Case of the Day: Synopsys, Inc. v. Ubiquiti Networks, Inc., 2018 U.S. Dist. LEXIS 14147 (N.D. Cal. Jan. 29, 2018)

Summary:

Plaintiff alleges the defendant pirated its software and stored the software in servers based in Taiwan. Then the defendant allegedly had its employees access the software remotely, for which the plaintiff sued for the Digital Millennium Copyright Act (DMCA) and fraud. In the course of the litigation, Plaintiff sought to conduct discovery over the Taiwanese servers, and the defendant objected.

The court granted the motion to compel. The court found the information stored in the servers in Taiwan is relevant. The court also rejected the defendant's claim that the DMCA did not apply to violations occurring wholly outside of the country, noting that this is a discovery motion and there are plausible scenarios under which the information stored in Taiwanese servers may be relevant--because, for example, the court may yet hold that the act of piracy happened in the United States rather than Taiwan. The court also found the Ninth Circuit's "Server Test" from Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) to be inapposite, as the Server Test does not cover the situation in which the violative act was initiated in the United States.

Takeaway:

Thrillsville! This is about as exciting as a case can get if you care about territoriality principles. Here is the perfect manifestation of the contradictions in Equity Extraterritoriality. On one hand, the question is: if territoriality principles are to be observed, on what basis could the United States court exercise jurisdiction over servers located in Taiwan? On the flip side: if the Server Rule is an attempt to apply the territoriality principles into digital information, why formulate a separate test based on "control," i.e. the location of the person initiating the action? The difference runs from the fact that the court is taking a different approach to a discovery motion rather than the merits, but such distinction cannot be considered meaningful when we are discussing the application of territoriality, a bedrock principle in international law.