Righthaven LLC v. Newman

Filing 25

MOTION to Dismiss for Lack of Jurisdiction Subject Matter and Personal First Amended Complaint by Defendant Garry Newman. Responses due by 8/18/2011. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J)(DiRaimondo, Anthony)

Exhibit H

{00641518.1}

Cable News Network, L.P. v. GoSMS.com, Inc., Not Reported in F.Supp.2d (2000)
2001 Copr.L.Dec. P 28,190, 56 U.S.P.Q.2d 1959, 29 Media L. Rep. 1009

2000 WL 1678039
United States District Court, S.D. New York.
CABLE NEWS NETWORK, L.P., L.L.L.P., Gannett
Satellite Information Network, Inc., Media WestGSI, Inc., The New York Times Company and its
wholly owned subsidiary, Times Company Digital,
Inc., the Washington Post Company, and its
wholly owned subsidiary,
Washingtonpost.Newsweek Interactive Company,
Plaintiffs,
v.
GOSMS.COM, INC., Gosms.com, Ltd, Yuval
Golan, Dr. Michael Golan, Brian Sagi and Karen
Spinks, Defendants.
No. 00 Civ. 4812(LMM).Nov. 6, 2000.
Opinion

MEMORANDUM AND ORDER
MCKENNA, J.
*1 Plaintiffs Cable News Network, L.P., L.L.L.P.,
Gannett Satellite Information Network, Inc., Media WestGSI, Inc., The New York Times Company and its whollyowned subsidiary Times Company Digital, Inc., and the
Washington Post Company and its wholly-owed
subsidiary
Washingtonpost.Newsweek
Interactive
Company (collectively “plaintiffs”) have brought this
action
against
Defendants
GoSMS.com,
Inc.
(“GoSMS.com-CA”), GoSMS.com, Ltd. (“GoSMS.comIsrael”) (collectively “GoSMS.com”), Yuval Golan
(“Golan”), Dr. Michael Golan (“Dr.Golan”), Brian Sagi
(“Sagi”), and Karen Spinks (“Spinks”) (collectively
“defendants”) alleging copyright infringement under the
Copyright Act, 17 U.S.C.A. § 501(a) (West Supp.2000),
false advertising and trademark infringement and dilution
under the Lanham Act, 15 U.S.C.A. § 1114 (West 1997 &
Supp.2000), § 1125(c) (West 1998 & Supp.2000) and
state law claims for tortious interference with contract,
trademark infringement and dilution, unfair competition
and deceptive acts and practices.
Defendants have moved to dismiss for lack of personal
jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2); defendants
Sagi and Spinks move to dismiss for failure to state a
claim upon which relief may be granted pursuant to
Fed.R.Civ.P. 12(b)(6); and defendants GoSMS.com-CA,
Sagi and Spinks move to dismiss for improper venue
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pursuant to 28 U.S.C. § 1391 (1994). For the reasons set
forth below, defendants’ motion to dismiss pursuant to
Fed.R.Civ.P. 12(b)(2) is denied with leave to renew at the
end of discovery; defendants Sagi and Spinks’ motion to
dismiss pursuant to Fed.R.Civ.P. 12(b)(6) is granted and
their motion to dismiss for improper venue is denied as
moot; and defendant GoSMS.com-CA’s motion to
dismiss for improper venue is denied.

BACKGROUND
Plaintiffs bear the burden of establishing this Court’s
jurisdiction over the defendants. See Metropolitan Life
Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d
Cir.1996). Prior to discovery, a motion to dismiss
pursuant to Rule 12(b)(2) may be defeated if the
plaintiffs’ complaint and affidavits contain sufficient
allegations to establish a prima facie showing of
jurisdiction.1 See id. Moreover, the Court must assume
the truth of the plaintiffs’ factual allegations, see PDK
Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d
Cir.1997), even in light of defendants’ “contrary
allegations that place in dispute the factual basis of
plaintiff[s’] prima facie case.” Pilates, Inc. v. Pilates Inst.,
Inc., 891 F.Supp. 175, 178 (S.D .N.Y.1995).
1

In considering a Rule 12(b)(2) motion, the court may
consider affidavits and documents submitted by the
parties without converting the motion into one for
summary judgment under Rule 56. See Laborers Local
17 Health and Ben. Fund v. Philip Morris, Inc., 26
F.Supp.2d 593, 604 (S.D.N.Y.1998).

Plaintiffs are established, well-known news organizations
that have each set up independent web sites to deliver
original articles (“content”) to computer users worldwide.
Plaintiffs have or are in the process of registering this
content with the United States Copyright Office. In
addition, each plaintiff has licensed its content for
republication in a variety of media, including syndication
to internet service providers. Several of the plaintiffs have
licensed their content to services similar to GoSMS.com.
*2 Defendant GoSMS.com-CA is a corporation organized
under the laws of the State of California and has its
principle place of business in San Diego, California.
Defendant GoSMS.com-Israel is a corporation organized
under the laws of Israel and has its principal place of
business in Tel-Aviv, Israel. Defendant Golan is the CEO
of GoSMS.com and resides in Israel. Defendant Dr.
Golan is the Chief Technical Officer of GoSMS.com and
resides in Israel. Defendant Sagi is the manager of
GoSMS.com and resides in San Diego. Defendant Spinks

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1

Exhibit H

Cable News Network, L.P. v. GoSMS.com, Inc., Not Reported in F.Supp.2d (2000)
2001 Copr.L.Dec. P 28,190, 56 U.S.P.Q.2d 1959, 29 Media L. Rep. 1009

is the director of GoSMS.com and resides in San Diego.
GoSMS.com’s service offers its users the ability to
receive information from the internet on various devices
such as mobile telephones or computers. At least two
times a day, GoSMS.com copies the trademarked and
copyrighted content on plaintiffs’ web sites onto a set of
servers. GoSMS.com then converts the content into a
“short message service” (“SMS”) format which strips the
content of all non-text material, such as advertisements
and graphics, and transfers the SMS version of the content
onto another set of servers for transmission to its
subscribers. Both types of servers are located in San
Diego and Israel.
The GoSMS.com service is currently offered free of
charge in the United States. There are three ways
plaintiffs’ content is potentially accessed through
GoSMS.com. The “GeeWeb” service allows users to send
requests to GoSMS.com. GoSMS.com then browses the
internet for responsive information and transmits it to
mobile telephones with SMS capability or two-way email devices. (Potenza Decl. Ex. A.) The “GeeAlert”
service allows users to request that certain information be
transmitted to their mobile telephones or two-way e-mail
devices at pre-arranged times. (Id.) Finally,
GoSMS.com’s internet web site offers a simulation of the
GeeWeb and GeeAlert services to computer users by
transmitting information in the format as it would be
displayed on a device capable of receiving information
from GoSMS.com. (Id. Ex. B.) Use of all three services
can result in the unauthorized copying of plaintiffs’
copyrighted and trademarked content and the transmittal
of that content.
The parties contest certain attributes of the GoSMS.com
service that are crucial to determining whether
jurisdiction properly can be asserted over the defendants
by this Court, namely, whether the GoSMS.com service
has ever been used by a New York resident.
Plaintiffs argue that the GoSMS.com service is available
in New York by both mobile telephone and e-mail users.2
Defendants counter that the only mobile telephone users
in the United States who can use its service are those
participating in a trial with Pacific Bell in California.
Plaintiffs, however, point to defendants’ representations
on their web site and elsewhere that apparently indicate
that the GoSMS.com service can be accessed via mobile
telephones nationwide as well as internationally.
Regarding e-mail users, defendants do not confirm or
deny that there were New York residents who used the
GoSMS.com service via e-mail.
2

Since the filing of this lawsuit, GoSMS.com has
discontinued its service for e-mail users.

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*3 Although the 12(b)(2) standard requires the Court to
construe all allegations in favor of the plaintiff, courts
have granted Rule 12(b)(2) motions to dismiss when
either plaintiff’s allegations have been affirmatively
disproved, see Stewart v. Vista Point Verlag & Ringier
Publ’g, No. 99 Civ. 4225, 2000 WL 1459839, at *4
(S.D.N.Y. Sept. 29, 2000), or were neither “factually
based [nor] intuitively apparent.” Mantello v. Hall, 947
F.Supp. 92, 102 (S.D.N.Y.1996). Defendants have not
affirmatively disproved plaintiffs’ allegations that
GoSMS.com delivered infringing content to New York
residents, particularly with respect to e-mail users. Nor do
defendants allege that GoSMS.com could not transmit or
prevents the transmission of such content via e-mail to
New York residents. Although plaintiffs’ allegations are
factually unsupported,3 it is “intuitively apparent” that
GoSMS.com was available to, and therefore used by,
residents of New York, the Court finds that for the
purposes of this motion it must regard plaintiffs’
allegations on this point as true.
3

The Court will not consider evidence that one of
plaintiffs’ attorneys used the GoSMS.com service
from a computer in New York. See Elbex Video
Kabushiki Kaisha v. Taiwan Regular Elect. Co., 93
Civ. 6160, 1995 WL 224774, at *2- *3 (S.D.N.Y. Apr.
14, 1997) (declining to find jurisdiction on the
grounds that the only basis for jurisdiction was
manufactured by the plaintiff).

DISCUSSION
I. Defendants’ Motion to Dismiss for Lack of Personal
Jurisdiction Pursuant to Fed.R.Civ.P. 12(b)(2)
Personal jurisdiction in federal court is determined by
looking to the law of the forum state, in this case New
York. When the defendant is a non-domiciliary, the Court
determines whether personal jurisdiction is appropriate
under either New York’s “doing business” test under N.Y.
C.P.L.R. 301 or under the long-arm statute, N.Y. C.P.L.R.
302(a) (McKinney’s 1990) (“CPLR”). See Carell v. The
Schubert Org., Inc., 104 F.Supp.2d 236, 268 (S.D
.N.Y.2000). If the Court determines that jurisdiction is
appropriate, it must then decide whether the exercise of
jurisdiction comports with due process. See Kernan v.
Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir.1999).
Plaintiffs assert that this Court has jurisdiction over
defendants under either CPLR 301 or 302. Because the
Court finds that jurisdiction is proper under CPLR
302(a)(3)(ii), it does not discuss the remaining provisions.
A. CPLR 302(a)(3)(ii)

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2

Exhibit H

Cable News Network, L.P. v. GoSMS.com, Inc., Not Reported in F.Supp.2d (2000)
2001 Copr.L.Dec. P 28,190, 56 U.S.P.Q.2d 1959, 29 Media L. Rep. 1009

CPLR 302(a)(3)(ii) confers jurisdiction when plaintiffs’
claims arise out of an out of state tortious act that caused
injury within New York and when the defendants “expect
or should reasonably expect the act to have consequences
in the state and derive substantial revenue from interstate
or international commerce.” CPLR 302(a)(3)(ii).
Defendants dispute that they have committed a tortious
act without the state, that plaintiffs suffered harm in New
York, that defendants should have expected
GoSMS.com’s service to have consequences in New York
and that they derive substantial revenue from interstate or
international commerce.
1. Tortious Act Committed Outside New York
In cases involving the posting of infringing material on an
internet web site courts have held that the tort occurs
where the web site is created and/or maintained, usually
where the server supporting the web site is located, not
where the internet web site can be seen, because that
would be literally anywhere the internet can be accessed.
See Telebyte, Inc. v. Kendaco, Inc., 105 F.Supp.2d 131,
134 (E.D.N.Y.2000); Citigroup, Inc. v. City Holding Co.,
97 F.Supp.2d 549, 567 (S.D.N.Y.2000). Here, plaintiffs
do not dispute that defendants’ servers are located in
California and Israel, therefore defendants committed the
tortious act in either California, Israel or in both locations,
but not in New York.
2. Harm Within New York
*4 Plaintiffs claim that New York residents, who are
among plaintiffs’ customers and potential customers, have
been confused and deceived by defendants’ use of
plaintiffs’ trademarked and copyrighted content, (Compl.¶
21, 39, 59, 63, 67). These allegations are sufficient to
allege harm within the state under 302(a)(3)(ii). See
Telebyte, Inc., 105 F.Supp.2d at 135-36; Citigroup, Inc.,
97 F.Supp.2d at 568; American Network, Inc. v. Access
America/Connect Atlanta, Inc., 975 F.Supp. 494, 497
(S.D.N.Y.1997).
3. Reasonable Expectation of Consequences in New
York
Plaintiffs also allege sufficient facts for the Court to find
that defendants reasonably should have expected the
transmittal of trademark and copyright infringing content
via the GoSMS.com service to have consequences in New
York for the purposes of CPLR 302(a)(3)(ii).

Cir.1999), the Court of Appeals for the Second Circuit
held that an agreement between a Japanese producer and
an American distributor to distribute the Japanese
defendant’s product worldwide, except for seventeen
specified Asian countries, combined with its “general
knowledge” that the American defendant would sell the
product in the United States was sufficient to find that the
Japanese defendant attempted to indirectly serve the New
York market, even though the agreement did not specify
New York. See id. at 242. Similarly, in a case involving
trademark infringement on a internet web site, where the
out-of-state defendant maintained a web site promoting its
business, the district court found that 302(a)(3)(ii)’s
forseeability requirement was satisfied because the
defendant claimed it could offer its services “across the
U.S.” and had signed up six New York subscribers.
American Network, Inc., 975 F.Supp. at 499.
With respect to the geographical limitations on the
GoSMS.com service, the GoSMS.com web site includes a
Frequently Asked Questions section with the following
exchanges:
I’m traveling abroad with my mobile. Will I still be
able to receive information? E-mail?
If you are traveling in the US, you will be able to
receive information and your e-mail to your phone.
Why can’t users abroad use this service? My friend in
England wants to.
Currently our service is limited to those countries in
which we are currently operating. We are now working
to enable users from other countries to receive our
messages. (Potenza Decl. Ex. G at 1-2 .)
Defendants also admitted during oral argument that the
use of the GoSMS.com service by mobile telephone is
limited to “California, Israel, [and] parts of Europe.” (Tr.
at 10:1-2.) The GoSMS.com service is therefore both
available in the United States and geographically limited
with respect to the worldwide market. In terms of direct
contact with the state of New York, plaintiffs allege that
GoSMS.com transmitted infringing content to New York
residents. Under the standard set forth in Kernan and
American Network, the Court finds that plaintiffs have
alleged sufficient facts to conclude that defendants
indirectly sought to serve the New York market and thus
that it was reasonable for defendants to expect that their
infringement of plaintiffs’ content would have
consequences in New York.
4. Substantial Revenue From Interstate or
International Commerce

In Kernan v. Kurz-Hastings, Inc., 175 F.3d 236 (2d
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3

Exhibit H

Cable News Network, L.P. v. GoSMS.com, Inc., Not Reported in F.Supp.2d (2000)
2001 Copr.L.Dec. P 28,190, 56 U.S.P.Q.2d 1959, 29 Media L. Rep. 1009

*5 The requirement that the defendant derive substantial
revenue from interstate or international commerce is
designed to preclude the exercise of jurisdiction over
“non-domicilliaries whose business operations are of a
local character.” Bensusan Restaurant Corp. v. King, 126
F.3d 25, 29 (2d Cir.1997) (citation omitted). Thus, in
Telebyte, Inc., the court found that the Washington state
defendant’s business was “local” in nature when out of
the defendant’s 1552 accounts, only nine were billed to
addresses outside of the state of Washington. See 105
F.Supp.2d at 136. In this case, however, at oral argument,
defendants admitted that GoSMS.com has earned $60,000
in revenue from its operations in Europe and Israel. (Tr. at
16:6-7.) Although the amount is not large, the Court
recognizes that it is common for internet companies to be
viewed as extremely successful despite the fact that they
operate at a great loss. The important fact in this analysis
is that GoSMS.com’s operations are international and in
no way limited to California.
GoSMS.com’s representations at oral argument and on
their web site with respect to the geographical limitations
of its service and plaintiffs’ allegations with respect to
New York users are sufficient for the Court to conclude
that defendants reasonably could have expected their
infringement of plaintiffs’ content to have consequences
in New York. The revenue derived from the defendants’
international operations ensures that defendants’ business
is not local in nature, thus the Court finds that exercising
personal jurisdiction over defendants pursuant to CPLR
302(a)(3)(ii) is not beyond the intended reach of the
statute.
B. Minimum Contacts
For the exercise of jurisdiction to comport with due
process, the Court must find that the plaintiffs’ claims
arises out of defendants’ contacts with the state, that
defendants “purposefully availed,” Hanson v. Denckla,
357 U.S. 235, 253 (1958), themselves of the privilege of
conducting activities within the forum state, and that
defendants could “reasonably anticipate being haled into
court there.” World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297 (1980). The Court also must consider
“whether the assertion of jurisdiction ‘comports with
“traditional notions of fair play and substantial justice”that is, whether it is reasonable under the circumstances of
a particular case.” ’ Kernan, 175 F.3d at 243 (quoting
Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84
F.3d 560, 568 (2d Cir.1996) (quoting International Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945))).
The first part of the due process inquiry is satisfied by the
same factors discussed regarding CPLR 302(a)(3)(ii). See
Kernan, 175 F.3d at 243. Plaintiffs’ claims arise out of
{00629663.1}

defendants’ contacts with New York state, namely,
plaintiffs’ allegation that defendants have transmitted
infringing content to New York users. Advertizing the
GoSMS.com service as available nationally and
transmitting infringing content to New York constitutes
purposeful availment of the privilege of doing business in
New York and provides a basis for defendants to
reasonably expect they would be haled into court in New
York for the infringing conduct.
*6 Once the Court establishes that the defendants have
minimum contacts with the state of New York, it is the
defendants’ burden to “present a compelling case that the
presence of some other considerations would render
jurisdiction unreasonable.” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 477 (1985). Defendants have
not identified any such factors. As the district court noted
in American Network, also involving infringement via an
internet web site, New York has a “clear interest in
adjudicating [a] dispute” involving harm to its residents,
which includes one of the plaintiffs, the New York Times,
“caused in part by confusion among New York residents.”
American Network, Inc., 975 F.Supp. at 500. The Court is
not aware of any countervailing reasons to refrain from
asserting jurisdiction over defendants.
By virtue of the Court’s finding that GoSMS.com-CA is
subject to personal jurisdiction in New York, venue is
also proper. See 28 U.S.C. § 1391(c).
II. Defendants Sagi and Spinks’ Motion to Dismiss for
Failure to State a Claim Upon Which Relief May Be
Granted Pursuant to Fed.R.Civ.P. 12(b)(6)
Under Rule 12(b)(6), a complaint will be dismissed if
there is a “failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). The Court must read the
complaint generously accepting the truth of and drawing
all reasonable inferences from well-pleaded factual
allegations. See Mills v. Polar Molecular Corp., 12 F.3d
1170, 1174 (2d Cir.1993). “A court should only dismiss a
suit under Rule 12(b)(6) if ‘it appears beyond doubt that
the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief.” ’ Valmonte v.
Bane, 18 F.3d 992, 998 (2d Cir.1994) (quoting Conley v.
Gibson, 355 U.S. 41, 45-46 (1957)).
Plaintiffs allege in their complaint that Sagi was the
manager of GoSMS.com, and that Spinks was the
Director and that “[b]y virtue of [his/her] position and,
upon information and belief [his/her] shareholdings,
[he/she] is one of the individuals that controls the affairs
of GoSMS.com and is personally involved in the
infringing conduct alleged herein.” (Compl.¶¶ 18, 19.)
Without allegations of acts of infringement, supervision
or control over the direct infringers, or contribution to the
infringement, the Court finds that plaintiffs’ allegations

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4

Exhibit H

Cable News Network, L.P. v. GoSMS.com, Inc., Not Reported in F.Supp.2d (2000)
2001 Copr.L.Dec. P 28,190, 56 U.S.P.Q.2d 1959, 29 Media L. Rep. 1009

are insufficient to plead either direct copyright or
trademark
infringement
or
either
contributory
infringement or vicarious liability. See Carell v. The
Shubert Org., Inc., 104 F.Supp.2d 236, 271
(S.D.N.Y.2000). The Court therefore grants defendants
Sagi and Spinks’ motion to dismiss pursuant to Rule
12(b)(6), thus rendering their motion to dismiss for
improper venue moot.

CONCLUSION

12(b)(2) is denied with leave to renew at the end of
discovery; defendants Sagi and Spinks’ motion to dismiss
pursuant to Fed.R.Civ.P. 12(b)(6) is granted and their
motion to dismiss for improper venue is denied as moot;
and defendant GoSMS.com-CA’s motion to dismiss for
improper venue is denied.
Parallel Citations
2001 Copr.L.Dec. P 28,190, 56 U.S.P.Q.2d 1959, 29
Media L. Rep. 1009

Defendants’ motion to dismiss pursuant to Fed.R.Civ.P.
End of Document

{00629663.1}

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© 2011 Thomson Reuters. No claim to original U.S. Government Works.

5

Exhibit H