising since Fraserside’s submission comes after over six months of jurisdictional discovery,” he added.

Judge Bennett concluded by stating that the maintenance of the lawsuit would “offend traditional notions of fair play and substantial justice” and dismissed the case.

Evan Fray-Witzer of Ciampa Fray-Witzer, the lawfirm that defended Youngtek, says this kind of case has parallels with many of the copyright-troll style lawsuits the U.S. is witnessing at the moment. Fray-Witzer says there are a dozen more similar cases against other sites currently underway.

“We think that these kinds of lawsuits are simply higher-end versions of the BitTorrent suits – an attempt to shake down foreign cloud storage companies by suing them in far flung jurisdictions under the threat of having their businesses shut down through pre-trial asset and domain name seizures,” Fray-Witzer told TorrentFreak.

“The decision [in the Youngtek case] is an important one because the Court took a real hard look at some cutting edge jurisdictional questions and said that it’s not enough simply to show that there were a lot of visitors to a site from the United States.”

Fray-Witzer adds that the decision by Judge Bennett was the right one.

“If our courts start dragging foreign companies and individuals into the U.S. simply because they run a site where infringing materials may have been posted, then there’s no good argument that U.S. citizens and companies can’t get dragged into Court in China (or wherever) because they host a site that speaks favorably of Falun Gong or the Dalai
Lama,” he concludes.

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