In a March 28, 2014 ruling, Judge Andrew L. Carter denied defendant Na El, Inc.’s motion to dismiss plaintiff Zelouf International Corp.’s copyright infringement action for lack of personal jurisdiction. “Zelouf designs, manufactures, and sells textile fabrics,” in which it obtains copyright registrations. It accused Na El of copying Zelouf’s designs, and supplying the infringing fabric to defendant Lito Children’s Wear, Inc., which manufactured it into children’s apparel. Although Na El sold other fabric to customers in New York in twenty-five different transactions, all the fabric at issue in this action was sold to Lito in California, and had no New York connection. Zoulef argued for jurisdiction over Na El under the provision in New York’s Long Arm statute conferring “personal jurisdiction over an out-of-state defendant who commits a tortious act outside New York that causes injury to “person or property’ in New York, if the defendant ‘expects or should reasonably expect the act to have consequences in [New York] and derives substantial revenue from interstate or international commerce.’” Na El conceded for purposes of argument that it committed a tortious act outside New York with consequences in the state, but contested whether it expected consequences here. Judge Carter rejected Na El’s contention, and ruled that “Na El’s allegedly tortious conduct created a foreseeable risk of having to defend its actions in a New York court.” In particular, the Court noted that Na El was aware of Zoulef’s activities in New York, making it “conceivable that Na El knew that Zelouf, a New York company had intellectual property rights in those designs.” Judge Carter also found that Na El made a conscious effort to serve the New York market by dealing directly with New York customers, and selling to Lito, which Na El knew to have national sales. In concluding that the Long Arm statute applies, the Court examined Na El’s sales, and found that both “numerically and as a percentage of total revenue, Na El ‘derives substantial revenue from interstate and international commerce.’”
Judge Carter further found that the assertion of jurisdiction comports with Due Process. Specifically, Na El had minimum contacts with New York both in dealing with Lito which it knew to do business in New York, and by transacting with New York customers (albeit in goods unrelated to the infringement). The Court likewise found that the assertion of jurisdiction was reasonable after examining the three factors that typically inform that decision.
