My client Signatures4U.com is a Mom and Pop side business operating out of Florida that sells signed sports memorabilia, mostly through its eBay site. Last year it was served with a Federal lawsuit filed in the Southern District of NY over alleged copyright infringement. The basis of the claim is that two sports photographers allege that my client never got permission to use their pictures to obtain signatures on them and then sell them. They filed a lawsuit against my client and about ten other organization s( large and small) involved in the same line of business.
The photographers quickly dropped one or two of the targets from the suit and settled with everyone else except my clients. When I read the complaint, I saw that one of the photographers was from Wisconsin and the other was from Illinois. What did this have to do with NY I wondered? I checked with my clients and found that they bought all their photos from trade shows and then went to either ball parks (during Spring Training when most teams are in Florida) or conventions to get them signed. The sellers of the images to my clients all gave them certifications that they had permission to sell the images. Only a handful of images were ever sold to a NY buyer and there was no proof that any of those few NY sales were of the plaintiffs’ photographs.
We decided to move to dismiss the case for lack of personal jurisdiction arguing that my client had no connection to NY and could not be sued here. Yesterday, Judge Jesse Furman of the SDNY, agreed with our arguments and threw the case out of court. In a decision that will likely be cited in internet cases brought in the SDNY, Judge Furman saw through the plaintiffs’ arguments that sought to connect my client to NY. They argued that the photos were licensed by the MLB, NBA and NFL – all of which are principally located in NY; that the main re-seller of my client’s memorabilia made many sales in NY on a regular basis; that the contract with that re-seller said that any claims must be brought in NY and decided under NY law; and that some of the photos were obtained from a NY company.
The court examined these arguments under NY law as the Copyright Act does not have a jurisdictional component. NY has a law called the “long-arm statute” which sets forth how a NY court can extend its long arm across the country to haul someone before it. Here, the applicable section requires that the controversy “arise from transacting business” in NY. All of the above arguments, the court said, might be strong enough to get jurisdiction over the re-seller, but not strong enough for my client.
Why the case is important
Before the advent of the Internet, jurisdictional cases were simpler to decide: companies are located where their brick and mortar facility is and unless they regularly transact business in another State or unless the the lawsuit directly involves a business transaction occurring in another State , the company must be sued in its home territory. But now, companies can advertise via the Internet; their ads can pop up on computers all across the globe; the companies that re-sell their wares can link to their website which can then be viewed and used by anyone anywhere.
Folks who want to file complaints against multiple infringers for cost and efficiency were lumping in targets that had connections to the suit State with companies that had no connection to the suit State. This makes it easier to file complaints over small, low-value infringements. Here, it appears NY was chosen because the main infringer (the re-seller) was from NY. So to save time and money, the lawyers threw in the companies that had connections to the re-sellers – most of them from out of State with little or no NY connection. Getting hit with a Federal lawsuit is bad enough. Having to defend it thousands of miles away from where you do business makes it that much worse.
To be sure, my client had many other substantive defenses to the lawsuit and if it is re-filed in Florida it will be prepared to litigate those defenses. At least it will do it in a courthouse close to home, where they can meet at their lawyer’s office easily and attend court conferences. Its always interesting to see how law evolves to deal with an ever-changing world. My students in my NY Practice class at Touro Law School now have a new case to be added to their reading on personal jurisdiction.
You can find the court’s decision here: https://www.pacermonitor.com/public/case/23537160/Boehm_et_al_v_SportsMem,_LLC_et_al
You can find great signed sports memorabilia here: https://www.pinterest.com/signatures4u/?autologin=true
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