CLARK W. LACKERT
President, AIPPI US Group
Partner, King & Spalding

Jurisdiction
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Internet Jurisdiction in the U.S.
• In the U.S., whether personal jurisdiction will be exercised over a defendant based solely on his or her Internet activities is handled on a case-by-case basis.
• It is difficult to predict the outcome of any given case.
• Due process concerns mandate that a U.S. court evaluate whether it is fair to subject an out of state defendant to its jurisdiction.
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Internet Jurisdiction in the U.S.
• There is no bright line test in the U.S.
• Generally, the more commercial and “interactive” the website is, the more likely the court will exercise jurisdiction over the website owner.
• Internet advertising alone will not subject a website owner to jurisdiction in a plaintiff’s home state.
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Internet Jurisdiction in the U.S.
Whether a defendant will be subject to personal jurisdiction turns on whether a defendant has sufficient minimum contacts with the forum, for example, New York State,
“such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)
(quoting Milliken v. Meyer, 311 U.S. 457, 463
(1940)).
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Internet Jurisdiction in the U.S.
The U.S. Supreme Court has held that personal jurisdiction is limited to cases where the defendant “purposely avail[s] himself of the forum” and the defendant must have “conduct and connection with the forum State…such that he should reasonably anticipate being haled into court there”.
Asahi Metal Industry Co. v. Superior Court,
480 U.S. 102, 112 (1987); World-Wide
Volkswagen v. Woodson, 444 U.S. 286, 297
(1980)
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Internet Jurisdiction in the U.S.
• One of the first cases to address Internet jurisdiction was Zippo Manufacturing v.
Zippo Dot Com, Inc., 952 F. Supp. 1119
(W.D. Pa. 1997).
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Internet Jurisdiction in the U.S.
• The Zippo Court distinguished between
“active” and “passive” websites, noting that “passive” websites were not sufficient to establish personal jurisdiction over the defendant.
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Internet Jurisdiction in the U.S.
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Internet Jurisdiction in the U.S.
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Internet Jurisdiction in the U.S.
• In Zippo, the court held that the court had personal jurisdiction over the defendant in a trademark infringement action because the following factors constituted a purposeful availment of doing business in the state:
– 3,000 of 14,000 paying subscribers were residents of the forum state.
– Defendant contracted with seven ISPs in the forum state.
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Internet Jurisdiction in the U.S.
The Zippo court noted that “[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 of personal jurisdiction.”
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Internet Jurisdiction in the U.S.
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Internet Jurisdiction in the U.S.
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Internet Jurisdiction in the U.S.
• Factors that likely will allow a court to exercise personal jurisdiction over a website owner:
• Internet sales to plaintiff’s home state.
• A commercial website that exchanges information with forum residents.
• Evidence that website owner is targeting forum residents.
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Internet Jurisdiction in the U.S.
An earlier trademark infringement case,
Inset Systems, Inc. v. Instruction Set, represents the outer limits of the exercise of personal jurisdiction based on the
Internet. 937 F. Supp. 161 (D. Conn. 1996)
(holding defendant subject to personal jurisdiction).
• The defendant’s only contacts with the forum state consisted of posting to a website that was accessible to approx. 10,000 residents of the forum state and maintaining a 800 number.
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Internet Jurisdiction in the U.S.
A similar case reached a different conclusion. In Bensusan
Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996).
• A New York jazz club sued a Missouri jazz club for trademark infringement in a New York court.
• The Missouri jazz club’s web site posted general information about the club, a calendar of events and ticket information.
• Since the website was not interactive (i.e., a user could not buy tickets from the website), the court refused to exercise personal jurisdiction over the Missouri defendant based on the website alone.
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Internet Jurisdiction in the U.S.
More recently, in a trademark infringement action, the Ninth Circuit ruled that an interactive web site (online retail store) with advertising targeted at residents within the forum state had sufficient contacts with forum state for the exercise of general jurisdiction. Gator.com Corp. v.
L.L. Bean, Inc., 341 F.3d 1072, 1078 (9th
Cir. 2003).
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Internet Jurisdiction in the U.S.
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Internet Jurisdiction in the U.S.
However, the Ninth Circuit agreed to rehear the case en banc, and vacated the 2003 decision. Gator.com Corp. v.
L.L. Bean, Inc., 366 F.3d 789 (9th Cir. 2004).
The parties subsequently informed the Ninth Circuit that they had reached a settlement agreement, which led the en banc majority to find the appeal to be moot and state that
"we must await another opportunity to resolve the important issues of personal jurisdiction originally raised by this appeal" because the panel decision "no longer has the force of law." Gator.com Corp. v. L.L. Bean, Inc., 398 F.3d
1125 (9th Cir. 2005).
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Internet Jurisdiction in the U.S.
• It is still is unclear how many Internet sales to forum residents are sufficient to support personal jurisdiction in that forum.
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Internet Jurisdiction in the U.S.
Defendants have successfully argued that their Internet activities are not directed at a forum state.
• For example, in Machulsky v. Hall, buyers, who bought items from the New Jersey plaintiff who sold coins on eBay, allegedly defamed the seller by posting public complaints about her via eBay’s online feedback forums. The court ruled that the buyers’ activities were insufficient to subject them to the jurisdiction of New Jersey. 210 F. Supp.2d 531
(D. N.J. 2002).
• The sellers were from Oregon, Alaska, and Georgia, respectively. None of the sellers had maintained any business interests within New Jersey.
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Internet Jurisdiction in the U.S.
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Internet Jurisdiction in the U.S.
• The policy concerns at stake are the potential chilling effects on Internet commerce.
• For example, small, regional businesses in New
York may not want to risk any Internet activities that could subject them to jurisdiction in
Alabama.
• On the other hand, online consumers must have confidence that they will have practical recourse against out-of-state sellers if the promise of
Internet commerce is to be realized.
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Internet Jurisdiction
• Courts have exercised personal jurisdiction over defendants when the information transmitted into the forum over the Internet causes harm within the forum.
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Internet Jurisdiction
• In Dow Jones & Co. v. Gutnick, 210 C.L.R. 575
(Australia 2002), the court ruled that defendant, a U.S. based publisher, was subject to a defamation suit in Australia because:
• the online article was available for download in Australia
• the injury was in Australia (defaming an
Australia businessman)
• at least 1,700 subscribers used Australian credit cards to pay their subscription fees
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Internet Jurisdiction
“Melbourne businessman Joseph Gutnick has resolved a lengthy defamation battle against
US publisher Dow Jones. In 2002 Dow Jones published an article on the Internet and in its journal, Barron's, alleging Mr Gutnick was a customer of convicted tax evader and money launderer, Nachum Goldberg.” Source: ABC
News Online (Nov. 12, 2004)
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Internet Jurisdiction
• In Richardson v. Schwarzenegger, 2004 EWHC
2422 (Q.B. Oct. 29, 2004), the High Court of
Justice in the U.K. subjected Gov.
Schwarzenegger’s campaign manager to a defamation suit in the U.K. based on his statements about a U.K. resident that were published on a newspaper website in the U.S.
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Internet Jurisdiction
Ms. Richardson sued
Schwarzenegger, his spokesman and another publicist, alleging that they tried to ruin her reputation by dismissing her assertions that
Schwarzenegger touched her chest during a press event at London's
Dorchester Hotel.
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Internet Jurisdiction
• The Richardson Court held jurisdiction over the U.S. defendant was proper because:
• The plaintiff was a U.K. citizen who was injured in the U.K.
• “It is well settled now that an Internet publication takes place in any jurisdiction where the relevant words are read or downloaded.”
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Choice of Law
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• A Canadian Internet site, iCraveTV.com, digitally broadcast plaintiffs’ copyrighted programming (such as NFL and
NBA games and “60 Minutes”) to computer users in the U.S. Although the Canadian company claimed that its broadcasts were for
Canadian residents only and submitted a declaration that its broadcasts were permissible under Canadian law, the U.S. court applied U.S. copyright law and issued an injunction against iCraveTV.com. Twentieth
Century Fox Film Corp. v. iCrave TV (W.D. Pa.
Feb. 8, 2000).
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Internet Choice of Law
• Similarly, a French court applied French law and ruled that the transmission of images of
Nazi objects by Yahoo! was illegal because these images were displayed in France when
French users accessed the Nazi auctions.
LICRA v. Yahoo! Inc., T.G.I. Paris, Nov. 20,
2000.
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Internet Choice of Law
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Internet Choice of Law
• Yahoo! claimed that it could not comply with the French court’s orders mandating that it block French users from accessing the Nazi auction and filed a declaratory judgment action in a U.S. court, arguing that the French court’s orders violated Yahoo!’s First
Amendment rights.
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Internet Choice of Law
• The Ninth Circuit denied Yahoo!’s declaratory judgment because, among other reasons, it was not persuaded by Yahoo!’s argument that it has “a First Amendment right to violate
French criminal law and to facilitate the violation of French criminal law by others.”
Yahoo! Inc. v. LICRA, 433 F.3d 1199 (9th Cir.
2006).
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Internet Choice of Law
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Conclusion
• The state of the law on jurisdiction and choice of law in the internet context is still in flux, and in the U.S. are determined on a case by case basis.
• As the body of law develops, a clearer pattern will develop as to when the law should exercise jurisdiction over web content.
• At the moment, we still need to address issues of passive and active websites, nature of the product, and other criteria.
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