Federal Judiciary

Tenth Stretches Personal Jurisdiction in eBay Infringement Case

By Robert Loblaw

Dudnikov v. Chalk & Vermillion Fine Arts, Inc., 06-1458 (10^th Cir., Jan. 28, 2008)

Late yesterday, the Tenth Circuit issued a very interesting decision showing how far the internet has stretched the concept of personal jurisdiction. The plaintiffs are Colorado-based eBay sellers who decided to make some money with an awkward variation on the elegantly dressed women drawn by the Art Deco artist Erte. Compare an original with a copy.

When the companies that own Erte?s images learned of this sacrilege, they contacted eBay, claiming that the sellers? wares infringed their copyrights. eBay responded by suspending the relevant auctions. The companies then emailed the sellers, threatening to sue them if they tried to repost their auctions.

So the sellers fired back by filing a pro se suit in Colorado, seeking a declaratory judgment that their wares constituted fair use.

The defendants are a Connecticut company and a British company with no ties to Colorado, so they moved to dismiss on the ground that the court lacked jurisdiction over them. Although a magistrate judge disagreed, the district judge overrode his recommendation and dismissed the suit for lack of personal jurisdiction.

On appeal, the Tenth Circuit reverses, adapting the standard test for personal jurisdiction to the internet age. In particular, the Court focuses on two allegations made by the plaintiffs. First, they alleged that the defendants knew that the plaintiffs were based in Colorado, as their auction pages prominently display their location. Second, the plaintiffs allege that the defendants acted tortiously in contacting eBay to have their auctions removed.

Accepting these two allegations at the pleading stage, the Court concludes that the defendants engaged in wrongful acts that were purposefully directed at the state of Colorado. The harm to the plaintiffs was foreseeable, and the claims in this litigation arise out of that harm. Finally, the Court concludes that requiring the defendants to appear in Colorado District Court does not offend traditional notions of fair play and substantial justice. Accordingly, at least at this stage, the law suit may continue.

The outcome is a harsh lesson for copyright holders who send cease and desist letters willy-nilly, but it?s also a lesson for district court judges: listen to your magistrates! Many of them actually know what they are talking about.

Full post as published by Decision of the Day on January 29, 2008 (boomark / email).