Professor Eric Goldman reported recently on a case which could mark a watershed change in US court’s jurisdiction over foreign defendants if it were to become the norm. The case involves copyright infringement, the source of many not-great legal rulings, and appears to stand for the proposition that targeting advertising to the US plus the use of US service providers may be sufficient to confer jurisdiction in the US. Given the premier position of many US service providers in the internet infrastructure, that’s a big deal.
In short, the court held that the owner of two websites based in Russia may be subject to jurisdiction in Virginia because the defendants: (1) targeted a significant amount of marketing to Virginia (which is relative, since it was only about 0.2% of the defendant’s worldwide audience), (2) used a US-based registrar and cloud services provider, and (3) registered a DMCA agent with the US Copyright Office. While the defendant in this case may not be an overly sympathetic character, that logic could be used to subject almost any ad-driven multinational website to jurisdiction in the United States, particularly given that the volume of business in Virginia, while significant, was a very small fraction of US traffic (to say nothing of total traffic). It’s definitely a red flag for companies providing services from outside of the US who aren’t intentionally targeting US consumers.
For international companies looking to stay out of the reach of US courts, there are definitely a few lessons to be learned here:
- Know where your ads are displayed. Many companies outsource a lot of their social media targeting, understandably, but if you want to avoid US jurisdiction you need to keep an eye on where your ads are being shown and, how they are being customized for a particular market. Courts are clearly considering these issues so it’s important you aren’t wasting advertising spend on markets you may not want to be in, for legal reasons or otherwise. You may decide to take the risk of selling in the US, but it should be a knowing decision rather than something which simply happens.
- Use non-US service providers. Although US providers like Amazon and Google may be ubiquitous, they may not always be the best choice. If you want to reduce your contacts to the US this is probably the easiest place to start, since there are domain name registrars and cloud service providers all over the world. They may not be as well known, but unless you absolutely must use a US provider it’s worth taking a look. As a bonus, you might also increase your compliance with GDPR and other international laws which US providers aren’t terribly keen on following. Your non-US customers might actually appreciate it.
- Reconsider the DMCA. This is a more difficult decision to make. Whatever its faults, the DMCA actually protects online companies from liability for content uploaded by customers, so it’s generally better to have a registered agent and follow the DMCA notice and counter notice regime where possible. That analysis might change, however, if the cost of that protection is general jurisdiction in the US for unrelated lawsuits.
It’s almost impossible for online marketers to avoid all contact with US providers, but it’s important to understand some of the risks which may accompany those providers and eliminate those risks where possible.
If you want more detail on this case, check out Professor Goldman’s post. As an aside, if you are active in internet marketing and the law, you really need to be reading that blog on a regular basis anyway (although keep checking back here as well!).
Image from Wikimedia.