Tuesday, April 30, 2019
Panel Says Action Against Canadian Music Licensor Was Erroneously Dismissed Based on Supposed Lack of Jurisdiction; Company’s Actions Aimed at U.S., Had Effect Here, No Due Process Infirmity
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday resuscitated a dismissed action by Universal Music, a Los Angeles-based publishing company, and another company, against Quantum Music Works, headquartered in British Columbia, over licensing by the defendant to NBCUniversal of a Puccini aria to which the plaintiffs claim exclusive rights.
The aria, “Nessun Dorma,” composed in Italy by Giacomo Puccini in 1926 for his opera, “Turandot,” was popularized in the 1990s by tenor Luciano Pavarotti. Universal Music MGB NA LLC contends that it owns the U.S. copyright on the work and co-plaintiff Casa Ricordi S.R.l. claims that it possesses the Italian copyright.
For a one-time fee, users—including NBCUniversal—were able to download works via Quantum’s website. Universal and Casa sued it in the Central District of California, and Quantum declined to participate in the proceedings, contending that only Canadian courts have jurisdiction.
Yesterday’s decision, in a memorandum opinion by a three-judge panel, reverses a dismissal with prejudice by District Court Judge Fernando M. Olguin of the Central District of California.
Under Federal Rule of Civil Procedure 4(k)(2), the opinion points out, a district court has jurisdiction where the claim arises from federal law—as a copyright action does; the defendant is not subject to the personal jurisdiction of a state courts—and Quantum wasn’t; and an exercise of jurisdiction does not offend due process.
With respect to due process, the opinion says the “purposeful direction” test is met because, under the allegations, Quantum, in licensing for “Nessun Dorma” to NBCUniversal, committed an intentional act causing harm in the United States. Too, the conduct was expressly aimed at the United States because it licensed to NBCUniversal and advertised its service throughout the United States, the opinion declares, adding:
“[T]he district court’s exercise of personal jurisdiction over Quantum in this action does not offend traditional notions of fair play and substantial justice. At this stage, the burden is on Defendant to present a ‘compelling case’ that such exercise of jurisdiction would be unreasonable and unjust….Because Quantum has made no such argument, it has not met its burden and no compelling case has been demonstrated against the exercise of jurisdiction.”
Appellants Fault Olguin
In its brief on appeal, Universal and Casa took aim at the procedures followed by Olguin, saying:
“The district court took a circuitous route to eventually dismissing Universal’s suit for lack of personal jurisdiction. The court repeatedly denied Universal a default judgment for various other reasons, which were without support either legally or factually. In hindsight, the district court seems to have been led astray by a false statement in an email from Quantum’s Canadian counsel to Universal’s counsel, which Universal had placed in the record only to show that Quantum had been asked, but had declined, to accept service of Universal’s Complaint. In this email, Quantum’s counsel claimed, falsely, that Quantum had some sort of ‘contract’ giving it the right to license Nessun Dorma to NBCU, and falsely asserted that Universal had a copy of this “contract.”
“These unsworn contentions were false. And the district court should not have considered them in the first place, in light of Quantum’s default and Universal’s allegations and evidence….But the assertions alone seemed to have engendered skepticism by the district court about Universal’s case, leading the court to make multiple erroneous assumptions and conclusions. Though Universal eventually demonstrated that all of these grounds for denying Universal a default judgment were without support, the district court still eventually dismissed Universal’s action altogether, without leave to amend, for lack of personal jurisdiction. This, too, was error.”
The brief went on to assert:
“The district court erred in determining that Quantum could infringe Universal’s copyright on a nationwide basis and in California, in violation of the U.S. Copyright Act, yet still evade personal jurisdiction in the U.S. for such infringing conduct. This conclusion is indefensible, and cannot be the law. Contrary to the district court’s view that the only link to California was Universal’s random and fortuitous presence in the state, the litigation had distinct and unique connections to California far beyond Universal’s presence.”
“The infringement occurred in part in California; the music licensing business in which Quantum chose to compete and the ‘media professionals’ to which it directed its business and its commercial, interactive website were concentrated in California; and Quantum’s licensee, NBCU, also had a major presence in California. This was hardly analogous to the cases on which the district court relied, which involved defendants who had no connection to the forum and a forum that had no connection to the tort other than that the plaintiff, randomly and fortuitously, happened to reside there. Further, the district court’s analysis of each of Quantum’s contacts in isolation, rather than in conjunction with one another, was rigid and formalistic, ignoring the reality of the situation and the practical and pragmatic approach that must guide the personal jurisdiction analysis.”
Comprising the Ninth Circuit panel deciding the case were Circuit Judges Susan P. Graber and Jay S. Bybee, joined by District Court Judge Janet Bond Arterton of the District of Connecticut, sitting by designation.
The case is Universal Music MGB NA LLC v. Quantum Music Works, 17-56925.
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