Update on CYBERsitter, LLC v. The People's Republic of China et al

Remember Green Dam Youth Escort? Short reminder: the Chinese government ordered computer manufacturers to bundle computers sold in China with software that could filter pornography by July 2009. It postponed the deadline because of pressure by foreign computer manufacturers. In August it backtracked the obligation to pre-install the software (Japanese companies Sony and Toshiba, and Acer from Taiwan voluntarily installed the software). It now only required schools and internet cafes to install the filter software. Soon it became clear that the software, called Green Dam Youth Escort. 

Now on January 5th, 2010, CYBERsitter LLC sued the following Chinese, Taiwanese and Japanese parties:

• The People's Republic of China ("a foreign state", as can be read in the original lawsuit)
• Zhengzhou Jinhui Computer System Engineering Ltd.
• Beijing Dazheng Human Language Technology Academy Ltd.
• Sony Corporation
• Lenovo Group Limited
• Toshiba Corporation
• Acer Incorporated
• ASUSTeK Computer Inc.
• Benq Corporation
• Haier Group Corporation
• DOES 1-10

The complaint at the California Central District Court is based on what allegation? Copyright infringement: CYBERsitter's allegation was that Green Dam Youth Escort makes use of approximately 3,000 programming lines of CYBERsitter. It demands damages worth 2,257,175,000 US dollar, based on 56.5 million unauthorised copies in China as of early June 2009, multiplied by 39.95 US dollar per copy. Rich Kuslan of AsiaBizBlog (the web's first China business and law blog) provides the lawsuit document here. Mr Kuslan provides another lawsuit document of CYBERsitter versus CBS Interactive, Inc, and DOES 1-10 here.

Michael Kan of IDG news gives us the update on the case. August 1, the U.S. District Court for the Central District of California denied the motions brought by the China-based Zhengzhou Jinhui Computer System Engineering and Beijing Dazheng Human Language Technology Academy. Their argument that the California court had no jurisdiction over the case was dismissed by Judge Gary A. Feess, because the companies had allegedly committed the criminal acts knowing that CYBERsitter was based in California and that its business there could be damaged.

Chinese electronics vendor Haier argued, according to Mr Kan, that the case's key defendant, the Chinese government, was immune from a U.S. court's jurisdiction. However, "[b]ecause Defendant PRC's wrongful acts alleged herein arise in connection with a commercial activity that causes a direct effect in the United Stated, Defendant PRC comes within an express exception to the Foreign Sovereign Immunities Act, viz, 28 U.S.C. section 1605 (a)(2):
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case - (1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver; (2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States;