Exercising the Extraterritorial Limitation on U.S. Copyright Law

In 2019, "Fearless Girl" found itself enmeshed in another controversy when SSGA sued Visbal in the U.S. District Court for the Southern District of New York for copyright infringement, trademark infringement and breach of contract, based on Visbal's direct activities within the United States. Subsequently, SSGA learned that, pursuant to licenses from Visbal, a replica and photographs of the "Fearless Girl" statue were being used in Australia for purposes explicitly prohibited by the license agreement. In an amended complaint, SSGA added, among other claims, causes of action for contributory copyright infringement, inducement of copyright infringement and vicarious copyright infringement (collectively, the secondary liability claims).

In this Second Amended Complaint, SSGA alleged that Visbal provided the replica and photographs of "Fearless Girl" to the Australian firms, authorized their use in Australia, and participated in the unveiling of the replica in Australia at which she promoted a campaign for gender equality in corporate leadership. The photographs were uploaded from servers in Australia to the Australian firms' websites, which were directed to their existing and potential customers in Australia, but were accessible in the United States via the worldwide web.

But in early 2020, Southern District Judge Gregory H. Woods denied the motion to add the secondary liability claims — due to the extraterritorial limitation on application of U.S. copyright law. State Street Global Advisors Trust Co. v. Visbal, 1:19-cv-01719. A necessary element of secondary liability claims is an underlying infringement of U.S. copyright law by a third party. If the activities abroad are not subject to the law, the predicate direct infringement required for the imposition of secondary liability cannot be established. In his ruling, District Judge Woods noted the mere availability of images of the "Fearless Girl" statue on websites accessible to viewers located in the United States, when all other alleged infringing activities occurred abroad.

Although not explicitly stated in the opinion, it is implicit that the direct infringement required to form the basis for secondary liability must be an infringement of U.S. copyright law.

Judge Woods acknowledged that courts have applied these principles in various ways, depending on the degree to which the alleged underlying infringement is connected to the United States. However, he concluded that the circumstances in State Street clearly required application of the extraterritorial limitation: "[T]he proposed amendment raises a clear question — does United States copyright law apply whenever a foreign person posts a copyrighted image to the Internet abroad, even if there is no connection to the United States other than the fact that the image is accessible here? The Court believes that the answer to this question should be no."

In support of this conclusion, Judge Woods emphasized: "The complaint does not allege that any of the Australian firms do business in the United States or that they have any other connection to, or interest in, the United States"; the Australian firms uploaded the photographs of the "Fearless Girl" replica to their websites and social media accounts using servers located in Australia; these websites and social media accounts were directed to the Australian market, rather than to persons or companies within the United States; and the Australian firms' use of the replica and photographs of "Fearless Girl" did not have a significant economic impact on the United States.

Judge Woods rejected the directly contrary holding in United Feature Syndicate v. Miller Features Syndicate, 216 F. Supp. 2d 198 (S.D.N.Y. 2002), that U.S. copyright law applies to images posted abroad solely because they were accessible in the United States on the Internet. He criticized United Feature Syndicate for failing to cite any supporting case law or to consider its "sweeping extraterritorial application of U.S. Copyright Law."

In addition, Judge Woods distinguished three cases in which copyrighted images posted on the Internet abroad and accessible in the United States, together with additional links between defendants' activities abroad and the United States, resulted in the application of U.S. copyright law: Spanski Enterprises v. Telewizja Polska S.A., 883 F.3d 904 (D.C. Cir. 2018) (direction of copyrighted materials into the United States); GB Marketing USA v. Gerolsteiner Brunnen GmbH & Co., 782 F. Supp. 763 (W.D.N.Y. 1991) (acts abroad were intended to, and did, have an effect within the United States); and Shropshire v. Canning, 809 F. Supp. 2d 1139 (N.D. Cal. 2011) (uploading of copyrighted materials to servers located in the United States). None of these extra connections to the United States were present in State Street.

Judge Woods succinctly stated the primary reason for his holding in State Street: "The adoption of a rule that would give rise to a copyright claim against a foreign actor solely on the basis of the fact that a U.S. copyrighted image was posted on the Internet — and was therefore 'accessible' within the United States would undermine the extraterritorial limitations on U.S. copyright law."

This persuasive reasoning still leaves plenty of room for argument, in other cases, as to whether there are sufficient connections between the foreign activities and the United States, beyond the mere accessibility here of an image posted abroad, to avoid the extraterritorial limitation on the application of U.S. copyright law.

Robert J. Bernstein practices law in New York City in The Law Office of Robert J. Bernstein. Robert W. Clarida is a partner in the New York law firm Reitler, Kailas & Rosenblatt and the author of the treatise Copyright Law Deskbook (BNA).