The general rule is that a defendant needs to have minimum contacts with a state in order to be sued in the courts of that state. Minimum contacts might be satisfied by doing a sufficient amount of business in a particular state. Additionally, even if there are not minimum contacts, but if harm occurs in a particular state, then the person causing such harm may be sued in such state.
Traditionally, a defendant accused of committing copyright infringement would be subject to be sued in the courts where the infringement actually occurred. This circumstance would make it more difficult and expensive for a copyright owner to undertake an infringement action against an out of state defendant.
Enter the Internet. The Second Circuit has now held in Penguin Group USA Inc. v. American Buddha, 2011 WL 1044581 (N.Y. March 24, 2011), that for online infringement (in this case where the defendant uploaded copyrighted material to a website), the harm occurs where the copyright owner is located. So, even though in this case the material was uploaded on servers located outside of New York, the court held that the defendant can be sued in the courts of New York. There is a dispute in the courts on this issue, but until the U.S. Supreme Court would decide differently, this is the law applicable when a copyright owner is located in New York.
This case certainly is of benefit to copyright owners located in New York. However, there are copyright trolls who will also appreciate this decision. A copyright troll is a person or business that has “purchased” the right to sue for copyright infringement, even though the troll is not the original copyright owner. Copyright trolls are opportunistic (and not well-liked by good natured folk). So, hopefully the courts will temper this ruling on the basis of fairness, when appropriate.