This article first appeared in Entertainment Law Matters, a Frankfurt Kurnit legal blog.
To what extent will a U.S. court entertain copyright claims involving a foreign defendant and its activities abroad? A recent federal district court decision examines this question. In Rundquist v. Vapiano SE, Swedish photographer Ewa-Marie Rundquist alleged that Vapiano, an international restaurant chain, was using her photographs without permission as a "central décor element" in its restaurants around the world and on its website, giving rise to claims of copyright infringement under the laws of the U.S. and fifteen foreign countries.
According to the Complaint, Ms. Rundquist is an internationally renowned photographer whose work has appeared in fashion magazines, advertising campaigns and books. One such book, La Pizza, The True Story from Naples, contains numerous photographs taken by Ms. Rundquist featuring Italian street and food imagery. These photographs appear as "large mural sized reproductions" in all Vapiano restaurants, which offer upscale Italian cuisine, as part of the uniform décor required by corporate management. There are over seventy Vapiano restaurants in the U.S., including two in D.C., and abroad, with more than one hundred additional restaurants in development.
Ms. Rundquist brought suit in a D.C. federal court against Vapiano International LLC and Vapiano Franchise USA, LLC, two U.S. based entities that operate Vapiano restaurants. She also named as a defendant Vapiano SE, a European public corporation based in Germany and the founder and franchisor of the Vapiano concept. Vapiano SE moved to dismiss the claims against it on several grounds, each predicated on the apparent disconnect between the foreign company, the alleged acts of infringement, and the forum.
At the outset, the district court examined whether it had personal jurisdiction over the German company. Ms. Rundquist claimed that the German company was transacting business in D.C. through its U.S. affiliates as well as Internet and promotional activities and was therefore subject to the court's jurisdiction, whereas Vapiano SE argued that it was a mere licensor of the intellectual property rights in the restaurant, which were, in fact, operated by defendants Vapiano International and Vapiano Franchise USA, the licensee and sublicensee respectively.
Although the record presently before it did not establish the requisite contacts with D.C., the court nevertheless permitted Ms. Rundquist sixty days of discovery to amass additional evidence as to the actual arrangement between the German company and the U.S. defendants. The court expressed skepticism as to Vapiano SE's denial of control over the U.S. restaurants, particularly in light of Vapiano SE's failure to produce a copy of its license agreement as well as the uniformity of the restaurants' design (including the use of Ms. Rundquist's photographs).
The court next dismissed the claims against Vapiano SE under U.S. copyright law to the extent they were based on alleged infringement in restaurants outside of the U.S. Count I of the complaint alleged that all three defendants were liable for direct infringement under the U.S. Copyright Act for copying and displaying Ms. Rundquist's photographs in Vapiano restaurants both in the U.S. and abroad, and Count II alleged that the defendants were liable for contributory and vicarious infringement because they require the display of such photographs in these restaurants.
With respect to Count I, the court held that Vapiano SE could not be liable under the U.S. Copyright Act for any infringement that took place in the foreign Vapiano restaurants. The court reaffirmed the general rule that U.S. copyright law does not apply extraterritorially. It also held that the exception to this rule – allowing the application of U.S. copyright law to foreign acts where a predicate act took place in the U.S. – did not apply because Ms. Rundquist had not alleged any act by Vapiano SE in the U.S. that led to the infringement abroad. (Although she claimed that Vapiano SE solicited foreign franchisees by "enticing" them with photographs of its American restaurants (which showed her photographs as part of the décor), the court found this argument far too attenuated to satisfy the predicate act exception.)
With respect to Count II, the court noted that a foreign defendant could be held liable for infringing acts outside of the U.S. if such defendant is alleged to be contributorily or vicariously liable for another's direct act of infringement in the U.S. By contrast, the court held that it could not exercise its authority over claims of infringement that took place in foreign Vapiano restaurants where no facilitating act took place in the U.S. The court again found that Ms. Rundquist had not alleged a U.S. act on the part of the German company.
Thus, the court dismissed the claims against Vapiano SE to the extent they were based upon acts of infringement in foreign restaurants, but retained such claims against the U.S.-based defendants, whose alleged acts did, in fact, take place in the U.S. Vapiano SE did not challenge the court's authority to hear claims based on allegations of acts that took place in the U.S.
Additionally, the court allowed Ms. Rundquist's claims under foreign copyright law against all three defendants to proceed, finding no bar to its ability to apply foreign laws. The court concluded that it should exercise supplemental jurisdiction over these claims (notwithstanding any potential difficulty in applying the laws of various other countries). Finally, the court rejected Vapiano SE's claim that D.C. was an inconvenient forum, finding that it had not shown the availability of another forum that could adequately address Ms. Rundquist's claims.
Clearly, traditional principles of personal and subject matter jurisdiction preclude U.S. courts from hearing copyright claims based on alleged acts of infringement by foreign defendants located entirely outside of the country. Nevertheless, as the Vapiano decision shows, should the court find a sufficient relationship between a foreign defendant's activities and the forum, it may consider not only the defendant's acts in the U.S. under U.S. law, but the defendant's acts abroad under the laws of foreign countries as well.
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