In a significant ruling, the Fourth District Court of Appeals has ruled that a Russian internet pirate must defend a lawsuit in Virginia brought by 12 U.S. record companies.[ref]UMG Recordings, et al v. Kurbanov, 2020 WL 3476993, Fourth District Court of Appeals, 2020.[/ref] At issue here are various websites that [the Defendant] operates that offer users a "‘stream-ripping' service through which audio tracks may be extracted from videos available on various platforms (e.g., YouTube) and converted into a downloadable format (e.g., mp3). A large portion, perhaps a majority, of the streams ripped using the Websites is alleged to derive unlawfully from YouTube videos."[ref]Id. at 1[/ref] This makes them very popular. Defendant's sites "are two of the most popular stream-ripping websites in the world and are among the most popular websites of any kind on the Internet. According to [the Defendant's] own data, between October 2017 and September 2018, the Websites attracted well over 300 million visitors from over 200 distinct countries around the world."[ref]Id. at 2[/ref] But the Defendant argued that even though between October 2017 and September 2018, "more than half a million unique visitors [from Virginia] went to the Websites, totaling nearly 1.5 million visits,"[ref]Id. at 6[/ref] this was not enough for him to have to defend the lawsuit in the United States. He contended: "[A]ll of the work that [Defendant] Kurbanov has performed on the Websites has been performed in Russia, and he has never performed any work on the Websites from within the United States. He also operates the Websites entirely from Russia. He has never had employees anywhere in the United States or owned or leased real estate anywhere here. Neither has he held a bank account or paid taxes in the United States. Kurbanov has never been to Virginia or anywhere else in the United States and…does not currently have a visa to visit, has never applied for, or has never obtained a visa to visit the United States."[ref]Id. at 2[/ref] Based upon these factors, the District Court ruled that Kurbanov did not have sufficient minimum contacts with the United States for it to exercise personal jurisdiction over him, and dismissed the case. Many pirate sites operate in a similar manner. They know that U.S. Copyright law does not have any extra-territorial effect. By setting themselves up in a foreign country, they attempt to insulate themselves from the ability for U.S. companies to drag them into court in the U.S. At the same time, they make their websites attractive to U.S. residents, accept plenty of traffic from them, and sell advertising directed at U.S. residents. The record companies appealed, and a unanimous panel reversed. The Court found " there are more than sufficient facts raised to conclude that Kurbanov has purposefully availed himself of the privilege of conducting business in Virginia and thus had a ‘fair warning' that his forum-related activities could ‘subject [him] to [Virginia's] jurisdiction.'"[ref]Id. at 6[/ref] First and foremost in my mind, is that Kurbanov registered with the U.S. Copyright Office an agent designated to receive DMCA notices, a step necessary to qualify for "safe harbor" defenses to copyright infringement in the United States.[ref]Id. at 7[/ref] Having invoked the protections of U.S. law, how can the argument be made that the website, and its operator, are exempt from U.S. law, and unreachable for the purposes of personal jurisdiction? The Court then ticks off a bunch of contacts the Defendant had, not only with the State of Virginia, but the United States as a whole.[ref]Id. at 2[/ref]
  • Until just before the commencement of the lawsuit, the websites were hosted by Amazon Web Services, a U.S. company, which utilizes servers physically located in Virginia.
  • The website domain suffixes were administered by two companies in Virginia.
  • The website domain names were registered with GoDaddy.com, a U.S. Company.
But, in particular, it is the advertising revenue derived from the website that provides the most important contact. Kurbanov contends that all of the advertising is handled by third party contractors, of which he has no control.[ref]Id. at 6[/ref] The Court in turn rules that this is not the point. Kurbanov collected all kinds of data about the persons visiting his site, including their location data. The TOS clearly states "that visitors' IP addresses, countries of origin, and other non-personal information may be collected ‘to provide targeted advertising.'"[ref]Id. at 2[/ref] The Court holds: "Here, the visitors' acts of accessing the Websites (and downloading the generated files) are themselves commercial relationships because Kurbanov has made a calculated business choice not to directly charge visitors in order to lure them to his Websites. Kurbanov then requires visitors to agree to certain contractual terms, giving him the authority to collect, among other information, their IP addresses and country of origin. Far from being indifferent to geography, any advertising displayed on the Websites is directed towards specific jurisdictions like Virginia. Kurbanov ultimately profits from visitors by selling directed advertising space and data collected to third-party brokers, thus purposefully availing himself of the privilege of conducting business within Virginia."[ref]Id. at 6[/ref] And finally, Indeed, this is not a situation where a defendant merely made a website that happens to be accessible in Virginia. (citation omitted) Rather, Kurbanov actively facilitated the alleged music piracy through a complex web involving Virginia visitors, advertising brokers, advertisers, and location-based advertising. From Virginia visitors, he collected personal data as they visited the Websites. To the advertising brokers, he sold the collected data and advertising spaces on the Websites. For end advertisers, he enabled location-based advertising in order to pique visitors' interest and solicit repeated visits. And through this intricate network, Kurbanov directly profited from a substantial audience of Virginia visitors and cannot now disentangle himself from a web woven by him and forms the basis of Appellants' claims. Thus, we find these facts to adequately establish an "affiliation between [Virginia] and the underlying controversy."[ref]Id. at 7[/ref] This last point is extremely important. Most piracy websites make their living from advertising. The "free stuff," gleefully pilfered from others, is the candy dangled in front of the consumer to sign up. To rule that this is not a significant contact, indeed a "doing business" contact, would have made the piracy situation worse than it already is. Now, will Kurbanov actually show up and defend? Maybe, maybe not. Surely, as long as he sits in Russia, any judgement the Plaintiffs receive might not be enforced with much enthusiasm by the Russian courts. Get an order seizing the domain names? Block the domains? He'd probably just move them to a new location. But with a money judgement, the possibility exists the record companies could then garnish the ad revenue generated in the U.S. to pay off the judgement. Hitting the pirates in the pocketbook? Now that's a strategy that just might work.