An Italian Fling

So I’m sitting in my office the other day, generally depressed about the depression, when my phone rings and (trumpets sound) a new case lands on my desk.

Now, I love the thrill of a new case. It’s like a new love (as best I can remember from way back when). Everything is new, and bright and interesting. And get this: this one was Italian. Actually, an Italian copyright case, to be exact.

Seems that my client – located in Italy -- had been accused by an American company of hacking into the Yank’s computer (located in the U.S.), and then copying software code (from Italy) that is covered by a valid, U.S. Copyright registration. And, of course, the U.S. company was threatening a parade of nasties all covered by the U.S. Copyright Act.

But that really begs the question, doesn’t it: if this was infringement, is it governed by the U.S. Copyright Act? Or is this a dispute that would have to be litigated in Italy?

In general, “United States copyright laws do not have extraterritorial effect, and therefore, infringing actions that take place entirely outside the United States are not actionable.” Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1091 (9th Cir. 1994) (en banc); Peter Starr Prod. Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442-1443 (9th Cir. 1986). In other words, even if the plaintiff is a U.S. based company, and the method of copyright violation occurs by internet connection (as would have been the case if my clients had infringed as alleged), “[a]t least one alleged infringement must be completed entirely within the United States.” Allarcom Pay Television, Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995); see also Danjac, LLC v. Sony Corp., 1998 U.S. Dist. LEXIS 22231, at *22 (C.D. Cal. 1998) (scope of injunction limited to domestic activities).

In Allarcom, the plaintiff was the authorized Canadian distributor of certain television and movie rights, while defendant, Showtime, had U.S. rights to some of the same material. 69 F.3d at 383-384. Co-defendant, General Instrument, manufactured a descrambling device that allowed unauthorized users to receive protected television signals from companies such as Showtime (e.g. they received the content for free by stealing it with the use of the descrambling device). The plaintiff sued for copyright infringement, filing its claim in a U.S. district court. The court held that the Copyright Act did not apply to infringement at issue, as it had occurred in Canada. Id. at 387. Specifically, the court held that although the signal was from the United States, it had been received and decoded in Canada, and thus “the potential infringement was only completed in Canada once the signal was received and viewed.” Id.

So bringing this back to my case, these facts will weigh heavily when negotiating a settlement. That is, while the plaintiff has asked for a boatload of money, I’ve pointed out that if she wants to litigate this case, she’d better brush up on her Italian (where, by the way, the penalties for alleged infringement are not as steep as they are in the U.S.). I’ll let you know haw this goes.

Jonathan.pink@bryancave.com