Last week, the U.S. Court of Appeals for the Second Circuit issued an opinion in Pablo Star Ltd. v. Welsh Gov't, No. 19-1262 (June 8, 2020), holding the Welsh Government is not immune under the Foreign Sovereign Immunities Act (FSIA) from suit for copyright infringement in the United States.
Pablo Star owns registered copyrights in photographs of Welsh poet Dylan Thomas. Pablo Star discovered the Welsh Government was using its copyrighted photographs to, among other things, promote a walking tour in New York honoring Thomas’s time there, as a way of ultimately encouraging tourism to Wales. After the Welsh Government refused to cease use of the photographs, Pablo Star filed suit for copyright infringement in the Southern District of New York.
The Welsh Government moved to dismiss asserting sovereign immunity under the FSIA. The district court denied the motion, holding that the exception for “commercial activity carried on in the United States by the foreign state,” under 28 U.S.C. § 1605(a)(2), applied. The Welsh Government filed an interlocutory appeal and asserted that the actions at issue in the suit (1) were not commercial, but rather governmental, in nature and (2) did not have substantial contact with the U.S.
The Second Circuit, which had appellate jurisdiction under the collateral-order doctrine, affirmed. First, the Court held the unauthorized use of the photographs on promotional websites and printed materials advertising tourism to Wales constituted commercial activity. It explained that whether an activity is commercial “depends on its ‘nature’ rather than its ‘purpose’ . . .” and, regardless of whether the motive is profit or fulfilling sovereign objectives, the question is whether the actions performed by the sovereign “are the type of actions by which a private party engages in ‘trade and traffic or commerce.’” Here, although promoting tourism may have been the Welsh Government’s goal, the Court concluded the activity was nevertheless commercial in nature because it is the type of activity used by private parties to promote business. Second, the Court held the commercial activity had “substantial contact” with the U.S., even though the tourism plan was formulated in Wales and the Welsh Government’s computers and servers were in the United Kingdom. “Substantial contact” was established because the Welsh Government distributed the brochures throughout the Northeast U.S., to promote a walking tour in New York, and contracted with New York companies to print the materials.
This blog post was co-authored by Paige Stradley & Rhett Sexton