Superama Corporation, Inc. v. Tokyo Broadcasting System Television, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 1, 2024
• Docket: 23-55001
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 1 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

SUPERAMA CORPORATION, INC., DBA No. 23-55001 U.S.A. Sumo, a Nevada Corporation, D.C. No. Plaintiff-Appellant, 2:22-cv-00299-MWF-JC

v. MEMORANDUM* TOKYO BROADCASTING SYSTEM TELEVISION, INC.,

Defendant-Appellee.

Appeal from the United States District Court for the Central District of California Michael W. Fitzgerald, District Judge, Presiding

Argued and Submitted July 9, 2024 Pasadena, California

Before: GRABER, N.R. SMITH, and NGUYEN, Circuit Judges. Partial Concurrence and Partial Dissent by Judge GRABER.

Superama Corp. appeals the district court’s dismissal of its complaint against

Tokyo Broadcasting System Television, Inc. (“TBS”) for lack of subject matter

jurisdiction. Superama claims that TBS circumvented technological measures that

effectively controlled access to its copyrighted work, in violation of the Digital

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201(a)(1), and raises

additional claims under Japanese copyright law. We have jurisdiction under 28

U.S.C. § 1291. Reviewing de novo, see S. Coast Specialty Surgery Ctr., Inc. v.

Blue Cross of Cal., 90 F.4th 953, 957 (9th Cir. 2024), we affirm in part, reverse in

part, and remand.

1. The district court concluded that it lacked subject matter jurisdiction

because a circumvention claim does not cover wholly extraterritorial conduct and

the conduct at issue here occurred in Japan. However, “whether a statute applies

abroad concerns ‘what conduct’ the statute prohibits, ‘which is a merits question.’”

Ratha v. Phatthana Seafood Co., 35 F.4th 1159, 1168 (9th Cir.) (quoting Morrison

v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 253–54 (2010)), cert. denied, 143 S. Ct.

491 (2022). Whether Superama alleged domestic conduct thus did not affect the

district court’s subject matter jurisdiction. See id.

Because the district court had federal question jurisdiction over Superama’s

DMCA claim under 28 U.S.C. § 1331, the district court had supplemental

jurisdiction over the Japanese law copyright claims under 28 U.S.C. § 1367(a). If,

on remand, the district court dismisses with prejudice the claims over which it has

original jurisdiction, it should consider whether to exercise supplemental

jurisdiction over any remaining claims. See 28 U.S.C. § 1367(c).

2 2. The district court properly determined that wholly extraterritorial conduct

does not give rise to a DMCA circumvention claim. We employ a “presumption

against extraterritoriality: Absent clearly expressed congressional intent to the

contrary, federal laws will be construed to have only domestic application.” RJR

Nabisco v. European Cmty., 579 U.S. 325, 335 (2016). For this presumption to be

rebutted, Congress must have “affirmatively and unmistakably instructed” that a

statute applies to extraterritorial conduct. Id.

Superama contends that § 1201’s use of the phrase “a work protected under

this title” references § 104’s definition of “works” that “are subject to protection

under this title.” 17 U.S.C. § 104(a), (b). But § 104’s worldwide protection

applies to works—not conduct. See Kirtsaeng v. John Wiley & Sons, Inc., 568

U.S. 519, 531 (2013) (“The [Copyright] Act does not instantly protect an

American copyright holder from unauthorized piracy taking place abroad. But that

fact does not mean the Act is inapplicable to copies made abroad.”).

Superama also argues that “[§] 1201’s focus on ‘access to works’ as opposed

to copies, is a further indication that [the statute] is not geographically concerned”

because “works are intangible pieces of property.” To the contrary, § 1201 applies

only to “a work protected under [the Copyright Act],” 17 U.S.C. § 1201(a)(1)

(emphasis added), and “[c]opyright protection subsists . . . in original works of

3 authorship fixed in any tangible medium of expression,” id. § 102(a) (emphasis

added).

In addition, Superama argues that several policy considerations counsel

against applying the presumption against extraterritoriality. Whatever the merits of

these arguments, we cannot consider them. See Morrison, 561 U.S. at 255, 259

(criticizing courts for “disregard[ing] . . . the presumption against

extraterritoriality” and instead “applying . . . [a] methodology of balancing

interests and arriving at what seemed the best policy”).

Therefore, we affirm the district court’s ruling that a circumvention claim

cannot rest on wholly extraterritorial conduct.

3. The district court concluded that Superama fails to allege a DMCA

violation that occurred in the United States. However, the district court’s

conclusion rests on the mistaken premise that an infringement claim and a

circumvention claim cannot occur in two different places when based on the same

factual allegations.

When determining “whether the case involves a domestic application of the

statute,” we must identify “the statute’s ‘focus.’” WesternGeco LLC v. ION

Geophysical Corp., 585 U.S. 407, 413 (2018) (quoting RJR Nabisco, 579 U.S. at

337). This “can include the conduct it ‘seeks to “regulate,”’ as well as the parties

and interests it ‘seeks to “protect”’ or vindicate.” Id. at 414 (cleaned up) (quoting

4 Morrison, 561 U.S. at 267). “‘If the conduct relevant to the statute’s focus

occurred in the United States, then the case involves a permissible domestic

application’ of the statute, ‘even if other conduct occurred abroad.’” Id. (quoting

RJR Nabisco, 579 U.S. at 337).

The district court likened stream ripping “to a download” in that it “creates a

copy.” But unlike an infringement action, which targets the unauthorized

download or copy, a circumvention claim targets the evasion of technological

measures preventing access to a copy. See 17 U.S.C. § 1201(a)(3)(A) (“[T]o

‘circumvent a technological measure’ means to descramble a scrambled work, to

decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or

impair a technological measure, without the authority of the copyright owner.”).

Relying on legislative history, the district court reasonably analogized

circumventing a technological protection measure to burglarizing a locked house:

[I]f unauthorized access to a copyrighted work is effectively prevented through use of a password, it would be a violation of [§ 1201] to defeat or bypass the password and to make the means to do so . . . . This is roughly analogous to making it illegal to break into a house using a tool, the primary purpose of which is to break into houses.

S. Rep. No. 105-190, at 11 (1998). But in this analogy, the focus of § 1201(a)(1)’s

anti-circumvention provision is the location of the lock, not the location of the tool

used to circumvent it. The tool’s location would be relevant to a claim under

5 § 1201(a)(2) for “traffic[king] in [circumvention] technology,” which is not at

issue here.

Superama alleges that “TBS applied . . . hacking techniques to Superama’s

servers in the United States, circumventing their U.S.-based protection in order to

permit a streamlined and unauthorized download of [Superama’s] work.”

Superama further alleges that the “ripping of the U.S.-based video occurred . . . in

the [United States].” If additional factual allegations were offered to permit this

element to be inferred, then Superama could adequately allege “a permissible

domestic application” of the DMCA, even if TBS directed the conduct from

abroad. RJR Nabisco, 579 U.S. at 337. Because the district court concluded

otherwise, we reverse the dismissal of Superama’s circumvention claim.

4. The district court criticized “the lack of details alleged about how the

circumvention actually took place” but did not decide whether Superama met Rule

8’s pleading standard. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“[A]

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim

to relief that is plausible on its face.’” (quoting Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007))). We leave it to the district court to address this issue in the

first instance.1

1 Superama’s unauthorized letter brief addressing this issue (docket entry no. 57) is stricken. See Fed. R. App. P. 28(c), (j).

6 In the district court, Superama sought “the opportunity to amend the

[complaint] to add facts to establish that . . . the circumvention occurred in the

United States.” “[A] district court should grant leave to amend even if no request

to amend the pleading was made, unless it determines that the pleading could not

possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122,

1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 494, 497

(9th Cir. 1995)). Because circumvention could in principle have taken place

domestically, Superama should be afforded the opportunity to allege facts that

make its claim plausible.

AFFIRMED in part; REVERSED in part; and REMANDED. Each

party shall bear its own costs.

7 FILED Superama Corp. Inc. v. Tokyo Broad. Sys. Television, Inc., No. 23-55001 AUG 1 2024 MOLLY C. DWYER, CLERK GRABER, Circuit Judge, concurring in part and dissenting in part: U.S. COURT OF APPEALS

I concur in Part 1 of the disposition but otherwise respectfully dissent.

The complaint, as now pleaded, viewing all allegations and inferences in

Plaintiff’s favor, adequately and plausibly describes a domestic application of

Section 1201 and therefore states a valid claim. The operative complaint alleges

that the “tortious acts,” including “hacking” and “YouTube ripping,” occurred in

the United States. It states that “[a] substantial part of the events giving rise to the

claims asserted herein occurred in Central District of California.” It further alleges

that all hacking activity took place domestically:

On information and belief, [Defendant] applied these hacking techniques to [Plaintiff’s] servers in the United States, circumventing their U.S.-based protection in order to permit a streamlined and unauthorized download of the work. Although the download itself is a violation of Japanese law because the download is deemed to have happened in Japan, the hacking and ripping of the U.S.-based video occurred here in the U.S.

(Emphases added). Those allegations sufficiently allege a “permissible domestic

application” of the statute’s focus. RJR Nabisco v. Eur. Cmty., 579 U.S. 325, 337

(2016); see id. (“If the conduct relevant to the statute’s focus occurred in the

United States, then the case involves a permissible domestic application even if

other conduct occurred abroad.”). If a complaint alleges that the defendant stole a particular item from the

plaintiff’s California warehouse during a particular time period, those allegations

suffice. At the pleading stage we don’t require that the plaintiff also specify

whether the defendant climbed into the warehouse through a broken window or,

instead, borrowed a warehouse employee’s key card.

Because I would reverse and remand on the ground that the operative

complaint adequately and plausibly describes a domestic application of Section

1201, I would not reach the question whether the statute applies

extraterritorially. Nor would I punt on the question whether the operative

complaint complies with Federal Rule of Civil Procedure 8, an issue that

Defendant did not argue to the district court. Finally, amendment of the complaint

is unnecessary; whether Plaintiff can prove the case it has alleged, with the

necessary details, is a question for another day.

In short, I would reverse and remand for further proceedings on the merits. I

therefore respectfully dissent in part.