In today's interconnected world, determining the reach of U.S. copyright law has become increasingly complex. As global online platforms and cloud servers blur the boundaries between countries and their jurisdictional limits, courts continue to be asked to navigate the ever-evolving intricacies presented by this digital landscape.

A recent case, Dow Jones & Company, Inc. v. Juwai Ltd. (Mar. 17, 2023), out of the Southern District of New York, sheds light on the territorial reach of U.S. copyright law and how the existence and use of cloud servers located in the United States can defeat a motion to dismiss a complaint and render a foreign entity subject to jurisdiction in a U.S. court.

This article will examine the copyright infringement claims in the Dow Jones case involving a foreign actor and its cross-border online activities, and how technology is reshaping the territorial boundaries of U.S. law when at least some of that technology touches U.S. soil. This may inadvertently subject businesses to foreign laws and the jurisdiction of foreign courts, as demonstrated by this case. Failure to heed the considerations presented here may result in costly inconvenient litigations across the globe.

Background

Dow Jones & Company, the owner of renowned publications such as The Wall Street Journal and Barron’s, filed an action against Juwai Ltd., a Chinese publisher operating predominantly out of Hong Kong. Dow Jones alleged that Juwai had reproduced over 100 articles from Dow Jones’ publications, without authorization, on Juwai's Chinese-language website, www.Juwai.com, with some of the articles being translations of Dow Jones’ publications, while others were copied verbatim.

Juwai sought to dismiss the claims, primarily arguing that its activities were beyond the territorial scope of U.S. copyright law given that it was a Chinese company publishing a Chinese-language website, and thus not subject to U.S. copyright laws.

Territorial Scope of U.S. Copyright Law

U.S. copyright law generally does not have extraterritorial application. Activities that occur entirely outside the United States do not violate the copyright law.

There are exceptions, however. If a defendant commits a predicate infringing act in the U.S., and the infringing act permits further reproduction abroad, then the defendant may find itself liable for related infringing acts occurring outside the country.

A plaintiff therefore must allege relevant domestic conduct in the complaint to defeat a motion to dismiss for failure to allege sufficient facts to satisfy an element of a copyright claim.

The nature and international connectivity of the internet, however, introduces unique obstacles when determining relevant domestic conduct. Technically, whenever a user accesses a webpage, regardless of where it is hosted, a copy of the content of that webpage is stored locally on the user’s device. If the content includes copyrighted works, some courts have considered this act of copying by a user in the U.S. sufficient to support an infringement claim based on U.S. law.

The majority of courts, however, disagree and find that establishing a copyright claim based solely on the fact that a copyrighted work is posted on the internet and made available to users in the U.S. would “undermine the extraterritorial limitations on U.S. copyright law.”

One such court is the Southern District of New York which has required plaintiffs to allege additional “plus factors” beyond online availability to establish a copyright infringement claim. These factors include: (1) the direction of copyrighted material into the U.S., (2) when foreign acts are intended to, and do, have an effect within the U.S., and (3) the uploading of copyrighted materials to servers located in the U.S.

Juwai's Use of U.S. Servers

While Juwai’s employees, core operations, and overall business presence operate exclusively outside the U.S., the crux of the case revolved around Juwai's use of cloud computers or servers located within the U.S.

Juwai employed Amazon Web Services' CloudFront content delivery service, which utilizes a network of cloud servers, more particularly known as “edge servers,” providing copies, or caches, of a website’s content to users based on their location. These servers typically enhance responsiveness and increase transfer speeds for visitors to a website, even while the website is created by an entity across the globe, because the cache, or copy, of the website is stored on a server closer to the user.

The complaint alleged that Juwai's website content, including the articles alleged to be infringing, was stored on CloudFront servers in Seattle and Chicago, and as such, Dow Jones argued, Juwai's stored and distributed copies of the infringing works in the U.S. satisfied the domestic activity and “plus factors” required to constitute copyright infringement under U.S. law.

The court found merit in Dow Jones’ argument, stating that when a defendant causes a copy of an infringing work to be made on servers in the United States, it constitutes an act of infringement within the country.

Juwai argued that any use of U.S. servers through the CloudFront network was triggered by website viewers and their locations, and not by any action on Juwai’s part, thereby absolving it of liability. The court, however, was unpersuaded and dismissed this argument, emphasizing that Juwai had actively chosen to use the CloudFront service to store copies of the infringing content on U.S. servers.

Thus, by uploading the content onto the U.S. servers, Juwai could be held liable for copyright infringement. As a result, the court concluded that Dow Jones had adequately stated a claim of copyright infringement against Juwai, and Juwai’s motion to dismiss this claim was denied.

Conclusion

Dow Jones v. Juwai highlights the intricate interplay between technology, copyright law, and jurisdictional implications posed by the global nature of the internet.

While copyright law generally does not have extraterritorial reach, as global businesses leverage cloud servers located in foreign territories, they may, as demonstrated by this case, inadvertently subject themselves to foreign laws and the jurisdiction of foreign courts.