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Royalty Network Inc. v. Dishant.com

July 29, 2009

THE ROYALTY NETWORK INC., PLAINTIFF,
v.
DISHANT.COM, LLC; DISHANT G. SHAH; MEETA SHAH; C I HOSTING, INC., AND PROPAGATION NETWORKS, INC. DEFENDANTS.



The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge

OPINION & ORDER

Defendant Dishant.com, LLC, through its proprietors-defendants Dishant G. Shah and Meeta Shah-operates a website, www.dishant.com, which is the self-proclaimed "home to Indian music." The website invites visitors to play Indian music, to create "playlists" of Indian songs, and to "listen to and download Bollywood Movie ringtones."*fn1

Plaintiff Royalty Network, Inc. is the designated American administrator of music owned by non-party Saregama India, Ltd., a music recording company based in India. As the administrator, Royalty collects all royalties and other fees derived from copyrights Saregama holds on its music. Royalty contends defendants' website provides visitors with unauthorized access to music produced and owned by Saregama, thereby violating Saregama's copyrights and denying Royalty royalties to which it is entitled. After notifying defendants of their allegedly infringing behavior, Royalty filed this complaint bringing Copyright Act, Lanham Act, and New York State law claims against Dishant.com, LLC and Dishant and Meeta Shah.*fn2

Dishant.com, LLC and Dishant and Meeta Shah now move to dismiss the complaint on the grounds that this Court lacks personal jurisdiction over them.*fn3 In particular, those defendants argue that despite the ability of New York residents to access the website, Dishant.com, LLC is a Virginia-based company that does no business in New York, owns no property in New York, and has no contacts in or with the state, and, therefore, this Court does not have jurisdiction over the corporate defendant. Absent jurisdiction over the corporation, defendants continue, the Court also lacks jurisdiction over individual defendants Dishant and Meeta Shah. Accordingly, it contends dismissal pursuant to Fed. R. Civ. P. 12(b)(2) is appropriate.

Royalty opposes dismissal, contending that this Court has jurisdiction over defendants pursuant to New York's "long-arm" statute, N.Y. C.P.L.R. § 302, on the basis that Dishant "transacts . . . business within the state" and that this suit arises out of those transactions of business. See N.Y. C.P.L.R. § 302(a)(1). Alternatively, Royalty asserts jurisdiction is appropriate pursuant to section 302(a)(3)(ii) which confers jurisdiction over those who commit tortious acts outside the state that cause injury within the state, provided the defendant expected or should have reasonably expected its acts to have consequences in New York. Finally, Royalty contends that jurisdiction over individual defendants Dishant and Meeta Shah can be founded solely on this court's jurisdiction over the corporate defendant because the individuals acted on behalf of the corporation and thereby engaged in all of the allegedly infringing activity.

Because this Court finds that neither provision of New York's long-arm statute confers jurisdiction over these defendants in this matter, defendant's motion to dismiss the complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) is granted.

I. BACKGROUND

Unless otherwise noted, the following facts are taken from the complaint and presumed to be true:

A. The Parties

Plaintiff Royalty Network, Inc. is a New York corporation with its principal place of business located within the Southern District of New York. (Compl. ¶ 1.) Pursuant to a written agreement dated November 29, 2005, Royalty serves as the American administrator of songs owned by Saregama India, Ltd., an Indian corporation and one of that country's largest music recording companies. (Id. ¶¶ 2, 3.) As the administrator, Royalty has the right to collect all royalties, fees, and other income derived from the copyrights held by Saregama on all of its musical compositions and master records, and has been authorized by Saregama to proceed as the plaintiff in this suit. (Id. ¶ 3; Ex. N to Decl. of Frank Liwall dated Dec. 11, 2008.)

Defendant Dishant.com, LLC is a limited liability company formed under the laws of Virginia and with a principal place of business in Richmond, Virginia. (Id. ¶ 4.) Dishant.com, LLC, through its officers, directors, and employees-specifically defendants Dishant and Meeta Shah-operates the website www.dishant.com. (Id. ¶¶ 4, 7-8, 11-12.)

According to the complaint, Dishant Shah personally conceived of and created the website and, along with Meeta Shah, authorizes and directs all of the website's activities, including the allegedly infringing activity at issue in this action. (Id. ¶¶ 6-9, 10-13.)

B. The Website

According to the complaint, www.dishant.com allows users to register and obtain a username; to play an extensive collection of Indian music; to create and save personal "playlists" for future use; and to download ringtones. (Id. ¶ 5.) The website, which professes to be the "Home of Indian Music," is available in several languages, and provides access to not only music, but to movies and photographs as well. (Motta Decl. ¶ 6; www.dishant.com (last visited July 27, 2009).)

Royalty contends Saregama owns-and has assigned to Royalty-copyrights in at least 25 percent of the music available on www.dishant.com either as streaming media or as downloadable ringtones. (Id. ¶¶ 5, 13.) By way of example, Royalty identifies approximately 90 songs all validly copyrighted by Saregama but available to be listened to without plaintiff's permission on www.dishant.com. (Ex. A to Compl.)

While all of the services offered by the website are free of charge to users, Royalty contends Dishant derives substantial revenues from operating the site. (Id. ¶¶ 7, 12.) It does so, plaintiff argues, by selling advertisements to such well-known national companies as Verizon, Citibank, and American Express, which seek to reach Dishant's primarily South Asian audience. (Decl. of Anthony Motta dated Dec. 12, 2008 ("Motta Decl.") ¶¶ 8-10.) Operating on the so-called "broadcast" or "advertising model," the website thus makes money by selling advertisers the opportunity to reach the website's audience. (Id. ¶ 11; Ex. F. to Motta Decl.)

In particular, www.dishant.com offers advertisers the opportunity to engage in "targeted advertising." (Motta Decl. ¶ 10.) As the website tells potential advertisers, www.dishant.com attracts "hundreds of thousands of South Asian visitors" and "this number is increasing by the day!," thus offering advertisers a unique opportunity to reach that particular audience with advertisements on the website. (Id.; Ex. E to Motta Decl.) Royalty contends a significant percentage of those visitors are based in the United States. And while it does not identify any specific visitor to the site, it provides data indicating that as many as 47,000 individuals in the United States visit www.dishant.com each month. (Ex. H to Motta Decl.)

C. The Complaint

The complaint contains seven counts brought pursuant to federal and New York state law. Count One alleges that defendants' operation of www.dishant.com infringes copyrights validly held by Saregama and assigned to Royalty, thereby violating section 501 of the Copyright Act. (Compl. ¶¶ 25-28.) In so doing, Royalty contends defendants are damaging Royalty's "goodwill and reputation" and "destroying the commercial market for the Songs administered by plaintiff and owned by Saregama." (Id. ¶ 34.) Count One thus seeks lost profits or, if lost profits are unascertainable, statutory damages in addition to the fees and costs incurred in bringing this action. (Id. ¶¶ 31-33.) Count Two raises identical claims against Dishant and Meeta Shah in their individual capacities as operators of www.dishant.com. (Id. ¶¶ 36-42.)*fn4

Count Four of the complaint alleges defendants' website not only makes plaintiff's music available to the public without permission but does so while also depicting Saregama's artwork and logo in an attempt to "deceive . . . the public" into believing that www.dishant.com is authorized by Saregama. (Id. ¶¶ 61-62). Royalty contends defendants are thus falsely designating www.dishant.com as a owner or originator of the copyrights and causing copyright dilution in violation of section 43(a) of the Lanham Act., 15 U.S.C. § 1125(a). (Id. ¶¶ 64-65.)

Counts Five through Seven, which are based on the same conduct, allege deceptive acts or practices in violation of New York law, (id. ¶¶ 66-69), and common law unfair competition and unjust enrichment.(Id. ¶¶ 71, 73-75.)

II. DISCUSSION

A. The Motion to Dismiss ...


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