Opinion ID: 737229
Heading Depth: 2
Heading Rank: 2

Heading: Charly Holdings and Charly International

Text: 54 Holdings purported to acquire worldwide rights to the Chess Masters and trademarks from Red Dog Express, Inc., a Louisiana corporation. Pursuant to the acquisition agreement, Chess Masters were physically delivered from the United States to Holdings. Charly Holdings then purported to license worldwide rights to the Chess Masters and trademarks to International, its wholly-owned subsidiary. International in turn conveyed Chess Masters to Records and granted Records the nonexclusive right to market the Chess Masters in the United Kingdom and Eire. There is no evidence that International at any time licensed Records to distribute the Chess Masters in the United States. As part of the license agreements, both Holdings and International received royalties on each unit sold by Records. 55 Apart from its deal with Records, International also licensed rights in the song White Cliffs of Dover, one of the Chess Masters, for worldwide use in the motion picture The Crying Game. The film was exhibited in California, and International received on-screen credit for licensing the rights to the song. Additionally, the song was contained in the soundtrack album, which was sold in California.
56 Someone distributed a flyer at a national music conference held in Florida in March of 1993 that contained the Chess trademark and stated, Charly International your safe source for Chess, Argo, Cadet. Call us collect....
57 Some of the CDs sold by Records in California gave credit to Holdings and/or International on the back cover. Sometimes there would be a circled p or c next to Holdings' name. MCA contends that these marks evidenced Holdings' claim to United States copyright protection for its allegedly infringing Chess recordings.
58 Holdings' and International's contacts fall well short of that required for general jurisdiction.

59 In determining whether Holdings or International have purposefully availed themselves of the privilege of conducting business in California, only their own contacts that are relevant. Because the corporate separation between Holdings and International is real, the contacts of one may not be imputed to another, even though they are related. Transure, Inc. v. Marsh and MacKennan, Inc., 766 F.2d 1297, 1299 (9th Cir.1985). 60 Many of the contacts identified by MCA provide no support for a finding of purposeful availment. Holdings' purported purchase of the Chess Masters from a Louisiana corporation clearly does not qualify as a contact with California. Likewise, although MCA makes much of the fact that Holdings' name was found on the back of numerous CDs distributed in California, there is no evidence that Holdings (and not Records) was responsible for including it there. As for International's license to Records, it cannot support jurisdiction because it specifically excluded the United States from its territory. Lastly, the flyer International distributed in Florida cannot support a finding of purposeful availment without evidence that negotiations with a California buyer resulted. 61 Holdings' license to International and International's license to the makers of The Crying Game do, however, satisfy the purposeful availment requirement. Trademark infringement is a commercial tort. See Int'l Order of Job's Daughters v. Lindeburg & Co., 633 F.2d 912, 915 (9th Cir.1980), cert. denied, 452 U.S. 941 (1981) (noting that Lanham Act protects against two types of the broad business tort of 'unfair competition' ). One who intentionally directs a tort at a forum's resident is ordinarily subject to jurisdiction in the forum state. Calder v. Jones, 465 U.S. 783, 788-90 (1984); see Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1492 (9th Cir.1993) (Wallace, C.J., dissenting); Brainerd v. Governors of the University of Alberta, 873 F.2d 1257, 1258-59 (9th Cir.1989); see also Lipton v. The Nature Co., 781 F.Supp. 1032, 1036 (S.D.N.Y.1992) (The licensor of an infringing trademark commits a predicate tort for the purpose of New York long-arm jurisdiction by the act of licensing, and may be held accountable in New York.). 62 Holdings and International argue that the brunt of the injury, if any, was not felt in California because only a small number of Chess recordings were actually sold in California. However, while some courts have held that the tort of trademark infringement occurs where the defendant sells or attempts to sell the offending product, e.g. Schieffelin & Co. v. Jack Co. of Boca, Inc., 725 F.Supp. 1314, 1318 (S.D.N.Y.1989), the brunt of the injury is nevertheless borne by the alleged trademark owner where the owner resides. So long as Holdings and International were aware of MCA's rights in the Chess Masters and trademarks, knew that MCA was a California corporation, and knew that their licensing of the Masters and trademarks would result in infringing products being distributed in the United States, a finding of purposeful availment is appropriate under Calder. 63 The evidence presented at trial would support the district court finding all of these facts by a preponderance of the evidence. Bruce Resnikoff, the senior vice-president and general manager of special markets and products at MCA, testified that MCA's acquisition of the Chess Masters in 1985 was publicized in virtually every music periodical in the world, as well as in non-music press. Additionally, Resnikoff testified that someone from MCA contacted Charly Holdings on more than one occasion and informed them that they were infringing MCA's rights in the Chess Masters. From this testimony, the district court could reasonably infer that Holdings and International knew or should have known that MCA was a California corporation and that their licensing of the Chess Masters would infringe MCA's rights. Additionally, the district court could reasonably infer from the licensing agreements that Holdings and International should have known that their licensing of the Chess Masters and trademarks would result in infringing products being distributed in the United States. Thus, Calder applies and the purposeful availment requirement is met. 64 We recognize that, were Holdings and International not guilty of an intentional tort, the commercial aspects of their activities--granting a worldwide, nonexclusive license--would most likely be insufficient to establish purposeful availment in California. However, because Holdings and International have committed an intentional tort knowing that the effects would be borne by a California resident, the purposeful availment requirement is satisfied.
65 As with Records, Holdings and International do not contend that the arising out of requirement is not met. But for their licensing of the Chess Masters, infringing products would not have been distributed in the United States.
66
67 In the case of an intentional tortfeasor purposefully directing its actions at a California resident, this factor weighs in favor of jurisdiction. 68
69 As with Records, Holdings and International make no argument as to why the exercise of jurisdiction would be burdensome. As with Records, this factor does not weigh against jurisdiction in the absence of such an argument. 70
71 Citing Rano v. Sipa Press, Inc., 987 F.2d 580 (9th Cir.1993), Holdings and International argue that jurisdiction over them would be unreasonable because they are foreign licensors who licensed the Chess Masters on a worldwide basis to foreign licensees. If a California court has jurisdiction over them, they argue, it also has jurisdiction over every artist, performer, and author in the world, as well as every other entity in the long chain of licensing and production. 72 Rano was a professional photographer and citizen of Great Britain who licensed his photographs to a French corporation, Sipa Press, which then sublicensed the photographs to magazine publications and other users. Id. at 583. Sometime after Rano and Sipa Press had a business disagreement, Rano moved to California and canceled the license agreement. Id. at 583, 588. Eventually, Rano sued Sipa Press and its owner, Sipahioglu, for copyright infringement in California. Id. at 583. Sipahioglu moved to dismiss for lack of personal jurisdiction, the district court granted the motion, and we affirmed. Id. at 587-88. Although Sipahioglu was alleged to have caused and profited from Sipa's licensing of the photographs to magazine publications Sipahioglu knew would be distributed in California, this was not enough. Id. at 588. The court reasoned that the photographer's argument, if accepted, would render Sipahioglu, and other foreign owners of art who sell their products to publications, amenable to personal jurisdiction in every state in which their art is eventually displayed. Id. Relying on the fact that litigation against an alien defendant requires a higher jurisdictional barrier than litigation against a citizen from a sister state, the court found jurisdiction to be lacking. Id. (citing Pacific Atlantic Trading Co. v. M/V Main Express, 758 F.2d 1325, 1330 (9th Cir.1985) (foreign-acts-with-forum-effects jurisdictional principle must be applied with caution, particularly in an international context) (citations and internal quotations omitted)). 73 Defendants' reliance on Rano is unavailing for two reasons. First, the plaintiff in Rano never raised a Calder -type tort argument to establish personal jurisdiction. Moreover, unlike MCA, which has always been a resident of California, Rano was a citizen and resident of Great Britain at the time the license agreement with Sipa Press was formed. Thus, Sipahioglu would reasonably anticipate that any dispute arising out of the agreement would be settled in Europe. See Rano, 987 F.2d at 588 (Sipahioglu could not have foreseen Rano's fortuitous move from Europe to California.). 74 Because Holdings and International purposefully directed their tortious activities at a California resident, any potential conflict with the sovereignty of Defendants' state does not weigh against jurisdiction. 75
76 California maintains a strong interest in providing an effective means of redress for its residents tortiously injured by commercial misappropriation. 77
78 MCA can only obtain effective relief for the alleged infringement of its federally-protected trademark rights in the United States. If jurisdiction is found to be lacking, a foreign licensor of worldwide rights to a foreign licensee could never be held accountable in the United States even if it knew that the infringing product was likely to be distributed in the United States and would infringe a United States resident's rights. 79
80 As with Records, Holdings and International have failed to identify any other forum available for redressing the harm to MCA's federally-protected trademark rights caused by the effects of their allegedly tortious activities in the United States. 81 Taking all of the factors as a whole, Holdings and International have failed to demonstrate that the exercise of specific jurisdiction is so unreasonable as to violate due process. By licensing products they knew would eventually be distributed in the United States and would infringe a California resident's rights, Holdings and International should reasonably expect to be haled into a California court to defend an infringement action.