Judge Recommends to Deny $250,000 Claim Against YTS Sites and Apps

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The operators of several YTS-branded apps and sites may escape a $250,000 damages claim from Hawaiian anti-piracy lawyer Kerry Culpepper, who accused them of trademark infringement, In a recommendation issued to the court, Magistrate Judge Wes Reber Porter notes that there isn't sufficient evidence that the defendants purposefully targeted the US.

YTS logoEarlier this year, Hawaiian anti-piracy lawyer Kerry Culpepper turned some of the most popular piracy brands into a powerful anti-piracy tool.

The attorney, who is listed as director of the company ’42 Ventures,’ registered several piracy-related trademarks, including ‘YTS’ and ‘Popcorn Time.’

The company, which was founded last year, legally claimed these marks and uses them on a website that doesn’t draw any significant traffic. What did get people’s attention, however, were the enforcement actions that followed.

Shortly after the trademarks were granted, Culpepper managed to suspend the Twitter account of a popular Popcorn Time fork. He offered to return it in exchange for a Popcorn Time licensing deal, which failed.

Trademark Lawsuits Against YTS Sites and Apps

In addition, the attorney also filed a trademark infringement lawsuit on behalf of 42 Ventures. The lawsuit targeted the operators of yst.lt, ytsag.me, yts.ae, ytsmovies.cc, yts.ms, as well as apps such as “Y Movies,” “YTS Movies Library” and “YTS movies.”

The people behind these sites, who are believed to be from India, China and Egypt, used the YTS brand as a promotional tool. This isn’t uncommon, as YTS has been a popular pirate brand for years, after originally belonging to a long-defunct release group.

Over the past weeks, one of the site operators agreed to settle the trademark infringement matter for $200,000, on paper. The other four didn’t respond to the allegations at all, which prompted the lawyer to request default judgments of $250,000 against all defendants.

“Defendants purposefully utilize Plaintiff’s YTS mark in their domain registrations and app names in order to mislead consumers about the origins of its goods and services as connected to Plaintiff, resulting in a substantial loss of income, profits, and goodwill,” Culpepper informed the court.

42 Ventures Requests Default Judgment

Since none of the defendants showed up in court there was little to stop a victory, except for the court itself, it now appears.

In a ‘findings and recommendations’ issued this week, US Magistrate Judge Wes Reber Porter recommends the court to deny the $250,000 damages request and dismiss the complaint because the court lacks personal jurisdiction.

For a court to decide over a defendant, it should have the right to do so. This is usually not a problem when a US citizen is taken to court in the US but, in this case, the defendants are foreigners. That changes everything.

The court can only issue a judgment when it’s shown that the defendants “purposefully directed their activities towards the United States.” Here, Judge Porter is not convinced that this is the case.

According to Culpepper, the trademark-infringing YTS sites and apps were available in the US, used US-based services including domain registrars, and used US-based payment providers, among other things.

Judge Doesn’t Believe Court Has Jurisdiction

Judge Porter doesn’t dispute these facts but doesn’t agree that this is sufficient to show that the court has personal jurisdiction.

“The Court finds that Defendants’ use of United States-based companies for webhosting and domain name services and for paying for those services is insufficient to show that Defendants aimed their allegedly infringing acts at the United States,” Porter writes.

The Judge notes that in some cases people simply choose to work with US-based companies because they are the biggest brands in their industries, or have a monopoly. Not because they’re from the US.

“Indeed, as other district courts have recognized ‘it is more accurate to say that [the defendant] utilized Apple and Google because they arguably have a virtual monopoly on the channels in which developers can distribute application-based software—not because they have offices in [the United States]’.”

If this logic indeed applies, then all foreigners with a Gmail account would subject themselves to the jurisdiction of US courts, which is something Judge Porter doesn’t agree with.

Two of the defendants also used advertising services, cookies and web beacons, to gather information about individual visitors, some of whom are from the US. Culpepper brought this in as another argument to show that the court has jurisdiction but that was disregarded as well.

“Finally, the Court finds that Plaintiff’s allegations regarding Defendants Mav and Shan collecting information about users on their websites is insufficient to show that these Defendants have done engaged in ‘conduct directly targeting the forum’.”

Judge Recommends Dismissal

All in all, Judge Porter concludes that the court lacks personal jurisdiction over the defendants. He therefore recommends denying the motion for a $250,000 default judgment and suggests a dismissal of the entire case.

This recommendation has yet to be adopted by the court in a final ruling and can be contested by Culpepper. However, the first signs don’t look positive for the trademark owner.

In closing, it is worth pointing out that YTS.mx, which is by far the most popular YTS site, wasn’t targeted in this trademark case. However, the same lawyer previously negotiated copyright infringement settlements with the site’s owner, totaling well over a million dollars.

Update: 42 Ventures’ attorney has filed a detailed 27-page objection to the findings and recommendation (pdf).

A copy of the findings and recommendations published by US Magistrate Judge Wes Reber Porter is available here (pdf)

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