June 2012

It is a well-known principle of copyright law that the Copyright Act has no extraterritorial reach.  For example, a U.S. copyright holder cannot bring suit for copyright infringement, in the U.S., against individuals or companies who reproduce and sell, outside the U.S., software, music CDs, DVDs or other copyright-protected works. What if, however, the initial infringement occurs in the United States, and the infringer distributes infringing copies outside the U.S.?  For example, what if an employee illegally copies an employer’s software program in the U.S., transports it to France (either on physical media or electronically), and sells it in Europe?  May the U.S. copyright holder recover damages based on lost profits or infringer profits in Europe? Surprisingly, this “infringe locally/sell abroad” issue has rarely come up under copyright case law in the U.S.  Until recently, only two courts have addressed it under the current copyright statute, the Second Circuit in 1988 (Update Art v. Modin) and the Ninth Circuit in 1998 (L.A. News Service v. Reuters).  However, in each of those cases the courts did permit recovery of damages arising from overseas infringing uses as long as the “predicate act” of infringement occurred within the United States, enabling further reproduction abroad.  By a “predicate act,” these courts meant simply that if the initial infringement took place in the U.S. and the foreign violations were directly linked to that infringement, then…