The following cases discuss the propriety of a court's exercise of personal jurisdiction over defendants based upon the defendants' Internet activities.
American Network Inc. v Access America/Connect Atlanta, Inc., 975 F. Supp. 494; 1997 U.S. Dist. LEXIS 12030 (SDNY 1997)
Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996).
Bensusan Restaurant Corp. v. King, 126 F.3d 25 (CA2 1997).
Blackburn v. Walker Oriental Rug Galleries, Inc., 1998 US Dist LEXIS 4517 (ED PA 4/9/98)
Bunn-O-Matic Corp. v. Bunn Coffee Service Inc., 1998 U.S. Dist. LEXIS 7819; 46 U.S.P.Q.2D
(C.D. IL 1998)
CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996)
Cybersell, Inc. v. Cybersell, Inc. et al., 130 F.3d 414 (9th Cir. 1997)
Digital Equipment Corporation v. Altavista Technology, Inc. 960 F.Supp. 456 (D. Mass. March 12, 1997)
EDIAS Software Int'l, L.L.C. v. BASIS Int'l Ltd., 947 F. Supp. 413 (D. Ariz. 1996)
Hearst Corporation v. Goldberger, 1997 U.S. Dist. LEXIS 2065 (S.D.N.Y. Feb. 26, 1997)
Heroes, Inc. v. Heroes Foundation, 958 F.Supp. 1 (D.D.C. Dec. 19, 1996)
Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D. Conn. 1996)
McDonough v. Fallon McElligott, Inc., 1996 U.S. Dist. LEXIS 15139, No. 95-4037, slip op. (S.D. Cal. Aug. 6, 1996)
Maritz, Inc. v. CyberGold, Inc., 947 F. Supp. 1328 (E.D. Mo. 1996)
Minnesota v. Granite Gates Resorts, Inc., 568 NW 2d 715 (Minn. Ct. App. 1997)
Panavision Int'l, L.P. v. Toeppen, 938 F. Supp. 616 (C.D. Cal. 1996)
Playboy Enterprises, Inc. v. Chuckleberry Publishing, Inc., 939 F. Supp. 1032 (S.D.N.Y. 1996)
Resuscitation Technologies, Inc. v. Continental Health Care Corp., 1997 U.S. Dist. LEXIS 3523 (S.D. Ind. 1997)
Telco Communications Inc. v. An Apple A Day Inc., 977 F. Supp. 404; 1997 U.S. Dist. LEXIS 14543 (ED VA 1997)
Weber v. Jolly Hotels, et al., 977 F. Supp. 327 (D NJ 1997)
Zippo Manufacturing Company v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa., Jan 16, 1997) (NO. CIV. A. 96-397 ERIE)
Plaintiff is a New York ISP. Defendant is a Georgia ISP. Defendant has its only office and all of its business facilities in Alpharetta, Georgia, and all of its employees are Georgia residents. It owns no property in New York. Its World Wide Web server, used to provide its customers with access to the Internet, is located in Georgia. Defendant claims that it has 7500 subscribers worldwide but only six in New York. It claims that those New York subscribers constitute only 0.08% of its customer base and contribute only $ 150 per month out of its monthly revenue of $ 195,000.
Plaintiff asserts claims of trademark infringement and unfair competition arising out of Defendant's use of the name "America.Net." Defendant moved to dismiss the complaint for lack of personal jurisdiction. The court DENIED the motion.
Analysis under NY Long-Arm Statute
Plaintiff relies on New York's longarm statute, N.Y. CPLR @ 302, for personal jurisdiction over Defendant. Relevant provisions provide that a "court may exercise personal jurisdiction over any nondomiciliary" who
"commits a tortious act without the state causing injury to person or property within the state . . . if he . . . expects or reasonably should expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce"
N.Y. CPLR @ 302(a)(3)(ii) (1997).
The court concluded that:
1. Defendant committed a tortious act (the allged trademark infringement) outside New York
from which plaintiff's claims arise;
2. Plaintiff suffered injury in New York (the alleged "harm in the New York market resulting from the confusion and deception of New York computer users");
3. It was "reasonably foreseeable to defendant that publishing its home page on its Web site, with the offending mark, would have New York consequences" because there were "tangible manifestations that defendant was attempting to reach a New York market. It stated twice on its home page that it could help customers "across the U.S." It had signed up six New York subscribers. Accordingly, it was a reasonable inference that its publication of its home page might have New York consequences"; and
4. Defendant "derives substantial revenue from international commerce" (undisputed by Defendant).
The court went on to hold that asserting jurisdiction over Defendant here would not violate the limitations of the 14th Amendment.
1. Purposeful availment. The court declined to hold that the establishment of a web page accessible to NY residents was alone sufficient to demonstrate "some act by which the defendant purposefully avails [itself] of the privilege of conducting activities with the forum state," citing Hanson v. Denckla, 357 U.S. 235, 253, (1958). But other contacts were sufficient to find "purposeful availment," viz. signing up six New York subscribers to the services advertised on its home page, sending software and a written copy of a service agreement to those subscribers, receiving subscription fees from those subscribers, and stating on its home page that it could aid customers "across the U.S.."
2. Plaintiff must also show that "the defendant's contacts with the forum are continuous and systematic, or that the suit arises out of or is related to those contacts," citing Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 415-16 (1984). The court held that "There is a sufficient nexus here between defendant's contacts with its subscribers and plaintiff's claims. The subscriptions are evidence of defendant's effort to market its services in New York. That effort is closely related to the basis of plaintiff's claims, because it is defendant's effort to sell its services under its mark that has allegedly caused the confusion of which the plaintiff complains."
3. Third, due process requires "that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there." WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Here, the court concluded that it "was reasonable for defendant to anticipate being haled into New York to defend itself from claims arising from the use of its mark in selling its services, because defendant sold its services there . . .sent [customers] materials, provided services to them, and received payment from them."
4. Finally, as to the "other factors" that a court "may evaluate" in determining whether the
assertion of jurisdiction over a party is so unreasonable as to violate due process, such as the
burden on the defendant, the forum state's interest in adjudicating the dispute, the plaintiff's
interest in obtaining convenient and effective relief, the interstate judicial system's interest in
obtaining the efficient resolution of controversies, and the shared interest of the states in
furthering fundamental substantive social policies, see Burger King Corp. v. Rudzewicz, 471 U.S.
462, 476-77 (1985), the court found that the defendant had not presented a "compelling case that
the presence of some other considerations would render jurisdiction unreasonable." Id. at 477.
The Court of Appeals affirmed the district court's finding that King was not subject to personal
jurisdiction in New York based on the use of his Internet web site. Without resorting to a due
process analysis, the court determined that Bensusan had failed to allege that King had committed
a tortious act in New York; an act which is required to exercise personal jurisdiction over a
non-resident defendant. The court stated that King was neither present in the state when the
allegedly tortious act (posting of the allegedly infringing trademark) occurred, nor did King
reasonably expect that posting his web site would have consequences in New York.
Plaintiff is a dealer of oriental rugs in Lancaster PA. Plaintiff created an Internet Web Site, located at the Internet address, www.wholesalerug.com, which contains graphics illustrating the various types of rugs sold by the plaintiff, accompanied by text that gives a description of each rug. Plaintiff alleges that Defendants, a Pittsburgh PA rug dealer and a Pittsburgh ISP, copied parts of Plaintiff's Web Site in violation of federal copyright law.
Defendant moved to dismiss for improper venue in the ED PA. For a copyright claim, venue is proper anywhere Defendant "may be found," i.e., in any federal court that has personal jurisdiction over the Defendant. Plaintiff argued that defendant has sufficient contacts with the Eastern District of Pennsylvania to support personal jurisdiction in ED PA, but the court disagreed.
With regard to Internet contacts, the court applied the framework set forth in the Zippo and Weber cases.
Three types of contacts have been identified in order to determine the existence of personal jurisdiction. Weber v. Jolly Hotels, 977 F. Supp. 327, 333 (D.N.J. 1997). The first type of contact is when the defendant clearly does business over the Internet. Id. "If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper." Zippo, 952 F. Supp. 1119 at 1124 (citing CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996)). The second type of contact occurs when "a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Website." Zippo, 952 F. Supp. 1119 at 1124 (citing Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328 (E.D.Mo. 1996)); Weber, 977 F. Supp. at 333. The third type of contact involves the posting of information or advertisements on an Internet Web Site "which is accessible to users in foreign jurisdictions." Zippo, 952 F. Supp. at 1124; see Weber, 977 F. Supp. at 333; Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996). Personal jurisdiction is not exercised for this type of contact because "a finding of jurisdiction . . . based on an Internet web site would mean that there would be nationwide (indeed, worldwide) personal jurisdiction over anyone and everyone who establishes an Internet web site. Such nationwide jurisdiction is not consistent with personal jurisdiction case law. . . ." Weber, 977 F. Supp. at 333 (quoting Hearst Corp. v. Goldberger, 1997 U.S. Dist. LEXIS 2065, at *2, 1997 WL 97097, at *1 (S.D.N.Y. Feb. 27, 1997)).
Defendant's web site, the court held, was essentially an advertisement for oriental rugs, and
therefore fell into the "passive" category (analogous to the site in the Cybersell case). Although
the site allowed users to send email to the Defendant, "there is no option to purchase rugs from
defendant, nor have any purchases from the Eastern District been alleged. The email link alone is
not enough to establish jurisdiction and plaintiff has not demonstrated that the nature and quality
of the commercial activity was sufficient to classify the defendants' Web Site as anything more
than passive. Because defendants' Web Site was only passive, defendant does not have sufficient
contacts with the Eastern District of Pennsylvania to be susceptible to personal jurisdiction."
Plaintiff BunnOMatic is an Illinois corporation engaged in the business of manufacturing and selling beverage processing and dispensing equipment throughout the country. Defendant Bunn Coffee Service is a New York corporation maintaining its sole place of business in Hicksville, New York, and is engaged in the business of providing office services, including coffee services, bottled beverages, snacks and paper goods in the Greater New York Metropolitan area, which includes parts of New York, New Jersey, and Connecticut. The dispute between the two parties involves an alleged trademark or service mark infringement by Bunn Coffee Services Plaintiff alleges that Defendant has used the infringing marks in nationally distributed publications, advertisements, on signs on trucks, on products and supplies, as a recorded greeting on all telephone calls to Defendant's business, and on Plaintiff's website on the Internet.
Defendant's website provides general information about Defendant and is accessible all over the country, including Illinois. The website is passive, in the sense that customers cannot place orders with Defendant by accessing the site. People can, however, enter a contest online to win free coffee but no Illinois residents have done so. The site contains toll free numbers, although these numbers are not accessible to residents of Illinois and elsewhere. The site also contains local phone numbers which can be accessed from anywhere in the country, including Illinois. Aside from its website, Defendant does not advertise, sell or ship any of its goods or services in Illinois.
Defendant moved to dismiss on the ground that the court did not have in personam jurisdiction. The court applied the Illinois long arm statute, which extends jurisdiction to the limits of that permitted under the constitution, 735 ILCS 5/2209(c), and concluded that asseting jurisdiction over the Defendant would not violate the federal constitutional limits.
"It is ... clear that the state in which a victim of a tort suffers the injury may exercise personal jurisdiction over the alleged tortfeasor. Janmark, Inc. v. Reidy, 132 F.3d 1200, 1202 (7th Cir. 1997) (noting that "there can be no serious doubt . . . that the state in which the victim of a tort suffers the injury may entertain a suit against the accused tortfeasor") (citing Calder v. Jones, 465 U.S. 783, 79 L. Ed. 2d 804, 104 S. Ct. 1482 (1984)). The court, relying on Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club Limited Partnership, 34 F.3d 410 (7th Cir. 1994), concluded that, because Plaintiff is an Illinois corporation with its principal place of business in Illinois, the injury of trademark infringement will be felt "mainly" in Illinois.
Defendant argued that some form of actual "entry" in the jurisdiction is required before
jurisdiction can be asserted. The Indianapolis Colts decision "explicitly left open the question of
whether some form of entry is required to establish personal jurisdiction when the defendant has
brought about an injury to an interest located in a particular state." The court found that
establishment of Defendant's "passive" website, accessible to residents of IL, satisfied this "very
low "entry" threshold."
"has conducted no commercial activity over the Internet in Arizona. All that it did was post an essentially passive home page on the web, using the name "Cybersell." While there is no question that anyone, anywhere, could access that home page and thereby learn about the services offered, we cannot see how from that fact alone it can be inferred that the defendant deliberately directed its merchandising efforts toward Arizona residents. The defendant did nothing to encourage people in Arizona to access its site, and there is no evidence that any part of its business (let alone a continuous part of its business) was sought or achieved in Arizona. . . . No Arizonan except for [plaintiff] 'hit' defendant's web site. There is no evidence that any Arizona resident signed up for defendant's . . . services. [Defendant] entered into no contracts in Arizona, made no sales in Arizona, and sent no messages over the Internet to Arizona."
Digital Equipment Corporation has successfully obtained an injunction against AltaVista
Technology, Inc.'s use of the "AltaVista" trademark on the ATI web site. Digital operates the
well-known and very successful AltaVista search service (http://altavista.digital.com). In March,
1996, Digital purchased an assignment of ATI's rights to the AltaVista trademark, and
immediately licensed back to ATI the right to use the AltaVista name as part of ATI's corporate
name and as part of ATI's Website address (http://www.altavista.com). The license agreement,
however, precluded ATI from using "AltaVista" as "the name of a product or service offering."
Shortly thereafter, however, ATI began using the AltaVista name on its own Web site, including
at that site, for example, a link that would allow users to "receive demo versions of the AltaVista
software." Digital then sued in federal district court (D. Mass), alleging a violation of the license
agreement and trademark infringement.
ATI moved to dismiss the lawsuit on the ground that the Massachusetts court lacked personal jurisdiction over ATI, a California corporation. The district court denied the motion. The court noted the difficulties of applying traditional jurisdictional concepts to Internet activity:
"The Internet has no territorial boundaries. . . . Physical boundaries typically have framed legal boundaries, in effect creating signposts that warn that we will be required after crossing to abide by different rules. [citing Johnson & Post, "Law & Borders," 48 Stan. L. Rev. at 1370-71]. To impose traditional territorial concepts on the commercial uses of the Internet has dramatic implications, opening the Web user up to inconsistent regulations throughout fifty states, indeed, throughout the globe."
This case, however, the court noted, does not raise the difficult issue of whether "any Web
activity, by anyone, absent commercial use, absent advertising and solicitation of both advertising
and sales, absent a contract and sales and other contacts with the forum state, and absent the
potentially foreseeable harm of trademark infringement, would be sufficient to permit the assertion
of jurisdiction over a foreign defendant." Here, because of ATI's prior licensing agreement with
Digital and its sales of software to Massachusetts residents, the court found that jurisdiction was
permissibly exercised. [The court then went on to hold that ATI had breached its license
agreement with Digital and had, therefore, infringed the trademark rights that Digital had
purchased from ATI.]
"Internet advertisements are similar to broadcast and direct mail solicitation in that advertisers distribute messages to Internet users, and users must take affirmative action to receive the advertised product. Here, the WagerNet site itself stated that it was "open to International markets," indicating an intent to seek customers from a very broad geographic area.. . . The fact that WagerNet had apparently paid for advertising in English on an American commercial site indicates an intent to reach the American market, and by advertising their services with a toll-free number, appellants indicated their intent to solicit responses from all jurisdictions within that market, including Minnesota. . . . Through their Internet advertising, defendants have demonstrated a clear intent to solicit business from markets that include Minnesota and, as a result, have had multiple contacts with Minnesota residents, including at least one successful solicitation. The cause of action here arises from the same advertisements that constitute appellants' contacts with the state and implicates Minnesota's strong interest in maintaining the enforceability of its consumer protection laws. Defendants have not demonstrated that submission to personal jurisdiction in Minnesota would subject them to any undue inconvenience. For these reasons, we hold that appellants are subject to personal jurisdiction in Minnesota because, through their Internet activities, they purposefully availed themselves of the privilege of doing business in Minnesota to the extent that the maintenance of an action based on consumer protection statutes does not offend traditional notions of fair play and substantial justice."
Defendant Apple is a Missouri corporation that claims to be the owner of the service mark "DIAL & SAVE." Plaintiff TELCO is a Virginia corporation, with a subsidiary, Dial & Save of Missouri, which is involved in selling discount long distance telephone service in Missouri. In December 1996, Apple sued TELCO in the United States District Court for the Eastern District of Missouri, alleging trademark infringement; that suit was pending when the current action was filed.
In this suit, Plaintiff alleges that Defendants issued two press releases and made calls to a securities analyst in Maryland, that these releases and calls defamed TELCO, and that TELCO's stock price was depressed as a result. Plaintiff asserts that this conduct constitutes (1) Defamation under Section 8.0145 of the Virginia Code; (2) Common Law Defamation; (3) Tortious Interference with a Contractual Relationship and Reasonable Business Expectation; (4) Conspiracy to Harm Business in violation of Sections 18.2499 and 18.2500 of the Virginia Code; and (5) Common Law Conspiracy to Harm Business.
Defendant moved to dismiss on the ground that the court lacked personal jurisdiction.
Virginia law [Section 8.01328.1(A)(4)] ("subsection (4)") permits personal jurisdiction to be exercised over a defendant who caused a tortious injury in Virginia by an act or omission outside Virginia if the defendant "regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered" in Virginia. The court, acknowldeging that this case presents a "complex question of what conduct occurred [because] unlike in most cases, the allegedly improper behavior transpired on the Internet," held that the Defendant did engage in a "persistent course of conduct" in Virginia. Following the Inset Systems decision, the court held that " Because they conducted their advertising and soliciting over the Internet, which could be accessed by a Virginia resident 24 hours a day, the Defendants did so regularly for purposes of the longarm statute. Accordingly, the Court finds that posting a Web site advertisement or solicitation constitutes a persistent course of conduct, and that the two or three press releases rise to the level of regularly doing or soliciting business, thus satisfying subsection 4" of the Virginia statute.
As to the constitutional limitations, the court held that "conferring jurisdiction in this case does
not upset the Due Process Clause." The Court found that the Defendants "could reasonably have
anticipated being haled into court" in Virginia, because they "should have reasonably known that
their press releases would be disseminated here, and they certainly knew that TELCO is based in
Virginia. Their activities were sufficient to serve as an analogue for physical presence.
Accordingly, they are subject to jurisdiction here."
Defendant is an Italian corporation that owns 32 hotels in Italy. Defendant does not conduct any business in New Jersey. However, it does provide "photographs of hotel rooms, descriptions of hotel facilities, information about numbers of rooms and telephone numbers" on its World Wide Web site on the Internet.
Plaintiff sustained injuries when she fell at a hotel owned by Defendant. She filed suit in New Jersey, and Defendant moved to dismiss the case for lack of personal jurisdiction. The court agreed that it lacked jurisdiction over the Defendant (although it did not dismiss the case, transferring it instead to the Southern District of New York).
The accessibility of Defendant's web site to consumers in NJ does not constitute the kind of "continuous and substantial" contacts with the forum state to sustain general personal jurisdiction over the defendant. "[E]xercising jurisdiction over a defendant who merely advertises its services or product on the Internet would violate the Due Process Clause of the Fourteenth Amendment [and] would disrespect the principles established by International Shoe and its progeny. "
Defendant placed information about its hotels on the Internet as an advertisement, not as a means of conducting business. In the past year, two district courts have refused to exercise jurisdiction over defendants who have a passive connection to the Internet. In Smith v. Hobby Lobby Stores, Inc., 968 F. Supp. 1356 (W.D. Ark. 1997), the Court found that an advertisement in a trade publication was an insufficient contact with the forum state because the defendant "did not contract to sell any goods or services to any citizens of Arkansas over the Internet site." Id. at 1365. In Hearst, supra, the Court concluded that advertising services on the Internet was equivalent to advertising in a national magazine, and that under New York law, such advertisements do not provide the requisite contacts to provide personal jurisdiction. 1997 U.S. Dist. LEXIS 2065, 1997 WL 97097 at *10; see also Bensusan, 937 F. Supp. at 301 (finding that creation of Web site is not sufficient to find that defendant purposefully availed himself of forum).
This Court agrees with the finding in Hearst that advertising on the Internet falls under the same
rubric as advertising in a national magazine. This Circuit has consistently held that advertising in
national publications "does not constitute 'continuous and substantial' contacts with the forum
state." See, e.g., Gehling v. St. George's School of Medicine, 773 F.2d 539, 542 (3d Cir. 1985);
see also Giangola v. Walt Disney World Co., 753 F. Supp. 148, 156 (D.N.J. 1990) [*334] ("In
an age of modern advertising and national media publications and markets, plaintiffs' argument
that such conduct would make a defendant amenable to suit wherever the advertisements were
aired would substantially undermine the law of personal jurisdiction."). In addition, advertising on
the Internet is not tantamount to directing activity at or to purposefully availing [**17] oneself
of a particular forum.
Defendant's contacts with Pennsylvania "have occurred almost exclusively over the Internet.
Dot Com's offices, employees and Internet servers are located in California. Dot Com maintains
no offices, employees or agents in Pennsylvania. Dot Com's advertising for its service to
Pennsylvania residents involves posting information about its service on its Web page, which is
accessible to Pennsylvania residents via the Internet. Defendant has approximately 140,000 paying
subscribers worldwide. Approximately two percent (3,000) of those subscribers are Pennsylvania
residents. These subscribers have contracted to
receive Dot Com's service by visiting its Web site and filling out the application. Additionally, Dot Com has entered into agreements with seven Internet access providers in Pennsylvania to permit their subscribers to access Dot Com's news service. Two of these providers are located in the Western District of Pennsylvania."
Court discusses "sliding scale" for exercise of personal jurisdiction based upon Internet contacts.
At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. E.g. Compuserve, Inc. v. Patterson, 89 F.2d 1257 (6th Cir.1996). At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise personal jurisdiction. E.g. Bensusan Restaurant Corp., v. King, 937 F.Supp. 296 (S.D.N.Y.1996). The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Website.
The court finds that jurisdiction is proper because the Defendant:
"has done more than create an interactive Web site through which it exchanges information with Pennsylvania residents in hopes of using that information for commercial gain later. We are not being asked to determine whether Dot Com's Web site alone constitutes the purposeful availment of doing business in Pennsylvania. This is a "doing business over the Internet" case in the line of Compuserve, supra. We are being asked to determine whether Dot Com's conducting of electronic commerce with Pennsylvania residents constitutes the purposeful availment of doing business in Pennsylvania. We conclude that it does. Dot Com has contracted with approximately 3,000 individuals and seven Internet access providers in Pennsylvania. The intended object of these transactions has been the downloading of the electronic messages that form the basis of this suit in Pennsylvania."