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McGraw-Hill Global Education Holdings, LLC v. Khan

United States District Court, S.D. New York

June 22, 2018

FARUKH KHAN, JOONWON PARK, JEONG HYUN CHU, MASUD KARIM, MD. RABIUL ISLAM, and JOHN DOES 1-10 d/b/a/,,,, www. digitaltestbank. com,, www. solutionmanualcenter. com, www.testbank-, and, Defendants.


          Paul G. Gardephe United States District Judge.

         Plaintiffs McGraw-Hill Global Education Holdings, LLC, Elsevier, Inc., John Wiley & Sons, Inc., Cengage Learning, Inc., and Pearson Education Inc. publish educational works. In this action, Plaintiffs allege that Defendants Farukh Khan, Joonwon Park, Jeong Hyun Chu, Masud Karim, Rabiul Islam, and John Does 1-10 have infringed on Plaintiffs' copyrights in their educational works, in violation of 17 U.S.C. §§ 106(1), 106(3), and 501. (Cmplt. (Dkt. No. 1)¶¶ 1-2, 40-46)

         Plaintiffs allege that Defendants own, control, and operate multiple illegal online websites and forums to create, store, and sell unauthorized digital copies of Plaintiffs' WorkSi (Id. ¶¶ 23-28) Defendants operate these infringing websites under multiple names or aliases and through the use of multiple email addresses. (Id. ¶¶ 24-25) At Defendants' websites, purchasers or potential purchasers can search for listings of unauthorized digital copies of Plaintiffs' instructor solutions manuals and test banks. (Id. ¶ 28) Defendants also host "product pages" where visitors can download free sample copies of the instructor solutions manuals and test banks. (Id. ¶¶ 29-30) Defendants have also registered multiple domain names and established corresponding websites, some with identical or duplicative content, all to avoid interruption of their illegal business should any one website or payment account be shut down. (Id. ¶ 39)

         Plaintiffs have made test purchases and downloaded free samples from Defendants' websites, confirming that Defendants are providing customers with digital copies of Plaintiffs' instructor solutions manuals and test banks. (Id. ¶ 33) Plaintiffs allege that Defendants' reproduction and distribution of Plaintiffs' copyrighted works has occurred without authorization and without compensation to Plaintiffs, their authors, and others in the legitimate chain of commerce. (Id. ¶ 35)


         This action was commenced on November 21, 2016. (See id.) That same day, this Court issued an order to show cause why a preliminary injunction should not be entered. (Order (Dkt. No. 3)) This Court also granted Plaintiffs' motion for an order authorizing alternative service, and directed Plaintiffs to make service on Defendants pursuant to Fed.R.Civ.P. 4(f)(3), by delivering electronic copies of the order, summons, and Complaint to Defendants' email addresses. (Id. at 7-8) On November 23, 2016, Plaintiffs certified that they had served copies of "(1) Plaintiffs' Complaint with Exhibit A. (2) the Summonses, (3) the Order, and (4) Plaintiffs' moving papers along with all supporting declarations and exhibits on Defendants on November 23, 2016 via electronic mail at Defendants' Email Addresses as specified in [this Court's] Order." (Certificate of Service (Dkt. No. 11) at 1)

         On December 5, 2016, this Court held a hearing on Plaintiffs' request for a preliminary injunction, and the Court subsequently entered an order granting Plaintiffs' motion for a preliminary injunction. (Order (Dkt. No. 15)) The preliminary injunction (1) enjoined Defendants from infringing Plaintiffs' works; (2) enjoined Defendants from transferring ownership or control of the websites or domain names associated with Defendants' websites; and (3) directed Defendants to locate all accounts connected to Defendants websites and refrain from transferring or withdrawing any funds from therein. (Order (Dkt. No. 3) at 4-7)

         On February 27, 2017, Plaintiffs moved for entry of default against Defendants, given their failure to appear or otherwise respond to the Complaint. (Request for Default (Dkt. No. 19)) On February 28, 2017, the Clerk of Court issued a certificate of default. (Clerk's Certificate of Default (Dkt. No. 21))

         On June 8, 2018, this Court issued an Order to Show Cause why a default judgment and permanent injunction should not be entered against Defendants. (Order to Show Cause (Dkt. No. 22)) This Court ordered that service by email be made by June 11, 2018, and scheduled a hearing for June 22, 2018 at 10:00 a.m. (Id. at 2) On June 8, 2018, Plaintiffs filed an Affidavit of Service, attesting that copies of this Court's Order to Show cause and the accompanying memorandum of law and declaration had been served on Defendants via electronic mail in accordance with this Court's November 21, 2016 Order authorizing alternative service. (Aff. of Service (Dkt. No. 25))

         Defendants have not filed an opposition and did not appear at the June 22, 2018 hearing.



         "A plaintiff's factual allegations, except those relating to damages, must be accepted as true where, as here, the defendant defaults." Gucci Am., Inc. v. Tvrrell-Miller, 678 F.Supp.2d 117, 119 (S.D.N.Y. 2008). '"[B]efore a court grants a motion for default judgment, [however, ] it must first assure itself that it has personal jurisdiction over the defendant."' City of New York v. Mickalis Pawn Shop. LLC, 645 F.3d 114, 133 (2d Cir. 2011) (citation omitted) (alteration in original); see also Sinoving Logistics Pte Ltd. v. Yi Da Xin Trading Corp., 619 F.3d 207, 214 (2d Cir. 2010) ("It was ... correct for the District Court... to inquire into its personal jurisdiction over [defendant] ... In so doing the Court was ... 'exercis[ing] its responsibility to determine that it ha[d] the power to enter [a] default judgment.'" (quoting Williams v. Life Sav. &Loan, 802 F.2d 1200, 1203 (10th Cir. 1986))). Where, as here, a plaintiff is proceeding under a federal statute that does not contain its own jurisdictional provision, "federal courts are to apply the personal jurisdiction rules of the forum state, provided that those rules are consistent with the requirements of Due Process." Penguin Group (USA) Inc. v. Am. Buddha, 609 F.3d 30, 35 (2d Cir. 2010) (citations omitted).

         A. New York's Long-Arm Statute

         1. New York CPLR § 302(a)(1)

         New York's long-arm statute provides, in relevant part, that a court may exercise specific personal jurisdiction over a non-domiciliary who "transacts any business within the state or contracts anywhere to supply goods or services in the state." N.Y. CPLR § 302(a)(1). To establish personal jurisdiction under this provision, a plaintiff must show that "(1) defendant purposefully availed himself of the privilege of doing business in the forum state such that the defendant could foresee being brought into court there; and (2) plaintiff's claim arises out of or is related to the defendant's contacts with the forum state." Aqua Products, Inc. v. Smartpool. Inc., No. 04 Civ. 5492 (GBD), 2005 WL 1994013, at *5 (S.D.N.Y. Aug. 18, 2005).

         "When analyzing whether a defendant's internet activity rises to the level of purposeful activity sufficient to satisfy Section 302(a)(1), courts apply a 'sliding scale' test based on the level of a website's interactivity." Audiovox Corp. v. S. China Enter., Inc., No. 11 Civ. 5142 (JS) (GRB), 2012 WL 3061518, at *3 (E.D.N.Y. July 26, 2012) (citing Best Van Lines. Inc. v. Walker, 490 F.3d 239, 251 (2d Cir. 2007) ("'[T]he likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet.'" (quoting Zippo Mfg. Co. v. Zippo Dot Com. Inc., 952 F.Supp. 1119, 1124 (W.D. Pa. 1997)))). "A website that merely passively provides information that is accessed by individuals in New York is not grounds for the exercise of personal jurisdiction." Id. at *3 (collecting cases). "However, if a website is interactive and allows a buyer in New York to submit an order online, courts typically find that the website operator is 'transacting business' in New York and is therefore subject to the court's jurisdiction." Audiovox, 2012 WL 3061518, at *3 (collecting cases); Hsin Ten Enter. USA, Inc. v. Clark Enterprises, 138 F.Supp.2d 449, 456 (S.D.N.Y. 2000) ("Generally, an interactive website supports a finding of personal jurisdiction over the defendant.").

         Here, Plaintiffs allege and have proffered evidence that Defendants own and operate "highly interactive" online websites and forums, through which Defendants distribute digital copies of Plaintiffs' works to customers for a fee. (Cmplt. (Dkt. No. 1) ¶¶ 23-26, 28; Lichtman Decl. (Dkt. No. 5) ¶¶ 5, 8-10, 12-17) Defendants' websites have received thousands of visits from customers located throughout the United States, including in this District. (Cmplt. (Dkt. No. 1) ¶ 34; Lichtman Decl. (Dkt. No. 5) ¶ 10) Moreover, Defendants' websites are "highly interactive," allowing prospective customers in New York to browse and purchase unauthorized digital copies of Plaintiffs' works. (Cmplt. (Dkt. No. 1) ¶¶ 26-34; Lichtman Decl. (Dkt. No. 5) ¶¶ 10-16) Because Defendants' "website is interactive and allows a buyer in New York to submit an order online," Audiovox, 2012 WL 3061518, at *3, Plaintiffs have established this Court's personal jurisdiction over Defendants pursuant to N.Y. CPLR § 302(a)(1).

         2. New York CPLR § 302(a)(3)(ii)

         N.Y. CPLR. § 302(a)(3)(h) provides that "any non-domiciliary who in person or through an agent 'commits a tortious act without the state causing injury to person or property within the state may be subject to personal jurisdiction if he .. . expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce....'" V Cars. LLC v. Israel Corp., 902 F.Supp.2d 349, 366 (S.D.N.Y 2012) (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 790-91 (2d Cir. 1999)). In a copyright infringement action, the situs of the injury - for purposes of long-arm jurisdiction under N.Y. CPLR § 302(a)(3)(h) - is the residence or "location of the copyright holder." Penguin Grp. (USA) Inc. v. Am. Buddha, 16N.Y.3d295, 301-02, 304 (2011) ("[A] New York copyright owner alleging infringement sustains an in-state injury pursuant to CPLR 302(a)(3)(h) when its printed literary work is uploaded without permission onto the Internet for public access.").

         Here, the situs of Plaintiffs' injury is New York, where the majority of Plaintiffs have their principal place of business, or are incorporated. (See id.; Cmplt. (Dkt. No. 1) ¶¶ 6-10) "It is [also] reasonably foreseeable that the provision of materials that infringe the copyrights and trademarks of a New York company will have consequences in New York." McGraw-Hill Companies, Inc. v. Ingenium Techs. Corp., 375 F.Supp.2d 252, 256 (S.D.N.Y. 2005). Moreover, Plaintiffs have demonstrated that Defendants derive substantial revenue from sales throughout the United States. (See Cmplt. (Dkt. No. 1) ¶ 34 (citing report indicating that there were almost 40, 000 visits to one of Defendants' websites, 67% of which came from visitors located in the United States)). Accordingly, this Court concludes that it also has personal jurisdiction over Defendants pursuant to New York CPLR § 302(a)(3).

         B. ...

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