Pearson Education, Inc. v. Doe 1

Background

The plaintiffs are educational textbook publishers that own copyrights or exclusive copyright rights in various works and own or exclusively license trademarks associated with those works. They sued multiple defendants, alleging that the defendants sold unauthorized counterfeit textbooks through storefronts on eBay, Amazon, Abebooks, and other online marketplaces. The complaint asserted copyright infringement, trademark infringement, and breach of contract.

Christopher Claude Ault, an individual who resides in Tennessee, operated three online storefronts: kipault7 on eBay and Huckleberry’s Books on both Abebooks and Amazon. The plaintiffs alleged that they purchased or obtained eight counterfeit books from Ault’s storefronts and later identified nine additional counterfeit books in his inventory. They also alleged that Ault had sold more than $1 million in textbooks since 2017, including more than $50,000 to customers in New York.

Ault moved to dismiss the First Amended Complaint under Federal Rules of Civil Procedure 8(a), 12(b)(2), and 12(b)(6). Rule 12(b)(2) concerns personal jurisdiction—the court’s authority over the defendant. Rule 12(b)(6) concerns whether the complaint states a legally sufficient claim. Rule 8(a) requires a complaint to give fair notice of the claims and the grounds for relief.

Personal jurisdiction

The court held that the plaintiffs made the required preliminary showing of personal jurisdiction under New York’s long-arm statute, New York Civil Practice Law and Rules § 302(a)(1). That provision permits jurisdiction over a non-New York defendant who transacts business in New York, or contracts to supply goods or services there, when the claims arise from that business activity.

The court treated eBay, Amazon, and Abebooks as highly interactive online marketplaces that allow customers to purchase goods. It distinguished regular commercial sellers who use online marketplaces to establish an ongoing business with customers in another state from occasional sellers who make only isolated sales. Based on the alleged volume of Ault’s textbook sales, his sales to New York customers, and his use of the online marketplaces, the court concluded at this stage that Ault transacted business in New York.

The court also concluded that the claims arose from Ault’s New York business activity. Although the plaintiffs did not identify a particular counterfeit book that Ault sold to a specific New York customer, the court found a sufficient connection between Ault’s New York textbook sales and the alleged sale of counterfeit textbooks through the same online marketplaces. The court therefore found that the plaintiffs’ claims were not unrelated or merely incidental to Ault’s New York activity.

The court separately considered constitutional due process. It found that Ault purposefully directed his conduct toward New York by offering and distributing textbooks to New York consumers and selling at least $50,000 in textbooks there. The court also found that exercising jurisdiction was reasonable, considering Ault’s burden of defending in New York, New York’s interest in the case, the plaintiffs’ connections to New York, and the states’ shared interest in protecting intellectual-property rights and preventing counterfeiting.

Because the court found personal jurisdiction under § 302(a)(1), it did not decide whether jurisdiction also existed under § 302(a)(3)(ii). It also did not decide the plaintiffs’ request for jurisdictional discovery.

Pleading sufficiency

The court rejected Ault’s argument that the complaint improperly grouped the defendants together or failed to explain which claims were asserted against him. The court found that the complaint and its attached exhibits identified the relevant copyright and trademark claims with enough clarity to give Ault fair notice and allow him to prepare a defense.

The court stated that the exhibits identified copyright claims against Ault involving works owned or controlled by McGraw-Hill, Cengage, Pearson, and Bedford, and trademark claims involving marks of McGraw-Hill, Cengage, and Pearson. The court also rejected arguments concerning claims purportedly brought by Elsevier, a trademark-counterfeiting claim by Bedford, and a secondary copyright-infringement claim, explaining that those were not claims asserted against Ault that required dismissal at that stage.

Ruling

Judge Ronnie Abrams denied Ault’s motion to dismiss under Rules 8(a), 12(b)(2), and 12(b)(6). The ruling addressed personal jurisdiction and the sufficiency of the complaint; it did not decide whether Ault actually infringed the plaintiffs’ copyrights or trademarks or breached a contract. The court directed Ault to answer the First Amended Complaint by July 14, 2020, and directed the plaintiffs to update the court about the status of the other defendants.