To be Argued by:

Charles Carreon
(Time Requested: 30 Minutes)

COURT OF APPEALS
of the

State of New York

PENGUIN GROUP (USA) INC.,

Plaintiff-Appellant
-- v. –

AMERICAN BUDDHA,

Defendant/Appellee

ON APPEAL FROM THE QUESTION CERTIFIED

BY THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT IN DOCKET NO. 09-1739-CV
_______________________ ___________________

BRIEF FOR RESPONDENT DEFENDANT-APPELLEE

_______________________ ___________________

CHARLES CARREON
Online Media Law, PLLC
2165 S. Avenida Planeta
Tucson, Arizona 85710
Tel: 520-841-0835
Counsel for Defendant-Appellee
Date of Completion: October 10, 2010
 CORPORATE DISCLOSURE STATEMENT

Defendant-Appellee American Buddha is a corporate entity and has no

parent corporation, subsidiaries or affiliates that have issued shares to the public.

i
 TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT ...........................................................i

TABLE OF AUTHORITIES .......................................................................................v

THE QUESTION CERTIFIED FOR REVIEW..........................................................1

SUMMARY OF THE ARGUMENT ..........................................................................1

STATEMENT OF THE FACTS .................................................................................4

ARGUMENT ...............................................................................................................7

I. CONGRESS EXPRESSLY PREEMPTED THE FIELD OF

COPYRIGHT LAW; THUS, AN AFFIRMATIVE ANSWER
TO THE CERTIFIED QUESTION WOULD
IMPERMISSIBLY INTRUDE UPON THE EXCLUSIVE
JURISDICTION OF THE FEDERAL COURTS .................................7

A. The Copyright Act of 1976 Preempts Any State-Law

Protection of Intellectual Property Rights Subject to
Copyright Protection.................................................................... 7

B. If Congress Had Wished To Establish The Situs of A

Copyright, It Could Have Done So, And In The Absence
of Congressional Authorization, This Court Has No
Authority To Do So ..................................................................... 9

C. Copyright Law Is A Vast and Complex System of

Congressionally-Created Rights That Cannot Be
Adapted to Fit the Answer Sought By the Certifying
Court .......................................................................................... 10

1. Copyrights Not Only Protect The Rights of Authors of

Creative Work As Diverse as Architecture, Sculpture,
Dance, Boat-Hulls and Microchips, They Also Control
Distribution of Commercial Content Through Diverse
Systems Such as Jukeboxes, Internet Radio, Cable TV
and Satellites, and Affect Import/Export Regulations ....11

2. A Copyright-Holder Possesses Four Rights: The Right of

ii
 Reproduction, the Right of Distribution, The Right of
Performance, and The Right of Display..........................12

3. Many Authors Can Own the Rights In A Single Creative

Work, and Worldwide Distribution Deals Multiply the
Interested Copyright-Holders Exponentially ..................12

4. Copyright Law is “Riddled With Exceptions,” Beginning

With Fair Use and The Library Exemption, and
Continuing With Many “Carve-Outs” That Small Interest
Groups, Such As Educators, Religious Groups, the
Handicapped, Rely Upon to Use Copyrighted Content
Without Fear of Liability for Infringement .....................14

D. This Court Has No Authority To Enhance The Rights of

A Copyright Claimant To File Suit Against A Library
Operating Under The Library Exemption From
Copyright Liability Codified At 17 U.S.C. § 108 ..................... 15

II. THE DISTRICT COURT DECISION WAS CORRECT

UNDER NEW YORK LAW ...............................................................18

A. American Buddha’s F.R.Civ.P. 12(b)(2) Motion

Established A Complete Lack of Jurisdictional Contacts
Between The Corporation and The State of New York ............ 18

B. Penguin Opposed The Motion Solely On The Basis of

N.Y. C.P.L.R. § 302(a)(3)(ii)..................................................... 18

C. The Proper Application of C.P.L.R. § 302(a) to Internet

Personal Jurisdiction Issues Obviates Any Need For A
“Separate Framework for Analyzing Internet-based
Jurisdiction” ............................................................................... 19

D. Judge Lynch’s Determination That New York Is Not the

Situs of Injury In A Copyright Action Alleging
Infringement Via the Internet By A Foreign Defendant
With No New York Presence Comports With This
Court’s Interpretation of C.P.L.R. § 302(a) In Fantis
Foods, Inc. v. Synergal, Ltd....................................................... 22

iii
III. THE CERTIFYING PANEL HAS INVITED THIS COURT
INTO ERROR BY PROPOSING A COURSE OF ACTION
THAT WOULD CERTAINLY RESULT IN AN
ERRONEOUS DECISION..................................................................23

A. One Cannot Fairly Equate The Instant Garden-Variety

Copyright Suit Between A Small Online Library and A
Large Publisher With The Commercial Tort of Unfair
Competition and Theft of Trade Secrets As Exemplified
In the Industrial Espionage Facts of Sybron.............................. 24

B. This Court Lacks Authority To Decide The Situs of A

Copyright, An Issue Of First Impression Preempted by
Federal Law ............................................................................... 26

C. The Suggestion That “Distribution of the Copyrighted

Material Will Involve More Than Derivative Harm” Is A
Mere Will ‘O The Wisp, Appealing To This Court’s
Imaginative, Rather Than Adjudicative, Powers....................... 30

IV. THE LAW OF PERSONAL JURISDICTION WOULD BE

RENDERED RIDICULOUS IF THIS COURT WERE TO
ATTEMPT TO PRESCRIBE THE SITUS OF INJURY
BASED ON THE TYPE OF RIGHTS THAT THE PLAINTIFF
ALLEGED WERE INJURED.............................................................32

V. ANSWERING THE CERTIFIED QUESTION IN THE

AFFIRMATIVE WOULD NOT RESOLVE THE INSTANT
CASE AND IN FACT WOULD RESULT IN ANOTHER
DISMISSAL FOR LACK OF JURISDICTION BY THE
DISTRICT COURT AFTER REMAND.............................................34

VI. THE DISTRICT COURT PROPERLY HELD THAT DMCA

PROCEDURES, THE MERITS, AND THE LITERARY
EFFORTS OF OPPOSING COUNSEL WERE IRRELEVANT .......35

VII. CONCLUSION....................................................................................37

iv
 TABLE OF AUTHORITIES

Case Page
Cases
Arlio v. Lively, 474 F.3d 46 (2nd Cir. 2007) .............................................................36
Arlio v. Lively, 474 F.3d at 52-53 ............................................................................36
Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 791 (2d
Cir. 1999) .............................................................................................................20
Bank Brussels Lambert, 171 F.3d at 792 .................................................................20
Bates v. Dow Agrosciences LLC, 544 U.S. 431, 453, 125 S.Ct. 1788 (2005).........27
Best Van Lines v. Walker, 2004 WL 964009, 2004 U.S. Dist. LEXIS 7830 ..........20
Best Van Lines v. Walker, 490 F.3d 239, 251-252 (2nd Cir. 2007) ..........................21
C.P.L.R. § 302(a)(2)(ii)............................................................................................23
Capitol Records, Inc. v. Naxos of America, Inc., 4 N.Y.3d at 557..........................27
Chloe v. Queen Bee of Beverly Hills, LLC, __ F.3d __, No. 09-3361-cv (2nd Cir.,
August 5, 2010)....................................................................................................21
Cipollone v. Ligget Group, 505 U.S. 504 (1992) ....................................................17
DiStefano v. Carozzi, Inc., 286 F.3d 81 (2nd Cir. 1976) ..........................................20
DiStefano v. Carozzi, Inc., 286 F.3d 81, 84 (2d Cir. 2001) .....................................20
Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 919, n. 15 (2nd. Circuit
1980) ......................................................................................................................8
Farmers Loan & Trust Co. v. Minnesota, 280 U.S. 204, 212, 50 S.Ct. 98 (1930) .29
Felder v. Casey, 487 U.S. 131, 138 (1988) .............................................................28
Free v. Bland, 369 U.S. 663, 666 (1963).................................................................28
Galgay v. Bulletin Company, Inc., 504 F.2d 1062, 1064 (2d Cir. 1974).................36
Goldstein v. California, 412 U.S. 546, 556, 93 S.Ct. 2303 (1973) .........................27
Harper & Row Publishers, Inc. v. Nation Enterprises, 723 F.2d 195, 200, n. 3 (2nd
Cir. 1983). ..............................................................................................................7
In Capitol Records, Inc. v. Naxos of America, Inc., 4 N.Y.3d 540, 830 N.E.2d 250,
797 N.Y.S.2de 352 (2005) ...................................................................................27
Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694,
702, 102 S.Ct. 2099 (1982)..................................................................................18
Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 732, 105 S.Ct. 2380
(1985) ...................................................................................................................27
Office Depot v. Zuccarini, 569 F.3d 696, 703 (9th Cir. 2010) .................................10
Office Depot v. Zuccarini, 569 F.3d at 703 .............................................................28
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584, 19 S.Ct. 1563, 143 L.Ed.2d
760 (1999) ............................................................................................................17
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 99, 103 S.Ct. 2890 (1983) ..................27

v
Sterling Nat’l Bank & Trust Co. v. Fidelity Mortgage Investors, 510 F.2d 870, 873
(2nd Cir. 1975) ......................................................................................................36
Sybron Corp. v. Wetzel, 46 N.Y.2d 197 (1978) ................................................ 23, 24
Tabacalera Severiano Jorge, SA v. Standard Cigar Co., 392 F.2d 706 (1968)......28
Teamsters v. Lucas Flour Co., 369 U.S. 95, 104, 82 S.Ct. 571 (1962)...................27
United States v. Price, 361 U. S. 304, 313 (1960)...................................................17
University Sports Publications Co., Inc. v. Rizzo, 2006 N.Y. Slip. Op. 52488(U) .22
Van Lines v. Walker, 490 F.3d 239..........................................................................21
Statutes
15 U.S.C. § 1125(d)(2)(A) .................................................................................. 7, 26
15 U.S.C. § 22............................................................................................................6
15 U.S.C. §§ 77aa and 78aa.......................................................................................5
17 U.S.C. § 107........................................................................................................11
17 U.S.C. § 108................................................................................................. 11, 12
17 U.S.C. § 301..........................................................................................................4
29 U.S.C. § 1132(e)(2)...............................................................................................6
42 U.S.C. § 9613(e) ...................................................................................................6
C.P.L.R. § 302(a) .............................................................................................. 17, 19
C.P.L.R. § 302(a)(ii) ................................................................................................17
C.P.L.R. § 302(a)(2)(ii)............................................................................................21
F.R.Civ.P. 12(b)(2) ............................................................................................. 2, 15
N.Y. C.P.L.R. § 302(a)(3)(ii).....................................................................................1
Treatises
1 Nimmer § 1.01[B][2] ..............................................................................................5
2 Nimmer on Copyright § 8.17 (jukeboxes), § 8.18[E] (cable TV),
§ 8.18[F] (satellite carriage)...................................................................................9
2 Nimmer on Copyright § 8.21[B] (Matthew Bender, Rev. Ed.) ............................10
2 Nimmer on Copyright, Chapter 8 (Matthew Bender, Rev. Ed.).............................8
H.Rep.No. 1476, 94th Cong., 2d Sess. 131 (1976), U.S. Code Cong. & Admin.
News 1976, p. 5747 (reprinted in 4 Nimmer App. 4)............................................5
Section 108 Study Group: Copyright Exceptions for Libraries and Archives ........11

vi
 THE QUESTION CERTIFIED FOR REVIEW
In copyright infringement cases, is the situs of injury for purposes of

determining long-arm jurisdiction under N.Y. C.P.L.R. § 302(a)(3)(ii) the location

of the infringing action or the residence or location of the principal place of

business of the copyright holder?1

SUMMARY OF THE ARGUMENT

The Certifying Panel originated this question sua sponte, after impliedly

concluding that District Court Court Judge Gerald E. Lynch had decided the case

correctly under C.P.L.R. § 302(a)(3)(ii) (sometimes herein referred to as the “New

York Longarm Statute”). Plaintiff-Appellant Penguin Group (USA), Inc. did not

argue the situs of a copyright, or the situs of its injury in the District Court or on

appeal to the Second Circuit. Accordingly, what the Certifying Panel has

presented to this Court is entirely its own theoretical invention, invented to plug a

perceived gap in the law interpreting the New York Longarm Statute in a fashion

that would tilt the scales of personal jurisdictional law toward New York copyright

action plaintiffs.

This Court should answer the certified question with a firm “no,” for reasons

that can be summarized as follows: (1) Congress expressly preempted the field of

1
Certified in Penguin Group (USA) Inc., v. American Buddha, No. 09-1739-cv (2nd Cir., June
15, 2010) by a panel consisting of the Hon. Robert D. Sack, the Hon. Robert A. Katzman, and
Hon. Denny Chin, herein, the “Certifying Panel.”

-1-
copyright law in the Copyright Act of 1976, and any attempt by this Court to

define an essential aspect of the Congressionally-created rights under which

copyright litigants proceed in federal court would impermissibly intrude upon the

jurisdiction of the federal courts; (2) if Congress had wished to establish the situs

of a copyright, as it has expressly done for Internet domain names, it could have

done so, and the likely situs would be the location of the Register of Copyrights,

i.e., the Library of Congress, in Washington D.C., which would centralize any

jurisdictional implications and maintain a level playing field among litigants; (3)

Copyright law is a vast and complex system of rights that cannot be adapted to fit

the answer sought by the Certifying Panel; (4) Copyright law not only protects an

inconceivably diverse range of creative activities, it also regulates media

distribution systems and export/import of media content, such that imposing a

“situs” upon copyrights would throw sand into the wheels of the system; (5)

Copyrights have a multifarious nature and diverse ownership, because (a) the law

accords copyright holders four basic rights, (b) multiple authors may hold rights in

a single work, and (c) distribution deals multiply these holders, and therefore,

imposing a “situs” upon copyrights would obstruct the smooth operation of the

dynamic system of rights exchange that characterizes modern media production;

(6) Congress has granted statutory liability exemptions to many interest groups,

including libraries and educators, and this Court should not alter the balance of

-2-
rights between holders and exempt media users by weighting the scales in favor of

New York copyright claimants and increasing the risk of litigation against these

exempt users; (7) District Judge Gerard E. Lynch correctly applied the New York

Longarm Statute under the authority of this Court’s holding in Fantis Foods, Inc.

v. Standard Importing Co., Inc., 49 N.Y.2d 317 (1980); (8) the Certifying Panel’s

suggestion to equate this garden-variety copyright case with the industrial-

espionage fact pattern of Sybron Corp. v. Wetzel, 46 N.Y.2d 197 (1978) is wholly

unwarranted, and would distort the logic of Sybron past the breaking point; (9) the

jurisprudence of the New York Longarm Statute has developed rationally without

bright-line rules to pre-determine the “situs of injury,” and imposing such rules

based on the nature of the property that had been injured would render the law

ridiculous, as various examples illustrate; and, (10) answering the certified

question in the affirmative would not resolve the instant case and would in fact

result in another dismissal for lack of jurisdiction by the District Court after

remand, because American Buddha, an Oregon nonprofit corporation, has no

commercial activity, no sources of revenue from the State of New York or any

source, and thus the requisites for imposing New York jurisdiction upon it will

never be established.

Finally, if this Court were to essay what no other state or federal court has

attempted, by determining (a) the situs of a copyright and (b) the situs of injury to

-3-
it, its doctrine would be born an orphan, left to shift as it might in the universe of

federal law. After answering this question, this Court will never have jurisdiction

to review an appeal from a jurisdictional finding by a federal District Court in a

copyright case. This Court has been asked to create a copyright litigation doctrine

that will place a heavy thumb on the scales of justice, favoring New York

plaintiffs, and disadvantaging defendants from the other forty-nine states and

foreign nations. The Certifying Panel sees the risk that forging such a rule without

federal statutory authority will be found to be a gross error of law, and one that will

have cascading ill-effects throughout the federal courts. If there were any need for

such a change in copyright enforcement law, Congress would have to make it by

positive amendment. The risk of error posed by anything but a firm negative

answer to the certified question is extremely large. This Court should decline to

play the role of Pandora, and answer the certified question with a firm “no.”

STATEMENT OF THE FACTS

Defendant-Appellee American Buddha is an Oregon nonprofit corporation2

that operates a passive website at www.naderlibrary.com (the “website”). (A-29-

2
The sole director of American Buddha is Tara Carreon. (A-77, Exhibit 10 to Kjellberg
Declaration; A-174, Supplemental Carreon Dec. ¶ 12.) It is unclear why Penguin erroneously
asserts that Charles Carreon, counsel to American Buddha, is a Director. Tara Carreon has been
the sole corporate director since January 22, 2002. (A-197-200; Exhibit 5 to Supp. Carreon
Dec.)

-4-
30, Hammond Dec. ¶¶ 3.) American Buddha operates an online library3 that

provides access to classical literature and other works through the website,

including three works published in print format by Plaintiff-Appellant Penguin

Group (USA) Inc. (“Penguin”).4

On January 20, 2009, Penguin sued American Buddha in the Southern

District of New York in a complaint alleging as follows: “Upon information and

belief, defendant American Buddha has engaged in infringing activities that injure

plaintiff in this district, and is otherwise subject to personal jurisdiction in this

district.” (A-6, Complaint ¶ 5.)

American Buddha moved for dismissal pursuant to F.R.Civ.P. 12(b)(2),

supporting its motion with evidence establishing a complete absence of contacts

between the corporation and New York, as follows: American Buddha has no real

estate, personal property, bank accounts, personnel, business associates or business

activities in New York. (A- 31-32, Carreon Dec. ¶¶ 2 - 14; A-29-30, Hammond

Dec. ¶¶ 3 – 6.) The website is hosted on servers located in Tucson, Arizona and

Portland, Oregon, and has never used hosting or Internet services based in New

York. (A-29-30, Hammond Dec. ¶¶ 4-5.) The servers and the material on the

3
Penguin takes issue with American Buddha’s assertion of the library exemption from copyright
liability under 7 U.S.C. § 108. As related infra, the District Court found the merits irrelevant to
the issue of personal jurisdiction.
4
The works are Oil!, by Upton Sinclair, It Can’t Happen Here by Sinclair Lewis, and an English
translation of The Golden Ass, by the Roman poet Apuleius.

-5-
website are not directed toward the residents of the State of New York. (A-30,

Hammond Dec. ¶ 6.) The website does not advertise on other websites anywhere,

and specifically, does not advertise on websites directed toward New York

residents. (A-30, Hammond Dec. ¶ 6.) The website has never been used to market

or sell anything to anyone, and specifically, has never been used to market or sell

to anyone in the State of New York. (A-30, Hammond Dec. ¶ 6.) American

Buddha has no commercial activities, and there are no links from any of its

websites, from which it is possible to make a purchase of any product. (A-172,

Supplemental Carreon Dec. ¶ 8.)

Penguin’s opposition to the motion did not rebut any of these facts, nor did it

allege that the availability of Oil!, It Can’t Happen Here, or The Golden Ass on

naderlibrary.com or American-buddha.com had led to infringements of copyright

in New York.

On April 21, 2009, the District Court entered its eight-page Opinion and

Order. Based on the finding that “plaintiff has not alleged … a New York

infringement, and bases its claim of injury solely on the economic effect of an

injury inflicted by defendant elsewhere,” the District Court dismissed the action

without reaching the issue of “whether the exercise of jurisdiction would comport

with due process.” (A-208, Order, p. 8.) Judgment was entered the same day, and

Penguin filed its Notice of Appeal on April 23, 2009.

-6-
 After briefing and argument held on January 7, 2010, on June 15, 2010, the

Second Circuit submitted the Certified Question to this Court, that accepted the

certification on June 29, 2010.

ARGUMENT

I. CONGRESS EXPRESSLY PREEMPTED THE FIELD OF

COPYRIGHT LAW; THUS, AN AFFIRMATIVE ANSWER TO THE
CERTIFIED QUESTION WOULD IMPERMISSIBLY INTRUDE
UPON THE EXCLUSIVE JURISDICTION OF THE FEDERAL
COURTS

A. The Copyright Act of 1976 Preempts Any State-Law

Protection of Intellectual Property Rights Subject to
Copyright Protection
By express federal legislation, Congress has provided that the federal courts

are the exclusive forum for presenting claims of copyright infringement.

The Copyright Act, 17 U.S.C. § 301, states in pertinent part:

“(a) On and after January 1, 1978, all legal or equitable rights that are
equivalent to any of the exclusive rights within the general scope of
copyright as specified by section 106 in works of authorship that are
fixed in a tangible medium of expression and come within the subject
matter of copyright as specified by section 102 and 103, whether
created before or after that date and whether published or
unpublished, are governed exclusively by this title. Thereafter, no
person is entitled to any such right or equivalent right in any such
work under the common law or statutes of any State.

Harper & Row Publishers, Inc. v. Nation Enterprises, 723 F.2d 195, 200, n. 3 (2nd

Cir. 1983).

-7-
 The scope of copyright pre-emption is very broad:

“[O]ne might question whether Congress intended to preempt

equivalent state-law rights for works, such as Tomy's, which lack
sufficient originality to qualify for protection under the Copyright Act.
The House Report, however, supplies the answer: “As long as the
work fits within one of the general subject matter categories of
sections 102 and 103, the bill prevents the States from protecting it
even if it fails to achieve Federal statutory copyright because it is too
minimal or lacking in originality to qualify ....”

Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 919, n. 15 (2nd. Circuit

1980), quoting H.Rep.No. 1476, 94th Cong., 2d Sess. 131 (1976), U.S. Code Cong.

& Admin. News 1976, p. 5747 (reprinted in 4 Nimmer App. 4). Thus, the

Copyright Act of 1976 preempts any state-law protection of Tomy's Disney figures

against copying by Durham. See 1 Nimmer § 1.01[B][2].

Where Congress has pre-empted the field, it has often provided specific

jurisdictional authorizations providing for expanded jurisdiction and service of

process procedures. Congress has never added a jurisdictional provision to any

claim allegeable under copyright law, as it has under the Securities Exchange Act

of 1934 [15 U.S.C. §§ 77aa and 78aa]; Section 12 of the Clayton Antitrust Act

[15 U.S.C. § 22]; ERISA [29 U.S.C. § 1132(e)(2); and CERCLA

[42 U.S.C. § 9613(e)], all of which permit nationwide service of process and

nationwide jurisdiction. The fact that Congress has not done so with respect to

copyright enforcement actions shows that interference in this field of legislation

would be improper.

-8-
 B. If Congress Had Wished To Establish The Situs of A
Copyright, It Could Have Done So, And In The Absence of
Congressional Authorization, This Court Has No Authority
To Do So
As the foregoing citations establish, a copyright is purely a creature of

federal law. The Certifying Panel has suggested that this Court should determine

the situs of a copyright – an issue that it admits no court has ever determined.

Were this Court to hold that the situs of a copyright owned by a New York citizen

has its situs in the State of New York, it would intrude upon Congress’s exclusive

scope of authority by determine a crucial aspect of an intangible property’s nature.

And it would throw a monkey wrench into the federalist balance of powers, for its

decision to grant New York copyright holders an additional source of jurisdictional

leverage would, by implication, determine that the copyrights held by the citizens

of the fifty states have their situs in whichever of the states their owners reside.

Because, as discussed infra, copyrights in a single work are often held by multiple

parties, this would invite “races to the courthouse” in many matters, and invite

chaos into the field of copyright litigation.

Certainly, if Congress had wanted to decide the “situs” of a copyright, it

could have done so, as it did for Internet domain names under the Anti-

Cybersquatting Consumer Protection Act ( “ACPA”), 15 U.S.C. § 1125(d)(2)(A):

“In an in rem action under this paragraph, a domain name shall be

deemed to have its situs in the judicial district in which ... the domain

-9-
 name registrar, registry, or other domain name authority that
registered or assigned the domain name is located....”

The federal courts have found such a designation of situs to be binding:

“Although the current proceeding is not an action under the ACPA,

the statute is authority for the proposition that domain names are
personal property located wherever the registry or the registrar are
located.

Office Depot v. Zuccarini, 569 F.3d 696, 703 (9th Cir. 2010).

It is difficult to imagine that the Ninth Circuit would have attempted to

determine the situs of a domain name without statutory guidance. It is still more

difficult to imagine this Court determining the same type of issue with respect to

federally-created intangible copyrights, without statutory or precedential guidance.

In two-hundred years of deciding copyright cases, the federal courts have not yet

decided the situs of a copyright; accordingly, it is difficult to conclude why this

Court should venture into a pre-empted field to essay its own attempt at an answer.

C. Copyright Law Is A Vast and Complex System of

Congressionally-Created Rights That Cannot Be Adapted
to Fit the Answer Sought By the Certifying Court
If this Court decided to attempt to determine “where” copyrights are located,

it would have to determine what copyrights are. This would require a careful

examination of the copyright statutes, that, since the enactment of the first federal

Copyright Act in 1790, have been amended so often that recounting the

amendments is equivalent to writing a history. The leading treatise deals with the

- 10 -
topic of “The Nature of the Rights Protected by Copyright”5 with a chapter that is

374 pages in length.

1. Copyrights Not Only Protect The Rights of Authors of

Creative Work As Diverse as Architecture, Sculpture,
Dance, Boat-Hulls and Microchips, They Also Control
Distribution of Commercial Content Through Diverse
Systems Such as Jukeboxes, Internet Radio, Cable TV
and Satellites, and Affect Import/Export Regulations
Copyrights inure to the creators of a vast range of creative works, including

writings, music, plays, pantomimes, choreography, artwork, photography,

sculpture, architecture, motion pictures, audiovisual works, sound recordings, web

pages, computer programs, as well as boat hulls and microchips. Copyright

statutes provide the rules governing technological forms of recordation and

transmission – such as sound recordings, cable television, and satellite

transmission. In order to prevent monopolistic conduct in publishing and

distribution, copyright statutes micromanage the relations between licensors and

licensees, facilitating the operation of jukeboxes, cable television and satellite

broadcasting,6 through the use of “mechanical licenses,” a term that harks back to

the days when Congress feared monopolization in the market for player-piano

rolls. Copyright statutes grant copyright owners the right to block exports and

imports of infringing work, and even make unlawful the importation of works that

5
2 Nimmer on Copyright, Chapter 8 (Matthew Bender, Rev. Ed.)
6
2 Nimmer on Copyright § 8.17 (jukeboxes), § 8.18[E] (cable TV), § 8.18[F] (satellite carriage).

- 11 -
infringe the copyright statutes of other nations, although those works, if produced

here, would not infringe U.S. law.

2. A Copyright-Holder Possesses Four Rights: The Right of

Reproduction, the Right of Distribution, The Right of
Performance, and The Right of Display
“Copyright,” in the singular, is a misnomer, for it encompasses a panoply of

rights that begin with the basic four: (1) the Right of Reproduction, (2) the Right of

Distribution, (3) the Right of Performance, and (4) the Right of Display. Congress

attempted to create a fifth, a “blanket right of performance,” by way of a 1995

amendment, the Digital Performance Right in Sound Recordings Act, but

according to the most authoritative commentator, the resulting statute is “so riddled

with exceptions and compromises worked out among the competing interests” that

lawyers and courts will have to await “the passing of some time and sorting out of

the various conflicting sources of rights” before it is certain that the “whole statute

[is not] reduced to a tragic waste.”7

3. Many Authors Can Own the Rights In A Single Creative

Work, and Worldwide Distribution Deals Multiply the
Interested Copyright-Holders Exponentially
Defining copyrights becomes even more difficult when one considers that a

single work is often the source of multiple rights held by many different persons.

The common singer-songwriter collaboration is a common example that has led to

7
2 Nimmer on Copyright § 8.21[B] (Matthew Bender, Rev. Ed.).

- 12 -
many lawsuits between collaborators who have created “joint works” in which they

both have rights. Theatrical productions, operatic works and dance performances

increase the number of collaborators to encompass composers, lyricists, librettists,

scenery-painters, costume-designers, and choreographers. Motion pictures provide

a good illustration of how this process of putting together the myriad creative

works into a single work can become very complex. A motion picture is often

intended to build on the popularity of a book. The author of the book has the right

to create derivative works, so the author would have to grant that right to the

filmmaker. The author of the screenplay would then have a right to the screenplay,

so that must be acquired. The music similarly comes from an independent creative

source, so those rights must be acquired. The cinematographer would have a right

to the footage, so those rights would have to be acquired. The producer would

have to aggregate all these rights in a complex business deal that is called “making

a movie.” The failure to manage all of these rights through careful legal planning

can result in a work that cannot ever be displayed because of disputes among the

rights-holders. When it is all done properly, however, the end result can be an

international hit, the rights to which will be parceled out, fractionated, sliced and

diced a hundred ways – domestic rights, foreign rights, DVD distribution rights,

television rights – the list goes on and on and the rights-holders are myriad. To try

- 13 -
to shoehorn all of these rights into a concept of “situs” is nearly preposterous and

very likely entirely dysfunctional.

4. Copyright Law is “Riddled With Exceptions,” Beginning

With Fair Use and The Library Exemption, and
Continuing With Many “Carve-Outs” That Small Interest
Groups, Such As Educators, Religious Groups, the
Handicapped, Rely Upon to Use Copyrighted Content
Without Fear of Liability for Infringement
Making the matter more complex, the entire body of copyright law is

“riddled with exceptions.” The most prominent exceptions are the doctrine of “fair

use” under 17 U.S.C. § 107, and the Library Exemption under 17 U.S.C. § 1088.

Other exceptions include the Classroom Exemption,9 the Religious Services

Exemption, the Nonprofit Performance Exemption, the Vending Establishment

Exemption,10 the Transmission to Handicapped Persons Exemption, the Fraternal

Order Exemption, and the Family Movie Act.11 Some of these exemptions not

only exempt persons from liability, but effectively create rights to use copyright-
8
Respondent’s research has disclosed not one case where the right of a true, non-profit, public
library has ever been litigated. Although the United States Supreme Court referred to the statute
several times in Sony Corporation of America v. Universal City Studios, Inc., 464 U.S. 417
(1984), the case, usually referred to as the “Betamax case” because it legalized home videotaping
of television programs, The Court did not interpret the scope of Section 108. In 2006, the
Library of Congress published the Report, Section 108 Study Group: Copyright Exceptions for
Libraries and Archives that specifically considered the issue of how the law should adapt to the
digital distribution of books online, and discussed possible amendments to Section 108.
<http://www.copyright.gov/fedreg/2006/71fr70434.html>
9
Recodified as the “TEACH” Act for Technology Education and Copyright Harmonization Act
of 2002 – a statute of mind-boggling complexity.
10
Allows music stores to play music so long as it is not heard outside the store.
11
A recent enactment that abolished the rights of film-makers to prevent the after-market editing
of their works to excise nudity and other “offensive” content.

- 14 -
protected content, such as the Family Movie Act, that allows video stores to

mutilate motion pictures before they rent them. Thus, the plethora of exemptions

further blurs the issue of what is a copyright.

D. This Court Has No Authority To Enhance The Rights of A

Copyright Claimant To File Suit Against A Library
Operating Under The Library Exemption From Copyright
Liability Codified At 17 U.S.C. § 108
The library exemption from copyright liability codified at 17 U.S.C. § 108

provides, in relevant part:

(a) Except as otherwise provided in this title and notwithstanding the

provisions of section 106, it is not an infringement of copyright for a
library or archives, or any of its employees acting within the scope of
their employment, to reproduce no more than one copy or
phonorecord of a work, except as provided in subsections (b) and (c),
or to distribute such copy or phonorecord, under the conditions
specified by this section, if—
(1) the reproduction or distribution is made without any purpose of
direct or indirect commercial advantage;
(2) the collections of the library or archives are
(i) open to the public, or
(ii) available not only to researchers affiliated with the library or
archives or with the institution of which it is a part, but also to other
persons doing research in a specialized field….
The Certifying Panel has invited this Court to explore “the issue of online

libraries” with respect to the certified question. This would be a hazardous

exploration.

First, the plain language of Section 108 does not distinguish between

libraries based on their location or the material of which a library is

- 15 -
manufactured. An online library housed in a server in Oregon is entitled to the

same protection as would be accorded to a small library lodged in a wooden

building on a mountain pass offering maps and mountain-climbing texts for the

edification of mountaineers, or a stone library endowed by Andrew Carnegie in a

borough of New York, providing free literature to the impoverished. Section 108

is broad in its extent and purpose, and protects the Constitutional rights of the

people to think, read, and discuss copyrighted works in a public forum, and this

Court has no authority to curtail its scope by procedural legerdemain.

Second, there has been no judicial interpretation of the application of Section

108 to online libraries, so there is no authority to discuss under this category of

analysis.

Third, the Copyright Office has not engaged in any rulemaking regarding

online libraries, such as it has done with respect to the application of the

Anticircumvention Requirements of the DMCA.12 The Section 108 Study Group

established by the Copyright Office supports the position that online libraries are

entitled to assert the immunity from copyright liability.13

Fourth, there is no legislative history that bears upon the proper

interpretation of the library exemption from copyright liability. Section 108 was

12
http://www.copyright.gov/1201/
13
http://www.section108.gov/

- 16 -
enacted July 30, 1947; thus, Congressional commentary contemporaneous with the

DMCA, enacted fifty-one years later, do not provide valid interpretive authority

regarding unamended portions of the earlier-enacted statute. The law is what

Congress enacts, not what Congressional staff insert into the record. The

verbiage culled from the legislative record and presented by Penguin as law was

never enacted by Congress and was not even recorded contemporaneously with the

enactment that created the library exemption; thus, it provides no reliable guidance

to any court, because as the United States Supreme Court stated in Cipollone v.

Ligget Group, 505 U.S. 504 (1992), quoting United States v. Price, 361 U. S. 304,

313 (1960):

"[T]he views of a subsequent Congress form a hazardous basis for

inferring the intent of an earlier one."

If this Court concluded that the goal of providing New York publishing

houses with a secure beach-head in copyright lawsuits against online libraries

warranted a judicial finding that copyrights held by New York publishers have

their situs in New York, not only would it alter the scope of federal rights accorded

to online libraries, it would be seen as a transparent move to reduce the bargaining

power of online libraries in forty-nine states to assert the liability protection of the

library exemption, by subjecting them to suits in New York to which they

previously would not have been subject. Such an assessment would not inure to

the reputation of this Court for fairness and equity toward all.

- 17 -
II. THE DISTRICT COURT DECISION WAS CORRECT UNDER NEW
YORK LAW
The Supreme Court has stated that the requirement that the District Court

establish personal jurisdiction over the defendant “represents a restriction on

judicial power … as a matter of individual liberty.” Ruhrgas AG v. Marathon Oil

Co., 526 U.S. 574, 584, 19 S.Ct. 1563, 143 L.Ed.2d 760 (1999), quoting Insurance

Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102

S.Ct. 2099 (1982).

A. American Buddha’s F.R.Civ.P. 12(b)(2) Motion Established

A Complete Lack of Jurisdictional Contacts Between The
Corporation and The State of New York
American Buddha’s motion negated all possibility of finding personal

jurisdiction in the State of New York based upon corporate presence, as the

District Court found:

“[American Buddha] conducts no activities in New York, although, of

course, as is the nature of the internet, its website
www.naderlibrary.com – which is hosted on servers in Arizona and
Oregon – is accessible in New York.” (A-203, Order, p. 3.)

Penguin did not introduce any evidence contrary to this finding, and did not

argue that it was erroneous on appeal.

B. Penguin Opposed The Motion Solely On The Basis of

N.Y. C.P.L.R. § 302(a)(3)(ii)
In response to the motion to dismiss for lack of personal jurisdiction,

Penguin stayed true to the sparsely-enunciated theory in its complaint, that

- 18 -
“defendant American Buddha has engaged in infringing activities that injure

plaintiff in this district…” (A-6, Complaint ¶ 5.) The Kjellberg Declaration does

not expand upon this bare statement; accordingly, the District Court had no

alternative but to conclude as it did, that “defendant’s only connection to New

York, as alleged by plaintiff, is the claimed injury caused to plaintiff.” (A-203,

Order, p. 3.) Judge Lynch further observed that “in asserting jurisdiction over

defendant only under C.P.L.R. 302(a)(3) – which provides jurisdiction over torts

committed inside New York – plaintiff appears to recognize that ‘in the case of

web sites displaying infringing material the tort is deemed to be committed where

the web site is created and/or maintained.’” (A-203, Order, p. 3, quoting Freeplay

Music v. Cox Radio, Inc., 2005 WL 1500896, at *7.)14

C. The Proper Application of C.P.L.R. § 302(a) to Internet

Personal Jurisdiction Issues Obviates Any Need For A
“Separate Framework for Analyzing Internet-based
Jurisdiction”
During Judge Lynch’s tenure on the District Court bench,15 he led the

development of the law applying C.P.L.R. § 302(a) to Internet personal jurisdiction

14
Freeplay, an unpublished opinion by Judge Lynch, was attached as Exhibit 1 to the Carreon
Declaration, and appears at A-34-49.)
15
Judge Lynch is an extraordinary jurist. He served as Special Counsel for the New York Special
Commission to Investigate City Contracts in 1986, and the same year became a full professor on
the Columbia law faculty. In the early nineties, he was Criminal Division Chief in the Southern
District of New York U.S. Attorney’s Office. He was an Associate Counsel in the Iran-Contra
independent counsel's office. Appointed to the federal bench by President Clinton in 2000, he
was elevated to the Second Circuit by President Obama shortly after deciding the case below,
and approved by the Senate on a vote of 94 – 3 on September 17, 2010.

- 19 -
issues.16 He acted with characteristic analytical precision in dismissing Penguin’s

complaint. He began his analysis with the following extensive quote from

DiStefano v. Carozzi, Inc., 286 F.3d 81 (2nd Cir. 1976), the definitive Second

Circuit case on the application of C.P.L.R. § 302(a)(ii):

“Courts determining whether there is injury in New York sufficient to

warrant [Rule] 302(a)(3) jurisdiction must generally apply a ‘situs-of-
injury’ test, . . . locat[ing] the ‘original event which caused the
injury.’” DiStefano v. Carozzi, Inc., 286 F.3d 81, 84 (2d Cir. 2001),
quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171
F.3d 779, 791 (2d Cir. 1999). “[T]he ‘original event’ occurs where the
first effect of the tort . . . is located” and is “generally distinguished
not only from the initial tort but from the final economic injury and
the felt consequences of the tort.”

Id., quoting Bank Brussels Lambert, 171 F.3d at 792. (A-204, Order, p. 4.)

Judge Lynch avoided the temptation to wax hyperbolic over the Internet

phenomenon, and rested his analysis on the facts alleged by Penguin:

“[W]hile the electronic nature of the alleged infringement may make it

possible for others acting in New York to infringe plaintiff's
copyrights here, plaintiff has not alleged such a New York
infringement, and bases its claim of injury solely on the economic
effect of an injury inflicted by defendant elsewhere." (A-207-208,
Opinion and Order, pp. 7-8.) (Emphasis added.)

<http://www.whitehouse.gov/the-press-office/president-obama-announces-judge-gerard-lynch-
united-states-court-appeals-second-cir>
<http://www.law.com/jsp/article.jsp?id=1202433887979&NY_Federal_Judge_Confirmed_for_n
d_Circuit>
16
Judge Lynch’s District Court decisions in a series of influential cases were analyzed by
Edward M. Spiro, co-author of “Civil Practice in the Southern District of New York, 2d Ed.,” in
an article entitled Personal Jurisdiction and the Internet, in the New York Law Journal Southern
District Civil Practice Roundup, Volume 234 – No. 29.
<http://www.maglaw.com/publications/data/00086/_res/id=sa_File1/07008050019Morvillo.pdf>

- 20 -
 Judge Lynch thus adhered to the same analytical methodology the Second

Circuit approved when it affirmed dismissal of the complaint in Best Van Lines v.

Walker, 2004 WL 964009, 2004 U.S. Dist. LEXIS 7830, quoted favorably by the

Second Circuit inter alia on review, as follows:

“While analyzing a defendant’s conduct under the Zippo sliding scale of

interactivity may help frame the jurisdictional inquiry in some cases, as the district

court here pointed out, ‘it does not amount to a separate framework for analyzing

internet-based jurisdiction.’” Best Van Lines v. Walker, 490 F.3d 239, 251-252

(2nd Cir. 2007), emphasis added, quoting from Best Van Lines v. Walker, 2004 WL

964009, at *3, 2004 U.S. Dist. LEXIS 7830, at *9.

Judge Lynch’s analytical framework for application of C.P.L.R. § 302(a) to

Internet cases was again endorsed in Chloe v. Queen Bee of Beverly Hills, LLC, __

F.3d __, No. 09-3361-cv (2nd Cir., August 5, 2010), in which the panel17 reversed

the dismissal of a complaint against a company that “operated a highly interactive

offering [handbags bearing counterfeit marks] for sale to New York consumers,”

citing Best Van Lines v. Walker, 490 F.3d 239, supra at id. for the principle that a

“website’s interactivity ‘may be useful’ for analyzing personal jurisdiction” “if it

helps to decide whether the defendant ‘transacts any business in New York.’ ”

17
Hon. Reena Raggi, Hon. Peter Welles Hall and Hon. James M. Carman.

- 21 -
 D. Judge Lynch’s Determination That New York Is Not the
Situs of Injury In A Copyright Action Alleging
Infringement Via the Internet By A Foreign Defendant
With No New York Presence Comports With This Court’s
Interpretation of C.P.L.R. § 302(a) In Fantis Foods, Inc. v.
Synergal, Ltd.
In Freeplay Music v. Cox Radio, Inc., 2005 WL 1500896, Judge Lynch had

previously determined the situs of injury in an action alleging copyright

infringement against a non-resident defendant with no New York presence whose

website allegedly “streamed” infringing music over the Internet,18 and thus could

be “streamed” in all fifty states, including New York. (A-47, Freeplay, supra,

*14.) Naturally, in this case, Judge Lynch cited Freeplay for its prior reasoning:

“Just as in Freeplay Music – which involved a copyright claim …

“economic loss . . . is only a consequence of the injurious unlicensed
use and is not the injury itself.”

(A-207, Order, p.7, quoting Freeplay, supra, 2005 WL 1500896, at *8, emphasis

added.)

In reaching this conclusion, Judge Lynch relied upon this Court’s decision in

Fantis Foods, Inc. v. Standard Importing Co., Inc., 49 N.Y.2d 317 (1980):

“[R]esidence or domicile of the injured party within a State is not a

sufficient predicate for jurisdiction, which must be based on a more

18
Freeplay’s facts suggest how nuanced copyright lawsuits can be, and how many the disparate
nature of the rights created by federal copyright law multiply the number of copyright “owners”
and claims: “Freeplay alleges that although Beasley is licensed by BMI to perform the Freeplay
musical works in question, that license does not grant Beasley the necessary ‘synchronization
rights’ that would allow Beasley to use Freeplay’s musical works in the manner alleged.”
(Freeplay, p. 2, A-35.)

- 22 -
 direct injury … than the indirect financial loss resulting from the fact
that the injured person resides or is domiciled here.”
Fantis, supra, 49 N.Y.2d at 326 emphasis added and other citations omitted,

quoted at A-205, Order, p.5.

Respondent’s research indicates that Fantis, supra, has been applied only

once in the Internet context by the lower courts of New York, in University Sports

Publications Co., Inc. v. Rizzo, 2006 N.Y. Slip. Op. 52488(U),19 holding

“plaintiff’s reference to over 41 printed pages for [defendant’s] website does not

demonstrate [defendant’s] significant contact to New York.” Citing Fantis for the

principle, the Supreme Court of Nassau County held: “The only connection

between the alleged tort claims asserted against Skies and any injury or foreseeable

consequence in New York is the fact that plaintiff is domiciled here. This is an

insufficient basis for personal jurisdiction.”

Thus, it is clear that Judge Lynch committed no error in his interpretation of

New York law, and his decision dismissing Penguin’s complaint was entirely

proper under the law.

III. THE CERTIFYING PANEL HAS INVITED THIS COURT INTO

ERROR BY PROPOSING A COURSE OF ACTION THAT WOULD
CERTAINLY RESULT IN AN ERRONEOUS DECISION
The Certifying Panel nowhere suggests that Judge Lynch erred when he held

that Penguin’s alleged “economic loss” in New York was insufficient to establish
19
<http://scholar.google.com/scholar_case?case=12569034013492989622&q=internet&hl=en&a
s_sdt=20000000004>

- 23 -
the requisite in-state injury. The Certifying Panel also conceded that the holding of

Sybron Corp. v. Wetzel, 46 N.Y.2d 197 (1978), “does not dictate the result of this

appeal.” (Opinion, p. 39.)

Thus, apparently because Judge Lynch did not err in his application of

C.P.L.R. § 302(a)(2)(ii), and because Sybron did not control, the Certifying Panel

suggested that this Court make new law, and suggested the manner in which it

could be done:20 (a) decide that copyright infringement is “analogous to a

commercial tort;” (b) decide the situs of intangible copyrights to be the residence

of the owner; and (c) assume the “likely ability of plaintiff”21 to foresee that the

distribution of the copyrighted material in issue will … involve more than

derivative harm” to the New York plaintiff.

A. One Cannot Fairly Equate The Instant Garden-Variety

Copyright Suit Between A Small Online Library and A
Large Publisher With The Commercial Tort of Unfair
Competition and Theft of Trade Secrets As Exemplified In
the Industrial Espionage Facts of Sybron.
We begin with the first of the Certifying Panel’s suggestions – that this

Court should attempt to construct a bridge between the bare allegations of garden-
20
The Certifying Panel suggested that this Court “may interpret the alleged wrong here-which is
analogous to a commercial tort and involves both the presumptive presence of intellectual
property rights in the State, and the likely ability of the plaintiff to foresee that the distribution of
the copyrighted material in issue will cause loss beyond that caused by the initial unauthorized
uploading of the copyrighted works-to involve more than derivative economic harm within the
State.” (Opinion, page 39.)
21
It seems almost certain that the Certifying Panel mis-spoke here, and intended to suggest,
without support in the record, that American Buddha could foresee that Penguin would suffer a
loss; otherwise, the suggestion seems nonsensical.

- 24 -
variety copyright infringement made by a huge publisher against a tiny online

library, and the industrial espionage case of Sybron Corp. v. Wetzel, 46 N.Y.2d 197

(1978).22

To equate these two cases as similar “commercial torts” is frankly absurd. A

library poses no commercial threat to a publisher – indeed the two institutions, one

nonprofit and for the public benefit, the other profit-oriented and beneficial to

private parties, have gotten on marvelously for centuries. The invocation of

Sybron is merely a stalking horse for the true goal of the Certifying Panel – to shift

the risk of wrongly-deciding an issue of federally-preempted law to this Court.

Nor does Sybron shed any light on the certified question. It does not identify

the situs of intangible property, or the place where a copyright-holder suffers

damage. Grasping at what slight resemblance there is between the instant garden-

variety copyright infringement case alleging no actual sales loss and a case of

massive trade-secret theft that involved the sale of “500-gallon reactors,” Penguin

makes much of the fact that the harm to the Sybron plaintiff ostensibly had not yet

22
Sybron involved a “conscious plan to engage in unfair competition and misappropriation of
trade secrets” against a New York company by a New Jersey competitor, De Dietrich, by hiring
Sybron’s manufacturer’s retired employee, who was subject to a New York confidentiality
agreement, to steal trade secrets that would reveal the manufacturing secret for creating glass-
lined chemical processing vessels. Sybron Corp. v. Wetzel, 46 N.Y.2d at 204. The record was
replete with evidence of actual conspiracy and actual harm: “[S]hould plaintiff's alleged trade
secrets be disclosed, business from New York sales could suffer significantly. It was shown, for
instance, that De Dietrich sales persons have actively solicited Sybron’s Rochester neighbor, the
multinational Eastman Kodak Company, a major customer of Sybron. In fact, by September,
1977, Kodak ordered from De Dietrich two 500-gallon reactors.” Sybron Corp. v. Wetzel, 46
N.Y.2d at 204.

- 25 -
eventuated; however, there is no doubt the plot to hire the retired employee and

pump him for secrets was fully accomplished. Further, since “Sybron customers in

New York are being pursued, it is reasonable that [defendant] foresee New York as

the place injury will occur.” Id. at 206. By contrast, American Buddha has never

pursued anyone in New York for any purpose, much less to make an impossible

sale of books that are available, as Penguin repeatedly invokes, “FREE, FREE,

FREE!”

The record in this case is precisely the contrary. American Buddha

established, and Penguin could not rebut the averments of its Site Administrator:

“The servers and the material on the website are not directed toward
the residents of the State of New York in any way, and never have
been. The website does not advertise on other websites anywhere,
and specifically, does not advertise on websites directed toward
residents of the State of New York. The naderlibrary.com website has
never been used to market or sell anything to anyone, and specifically,
has never been used to market or sell to anyone in the State of New
York.”

Declaration of Jacob Hammond, ¶ 6. A-30.

B. This Court Lacks Authority To Decide The Situs of A

Copyright, An Issue Of First Impression Preempted by
Federal Law
The federal copyright system, including the Section 108 library exemption

from copyright infringement liability that preserves public access to creative

works, is of great value to the nation’s creative workers, and is protected by the

preemption principle from being fragmented by inconsistent state laws. The

- 26 -
Supreme Court described the value of the national system of copyrights in a

seminal case finding a limited state right to prosecute infringers of copyrights

protected by state law:

“The national system which Madison supported eliminates the need

for multiple applications and the expense and difficulty involved. In
effect, it allows Congress to provide a reward greater in scope than
any particular State may grant to promote progress in those fields
which Congress determines are worthy of national action.”

Goldstein v. California, 412 U.S. 546, 556, 93 S.Ct. 2303 (1973).

In Capitol Records, Inc. v. Naxos of America, Inc., 4 N.Y.3d 540, 830

N.E.2d 250, 797 N.Y.S.2de 352 (2005), this Court observed that the states had

power to regulate only those works not protected by federal copyright law:

“The Supreme Court also acknowledged that the states were free to
act with regard to sound recordings precisely because Congress had
not, and in the absence of conflict between federal and state law, the
Supremacy Clause was not a barrier to a state's provision of copyright
protection to a work not covered under federal copyright law.”

Capitol Records, Inc. v. Naxos of America, Inc., 4 N.Y.3d at 557.

It is axiomatic that, because Penguin’s works are provided with federal

copyright protection, this Court has no authority to shape the scope of Penguin’s

Congressionally-created private right of action. The goal of Congressional

preemption is to foster consistent standards and protections nationwide, and the

test for whether a particular rule is preempted is whether it would be inconsistent

with federal law. See, eg., Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S.

- 27 -
724, 732, 105 S.Ct. 2380 (1985); Teamsters v. Lucas Flour Co., 369 U.S. 95, 104,

82 S.Ct. 571 (1962); Bates v. Dow Agrosciences LLC, 544 U.S. 431, 453, 125 S.Ct.

1788 (2005); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 99, 103 S.Ct. 2890

(1983).

The United States Supreme Court has stated with regard to the effect of

preemption:

“Under the Supremacy Clause of the Federal Constitution, ‘[t]he

relative importance to the State of its own law is not material
when there is a conflict with a valid federal law,’ for ‘any state law,
however clearly within a State's acknowledged power, which
interferes with or is contrary to federal law, must yield.’ “

Felder v. Casey, 487 U.S. 131, 138 (1988) (emphasis added), quoting Free v.

Bland, 369 U.S. 663, 666 (1963).

Federal law has not defined the situs of a copyright. This omission cannot

be said to be coincidental, since with respect to Internet domain names, Congress

did specify a situs. 15 U.S.C. § 1125(d)(2)(A); Office Depot v. Zuccarini, 569 F.3d

at 703. Furthermore, in selecting the situs of domain names, Congress chose to

centralize their location by providing that all domains would have a single situs –

the place where they are registered. Following that logic in the copyright context,

all copyrights should have their situs where they are registered, with the Library

of Congress, in Washington, D.C.

- 28 -
 “The situs of intangible property is about as intangible a concept as is

know to the law.” Tabacalera Severiano Jorge, SA v. Standard Cigar Co., 392

F.2d 706 (1968) (Emphasis added.) Battling over the situs of property has

nevertheless been a popular pastime among lawyers litigating over rights to

intangibles. Much like the search for the Deity, many claim to have succeeded in

their search, only to be revealed as self-seekers. Further, the consequences of

establishing the situs of copyrights is fraught with potential unintended

consequences. Were this Court to adopt a rule that, for its residents, federally

protected copyrights have their situs exclusively in the State of New York, it would

begin the process of balkanizing federal copyright law.

A decision that allowed copyright plaintiffs to allege in-state injury by

holding their copyrights in New York would invite forum shopping, and potential

plaintiffs would quickly develop arrangements to “place their copyrights in New

York” in order to gain the advantage thus extended by New York over other

jurisdictions. Assisting copyright plaintiffs to forum shop is not consistent with a

fair system of federal law, and destabilizes the relations among the states.

Establishing the situs of copyrights will also lead to unexpected

consequences, such as different states seeking to tax ownership of copyrights, since

intangible property resident within a jurisdiction is subject to taxation, but only in

that one state where it is located, for the Supreme Court has held: “We have

- 29 -
determined that in general intangibles may be properly taxed at the domicile of

their owner and we can find no sufficient reason for saying that they are not

entitled to enjoy an immunity against taxation at more than one place similar to

that accorded to tangibles.” Farmers Loan & Trust Co. v. Minnesota, 280 U.S.

204, 212, 50 S.Ct. 98 (1930). Indeed, should the state of New York initiate

taxation of copyrights, publishers could be incentivized to “park” their copyrights

in other states with lower tax rates, or to utilize licensing arrangements to move

them offshore to tax-free jurisdictions. Sparking conflict over tax revenues among

the states, and incentivizing strategic tax-avoidance behavior would be further

bitter fruits of the blighted harvest that would result from an affirmative answer to

the certified question.

In summary, for this Court to attempt to establish the situs for copyrights

and injury thereto would be inherently an invasion of Congressional authority to

define the scope and enforceability of copyrights, would begin a round of strategic

behaviors among states and copyright-holders, and would induce an avalanche of

other unforeseen effects. Accordingly, this Court should steer well clear of the risk

of committing a grave infringement upon federal authority.

C. The Suggestion That “Distribution of the Copyrighted

Material Will Involve More Than Derivative Harm” Is A
Mere Will ‘O The Wisp, Appealing To This Court’s
Imaginative, Rather Than Adjudicative, Powers
The Certifying Panel spoke of the “likely ability of plaintiff to foresee that

- 30 -
the distribution of the copyrighted material in issue will … involve more than

derivative harm.” The Certifying Panel could not mean what it literally said,

because it makes no sense; however, let us leave aside what plaintiff or defendant

could foresee, and ask the question – what does the Certifying Panel mean by

asking this Court to look for “more than derivative harm”?

By using this phrase, the Certifying Panel suggests Judge Lynch was

mistaken when he stated that Penguin had alleged only lost economic benefit in

New York, i.e., “mere derivative harm,” what this Court called “indirect financial

loss” that is “not a sufficient predicate for jurisdiction.” Fantis Foods, supra, 49

N.Y.2d at 326. But Penguin did not allege anything but the most general statement

of harm in its complaint, and the copying of a file off the Internet by their lawyer

certainly is no harm at all. Of course, going to the merits of library use and far

beyond the record below, it has never been argued that libraries should be liable for

lost sales because the public slakes its reading appetite in a library. Quite the

contrary, the habit of reading, and therefore of buying books, is nurtured in

libraries, and what is more important, the populace is educated at the fount of

public knowledge. But assuming arguendo, Penguin suffered any harm at all, it

was nothing but economic in nature. Try as one might to imagine it, Penguin could

not have suffered anything but “mere derivative harm” by American Buddha’s

offering of nonprofit online library access.

- 31 -
 By suggesting that this Court seek for something constituting more than

derivative harm, some je nes sais quoi that might be discovered by fishing about in

the aether, the Certifying Panel has merely conjured a will o’ the wisp, appealing

to this Court’s imaginative, rather than its adjudicative, powers. The publishing

industry already supplies fiction in abundance. We look to the courts to analyze

facts in light of the law, not to invent new types of harm, previously unknown.

IV. THE LAW OF PERSONAL JURISDICTION WOULD BE

RENDERED RIDICULOUS IF THIS COURT WERE TO ATTEMPT
TO PRESCRIBE THE SITUS OF INJURY BASED ON THE TYPE OF
RIGHTS THAT THE PLAINTIFF ALLEGED WERE INJURED
The New York Longarm Statute has been used to analyze personal injury

within the state by an act outside the state in many contexts – an exploding gas

tank from Kansas, the bite of a Spanish dog, a defective fondue pot from Canada,

dental malpractice in New Jersey, and medical negligence in Connecticut have all

contributed to the growth of the law. In none of these cases was a “bright-line

rule” to establish the situs of injury to the person required. Cases involving injury

to business entities have also been adjudicated without any preconceived rule

designating the situs of the loss.

The Certifying Panel, however, suggests by its question that the adjudication

of all these cases might have been easier if the legislature had adopted the

approach suggested by the Second Circuit panel, by enacting a law that said, for

example, “whenever and wherever a New Yorker is injured, he or she is deemed to

- 32 -
have suffered injury in New York.” In these days when baggage often goes astray,

it would be helpful to have a statute that declared, “whenever a New Yorker’s

luggage is shipped to the wrong airport, it is deemed lost in New York.” To

simplify financial litigation, it could have declared, “a breach of any covenant

contained within a financial instrument issued by a New York bank is deemed to

have occurred in New York.” To simplify litigation for railroads, airlines, and

agricultural producers, the Legislature could have assigned the situs of damage to

railroad cars, airplanes, or crops based on their New York origins.

These suggestions are ridiculous, and that is the point. They are no more

ridiculous than the Certifying Panel’s suggestion, that amounts to asking this Court

to append to the New York Longarm Statute words to this effect: “any lawsuit

arising from a song written in the State of New York, or which has been licensed to

a New Yorker, shall be litigated in the State of New York.” To this must be added,

of course, the proviso that the word “song” encompasses also every “painting,

photograph, sculpture, architectural work, computer program, boat hull, computer

chip, and any other original, tangible, creative work, including works licensed for

distribution anywhere on earth in any medium including cable, Internet and

satellite.”

- 33 -
V. ANSWERING THE CERTIFIED QUESTION IN THE
AFFIRMATIVE WOULD NOT RESOLVE THE INSTANT CASE
AND IN FACT WOULD RESULT IN ANOTHER DISMISSAL FOR
LACK OF JURISDICTION BY THE DISTRICT COURT AFTER
REMAND

Although the fourth certification factor is that the question certified will

control the outcome of the case, the Certifying Panel conceded that “resolution of

the certified issue will … not necessarily [determine] whether jurisdiction will

ultimately be found appropriate in New York State.” Opinion, 27:1-4. This is

actually a bit of understatement, because answering the certified question will

most definitely not resolve this case.

Why is this? Because Penguin was unable to show, at the District Court

level, that American Buddha’s activities conformed to either of the two alternative

requirements under the New York Longarm Statute that must be shown to justify

the State’s exercise of jurisdiction over a defendant, to wit, that American Buddha

either: (i) regularly does or solicits business or engages in a persistent course of

conduct, or derives substantial revenue from goods used or consumed or services

rendered in the state, or (ii) expects or should reasonably expect the act to have

consequences in the state and derives substantial revenue from interstate or

international commerce.”

A non-profit library that engages in no commerce anywhere whatsoever

cannot either (1) obtain substantial revenue from New York, or (2) derive

- 34 -
substantial revenue from interstate or international commerce.”23 Accordingly,

whatever this Court’s decision, American Buddha will never be found lawfully

subject to New York jurisdiction; however, the consequences of any answer by this

Court other than an unequivocal “no” to the certified question would reverberate in

the jurisprudence of the federal courts until at last the cacophonous sound, heard in

the nation’s highest court, compelled correction of the error.

VI. THE DISTRICT COURT PROPERLY HELD THAT DMCA

PROCEDURES, THE MERITS, AND THE LITERARY EFFORTS OF
OPPOSING COUNSEL WERE IRRELEVANT
In its eight-page Opinion and Order granting American Buddha’s motion,

the District Court found much of Penguin’s proposed evidence to be superfluous:

“In response to defendant’s motion, plaintiff discusses the merits of

its copyright infringement claim, argues the relative lack of merit in
defendant’s anticipated defenses, and provides a guided tour through
the mechanisms for notification and counter-notification under the
Digital Millennium Copyright Act, leading to its conclusion that
defendant ‘invited’ this lawsuit. All of that, however, is irrelevant to
the only issue presently before the Court: whether there is a basis for
jurisdiction over defendant." (A-201, Opinion and Order, p. 1.)

The District Court acted well within its discretion by declining to consider

irrelevant matters. Apparently hoping to give rise to some prejudicial impulse that

it wrongly believes it might improperly stimulate in this Court, Penguin persists in

exhuming this corpus of non-probative facts. As a foil, it argues that such matters

23
“The naderlibary.com website has never been used to market or sell anything to anyone… .”
Declaration of Jacob Hammond, ¶ 6. Appendix, A-30.

- 35 -
come within the “totality of circumstances” relevant to determining the issue of

personal jurisdiction. However, the totality of the circumstances does not expand

the scope of evidence beyond those facts having a tendency to prove the matter in

dispute.24 In a hearing on personal jurisdiction, “[t]he proper inquiry … is

“whether looking at ‘the totality of the defendant’s activities within the forum’,

purposeful acts have been performed in New York ….” Sterling Nat’l Bank &

Trust Co. v. Fidelity Mortgage Investors, 510 F.2d 870, 873 (2nd Cir. 1975),

quoting Galgay v. Bulletin Company, Inc., 504 F.2d 1062, 1064 (2d Cir.

1974)(further citations omitted). The District Court determined that statements

regarding “the lack of merit of American Buddha’s purported defenses …

American Buddha’s sophistication with regard to electronic commerce and internet

litigation … and certain writings, actions and statements of Charles Carreon,”25

were irrelevant to the jurisdictional issues presented by the motion to dismiss.

The Certifying Panel apparently found nothing helpful in this material either.

As the Second Circuit held in Arlio v. Lively, 474 F.3d 46 (2nd Cir. 2007), courts

properly exclude irrelevant evidence because it merely sidetracks the process of

decision-making:

24
See, Advisory Committee Note, F.R.E. § 401. “Once the rules of pleading and procedure have
determined the material facts in a case, the concept of relevance can be applied to limit evidence
that is admissible to prove those facts.” Wright and Graham, Federal Practice and Procedure:
Evidence § 5126, at 15.
25
Appellant’s Brief, 25 - 26.

- 36 -
 “To open the doors of relevance so wide as to allow a plaintiff to
recite facts concerning claims he is not making or damages he is not
seeking would violate the spirit of the Federal Rules and "hamper
rather than advance the search for truth."

Arlio v. Lively, 474 F.3d at 52-53, quoting 2 Weinstein & Berger, Weinstein's

Federal Evidence § 402.02[3], at 402-15.

VII. CONCLUSION

While expressing its deepest respect for this Court, American Buddha cannot

refrain from stating that this proceeding is, from its point of view, merely the latest

false turn in a long, harassing detour that Penguin has inflicted on American

Buddha by mere obstinate perseverance in an unjustified course of action. The

irony of this proceeding is that even though American Buddha demonstrated

immediately in a brief and well-taken motion in the District Court that it should not

be required to defend against Penguin’s claims in the State of New York, it is still

defending itself in the wrong jurisdiction two years later. To end this abuse of the

law, to avoid encouraging further such abuses, and to prevent the proliferation of

erroneous decisions in the federal and state courts of New York, this Court is

respectfully requested to answer the certified question firmly “no.”

Dated: October 10, 2010 ONLINE MEDIA LAW, PLLC

Digitally signed by Charles H. Carreon
DN: cn=Charles H. Carreon, o=Online
Media Law, PLLC, ou=Law Firm,
email=chas@charlescarreon.com, c=US
Date: 2010.10.11 00:44:19 -07'00'
By: ______________________________
CHARLES CARREON CSB # 1279139
Attorney for Respondent Defendant-
Appellee American Buddha

- 37 -
 CERTIFICATE OF SERVICE
The undersigned hereby certifies:
On the date subscribed below, I served three copies of the foregoing Respondent
Defendant-Appellee’s Brief on
Richard Dannay
Cowan, Liebowitz & Latman, P.C.
1133 Avenue of the Americas
New York, New York 10036

By enclosing the same in an envelope so addressed, and depositing it, on the said
date, in a U.S. Postal Service mail receptacle, postage fully prepaid.

I further certify that the original and all required copies of the foregoing Appellee’s
Brief were filed with the Clerk of the New York Court of Appeals by courier for
next-day delivery on the date subscribed below.

Dated this 11th day of October, 2010

ONLINE MEDIA LAW, PLLC

Digitally signed by Charles H. Carreon
DN: cn=Charles H. Carreon, o=Online
Media Law, PLLC, ou=Law Firm,
email=chas@charlescarreon.com,
c=US
Date: 2010.10.11 00:44:04 -07'00'
By:
CHARLES CARREON CSB # 127139
Attorney for Defendant-Appellee
American Buddha

- 38 -