Heroes Inc. v Heroes Foundation
Brad Slutsky's article in Internet Jsx
The following is a list of cases involving the web and personal jurisdiction that Dan Burk at Seton Hall posted on Cyberia-L:
Granite Gates (Minnesota), Edias v. Basis, Panavision, Cybergold, Bensusan, Inset Systems.
Bob Hamilton (also on the list) added " the December 19, 1996 decision by the U.S. District Court for the District of Columbia (Judge Thomas A. Flannery) in Heroes Inc. v. Heroes Foundation, Civ. No. 96-1260 (TAF). ... The case is summarized in BNA's Electronic Information Policy & Law report, vol. 2, no. 3 Jan. 17, 1996, at 81-82. " The case can be found online. Another recent case is there is Zippo Mfg. Co. v. Zippo Dot Com, Inc..
Bradley Slutsky has a webbed article on Internet jurisdiction.
Dan Burk writes My essay, "Jurisdiction in a World Without Borders" is now available on-line in the premier issue of the Virginia Journal of Law & Technology.
(Apologies for the misformatting--for some reason Olivia's draft is reaching me in a somewhat odd form. DDF)
CYBERSPACE is a new frontier. And, as one may predict, interaction in this new frontier has produced dispute. Legal issues emanate from this recent medium which are not novel. However, because CYBERSPACE appears to be realm apart from the world of real space, certain traditional legal concepts are challenged against the backdrop of this new landscape. In particular, the legal concept of jurisdiction, predicated on real space demarcation, may appear an ill-fit when paired with the notion of CYBERSPACE.
Cyber-disputes involving residents of two different real space states, have generated the age old question of whether a forum state may assert personal jurisdiction over a nonresident defendant. If a defendantís contacts with the forum state are solely or substantially through the Internet, do the traditional tests for the assertion of specific personal jurisdiction suffice? Or, does the evolution of CYBERSPACE call for a new legal paradigm? This paper examines the recent case law, specifically within the context of interstate commercial business disputes, to determine if the courts have used the traditional tests, and, if so, does the Shoe fit?
i. What is CYBERSPACE?
CYBERSPACE often brings to mind the image of a vast, uncharted other world. But, although CYBERSPACE is imagined as a place, there is also the understanding that it is a conceptual location without physical walls or even physical dimensions. It is a globally networked virtual reality; computer-sustained, computer-accessed, and computer-generated. This realm is multi-dimensional and artificial, in which
[o]bjects seen or heard are neither physical nor, necessarily presentations of physical objects, but are rather ñ in form, character and action ñ made up of data, of pure information. This information is derived in part from the operation of the physical world, but is derived primarily from the immense traffic of symbolic information, images, sounds, and people, that constitute human enterprise in science, art, business and culture.
And although abstract in nature, what occurs in CYBERSPACE tangibly impacts those of us who live in real space.
i. Communication in CYBERSPACE
In CYBERSPACE, vast amounts of information are rapidly disseminated to large audiences; information flows freely back and forth among individuals and entities, unhindered by the constraints of conventional communications. The universal electronic fluidity of the Internet ìbrings together many people who would never meet under normal circumstances,î cultivating ìregular communication between people who would otherwise be isolated from each other.î And, while the Internet promotes greater social interaction, parties may interact in CYBERSPACE without knowingly the identity of one another. Information can be created, dispersed and accessed with complete anonymity of sender and receiver.
The reach of the Internet is enormous. A web page placed on the Internet may be accessed from any state in the country and from any country in the world. Anonymity of sender or receiver may also be paired with anonymity of geographic locale. In the borderless realm of CYBERSPACE, a person may not realize that information retrieved from a web site originates from a server located in another state or even another country. ìIn this world, onto which every computer screen is a window, actual, geographical distance is irrelevant.î
ii. Dispute in CYBERSPACE
Not surprisingly, with communication in CYBERSPACE comes dispute in CYBERSPACE. Commerce conducted via the Internet has generated the same types of disagreements which occur when traditional methods of communication are used. In many instances, discord erupts between parties whose only contact has been on-line against a backdrop lacking in physical or territorial boundaries. The unbounded nature of the Internet has challenged the bases for the traditional notions of jurisdiction which are predicated upon real space demarcation. In particular, the question arises of whether the seemingly unlimited horizons of CYBERSPACE strain the due process considerations set forth by the Fourteenth Amendment to the United States Constitution.
i. Jurisdiction: The Power of the Court to Adjudicate a Dispute
When a dispute arises, the court before which the suit is brought must have authority to adjudicate the action. The authority of the court to proceed with the action is predicated upon the courtís ability to assert jurisdiction over the subject matter of the claim as well as over the person of the defendant. Without appropriate jurisdiction, the judgment of a court will not be enforceable.
ii. Personal Jurisdiction: The Power of the Court Over the Person of the Defendant
State sovereignty is a foundation concept of jurisdiction. Each independent territory owes protection to its own citizens and yet, ì[t]he authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to exercise authority beyond limits would be deemed in every other forumÖan illegitimate assumption of power and be resisted as mere abuse.î The answer to whether a court may assert jurisdiction over a nonresident defendant, compelling the defendant to litigate in the forum state ìlies shrouded in one of the foggiest realms of civil procedure, the doctrine of personal jurisdiction.î
ìEver since the landmark case of Pennoyer v. Neff the Supreme Court has consistently held that plaintiffs are not free to bring suit wherever they choose.î A nonresident defendant is only subject to suit in a forum state if the court is able to assert personal jurisdiction over the defendant. The ability of a court to render an enforceable judgment over a nonresident defendant is limited by (1) state law, as delineated by a stateís long-arm statute and (2) Constitutional Due Process considerations, as set forth in the Fifth and Fourteenth Amendments to the United States Constitution.
a. Long-Arm Statutes
The legislature of each state, through statute, must grant to its courts the power to exercise personal jurisdiction. conferred by state law through long-arm statutes. The extent to which such authority may be exercised is governed by the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Although, the exercise of personal jurisdiction may be authorized to extent allowed by the Fourteenth Amendment, many states have not given their courts blanket authority to exercise personal jurisdiction to the extent allowed by due process. These states, instead, have long-arm statutes which allow their courts to exercise personal ìjurisdiction over defendants based on specific types of contact with the forum state.î The kinds of contacts which may permit a court to render judgment over a nonresident defendant include the commission of a tortious act within the state, the transaction of business within the state, or the ownership of property within the state.
b. Constitutional Due Process Considerations
The Fourteenth Amendment declares that a State may not ìdeprive any person of life, liberty or property without due process of law.î Included within the rights protected by the Due Process Clause is a limit on where a defendant can be required to defend a lawsuit. This consideration has led the Supreme Court to repeatedly attempt to define appropriate limits on the power of state courts to exercise personal jurisdiction over a defendant.
ii. The Traditional Framework for the Exercise of Personal Jurisdiction: The Minimum Contacts Test
A number of bases for the assertion of personal jurisdiction have evolved through case law. Pennoyer v. Neff established that the assertion of personal jurisdiction may be based on the defendantís consent to the litigation, the defendantís citizenship in the forum state, or the defendantís presence in the forum state at the time of service of process. In addition to the consent, citizenship or presence test of Pennoyer v. Neff, International Shoe v. Washington enounced that ìdue process requires only that in order to subject a defendant to a judgment in personamÖhe have certain contact with [the forum state] such that the maintenance of the suit does not offend ëtraditional notions of fair play and substantial justice.íî When a defendant is not a citizen of the forum state, the ìminimum contactsî test of Shoe may be the only basis upon which the court can establish personal jurisdiction. Therefore, whether the court of a forum state can assert personal jurisdiction over a nonresident defendant is determined by the (1) the reach of the stateís long-arm statute, balanced by (2) constitutional due process considerations examined through a ìminimum contactî analysis of the defendantís conduct.
Shoe does not define explicitly what kind of ìminimum contactî is sufficient to satisfy a requirement for the assertion of personal jurisdiction. Instead, Shoe analyzes a broad spectrum of possible contacts and their jurisdictional consequences. On one end of the spectrum, if the defendant has had no contact, or only a casual or isolated contact, with the forum state, this is not sufficient contact for the establishment of personal jurisdiction. However, a single contact with the forum state may be sufficient if it is of a certain ìquality and nature.î ìContinuous and systematic contactsî with the forum state are sufficient to establish jurisdiction, as are, at the far end of the spectrum, ìsubstantial or pervasiveî contacts.
Although the spectrum set forth by International Shoe v. Washington provides more of a qualitative than quantitative yardstick, three standards for the measurement of sufficient minimum contact may be gleaned from the Shoe opinion. First, Shoe implies that a nonresident defendant should clearly expect to be subject to the jurisdiction of the forum state when the nonresident defendant seeks the benefits and protections of the laws of the forum state. The nonresident defendant may expect that ìthe state has a right to enforce the orderly conduct of affairs within its borders by adjudicating disputes that arise from such in-state activities. Second, as in Pennoyer, the rationale of Shoe enounces that the forum state receives power to exercise jurisdiction based on the defendantís voluntary relation to the state and that, therefore, the exercise of jurisdiction should be limited to cases arising out of that relation. Third, the Shoe opinion sets forth, that the exercise of personal jurisdiction must not offend ìtraditional notions of fair play and substantial justice.î
iii. The Refinement of the Minimum Contacts Doctrine
From the progeny of Shoe has emerged a three-pronged test for use in determining whether sufficient minimum contacts exist for the exercise of specific personal jurisdiction when the cause of action arises from the defendantís contacts with the forum state. First, did the defendant purposefully establish minimum contacts with the forum state? Generally, if the cause of action arises directly from the defendantís intentional contacts with the forum state, sufficient minimum contacts exist and jurisdiction over the defendant is permissible. If a defendant has intentionally established minimum contacts with the forum state, then he or she should expect to be subject to the jurisdiction of that forum state. A defendant has met the standard for intentional minimum contacts when he or she has ìpurposefully availed himself of the benefits and protections of the forum stateís laws.î In doing so, the nonresident defendant may anticipate that a ìstate has a right to enforce the orderly conduct of affairs within its borders by adjudicating disputes that arise from such in-state activities. Second, is the defendantís conduct in relation to the forum state such that he or she should reasonably anticipate being haled into court there? The Supreme Court has indicated that if the exercise of specific personal jurisdiction is appropriate only when the defendant could reasonably have foreseen that activities engaged in outside of the forum state might reasonably lead to litigation in the forum state. ìDisagreement exists as to what circumstances lead to reasonable foreseeability in the modern business environment.î Third, are the circumstances such that the maintenance of the suit does not offend the traditional notions of fair play and substantial justice? In determining if the due process requirements are met, compelling a nonresident defendant to litigate in the court of the forum state, the following factors are considered: the burden on the defendant in litigating in the forum state; the interests of the forum state (see below for more detail); and the interests of the plaintiff in obtaining relief.
Can Disputes in CYBERSPACE Be Resolved Using the Traditional Notion of Jurisdiction?
Jurisdictional criteria, familiar to every first-year law student, do not necessarily produce recognizably coherent results even when applied to real-space activity. Although the broad outlines of a comprehensive theory of personal jurisdiction may be discerned from the legacy of International Shoe, ìpredicting the outcome of the ëminimum contactsí test under a given set of transactions is something of a black art. This will undoubtedly be true for on-line transactionsÖ[E]arly cases dealing with jurisdiction in the milieu of proprietary computer networks demonstrate the difficulty the courtsÖhave [had] extending the indistinct criteria of minimum contacts into an electronic environment.î
The advent of CYBERSPACE has raised a critical issue for the legal system: ìto what extent it possible to enforce laws against a defendant residing beyond a courtís territorial boundaries, based on conduct which takes place on-line?î When dispute occurs and the defendantís contacts with the forum state are solely or substantially through the Internet, is that contact sufficient, weighed within the context of due process considerations, to subject a nonresident defendant to suit in the forum state?
Is CYBERSPACE a foreign land necessitating its own laws, or is it simply a new form of communication comprised of ìinterconnected wires, with computers at the end of the wires, and with people in front of the computersî; its disputes easily settled within our established legal framework? How have the courts decided the issue of personal jurisdiction in CYBERSPACE? Do the existing legal paradigms suffice? Does the Shoe fit?
A. How the Courts Have Analyzed the Issue of ìJurisdiction in CYBERSPACEî
This section will survey cases in the new milieu of CYBERSPACE has presented jurisdictional challenges. This issue is recent and therefore the surveyed cases span the narrow timeframe of 1994 to 1996. A synopsis of the facts of each case pertinent to the issue of jurisdiction will be provided and the due process rationale for the decisions of the courts will be examined. In conclusion, any trend that may be gleaned from the courtsí decisions will be discussed.
i. Pres-Kap, Inc. d/b/a/ Prestige Travel of Rockland, Appellant, v. System One, Direct Access, Inc., Appellee
The plaintiff originally filed a breach of contract action. The defendantís moved to dismiss for lack of personal jurisdiction and was denied by the trial court.
The plaintiff owns and operates a computerized airline reservation system. The hardware and database for the reservation system and the billing and main business office are located in Florida. A branch office is also maintained in New York. In exchange for a monthly rental fee, the plaintiff provides computer terminals through which a travel agency may access the reservation system and book airline flights, rental cars and hotel accommodations. The plaintiff markets its reservation system throughout the entire country and has lease contracts with travel agencies nationwide.
The defendant is a travel agency with its sole office located in New York. The plaintiffís New York office solicited the defendantís business as part of a nationwide marketing effort. A lease agreement ensued which was negotiated in New York and signed by the defendant in 1989 in New York. The agreement was then forwarded to Florida for signature by the plaintiff. After the lease was fully executed, computer terminals were delivered and installed in the defendantís travel agency. Each month, the defendantís rental fees were sent to the plaintiffís office in Florida. All other business between the parties was conducted via the plaintiffís New York office.
In early 1991, the defendant complained to the plaintiffís New York office that the reservation system was not working properly. The defendant claims that no effort was made to repair the equipment. The defendant waited until March, 1991and then stopped its monthly rental payments. In July of 1991, at the defendantís request, the plaintiff removed the leased computer terminals.
Prior to 1989, the defendant had entered into three similar lease agreements with the plaintiffís predecessor. As with the current lease agreement, the three prior lease agreements were solicited in New York, the monthly rental fee was remitted to the Florida billing office, and business between the parties was conducted through the New York branch office. However, each prior agreement stipulated that in the event of a dispute, the defendant would be subject to suit in Florida. This provision, however, is not in the current lease agreement.
In an April 12, 1994 decision, the Court of Appeal of Florida, Third District remanded the cause to the trial court, stipulating that the action against the defendant be dismissed for lack of in personam jurisdiction. The Court conducted its analysis of the issue within the traditional framework of due process considerations set forth by International Shoe:
[t]he law is well settled that in order for a state court to subject a nonresident defendant to an in personam judgment, due process requires the nonresident defendant have certain minimum contacts with the forum state such the maintenance of the suit does not offend traditional notions of fair play and substantial justice.
The court considered the question of whether ìthe conduct of the nonresident defendant in connection with the forum state is such that the defendant could reasonably anticipate being haled into court there?î
The court determined that the defendantís only contacts with Florida consisted of: (1) sending rental payments to the plaintiffís billing office; and (2) accessing, through phone lines, the computer database of the reservation system. The court concluded that these two contacts ìcannot convert this obviously New York-based transaction into a Florida transaction so that the defendant could reasonably expect to be sued in Florida in the event the transaction soured.î The fact that the computer database was located in Florida did not impact the decision. The court remarked that there was no indication that the defendant knew that the computer database was located in Florida. It further surmised that, even if known, this information would have been unimportant as it ìwould not have altered the defendantís reasonable expectation that New York courts would be resorted to in the event of a dispute.î
The court concluded that, based on the totality of the circumstances, the maintenance of the suit against the defendant ìoffends the traditional notions of fair play and substantial justice ñ and therefore does not comply with the minimum contacts due process requirement.î Predicting that a contrary decision would have far-reaching implications the many users of on-line computer services, for which the database is located out-of-state and for which payments are made out-of state, the court declared:
Lawyers, journalists, teachers, physicians, courts, universities, and business people throughout the country daily conduct various types of computer-assisted research over telephone lines linked to supplier databases located in other states. Based on the trial courtís decision below, users of such ëon-lineí services could be haled into court in the state in which [the] supplierís billing office and database happen to be located, even if such users, as here, are solicited, engaged, serviced entirely instate by the supplierís local representative.
This, the court concluded, would be ìwildly beyond the reasonable expectations of such computer-information users,î thus circumventing traditional due process considerations.
ii. Inset Systems, Inc. v Instruction Set, Inc.
The plaintiff, a corporation with its principal place of business in Connecticut markets computer software and other related services worldwide. The defendant, a corporation with offices and its principal place of business in Massachusetts, provides computer technology and support to thousands of customers throughout the world. The defendant does not have any employees or offices in Connecticut, nor does it conduct business in Connecticut on a regular basis.
The plaintiff filed for registration as the owner of the federal trademark ìINSET.î Thereafter, the defendant obtained ìINSET.COMî as its Internet domain name and uses the domain address to advertise its goods and services. The defendant also uses the phone number 1-800-US-INSET to advertise its goods and services. The plaintiff first learned of the defendantís domain address when it attempted to register the same domain name. On April 17, 1996 the plaintiff filed suit against the defendant alleging infringement of state and federal trademark laws. A motion to dismiss for lack of personal jurisdiction filed by the defendant was denied by the court.
In analyzing the issue of whether Connecticut could assert personal jurisdiction over the defendant, the federal court held in an April 17, 1996 decision that conduct of the defendant satisfies the ëminimum contactsí requirement of the Due Process Clause of the Fourteenth Amendment. The plaintiff ìhas directed its advertising activities via the Internet and its toll-free number toward not only the state of Connecticut, but all states. Plaintiff has purposefully directed its advertising activities toward Connecticut on a continuing basis since March, 1995 and therefore could reasonably anticipate being haled into court there.î
iii. Compuserve, Incorporated, Plaintiff-Appellant, v. Richard S. Patterson, individually, and Flashpoint Development, Defendants-Appellees
The plaintiff is a computer information service headquartered in Ohio. It contracts with individual subscribers to provide access to computing and information services via the Internet. It is the second largest such provider. The plaintiff also operates as distributor of computer software ìshareware.î The shareware may originate from the plaintiff or from other parties. The creator of the shareware is paid only through the voluntary compliance of an end-user. The end-user, a CompuServe subscriber, pays the creatorís suggested licensing fee if he or she uses the shareware beyond the specified trial period. The end-user pays the licensing fee directly to CompuServe. CompuServe then takes a 15% fee before remitting the balance to the sharewareís creator.
The defendant, Richard Patterson, is a resident of Texas who also does business as Flashpoint Development. The defendant subscribed to CompuServe and also placed shareware on the CompuServe system for other subscribers to use and purchase. When the defendant became a provider, he entered into a ìShareware Registration Agreementî (ìSRAî) with CompuServe. The SRA incorporates the CompuServe Service Agreement (ìCSAî) by reference. Both the SRA and the CSA provide that they are entered into in Ohio and the SRA further states that it is to be ìgoverned by and construed in accordance withî Ohio law. The SRA is an on-line document, asking a new shareware provider to type ìAGREEî at various points in the document.
The defendantís product was software designed to help people navigate around the Internet. CompuServe began marketing a similar product, with allegedly similar markings and name. The defendant notified CompuServe via email that CompuServe was infringing his common law trademarks. CompuServe changed the name of their program, but the defendant continued to complain. When the defendant demanded $100,000 to settle his potential claims, CompuServe filed a declaratory judgement action in the federal district court for the Southern District of Ohio. The defendant responded with a motion to dismiss for lack of personal jurisdiction. The district court granted the motion. CompuServe appealed.
Upon review of the lower courtís decision, the United States Court of Appeal for the Sixth Circuit commented that ì[a]s always in this context, the crucial federal constitutional inquiry is whether, given the facts of the case, the nonresident defendant has sufficient contact with the forum state that the district courtís exercise of jurisdiction would comport with ëtraditional notions of fair play and substantial justice.íî In its ensuing minimum contacts analysis, the Court concluded that Patterson had purposefully availed himself of the privilege of doing business in Ohio: he choose to transmit his software over a three-year span from Texas to CompuServeís system in Ohio; he advertised and sold his software through this system; and myriad others gained access to his software through this system. The court commented that Pattersonís contacts with CompuServe were deliberate and repeated, even though they yielded little revenue. Secondly, the court pointed out that Patterson had not only purposefully availed himself of CompuServeís services, but that he had ìoriginated and maintainedî contact with Ohio through the email that he sent to CompuServe regarding their competing product. In considering the second prong of the test, the Court concluded that Patterson contacts with Ohio were certainly related to the operative facts of the controversy. And, thirdly, the Court determined thatì[s]omeone like Patterson who employs a computer network service like CompuServe to market a product can reasonably expect disputes with that service to yield lawsuits in the serviceís home state.î In a July 22, 1996 decision, the US Court of Appeal court held that Patterson had sufficient contacts to support the exercise of personal jurisdiction over him, expanding ìthe scope of the minimum contacts test to include contacts that were almost entirely electronic in nature.î
iv. John W. McDonough v Fallon McElligott, Inc. and Professional Publications, Inc.
McDonough is a professional sports photographer and resident of California. His photographs appear in magazines such as Business Week, Sports Illustrated and Time. Professional Publications is an advertising agency, incorporated in the state of Minnesota, with its principal place of business also in Minnesota. McDonough claims that on or about June 13, 1993, he created an original photograph of basketball player Charles Barkley. He alleges that this photo was subject to copyright registration issued to Time, Inc. and that the photograph will also be subject to copyright registration to be issued to himself.
McDonough claims that Fallon McElligott, Inc. and Professional Publications, Inc. (the ìAdvertising Agencyî) knowingly reproduced the photograph for a Nikon camera advertisement without seeking or obtaining permission. The photograph allegedly appeared in at least one national publication. McDonough also claims that the Advertising Agency entered the advertisement containing the photograph in a national advertising awards contest. When the advertisement was a finalist in the contest McDonough claims that the Advertising Agency knowingly attributed the photograph to someone other than himself. As a result, McDonough filed, in part, claims for copyright infringement and unfair competition. The Advertising Agency responded with a motion to dismiss the action based on lack of personal jurisdiction, which the United States District Court for the Southern District of California granted.
On August 5, 1996, the District Court held that McDonough did not satisfy the requirements set forth by the three-pronged minimum contacts test. Upon examination of the requirements necessary for the establishment of the initial prong of the test, the Court considered that while the Advertising Agency places advertisements with businesses who sell to Californians, the Advertising Agency itself has no significant California clients. The Court commented that ìjurisdiction upon the basis of the California contacts of Fallonís business associates would be one-step removed. Personal jurisdiction cannot be so attenuated.î Additionally, the Court noted that the Advertising Agency has no permanent employees or offices located in California and pays no taxes to California. However, McDonough alleged that the Advertising Agency had purposefully availed itself of the privilege of conducting activities within the forum via the maintenance of its World Wide Web site. The Court balked at this attempt to establish a purposeful connection with the forum state, declaring:
ì[b]ecause the Web enables easy world-wide access, allowing computer interaction via the web to supply sufficient contacts to establish jurisdiction would eviscerate the personal jurisdiction requirement as it currently exists; the Court is not willing to take this step. Thus, the fact that Fallon has a Web site used by Californians cannot establish jurisdiction by itself.î
v. Maritz, Inc. v. Cybergold, Inc.
CyberGold, Inc, (hereinafter ìCyberGoldî) maintains an web site on the Internet, the server for which is located in California. The web site provides information about a new service that CyberGold plans to offer. In this proposed service, an Internet user will provide CyberGold with his or her area of interest. CyberGold will then give the user, at no charge, a personal electronic mailbox to which advertisements that match the selected interests will be forwarded. CyberGold will provide users with incentives for reading the advertisements and charge advertisers for their access to the mailing list.
Maritz, Inc. (hereinafter ìMaritzî), a corporation located in the state of Missouri, brought an action against CyberGold alleging trademark infringement and unfair competition. CyberGold moved to dismiss for lack of personal jurisdiction. The United States District Court for the Eastern District of Missouri, Eastern Division held that CyberGold had sufficient minimum contacts with the forum state so that the exercise of personal jurisdiction would not violate due process considerations.
In its analysis, the Court determined that the maintenance of CyberGoldís web site, ìwhich can be accessed by any Internet user, and which appears to be maintained for the purpose of, and in anticipation of, being accessed and used by any and all Internet users, including those residing in Missouri, amounts to promotional activities or active solicitationsî sufficient to provide the minimum contacts necessary for the exercise of personal jurisdiction over a nonresident corporation. The Court noted that CyberGoldís ìintent is to reach all Internet users, regardless of geographic location.î The Court also commented that CyberGold inaccurately characterizes its Internet activity as a ìpassive website;î that through its website, CyberGold not only solicits clients and advertisers, but also sends automatic replies to those who respond. The Court concluded that CyberGold, through its Internet activities, purposefully availed itself of the benefits an privileges of doing business with the forum state of Missouri such that CyberGold could reasonably anticipate the possibility of being haled into court in there.
vi. Bensusan Restaurant Corporation v. Richard B. King, individually, and d/b/a The Blue Note
Bensusan, a New York Corporation, is the creator of the New York jazz club ìThe Blue Note.î It holds all rights, title and interest in and to the trademark ìThe Blue Note.î King, a resident of Missouri, owns a small club in Missouri also named ìThe Blue Note.î In April 1996, King posted a web page, via a server located in Missouri, which promotes his club. Bensusan alleged that the web site contained ìa fanciful logo which is substantially similar to the logo utilized by [Bensusan].î The web site also contains general information about the club, including a calendar of events and ticketing information. It lists the names and addresses of ticket outlets in Columbia. The web site also provides a telephone number for charge-by-phone ticket orders. The tickets are available for pick-up the night of the show at the box office of The Blue Note. At the time Bensusan brought the action against King, the web page contained the following disclaimer: ìThe Blue Noteís Cyberspot should not be confused with one of the worldís finest jazz club[s] [the] Blue Note, located in the heart of New Yorkís Greenwich Village. If you should find yourself in the big apple give them a visit.î
The United States District Court for the Southern District of New York in its review of whether jurisdiction could be obtained over King was ìwhether the creation of a web site, which exists either in Missouri or in CYBERSPACE, i.e. anywhere the Internet exists, with a telephone number to order the allegedly infringing product, is an offer to sell the product in New York.î The Court determined that King had done nothing to purposefully avail himself of the benefits and privileges of New York. In its estimation, King had simply created a web site, allowing anyone who found it to access it. The Court commented that it would take several affirmative steps by a New York resident to access the web site and its information. ìCreating a web site, like placing a product into the stream of commerce, may be felt nationwide, or even worldwide, but, without more, its is not an act purposefully directed toward the forum state.î In a September 9, 1996 decision, the Court held that ì[t]he mere fact that a person can gain information on the allegedly infringing product is not the equivalent of a person advertising, promoting, selling or otherwise making an effort to target its product in New York.î The Court accordingly concluded the exercise of personal jurisdiction over King would violate the Due Process Clause of the United States Constitution.
vii. Panavision International, L.P., a Delaware Limited Partnership, v. Dennis Toeppen, an individual, Network Solutions, Inc., a District of Columbia Corporation and Does 1-50, Defendants
Panavision International, L.P. (hereinafter ìPanavisionî) is a Delaware limited partnership with its principal place of business in California. Panavision owns several federally registered trademarks, including ìpanavisionî and ìpanaflex.î Dennis Toeppen, a resident of Illinois, registered ìpanavisionî and ìpanaflexî as his own Internet domain names: ìpanavision.comî and ìpanaflex.com.î Toeppen established a web page at ìpanavision.comî which displayed an aerial view of Pana, IL. Toeppen never used ìpanavision.comî name in connection with the sale of any goods or services. Panavision then attempted to establish a web site under its own name and discovered that Toeppen had registered ìpanavision.comî as his own domain name. When Panavision notified Toeppen that it wanted to use ìpanavision.com,î Toeppen demanded $13k to ìdiscontinueî the use of the domain name. Panavision refused. Toeppen then registered Panavisionís trademark ìPanaflexî as the domain name ìpanaflex.com.î
Panavision brought a trademark dilution action against Toeppen under both state and federal law. Panavision charged that Toeppen had intentionally registered Panavisionís trademarks as his Internet domain names for the purpose of exacting payment in exchange for the termination of the registrations of the domain names. The United States District Court for the Central District of California held that Toeppenís conduct diluted Panavisionís trademarks in violation of the Federal Trademark Dilution Act of 1995 and the California dilution statute, justifying the exercise of personal jurisdiction ìby virtue of Toeppenís intentional actions, which were expressly aimed at California and which caused harm, the brunt of which was suffered ñ and which Toeppen knew was likely to be suffered ñ in California.î
viii. EDIAS Software International, L.L.C., an Arizona limited liability companyí EDIAS Software International GmbH, a German business entity; EDIAS Software International B.V., a Dutch business entity, Plaintiffs v. BASIS International, Ltd., a New Mexico corporation, defendant
In March 1995, Edias Software International, L.L.C. (hereinafter ìEDIASî) and BASIS International, Ltd. (hereinafter ìBASISî) signed an agreement through which EDIAS became a distributor of BASISí software in certain European countries. The two companies signed the contract in New Mexico. In the event of a dispute, the contract provided that New Mexico law would govern.
When BASIS became dissatisfied, it terminated its agreement with EDIAS. BASIS informed its European customers and its employees of the decision via e-mail messages. BASIS additionally posted a ìpress releaseî regarding the split on its web page. Both the e-mail and the web page informed readers that EDIAS had been unwilling to agree in writing to sell BASISí products at a fair price; provide technical support and distribute product information. EDIAS filed a complaint with the United States District Court for the District of Arizona against BASIS for breach of contract. BASIS responded with a motion to dismiss based on lack of personal jurisdiction.
In November 19, 1996 decision, the court held that BASIS had purposefully availed itself of the benefits and protections of doing business in Arizona such that the company could anticipate being haled into court there. The court noted that BASIS had contacted EDIAS ìvia telephone, fax, and e-mailÖsold several thousands of dollars worth of products to EDIAS for distribution, sent invoices to EDIAS in Arizona, BASIS employees have visited Arizona, and, finally, BASIS disseminated allegedly defamatory statements about EDIAS that were both directed at and caused harm in Arizona.î The Court concluded that the exercise of jurisdiction over BASIS meets Constitutional due process requirements, denying BASISí motion to dismiss for lack of personal jurisdiction.
ix. Heroes, Inc. v Heroes Foundation, The Boomer Esiason Heroeís Benevolent Fund, Inc., and Boomer Esiason Heroís Foundation
xi. Zippo Manufacturing Co. v Zippo Dot Com, Inc.
Zippo Manufacturing Co. (hereinafter ìZippoî) is a Pennsylvania corporation with its principal place of business in Bradford, Pennsylvania. Zippo makes Zippo lighters. Zippo Dot Com, Inc. (hereinafter ìZippo Dot Comî) is a California corporation with its principal place of business in Sunnyvale, California. Zippo Dot Com operates an Internet web site and Internet news service. It has obtained the right to use the domain names ìzippo.comî; ìzippo.netî; and ìzipponews.comî on the Internet. Zippo Dot Comís web site contains information about the company, advertisements and an application for its Internet news service. The news service allows a subscriber to view and/or download Internet newsgroup messages that are stored on the Zippo Dot Comís server in California.
Zippo filed suit against Zippo Dot Com, alleging federal and state trademark dilution; trademark infringement; and false designation under Federal Trademark Act. Zippo Dot Com moved to dismiss the action based on lack of personal jurisdiction. The United States District Court for the Western District of Pennsylvania, in its review of Zippo Dot Comís contacts with the state of Pennsylvania. It found that itsí contacts with Pennsylvania have occurred almost exclusively over the Internet; it has no offices, employees or agents in Pennsylvania; its advertising for its services to Pennsylvania residents consists of posting info on its Web page; 2% of its 140,000 web subscribers are Pennsylvania residents; subscribers visit the web site and fill out an application; Zippo Dot Com has also entered into contracts with seven Internet access providers in Pennsylvania to permit the Internet access providerís customers to access Zippo Dot Comís news service.
The Court found that Zippo Dot Comís conducting of electronic commerce with Pennsylvania residents constituted purposeful availment of doing business in PA, making exercise of personal jurisdiction reasonable. The Courtís decision was based on the fact that Zippo Dot Com contracted with three thousand individuals and seven Internet access providers in Pennsylvania; that the intended object of these transmissions has been the downloading of the electronic messages that form the basis of this suit; even a single contact can be sufficient. The Court concluded that Dot Com consciously chose to do business in Pennsylvania and reap profits from that state, commenting that ì[t]he Due Process Clause is not a ëterritorial shield to interstate obligations that have been voluntarily assumed.íî
x. State of Minnesota by its Attorney General Hubert H. Humphrey III, v. Granite Gate Resorts, Inc. dba On Ramp Internet Computer Services; and Kerry Rogers, individually and as president or principal officer of Granite Gate Resorts, Inc.
This lawsuit was one of six filed by the Minnesota Attorney General on July 18, 1995 in the District Court, Second Judicial District. In each of the six separate suits, the Attorney General alleged that the various companiesí or individualsí activities violated the Minnesota Consumer Fraud Act, the False Advertising Statute and the Deceptive Trade Practices Act. The lawsuits were the result of a review in which investigators ìsurfedí the Internet and the on-line services. The investigators found that computer users were exposed to illegal activities ranging from deceptive, misleading and unsupported product claims; advertisements for information on how to commit mail fraud; credit repair scams advising violation of state and federal laws; pyramid schemes; and illegal sports betting.
The present suit is filed against Granite Gate Resorts, Inc., a Nevada corporation with its principal place of business in Nevada, and against its president Kerry Rogers, a resident of Nevada. The Minnesota Attorney Generalís office alleges in its complaint that the defendants advertise a service on their ìvegas.comî web site which will allow consumers to bet on sporting events over the Internet. The advertisement for ìWagerNetî has consistently claimed that it will soon ìprovide fans with a legal way to bet on sporting events from anywhere in the worldÖ24 hours a day.î For an initial $100 set-up fee and a minimum deposit of $1000 into an ìaccount,î consumers will then be able to bet against the account for a 2.5% charge. The advertisement invites consumers to join the WagerNet mailing list by providing their name and address, including state, and email address. The advertisement also informs consumers that in the event of a dispute, WagerNet has the right to seek relief in ìyour state,î but further informs consumers that they have submitted to the jurisdiction of the courts of Belize for any action that they may file.
Although commercial sports betting is legal in Nevada and Belize, it is illegal in the state of Minnesota. Such activity is also in violation of federal law which prohibits ìthe foreign or interstate transmission of bets or wagers or information on bets or wagers by use of a wire communication.î The Attorney General charged that by advertising WagerNet in Minnesota, and by explicitly and implicitly representing that the activity is lawful, the defendants are violating Minnesotaís consumer protection statutes which prohibit false advertising, deceptive trade practices and consumer fraud. The defendants responded to the complaint with a Motion to Dismiss for Lack of Personal Jurisdiction, arguing that they do not have sufficient minimum contacts with the State of Minnesota. In the defendantsí motion to dismiss, the defendants attempted to argue that this case is somehow unique because it involves the Internet. The Attorney Generalís response was that the defendants ìÖare merely seeking to circumvent well-established law by hiding behind recent advances in technology. ì The Attorney General further stated that his office vigorously enforces consumer protection laws, regardless of the medium in which a defendant may choose to solicit customers. ìThe Internet is simply the latest technological innovation for reaching potential customers.î
In an April 3, 1997 decision, the State of Minnesota District Court held that the defendants, through their web site advertisement, had purposefully availed themselves of the market in Minnesota, thereby making the exercise of personal jurisdiction constitutionally permissible. In its analysis, the Court evaluated the quantity of contacts with the forum state; the nature and quality of those contacts; the connection of the cause of action with the contacts. In its evaluation, the Court established that: (1) Minnesota residents, as well as residents from other states throughout the country, are on the WagerNet mailing list; (2) Defendants admit that their web site can be viewed worldwide via the World Wide Web; (3) Computers in Minnesota and throughout the world have accessed the web site; (4) During a two-week period in 1996, at least 248 Minnesota residents accessed and received transmissions from the defendantís web site; (5) computer located in Minnesota are among the top 500 computers most commonly accessing the web site; and (6) Defendants receive calls on a toll-free number advertised on its web site from Minnesota, as well as from other states. The Court concluded that the inconvenience of defendants was too insufficient to overcome the above issues.
No exercise of jsx re: Pres-Kap. Distinguishable because it addresses the issue of jsx over a consumer of on-line services versus a provider of on-line services? To subject to jsx would be ìwildly beyond reasonable expectationsî of on-line computer users.
Inset = jsx predicating on advertising activities directed towards all states, including CT, i.e. soliciting business
Compuserve = jsx predicated on purposeful availment
McDonough = no jsx b/c minimum contacts supplied solely via the web ìwould eviscerateî the personal jsx requirements (see Pres-Kap)
Maritz = jsx predicated upon web site which not passive. Making an offer to sell, actively recruiting subscribers, commission of tortious act
Bensusan = no jsx b/c web site passive. Mere posting of info. Phone no. for ordering of product no enough.
Panavision = jsx predicated upon combination of tort and web page.
EDIAS = jsx predicated upon numerous contacts with AZ, including business email and defamatory email
Heroes = jsx predicated upon combination of newspaper ad and web page
Zippo = jsx based on conducting electronic commerce with residents of state of PA
State of MN, AG = jsx predicated upon WagerNet web site. Purposeful availment of MN market, as well as any other market
When presented with the issue of whether a forum state may assert personal jurisdiction over a nonresident defendant, when the defendantís contacts with the state have been solely or substantially via the Internet, the courts have continued to use the traditional minimum contacts test. The use of this test in the new milieu of CYBERSPACE does not appear to strain the due process concerns which are the foundations of the minimum contacts doctrine. The traditional tests simply need to be viewed in the totality of the new situations which are presented by the medium of CYBERSPACE. ìThe context must be thought of not against the backdrop of communication and transportation criteria of yesteryears, but against modern day accelerated commercial and personal relationships.î The fundamental parameters drawn by the traditional tests are sound. The concerns of due process, etc. that they express do not need to be tampered with, but we need to simply recognize that the backdrop against which they are analyzed is changing and will inevitably change again. The beauty of the traditional concepts is that they are ageless, and so far, regardless of new forms of communication which have generated new types of interaction, their goals remain intact. The Internet may change the fashion of communication, but the Shoe still fits.
Add as footnotes:
i. Elaboration of the Minimum Contacts Doctrine
The minimum contacts test set forth in Shoe has been elaborated upon and further explained by subsequent cases. In particular, Burger King v Rudzewicz, within the context of a contract dispute, articulated a two factor analysis for courts to apply when analyzing minimum contacts. The factors are: (1) purposeful availment and (2) foreseeability. The concept of purposeful availment was first set forth in Shoe. However, Burger King articulates that the test for ìpurposeful availmentî is met when a nonresident defendant purposefully directs activities toward the forum state. This idea also ensures that a defendant will not be haled into court on the basis of ìrandom,î ìfortuitous,î or ìattenuatedî contacts. World Wide Volkswagon v Woodson further addresses the concept of foreseeability, establishing that the test for this requirement is satisfied if the nonresident defendantís activities ìin connection with the forum state are such that he should reasonably expect to be subject to the distant forum stateís jurisdiction.î (Santisi)
Burger King v Rudzewicz and World-Wide Volkswagen v Woodson analyzes the issue of minimum contacts not only in terms of sufficiency, but also based on whether it is reasonable to require the nonresident defendant to answer the claim in the forum state. Again, the concept of reasonableness was first established in Shoe, however World-Wide Volkswagen detailed this concept through a five-part analysis that a court should consider when deciding whether a suit would be reasonable: (1) the burden on the nonresident defendant of litigating in the forum state; (2) the interest of the forum state in applying its laws; (3) ìthe plaintiffís interest in obtaining convenient and effective relief, the interstate judicial systemís interest in efficient resolution of interstate conflicts, and the shared interest of the states in furthering substantive social policies.î
ii. Specific versus General Personal Jurisdiction
The categories of contacts in the Shoe spectrum which are the basis for the assertion of personal jurisdiction, can be further divided into categories of contacts which establish either specific personal jurisdiction or general personal jurisdiction. Specific personal jurisdiction is derived from a single contact of a certain ìquality and natureî and from ìcontinuous and systematic contactsî with the forum state. In these categories, the nonresident defendant is subject only to jurisdiction for claims arising out of these kinds of ìminimum contacts.î ìSpecific jurisdiction allows a court to assert jurisdiction only over claims related to the defendantís contacts with the forum state.î General personal jurisdiction, on the other hand, is derived from in-state activities which result in ìsubstantial or pervasiveî contacts, but which may not relate to the claim. The nonresident defendant may be subject to jurisdiction for a claim that is completely unrelated to its in-state activities. However, in this paper, because of the nature of the disputes in the cases to be examined, the focus will be on only specific, rather than general, personal jurisdiction.
The term CYBERSPACE was coined by author William Gibson in his science fiction novel Neuromancer.
William Gibson, Neuromancer 51 (1984).
CYBERSPACE is ì[a] consensual hallucination experienced daily by billions of legitimate operators, in every nationÖA graphic representation of data abstracted from the banks of every computer in the human system. Unthinkable complexity. Lines of light ranged in the nonspace of the mind, clusters and constellations of data.î Id. at 51.
William S. Byassee, Jurisdiction of CYBERSPACE: Applying Real World precedent to the Virtual Community, 30 Wake Forest L. Rev. 197, 199 (1995) citing Lawrence H. Tribe, The Constitution in CYBERSPACE: Law and Liberty Beyond the Electronic Frontier, THE HUMANIST, Mar. 26, 1991, at 15, 15.
Conflicts on the Net: Choice of Law in Transnational CYBERSPACE citing Willard Uncapher, Trouble in CYBERSPACE: Civil Liberties at Peril in the Information Age, Humanist, Sept.-Oct 1991 at 5, 9 quoting CYBERSPACE: First Steps (Michael Benedikt ed., 1991); Sci. Amer., Sept., 1991.
Ditto footnote no. 4
The term ìInternetî in this paper is used to refer to the two million plus computers connected by interlinked computer networks
Comment: Property in CYBERSPACE. Harold Reeves Smith, 63 U.Chi. L. Rev. 761, p6, citing, for example, Mike Goodwin, Electronic Frontier Foundation
ditto footnote 7
ìweb pageî =
ditto footnote no. 4
Civil Procedure Cound, Friedenthal, Miller and Sexton, p22 (not a direct quote) As well as proper venue
Pennoyer v Neff, p 66 Civil Procedure, Cound and Friendenthal
Civil Procedure ñ Examples and Explanations, Joseph W. Glannon, p3
Pennoyer v Neff, 95 U.S. 714 (1877)
Supra, Law Journal Extra! p1
Kulko v CA Supreme Court
Glannon, p 24
Glannon, p 24
Glannon, p 25. Note:
ìThe starting point in analyzing pjsx issues in federal cases is the ëlong-armí statute in effect in the state in which the court is locatedî McDonough citing Aanestad v Beech Aircraft Corp.
The analysis section of this paper focuses on the minimum contacts doctrine and does not address issues relating to long-arm statutes.
US Constitution, p 26
supra, Pennoyer v Neff
International Shoe v Washingtion
supra, International Shoe v Washingion, p81
Glannon, p 5 (check page no.)
e.g., McGee v International Life Insurance Company, 335 U.S. 220 (1957)
e.g., Burger King Corporation v Rudzewicz, 471 U.S. 462 (1985)
e.g., Perkins v Benguet Consolidated Mining Co., 342 U.S. 437 (1952) and Helicopteros Nacionales de Colombia, S.A. v Hall, 466 U.S. 408 (1984)
Glannon, p __
Glannon, p 4
Glannon, p 4
International Shoe v Washington, Friendenthal, p 81
Glannon, p 4
examples: jurisdiction improper = WW VW and SC split = Asahi
West Bar Review, p 67
Dan Burk, ìJurisdiction in a World Without Bordersî
Dan Burk, ìJurisdiction in a World Without Bordersî
Law Journal Extra! Computer Law - Resolving Jurisdiction and Venue Issues on the Internet Raysman and Brown p1 (quote and idea contained in paragraph ñ how to give credit?)
Albany Law Journal of Science & Technology, p103 n82
Pres-Kap, Inc. d/b/a/ Prestige Travel of Rockland, Appellant, v. System One, Direct Access, Inc., Appellee was filed on April 12, 1994 in the Court of Appeal of Florida, Third District.
Until 1987, the plaintiff was a division of Eastern Airlines. In 1987, a holding company purchased Eastern Airlines and converted the plaintiff into a separate corporation.
Pres-Kap, p 2 citing Shoe and BK
Pres-Kap, p 2, citing WW W
The court further stated that is settled law that a contract with an out-of-state party does not, by itself, establish sufficient minimum contacts with the forum state to support an assertion of in personam jurisdiction against the nonresident defendant, even when he or she allegedly breaches the contract by failing to remit payments to the forum state. Pres-Kap citing BK
The court also stated that any financial benefit that the defendant received from the agreement was gain arising from a New York and not Florida based interaction. But, did the defendant not ìavail itself of the benefits and protections of the law of the forum stateî through its access of the Florida database?
Pres-Kap, p4. And without comportment to due process requirements, there is no basis for the assertion of Floridaís long-arm statute.
based on the courtís diversity subject matter jurisdiction
Compuserve v Patterson, p 7
CompuServe v Patterson, p 14
IP Worldwide, US Courts Use Internet to Assert Jurisdiction Over Foreign Defendants, p.1 January/February 1997
McDonough v Fallon, p 17
McDonough v Fallon, p 17
Maritz v CyberGold, p 38
Maritz v CyberGold, p 38
Bensusan v King, p 25
Bensusan v King, p25
Bensusan v King, p 27
Bensusan v King, p 29
Main purposes of domain names: (1) identification of the entity who owns the web site, and (2) allow Internet users to locate web sites quickly and easily. Panavision v Toeppen
corporate name used out of context. Zippo Manufacturing v Zippo Dot Com
Panavision v Toeppen citing Calder v Jones
Edias v Basis
71 Edias v Basis, p 12
McGee v International Life
Zippo citing Burger King
State v Carolyn McClendon, ìgermaniumî re: cancer and aids
how to circumvent postage requirements using .2 stamps
State of MN v GG STATEíS MEMORANDUM IN OPPOSITION TO DíS MOTION TO DISMISS, p 10
The location of the server for the proposed sports betting service is in Belize.
18 U.S.C. (1084
(5) AG not seeking to hamper the development of the Internet. Not an issue of freedom of speech or other First Amendment concerns. This is commercial speech and it is well established that there is no constitutional protection for false, deceptive or misleading speech. Applying consumer protection laws to the Internet will promote consumer confidence in the Internet.
Pres-Kap, p1 citing Alchemie Intíl. v Metal World
ì[T]o the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue.î Shoe at _______
Santisi quoting BK
cites for BK and WW VW
Shoe: when the court enounced that a jurisdiction could be established over a nonresident defendant only if the defendant had certain minimum contacts with the forum state such that the maintenance of the suit does not offend ìtraditional notions of fair play and substantial justice
38 ìJurisdiction in a world w/o bordersî Dan Burk, p17 citing Burger King, 471 U.S. at 477
e.g., Burger King Corporation v Rudzewicz, 471 U.S. 462 (1985)
EDIAS Software International v BASIS International, p 5 citing Burger King, 471 U.S. at 472-73, 105 S. Ct. at 2182
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