Jurisdiction: Building Confidence in a Borderless Medium
July 26-27, 1999
Minimum Contacts Analysis In Cyberspace--Sale Of Goods And Services
DRAFT-WORK IN PROGRESS
Professor John L. Gedid
Widener Law School
Harrisburg, Pennsylvania, U.S.A.
This draft is part of an American Bar Association, Business Law Section, Jurisdiction in Cyberspace Project. The focus is on jurisdiction in cases involving computer communications, primarily employing the Internet , for the sale of goods or services. Consideration will proceed by examining several hypothetical situations which illustrate problems in this emerging area.
A few preliminary points are necessary. First, it is assumed that the reader is generally familiar with the International Shoe minimum contacts analysis. In the discussion which follows, focus will be upon how those general International Shoe standards should be applied in particular situations involving the Internet. Second, the focus of this discussion is federal due process minimum contact analysis. In every case involving the exercise of long arm jurisdiction, a general two step analytical process must be followed. The first step is that the state seeking to exercise the jurisdiction must have in effect a validly-enacted long arm statute, and any exercise of long arm jurisdiction must meet the requirements of that statute. The second step is for a court to assess whether the particular exercise of long arm jurisdiction satisfies the requirements of the federal due process clause. The focus of this article is on step two. It will be assumed throughout that the state exercising long arm jurisdiction has satisfied Step One; that is, that the state has a validly enacted long arm statute, and the particular exercise of jurisdiction involved in the case that is being considered satisfies the requirements of the state long arm statute.
Introduction: DRAFT-WORK IN PROGRESS
Recently, there has been an exponential growth in business conducted in or through or with some involvement with "cyberspace." Cyberspace refers to the interaction of people and
businesses over computer networks, electronic bulletin boards and commercial online services.1 In part, this explosive growth has been caused by some of the features of cyberspace as manifested in the Internet2 and the World Wide Web.3 Although the internet was originally created in order to permit the access to, and exchange of, scientific work via computers, the Internet has changed and taken on new characteristics as it has grown. In particular, it has become a major advertising and communications medium for business and non scientific customers or consumers.4
The growth of the Internet for commerce has probably come about because of the relative ease of transmitting information nationwide, or indeed worldwide, instantly.5 One knowledgeable commentator has observed that the Internet and Web function as an electronic marketplace, and have created new models of commerce.6 Ease of use, powerful and effective communications that are interactive, and a culture which encourages the use of computers has created the "virtual storefront."7 Some commentators have predicted that the Internet will radically recast the way in which business is conducted. It is predicted that the expanision of advertising and sales over the Internet will be nothing short of revolutionary8: by the year 2000 tens of billions of dollars of goods will be sold over the Internet, and whole new technological growth industries which service the Internet and create billions of dollars of revenue will exist by 2000.9 The Internet is redefining the way that business is done worldwide.10 Thus, the sale of goods and services over and through the Internet are a major area of expansion for commercial transactions.
However, legal analysis of the electronic media has neglected cyberspace sales law and focussed on intellectual property and payment systems.11 The neglect of sales law has in turn been exacerbated by the rapid, exponential growth of the Internet. Thus, in the United States and the entire world, we have an expansive, growing new technology for sales which involves tens of millions of users merely in the United States, with which many courts, lawyers and users are unfamiliar. One student commentator who struggled to explain the magnitude of the problem of jurisdiction in cyberspace in light of the recent explosive growth of the Internet and the relative unfamiliarity of the legal system with this new technology suggested a comparative scenario to consider the present state of law of cyberspace sales jurisdiction. He asked what would have happened if the automobile had been invented in a single day and twenty million automobiles had been distributed free to citizens of the United States at a time when the horse and buggy were the accepted means of transportation.12 All persons would agree that, in that situation it would be very difficult for lawyers and judges to work fairly and efficiently, and also for jurors to be found who could fairly decide cases, because of unfamiliarity with the new technology.13 In short in the hypothetical scenario the legal system would be strained and nearly overwhelmed until it could learn about the new technology and work out answers for how to deal with numerous unfamiliar problems that the new technology created. The question which would have to be asked in that situation is whether the legal system would have sufficient familiarity with the new hypothetical technology to administer "efficient and intelligent justice."14 One thesis of this project is that the legal system faces a similar challenge, most especially in the area of jurisdiction, arising out of the new Internet-cyberspace technology. This project is an attempt to help the legal system move more rapidly to knowledgeable, efficient and fair-to-all-parties adjudication of sales cases involving cyberspace.
Although the introduction of this new technology poses many problems, perhaps the most difficult one is long arm jurisdiction in cases involving the Internet. Jurisdiction is a particular problem because of the nature of the Internet itself, and because of the nature of the Supreme Court test for the constitutionality of the exercise of long arm jurisdiction.
Certain features of the Internet contribute to the jurisdiction problem. For example, the Internet makes possible instantaneous worldwide advertising and communication.15 However, persons working on the Internet often do not know where their server is located.16 Also, Internet users may access a web site from anywhere in the world, and that access may create an effect in the jurisdiction from which the user has accessed the web site.17 That feature means that, at least potentially, a person or entity maintaining a web site could possibly be subject to long arm jurisdiction anywhere in the United States or the world.18 A further source of potential difficulty is the fact that web users are often or usually unaware of having "transcended" the boundaries of physical space; that is, they do not know by whom or from where their web page has been accessed,19 and they cannot control who accesses their site.20 This last feature creates a particular problem because of that part of the International Shoe test which focusses on purposeful availment. One commentator has opined that these features may create the opportunity for egregious forum shopping.21
Uneven and inconsistent judicial treatment of cyberspace jurisdiction cases has also been an equally serious problem. Even in the absence of plaintiff forum shopping, judges who do not understand the new technology misapply it.22 One part of the problem is that the Supreme Court minimum contacts test is flexible and fact intensive by design.23 One of the premises of the International Shoe case was that the minimum contacts test must remain flexible in order to keep pace with technological developments.24 However, at the present time as one commentator put it:
Unfortunately, the relative legal novelty of the Internet, the World Wide Web, and other computer networks has frustrated consistent application of the minimum contacts test to these new contacts and has led to factual errors. 25
The combination of judicial unfamiliarity with the new technology and the flexibility of the minimum contacts test has led to such disparate and inconsistent application of the minimum contacts test by the lower federal courts that the law of cyberspace long arm jurisdiction has been described as in "disarray" or "in a muddle."26 Furthermore, in addition to the tendency for the flexibility of the International Shoe minimum contacts test to create different outcomes simply because it is applied differently by various lower federal courts, the nature of the minimum contacts test itself probably creates divergent applications by the courts in cyberspace cases. For example, one element of that test is purposeful availment. However,
. . . [G]iven the nature of the Internet, it is often not meaningful to say that an actor could structure his or her conduct to avoid a given jurisdiction. The structure of the Net is such that there is often no real means of avoiding contact with a specific jurisdiction, except to stay off the Internet completely.27
Further, some commentators have pointed out, probably correctly, that the courts applying the minimum contacts test in cyberspace have attempted to use analogies to earlier technologies such as mail, telephone and advertising.28 But this style may be inadequate.29 Some of those commentators have argued that in Internet jurisdiction cases the use of analogy to traditional communication media is inaccurate and unfair.30 They have pointed out that analogy will not work because of numerous and substantial differences between various aspects of Internet communication and telephone, magazine advertising and regular mail.31 Some cases have recognized these differences.32 On the other hand some courts have refused to recognize any difference between traditional methods of communication and the Internet.33 In any event, most persons would agree that, in order for the logical device of analogy to operate effectively and accurately, the person analogizing, that is, judges deciding Internet cases, must be familiar with the factual basis of the item or matter which forms the basis for the analogy-in the present instance telephone, magazine and mail features as well as precedent from earlier cases that are being looked to for guidance-and also equally familiar with the new item or matter that is the subject of the litigation before the court-Internet technology. Thus, to the extent that judges deciding Internet cases are not thoroughly familiar with Internet technology, analogy will be a weak tool. It is also submitted that judges deciding Net cases have differing levels of knowledge and understanding of Internet technology, which has led to differing use of analogy and different outcomes in Internet cases.
One final problem must be examined. Some analysts have taken the position that the existing Supreme Court test for long arm jurisdiction is unsuited to cyberspace.34 As one of the more persuasive articles taking this position, put it:
The rise of an electronic medium that disregards geographical boundaries throws the law into disarray by creating entirely new phenomena that need to become the subject of clear legal rules but that cannot be governed, satisfactorily, by any current territorially based sovereign.35
This position is essentially that cyberspace is a place or sphere which is different from the physical world; that law must in some fashion correspond to the characteristics of the space it regulates; and that minimum contacts, while appropriate for the physical sphere, are not appropriate for the Internet.36
On the other hand, many commentators have taken the position that the present tests for the constitutionality of long arm jurisdiction are satisfactory in cyberspace. Some commentators have taken the position that the Internet merely provides a new form of communication; and, when the courts master the structure and nature of this new technology, they will be able to apply the traditional minimum contacts criteria.37 Others have said that, rather than focussing upon the nature of cyberspace, the solution is to separate the defendant's conduct from the medium, the Internet; and, when courts analyze in this fashion, the traditional tests work well for cyberspace cases.38 Part of this approach, or closely related to it, is the idea that, regardless of the characterization by some modern courts and computer experts of cyberspace as a distinct, different realm from the physical world, use of the Internet involves real persons causing real effects in the real, physical world; thus, the traditional tests for long arm jurisdiction are appropriate.39 As one student writer effectively put this argument:
Because cyberspace does not, nor can it, exist separate and apart from the physical world, courts must use conceptually parallel notions derived through other technological advances to resolve jurisdictional questions that arise from cyberspace. An examination of how traditional legal concepts are suited to deal with the challenges of cyberspace, and how the existing body of jurisdictional jurisprudence is equipped to deal with the unique scenarios that arise when a non-resident defendant's contacts with a forum are isolated electronic travels, reveal existing paradigms that can resolve cyberspace's complex jurisdictional issues. The existing paradigms are well developed and the system's transactional costs, reflected in litigation and reformulation of the minimum contacts test, are minimized. Most importantly, application of existing paradigms, rather than reactionary changes, will ensure the continued flexibility of jurisdictional jurisprudence.40
In other words, even if "cyberspace" as defined by computer experts does not describe a physical realm, nevertheless, "actions occurring in cyberspace affect real people in real jurisdictions. Thus, notions and paradigms of traditional jurisdiction should be employed. . . ."41
All of these features and problems have led to the present attempt to fashion a coherent and workable approach to Internet jurisdiction cases involving the sales. Consistency in treatment of like Internet cases is important, but to date the cases have not been consistent in cases which appear to be factually identical.42 Consistency is important, among other reasons, not merely because it is fundamental to fairness and a sense of justice, but also because one object of the International Shoe test is to create predictability that will "allow potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit."43 More recent cases such as World Wide Volkswagen, Asahi and Burnham have emphasized the importance of predictability to defendants.44 This study seeks to assess how to apply the minimum contacts test of the International Shoe line of cases to create consistency and predictability for Plaintiffs and defendants in Internet cases involving sales.
Hypothetical Problems: DRAFT-WORK IN PROGRESS
Advertising or Informational Web Site
Consider the following Hypothetical 1 and its (slight) variant Hypothetical 1(a):
Sellwell (S) operates a retail and wholesale hardware store in Illinois. Virtually all of S's retail sales are to Illinois and Indiana residents who come to S's retail site. S does not do mail order sales and does not have a mail order department. S operates only at the Illinois site.
S is a major distributor for the products made by ElectroCo (E hereafter). Two of the most popular E products which S distributes are the Electromow and the ElectroPerk. The Electromow is an electric mulching lawnmower. The ElectroPerk is a high tech, very expensive automated coffeepot. S is the only distributor of Electromows in the United States; S has the exclusive right to distribute the Electromow and E does not do any distribution at all.
S's wholesale business consists of selling to brokers, who then resell the goods to retailers. S has built up its wholesale business to a point where it accounts for 25% of S's total sales. S deals with various brokers, several of whom S is aware sell throughout the United States. However, all of S's sales are fob its store in Illinois to the brokers. Occasionally, the brokers have S deliver directly to their customers, who are retail department and hardware stores in other states. But most of the time, S delivers to the brokers' warehouses, which are located in Illinois or Indiana.
S contracts with AOL to post advertisements on the Internet. S uses this Internet connection especially for sales at which special prices are given for selected merchandise. This is the sole use that S makes of the Internet. S posts advertisements regularly with AOL for the Electromow.
B, who resides in Los Angeles, California, subscribes to AOL. Several weeks later, while in a department store in Los Angeles, B purchases an ElectroPerk coffeepot for $1000.00. B has not seen the advetisements for the Electromow on the Internet.
The ElectroPerk, for which B paid $1000, not only will not make coffee, but also malfunctions and and destroys the electrical system in B's house. B brings an action against S for breach of contract in California. S appears specially to contest the California exercise of jurisdiction
Hypothetical 1 (a):
All the same facts, except that S maintains its own web site on which it posts advertisements for its merchandise and periodically general statements that the prices for certain models have been reduced (this is generally done at the end of the season when retail stores are reducing prices on left over merchandise, although there is no coordination or communication about these reductions between S and brokers and retailers).
Introductory Discussion of Hypotheticals 1 & 1(a)
A court considering this problem would examine two general issues: 1. Can the California court exercise general jurisdiction consistent with the International Shoe due process requirements? And 2. Can the California court exercise specific jurisdiction consistent with International Shoe due process requirements?
General Jurisdiction-Third Party Advertising Or Defendant Web Site With Advertising Only
General jurisdiction means the power of a court to hear a cause of action even if the cause of action did not arise out of the defendant contacts with the forum.45 General jurisdiction requires "continuous and systematic" contacts with the forum.46 The overwhelming majority position in the U.S. cases is that merely posting an advertisement on the Internet will not satisfy the International Shoe minimum contacts test for general jurisdiction.47 This hypothetical is a general jurisdiction case because the cause of action is not related to and does not arise out of the internet contacts. In fact, several cases have stated that it is nearly impossible to establish general jurisdiction solely through Internet contacts regardless of their quantity or quality.48 If such general jurisdiction is to exist, one court explained that
Where the minimum contacts on which jurisdiction is allegedly based are unrelated to the acts comprising the cause of action, the courts have applied a strict test to determine whether the defendant's transactions suffice to amount to "purposeful availment." In Hanson v. Denckla, 357 U.S. 235, 251, 253, 78 S.Ct. 1228, 1238-39, 2 L.Ed.2d 1283 (1958), for example, where the cause of action did not arise from the defendant's contacts with the forum state, the Court noted that "it is essential ... that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws."49
Generally, all minimum contacts analysis, whether of general or specific jurisdiction problems, requires purposeful availment; that is, the defendant's contacts with the forum must be shaped by deliberate, knowing defendant conduct which makes it reasonable for defendant to anticipate being haled into court to defend a suit in the forum.50 A passive web page, which provides information but no more, is not sufficient to support general jurisdiction, for it does not give such notice.51 The requirement of continuous and systematic contacts requires considerably more than bare contacts and is a "rigorous" test: the contacts must also be substantial to support general jurisdiction .52 Internet posting of an advertisement on a web site or in a manner that is generally accessible is analogous to advertisements in a national magazine; such print advertisements have consistently been held not to support general jurisdiction.53 As one court put it: to hold that such defendant general advertisements makes the exercise of jurisdiction constitutional in every state where those advertisements are aired would undermine the law of personal jurisdiction.54
Thus, for example, in a case involving personal injury occurring at an Italian hotel, the mere fact that defendant posted an advertisement for its hotel on the Internet was insufficient to establish general jurisdiction in an American court.55 Internet general advertisements, even coupled with an occasional sale in forum and national print advertisements, were not sufficient purposeful availment in patent infringement case to support haling California and Canadian defendants into a New Jersey forum.56
Most United States courts have held that on the facts of hypothetical 1 & 1(a) the potential Internet contacts are insufficient to support the exercise of jurisdiction in a state where a plaintiff resides. In other words, the ability of users in the forum to access the seller web site is not sufficient to meet the criteria for general jurisdiction.
Hypothetical 1(b): Change the hypothetical as follows. What if, other facts remaining the same, about 200 persons from B's home state, have "hit" S's web site. Would or should that change the outcome?
Discussion of Hypothetical 1(b). Probably not. The type of jurisdiction that California is attempting to exercise is still general jurisdiction because on our facts there is no connection between the Internet contacts and the cause of action of B. The contacts for general jurisdiction, as explained above, must be continuous and systematic; the test is rigorous, and the contacts must be substantial. Two hundred hits are not substantial.
Specific Jurisdiction-Third Party Internet Advertising Or Defendant Advertising-Web Site Only
S posts an advertisement for an electric mulching lawnmower, the Electromow, with AOL. The advertisement states that the Electromow is a "powerful self-propelled electric mulching mower." B, who resides in Los Angeles, California, observes the Electromow advertisement on AOL. It appears to be perfect for B's lawn. B then goes to a retail department store which also sells Electromows in Los Angeles, California and purchases one there.
The Electromow is a very poor mower. It is so underpowered that it will not cut grass that is more than one inch high. It can be easily established that the standard in the industry is that mowers generally must be able to cut grass that is two inches in length, and the description of "powerful" in the industry is used generally for mowers that will cut grass which is three inches in height. In addition, in the lawn care tool industry the sale of any mower which will not cut grass that is at least 1 inch in height is not acceptable.
The first time that B attempts to use the Electromow, he discovers that it will not cut his grass, which is one inch in height, because its engine is so weak that it will not move without being pushed by the operator, and it will not cut the grass, even if it is pushed, under any circumstances.
Upset because S has misled him, B brings an action for misrepresentation and breach of warranty against S in California. B asserts jurisdiction under the California long arm statute that provides for the exercise of jurisdiction by California courts "to the full extent permitted by the federal constitution." S resists the exercise of jurisdiction by the California courts on the basis that such exercise violates the due process clause of the federal constitution.
Majority Position: DRAFT-WORK IN PROGRESS
The majority position is that merely posting an advertisement on the Internet will not be sufficient to satisfy the International Shoe due process test for specific jurisdiction.57 These cases held that in this situation there is no purposeful availment under the Asahi case test.58 As the Court succinctly stated in the Bensusan opinion:
Creating a site, like placing a product into the stream of commerce, may be felt nationwide-or even worldwide-but, without more, it is not an act purposefully directed toward the forum state.59
This means that merely operating a web site does not satisfy the purposeful availment test, for a "web site operator must . . . do some act that suggests it is reaching out to the forum."60 The key inquiry is whether the operator of the web site would have fair warning based on her activities that she might be haled into court in the forum.61 Purposeful availment means that the defendant has deliberately exercised the "privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws."62 The concept of purposeful availment involves notice to a defendant that she might have to defend in a particular forum as a result of her activities.63 Thus, as the well-known case of Hearst v. Goldberger64 reasoned, a national advertisement on the Internet couldn't be held to create specific jurisdiction in a particular state forum without more, because 1. To hold otherwise would allow the exercise of jurisdiction by any forum in the world, which would be a devastating impact; 2. the connection between the downloader and the provider is remote & unforeseeable (to the provider); and 3. there has been no purposeful direction by provider aiming her advertisements at the forum.65
Applied to hypothetical situation 2, the majority position would clearly prevent the exercise of jurisdiction by California. Under the analysis of the majority view, S has done nothing more than post a general advertisement with AOL. He has not purposefully availed himself of the benefits of California law; he has not targeted California in any way; and he should not as a reasonable person be required to anticipate being haled into California to defend a suit. In short, his connection with California is remote and unforeseeable. S has had no notice that he might have to defend in California based on S's contacts and activities.
Minority Position: DRAFT-WORK IN PROGRESS
A few cases have not followed the majority position. Those minority decisions are not merely an alternate reading of the facts or an alternate application of the same rule applied in the majority opinions. Instead, these minority opinions, in holding that a state may exercise long arm jurisdiction on the basis of a passive web site, have articulated a divergent, inconsistent approach and rationale. The two principal cases, which will be here discussed, are: Inset Systems v. Instruction Set66 and Maritz v. Cybergold.67
In the Inset case, a Connecticut software firm held the copyright for Inset, and a Massachusetts firm, Instruction Set, Inc (ISI) registered the domain name Inset.com, and began advertising its computer technology and support services at its web site. The defendant site was entirely passive: it consisted of advertisements only (although it included a toll free telephone number), and was accessible to anyone on the Internet. Plaintiff brought an action for trademark infringement in Connecticut.
The Inset court held that Connecticut could exercise jurisdiction over the Massachusetts defendant on the basis that a passive web site with advertisements meets the International Shoe due process test. The court held that the power prong of the International Shoe test had been met. The court based that holding on a distinction that the court argued existed between national television and magazine advertising and advertising on the Internet, as follows:
. . . Unlike television and radio, in which advertisements are broadcast at certain times only, or newspapers in which advertisements are often disposed of quickly, advertisements over the Internet are available to Internet users continually, at the stroke of a few keys of a computer. At this time there are at least 10,000 Internet connected computer users in the state of Connecticut.68
Thus, to the Inset court, the nature of Internet advertisement (and it appears without distinguishing between an advertisement posted through a third party provider and one posted on one's own web site) leads to the conclusion that the purposeful availment/reasonable anticipation tests for minimum contacts have been met. The International Shoe tests had been met, the court explained, for the following reasons. First, the court reasoned that there were over 10,000 persons connected to the Internet in Connecticut, all of whom could have visited the defendant web site. Second, the court reasoned that the Internet is designed to reach persons in every state, and the defendant had chosen to advertise on the Internet. As the court put it, the defendant had directed its advertising to Connecticut and to all the states.69 It is difficult to understand what the court meant by this conclusion. It appears to reason that, because web site advertising remains available to all persons on the Internet, who include Connecticut residents, the defendant has purposefully availed itself of the benefits of Connecticut law and economics and could reasonably anticipate being haled into the forum, thus satisfying the power prong of the International Shoe test for minimum contacts.70 This is strained logic to say the least. The court is in effect stating that: because Connecticut residents may choose to visit the defendant web site, the defendant has minimum contacts with Connecticut. But this is true of every jurisdiction on earth that is connected to the Internet. Moreover, the approach does not answer or even consider the question of purposeful availment/notice to defendant. Also, the courts approach does not consider the actual facts or contacts (e.g. how many hits occurred on defendant's web site or how many Connecticut residents saw the advertisements on the Internet). The court also held that the reasonableness prong of the International Shoe test was met, primarily because the defendant was from Massachusetts, a state adjacent to the forum, Connecticut; and because Connecticut had an interest in serving as forum for its residents in suits of this type.71
The other case that held a passive web site subjects a defendant to jurisdiction in any state is the Maritz case.72 In that case Defendant from California operated a web site that allowed users to sign onto a mailing list to receive advertisements. Before Defendant's site actually began to operate by taking ads and registering subscribers, Plaintiff, a Missouri corporation, filed suit claiming trademark infringement and unfair competition. The only contacts with Missouri were 300 hits by Missouri residents on the defendant web site, 180 of which were by plaintiff. The court held that Missouri could exercise jurisdiction consistent with the International Shoe test. That test, as applied in the Eighth Circuit, consisted of five factors: the nature and quality of the contacts; the quantity of contacts; the relation of the cause of action to the contacts; the interest of the forum in adjucating the case; and the convenience of the parties.73 The court applied these factors as follows. First, in assessing the quality and nature of the contacts the Maritz court used a rationale that was almost identical to that of the court in Inset. The court explained that maintenance of a web site on the internet is clearly of a different nature and quality than other, more traditional, means of contact with a forum. The major difference, according to the Maritz opinion, is that the web site seeks to reach all internet users. Therefore, without explanation or justification, the court concluded that the defendant's contacts were of such a quality and nature that they favor the exercise of personal jurisdiction over defendant. Second, the court observed that there had been 181 hits on the defendant web site, and that the web site "was clearly intended as a promotion."74 Without explaining why or how, the court concluded that these were a sufficient quanitity of contacts with the forum to justify the exercise of jurisdiction under the International Shoe test.75 Third, the court reasoned that the contacts and the cause of action were related. Just as in the Inset case, the rationale by which the court justified its holding was defendant's intent to reach a global audience. The court also reasoned that that a commercial Web page, by its very nature, "solicits" business within the forum.76 Just as in the Inset case, the court presumes purposeful availment, largely from the use of the Internet.
Advertising Plus Other Traditional Acts Of Communication
Advertising Plus Toll-Free Telephone Number: DRAFT-WORK IN PROGRESS
Several cases have addressed the situation in which third-party advertisements or web site advertisements have contained a toll-free telephone number. They have concluded generally that the addition of a toll-free telephone number does not constitute such an increase in contacts or activity that the exercise of jurisdiction by a forum is thereby justified.77
The cases explain this outcome as follows. Subjecting individuals to jurisdiction in this situation would subject millions of persons to jurisdiction in distant forums merely because they maintained a web site with a toll-free telephone number.78 The key inquiry is whether the defendant has purposefully availed itself of the benefits of forum law. Even where there is a toll-free telephone number, if the web site advertisement is general in nature and the toll-free number is also directed to a national or international audience, then the defendant has not targeted the forum or purposefully availed itself of the benefits of forum law.79 After reviewing the existing precedents on due process for internet cases, one court concluded as dictum that there must be a web site with advertisements, it must also be interactive to some degree, and there must also be non-internet activity, all of which taken together satisfy the International Shoe criteria.80 Another court explained that a hard copy advertisement by a third party which contained the defendant telephone number did not satisfy the International Shoe minimum contacts test if the web site was not directed at the forum.81 Another court explained that the test involves the consideration of the "actual nature" of the contacts between the defendant and the forum.82 If this were not the test, then the due process limitations on the exercise of long arm jurisdiction would be eviscerated.83 Several courts have held that "something more" than Internet contacts is required for the exercise of jurisdiction, and that the court will consider Internet and non-Internet contacts in applying this test (although it is not the only "something more" that courts can consider).84 The mere existence of a telephone number with a web site is not enough to lead to the conclusion that the defendant has purposfully directed its activities toward the forum.85
Internet Advertisement Plus Traditional Magazine Avertisement: DRAFT-WORK IN PROGRESS
One case has held that an Internet site with advertisements plus traditional magazine advertisements justifies the exercise of jurisdiction. That case is Heroes, Inc. v. Heroes Foundation.86 In the Heroes case, which was a trademark infringement case, the defendant operated a web site, but also ran a a magazine advertisement that was in a forum newspaper and intended to solicit forum residents. The court held that the combination of the continuing web site advertisements, the targeted newspaper advertisement, and the responses in the form of donations from forum residents was sufficient to meet the minimum contacts test for the exercise of long arm jurisdiction. That combination of factors led the court to conclude that defendant had purposefully availed itself of the benefits of forum law, and should have reasonably anticipated being haled into the forum to defend.87
Discussion And Analysis Of Passive Web Site Cases
Several common features stand out in the preceding cases and hypothetical situations. First, with advertisements posted to his own or a third party passive web site, the seller cannot know who will hit the site. Second, she cannot know initially without more from where a visitor is accessing the site. Third, --and related to these first two features--it cannot plausibly be asserted that such a passive web site is directed a particular jurisdiction, for exactly the opposite is true: such a site is directed to the online world at large. The strongest analogy to a passive web site thus appears to be national or international magazine advertisements. Much the same is true with this print medium: when an advertisement goes into it, all the advertiser knows is that it will reach a national or international audience. The advertiser does not know about the particualar jurisdictions that the advertisement will reach. Precedents have clearly established that such national advertising does not establish any particular target and does not constitute minimum contacts undr the International Shoe test.
Some International Shoe History Overlooked by the Courts in the Internet cases
In adopting the International Shoe tests, the Supreme Court recognized certain needs and certain changes ways of doing business and in the relative situations of buyers and sellers. The Supreme Court recognized that in the world of modern technology, the old physical presence test was inadequate, so the Court modified it. However, with the new minimum contacts test , it soon became apparent, beginning with the Hansen case, that the Supreme Court refused to hold that a plaintiff could simply sue anywhere a defendant product or a plaintiff was located. Instead, the Supreme Court balanced plaintiff need for a forum against fairness to defendants. This balancing required examination of the actual contacts of the defendant with the forum. Those contacts-even where there were actual contacts-were required to justify the conclusion that defendant had purposefully availed herself of the benefits of the forum legal system or legal protection and economy. And such purposeful availment occurred only when the defendant activity was sufficient to put the defendant on notice that she might be haled into court in the forum.
In the World Wide Volkswagen, Burger King and Asahi cases, the Supreme Court explained that one reason for these notice requirments is the seller need for to operate a business in an orderly and predictable fashion.88 Sellers have to be able to calculate their risks and to do so based upon the location, quality and quantity of their activities relative to various jurisdictions. If a seller can be haled into court in any forum where a plaintiff is located regardless of defendant activity, then all predictability is lost for seller. In addition, on more traditional grounds of fairness, if seller could be haled into every forum where a plaintiff is located regardless of seller activity, seller has no notice of the risk of litigation in many forums; such lack of notice has been thought to be unfair.
On the other hand, in the sales situation most times the buyer need for a forum will be satisfied. Frequently, when a buyer brings a cause of action on a sales theory, the allegation is that there was an agreement amounting to a contract, or that the defendant breached a contract , or that the goods or services delivered under the contract were defective and/or a warranty was breached. But such situations do not involve a passive web site. If they have occurred, then it is likely that there have been additional non-Internet contacts or that there have been much more elaborate interactive Internet contacts between seller & buyer. Those situations are the subject of the sections which follow.
The Problem of the Injured Plaintiff and the Stream of Commerce
The discussion above arguably leads to the conclusion that there is no apparent gross unfairness between buyers & sellers under the United States law on long arm jurisdiction. However, there is at least one situation involving sales in which this conclusion does not hold true. In all of the discussion above, the examples and discussion has been premised upon a buyer & seller who deal directly with each other (albeit through the Internet). There is another situation that arises with some frequency about which it is not so clear that present law operates fairly or even coherently. That is the situation in which the defendant sells to a manufacturer who incorporates the defendant part into a product which injures or in which the defendant simply sells to distributors, who then market nationally or internationally. Without more, it is not at all clear that under the International Shoe tests a plaintiff can bring an action against the remote seller, because--in the language of the later International Shoe cases--the seller cannot be held to have purposfully availed herself of the benefits of the forum law or economy, and that the defendant does not have notice based on defendant activities that the defendant might be haled into the forum. This was the situation, for example, in the Asahi case. There are also lower court cases that reach the same conclusion.89
Web Sites That Are Interactive Or Web Sites With Additional, Non- Internet Traditional Acts
Consider the following Hypothetical 3:
Our same seller, Sellwell (S) is operating his business and generally selling the same merchandise from his location in Illinois as in hypotheticals 1, 1(a) and 2.
However, S has seen the possibilities of commerce on the Internet, so he has changed his web site as follows:
Hypothetical 3(a): S's web site has an information page which a customer can fill out, and S will subsequently send information on the products in which the customer indicates interest by e mail. S answers all requests wherever they originate. B is from California. B fills out two information requests about the Electromow and the ElectroPerk which S distributes nationally. S replies by e-mail that describes in detail all of the attributes of both products. B purchases an Electromow from a department store in California, which had purchased the Electromows from S. The Electromow is defective and also runs wild and destroys B's yard and front porch. B brings an action for misrepresentation and breach of warranty against S in California. The California long arm statute permits exercise of long arm jurisdiction to the "full extent permitted by federal due process." Can California exercise long arm jurisdiction over S under the International Shoe standard?
Hypothetical 3(a), Variation 1. Assume the facts are identical in all respects, except that S also tells B the names and addresses of local distibutors in California. B purchases from one.
Hypothetical 3(b): Same facts as 3(a) except now S has added e-mail, by which potential purchasers can ask questions about the products, and an order form. S then ships the goods cash on delivery to the customer. B, a California resident, orders an Electromow after an exchange of e-mails with S. The Electromow is defective and does the same damage as in Hypothetical 3(a). B brings the same California action against S in the California courts. Can California exercise long arm jurisdiction over S under the International Shoe standard?
Hypothetical 3(c): Same facts as in 3(b) except now S has added a section to his web site which permits customers to order and pay by credit card for S's products after fillling out the order form. S then ships the goods to the purchaser. B places and order for an Electromow and pays for it using his credit card at S's web site. Same results and same California lawsuit as in hypotheticals 3(a) and 3(b). Can California exercise long arm jurisdiction consistent with International Shoe standards?
Several United States cases discussed interactive web sites and the exercise of long arm jurisdiction in 1997. Three cases were decided without reference to each other, and engage in a general discussion and analysis of the area.90 One case, also decided in 1997, gave a focussed and detailed review and analysis of the different degrees of interactivity. That case, Zippo Manufacturing v. Zippo Dot Com91 has become the leading precedent on the exercise of jurisdiction on the basis of Internet contacts.
In one case92, a Georgia Internet provider was claimed to have infringed on a New York plaintiff's trademark. The contacts with New York were that defendant operated a web site that contained a hyperlink to a sales page. The sales page contained the service agreement or contract which the defendant stated would be mailed to the customer. Defendant entered contracts with six New York subscribers for which it received $150 total per month. Defendant total subscribers were 7500 and its total monthly revenue was $195,000. The New York income was .08% of defendant income.
The combination of Internet and non-Internet contacts established purposeful availment. In addition to the Internet advertisements, factors that influence the court were that software was mailed into New York, contracts entered there, and money was paid by six subscribers from New York for the services rendered by defendant. Moreover, the court stressed that the defendant activity was commercial and the defendant advertised and delivered the exact services described in New York
Although this case has been described as an Internet contacts case, it is not clear that the Internet contacts control the outcome. It is submitted that this case is a case in which the advertisements involved happened to be via Internet and there was a hyperlink to a sales page. But the case also involved substantial non-Internet activity, and the decision does not make clear the extent of Internet interactivity involved in the case. Therefore, this case is more properly described as a web site plus non-traditional contacts case. However the decision does illustrate how courts will consider Internet and non-Internet contacts together to answer the question of whether there has been purposeful availment.
In Hasbro v. Clue93 the court also heavily weighed connected Internet and non-Internet contacts. In that case defendant operated a computer consulting firm, headquartered in Colorado, which maintained an advertising web site that customers could e-mail. The site used a trademarked name of plaintiff. In three years of existence, defendant had eight customers. One of those eight customers was from the forum, Massachusetts.
The court held that the defendant purposefully availed itself of Massachusetts law by operating an interactive web site and by serving one customer from the forum for one year (which constituted one third to one half of the defendant income for that year). The court analogized placing an advertisement on the Internet to placing it into the stream of commerce. However, the court correctly reasoned that the Asahi case requires something more than merely placing the advertisements into the stream of commerce: the defendant must indicate an intent or purpose to serve the forum. That test was met here by several factors. In assessing purposeful availment, the court reviewed the Internet precedents and noted that several cases had refused to hold that a mere advertisement could constituted sufficient contacts to satisfy due process because it does not show deliberate availment. In several of those those cases the court noted that if defendant takes action to avoid doing business in the forum after learning of the forum identity and contact, then the forum cannot exercise long arm jurisdiction consistent with International Shoe because the defendant can only have acted purposefully after notice of the forum contact.94 In the present case, he court held that the defendant purposefully availed itself of forum law because, after notice of the identity of the forum by contact from forum customers, the defendant nevertheless sent software and software agreements into New York.95 If this defendant did not want to defend in this forum, the court reasoned that it should have refused to send software and software contracts to the forum customers after learning of their location in New York.96
The third case, Gary Scott International v. Baroudi,97 was a trademark infringement action. Defendant operated a web site which advertised his product. Defendant sold 12 items to forum residents and stated at a trade show that he intended to sell large number of items to a major pharmacy chain that did business in the forum. The court held that the defendant assumed the risks of nationwide distribution by his advetising and purposefully availed himself of forum law by sending his product into the forum on twelve occasions and announcing at a trade show that he sought to do business with a major forum pharmacy chain.98 Thus, in this case, the court weighs related Internet and non-Internet factors together in determining purposeful availment. Sending goods into the forum-even a relatively small amount-in connection with the operation of an interactive or non-interactive web site may constitute a substantial factor that indicates defendant purposeful availment.
These three cases were instructive. They explore and explain the significance of web site interactivity. They also began to develop an approach to the problem of mixed Internet and non- Internet contacts, and the relation between them. However, although each decision reviewed the Internet precedents available, each one was an ad hoc response to a specific situation. None of the cases offered anything but a specific response, without much explanation, to a specific set of facts. Moreover, the cases discussed interactivity, but they did not actually turn on interactivity. Instead, this group of cases involved web sites with interactive potential, primarily unused, and other non-Internet contacts. However, the next case, Zippo Manufacturing v. Zippo Dot Com,99 involved actual interactivity and articulated a more comprehensive approach.
The Zippo Manufacturing V. Zippo Dot Com Case
In the Zippo case a Pennsylvania manufacturer of well-known cigarette lighters brought a trademark infringement action against a California Internet news service company that used the domain name of Zippo.com. The defendant's web site displayed an advertisement and an application form which customers could fill out to subscribe to various levels of defendant's news service. At the web site a customer could have her application processed, submit her credit card number, have her credit approved, and have a password assigned so that she could receive defendant's news service. Defendant electronically entered into subscription agreements with 3000 forum residents. In addition, defendant entered contracts with seven Internet providers to furnish its service to subscribers in Pennsylvania. The court held that defendant had purposefully availed itselfself of the benefits of the Pennsylvania law and economy so that the forum could exercise jurisdiction consistent with the International Shoe criteria.
Zippo is the most important, or one of the most important, cases on the subject of jurisdiction involving Internet contacts. As will be seen, the court surveyed the existing precedents, the nature of the Internet, and the nature of the International Shoe approach in order to formulate a comprehensive approach to cyberspace jurisdiction. The court also manifested a familiarity with and some understanding of the Internet and how it works, unlike several of the earlier opinions. As will also be seen, the Zippo approach has been adopted in many subsequent Internet jurisdiction cases.
The Zippo opinion articulated a new, comprehensive test for cyberspace long arm jurisdiction cases. Generally, in a case involving jurisdiction predicated on Internet contacts, the Zippo case explained that the International Shoe principles require application according to a "sliding scale," which measures the nature and quality of the commercial activity of the defendant on the Internet.100 For purposes of analysis, this sliding scale can be divided into three levels: the passive web site, the intermediate web site and the interactive web site.
The first level or category is the passive web site. The passive web site merely distributes information and/or advertising. A user may visit the site and read the information, but there is no other activity. The Zippo court opined that the exercise of long arm jurisdiction is inconsistent with due process for a web site with only these characteristics.101
In contrast to the passive web site, the intermediate category web site has some degree of interactivity. With this second category, there is some exchange of information between a user and the web site operator. Depending on the level of interactivity and the commercial nature of the exchange that occurs between the user and the web site, with this intermediate category the exercise of jurisdiction may be consistent with the International Shoe criteria.102 Each case involving the intermediate category requires an individual factual inquiry and an ad hoc evaluation. The court applies a totality of circumstances test in connection with this intermediate category: the court examines and weighs Internet and other non-Internet contacts together in conducting its analysis. The Zippo opinion also draws a major distinction between the seller of goods or services and a consumer or user: there are serious problems with attempting to apply the International Shoe tests to a consumer as distinguished from a seller.103
The third Zippo category involves the defendant who conducts business over the Internet. In these cases the defendant enters contracts over the Internet and/or conducts knowing and repeated transmission of computer files over the Internet.104 In this situation the exercise of jurisdiction is consistent with the principles of the International Shoe line of cases on personal jurisdiction.
Applying this test in Zippo, the court found that the case clearly involved a category three, doing business or fully interactive web site, and therefore the forum, Pennsylvania, could exercise long arm jurisdiction consistent with due process principles. First, the defendant entered contracts interactively with three thousand Pennsylvania residents. Second, the defendant issued passwords to those three thousand subscribers, thus beginning performance of the contracts. Third, the defendant entered into contracts with seven Internet providers to serve customers in the forum.
These contacts satisfied the sliding scale test articulated in the opinion and, because that test is predicated upon the principles of International Shoe, also satisfied the criteria of that line of cases. The court explained that these electronic activities showed that the defendant targeted or directed its activities toward the forum. Therefore, the defendant had purposefully availed itself of the benefits of the forum law and economy and should have, as a reasonable person, anticipated being haled into the forum to defend. These contacts were not fortuitous as they were in World Wide Volkswagen, because in Zippo defendant "repeatedly and consciously" made the choice to process forum resident applications and assign passwords to customers from the forum.105 Thus, the defendant "freely" chose to do business with Pennsylvania residents after notice of their identity and location.106 This was a conscious, deliberate defendant choice to do business with residents of the forum.
The court also rejected the defendant argument that the contacts were too "insignificant" to justify the exercise of jurisdiction.107 The court correctly noted that, under the minimum contacts test, there exists abundant authority for the proposition that even a single contact can be sufficient to support the exercise of jurisdiction. The test has always been the "nature and quality," not the quantity, of the contacts.108 Finally, the court explained that the reasonableness prong of the International Shoe test had also been easily met.109
The Zippo opinion is comprehensive, thorough and persuasive. In it the court displays substantial understanding, or at least willingness to learn about, operations on the Internet; comprehension of the idea that the principles of International Shoe control this new technology; and a willingness to reason analogically to apply the International Shoe criteria to the problem of cyberspace jurisdiction. The court's review of precedents is sweeping and thorough, and its logic is compelling. The Zippo court fully understood and explained difficult predents, so that they could be understood in terms of the International Shoe criteria. While there are some who would question the approach on the theories that it does not go far enough or that it goes too far, nevertheless, it is an attempt at stating a more comprehensive and coherent approach Internet jurisdiction cases. The result was that the Zippo opinion is probably the most persuasive and influential opinion that has been published on the subject of cyberspace jurisdiction. So many subsequent decisions have drawn upon and applied the Zippo analysis that in the few years since it appeared it has become the leading authority on cyberspace jurisdiction.
One service that Zippo performed was to explain the significance and theory of decision of the earlier case of Compuserve v. Patterson,110 which was a decision that caused some confusion.111 In that case, defendant was a subscriber for plaintiff's Internet service and also entered an agreement for the distribution of shareware over plaintiff's network. Plaintiff entered an Internet shareware distribution contract with defendant which created an independent contractor relationship between the parties. That agreement also incorporated by reference the plaintiff's Service Agreement and Rule of Operation, both of which were published on plaintiff's web site. These incorporated agreements recited that the contract performance occurred in the forum and that the parties chose forum law to govern any dispute. During the course of this agreement, twelve subscribers from the forum state, Ohio, downloaded defendant software. Plaintiff began to use a name for some of its software which Patterson claimed infringed on his trademark. Compuserve brought a declaratory judgement action in forum to settle the claim in Ohio. Patterson who was a resident of Texas who had never been present in Ohio objected to the exercise of long arm jurisdiction by that forum.
The court held that Ohio could exercise long arm jurisdiction consistent with International Shoe principles. The test is three pronged for the exercise of long arm jurisdiction. Defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. The cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum to make the exercise of jurisdiction over the defendant reasonable.
This test was met. First, purposeful availment existed because defendant acted deliberately to create the connection with the forum. Two plaintiff documents gave notice that Ohio was the place of performance and that Ohio law would govern. That was sufficient for a reasonable person to understand that she might be haled into an Ohio forum. Also, after that notice, defendant engaged in repeated commercial transactions with plaintiff. Defendant was not a mere consumer of the Internet service provided by plaintiff; rather, he was a third party provider of software who used the plaintiff service to distribute his wares. The Defendant deliberately established a relationship with plaintiff to electonically advertise and market with notice of forum connection and there were transactions in the forum. Second, the contacts were sufficiently substantial to support the exercise of specific jurisdiction. It is the quality, not quantity, of contacts that is significant in a minimum contacts case. The court reasoned that the independent contractor arrangement was analogous to a license to distribute goods in forum state and contemplated ongoing marketing in forum state.
The Zippo court drew upon the Compuserve v. Patterson decision as an illustration of the third category in its sliding scale: a defendant doing business involving an interactive web site. In the Patterson case the Zippo court explained that this was a category three case because of two factors. First, the high degree of interactivity involving the web site transactions between plaintiff and defendant. Defendant, after knowledge of the location and emphasis on forum, "deliberately and repeatedly" transmitted files to Ohio.112 Second, the Zippo court reasoned that the defendant had "knowingly" entered into a contract with an Ohio resident.113 In thus analyzing the Compuserve decision, the Zippo decision began to pull together the sometimes confused analysis and precedents involving cyberspace jurisdiction.
Cases Adopting The Zippo Approach That Hold Jurisdiction Proper
As mentioned above, Zippo also has become the leading authority on cyberspace jurisdiction. Later decisions on that subject have been dominated by the Zippo approach. One leading example is Vitullo v. Velocity Powerboats.114 In the Vitullo case, the defendant was a Florida manufacturer of powerboats. Defendant regularly sold his goods to an intermediary dealer in Michigan. That dealer sold a boat to the plaintiffs in Illinois. One plaintiff was killed and another injured when the boat broke apart. Plaintiffs brought a product liability claim. The defendant maitained an Internet site which had e-mail capability, a customer information form, and the ability to notify customers of boat shows that included defendant products being held in the plaintiff's locale. Defendant also engaged in national advertising in magazines, and occasionally bought parts in the forum.
The Vitullo court adopted the Zippo test and held that this case involved a middle category interactive web site that met the International Shoe requirements for the exercise of long arm jurisdiction by the forum. The court examined all of the actual contacts with the forum and concluded that, taken together, those contacts established that the defendant targeted the forum state.
The court's analysis of the defendant activity relied upon the following factors. First, this was a middle category case because, although transactions could not be completed through contact with defendant's web site, it did enable e-mail exchanges. Furthermore, the web site had an explicit advertisement encouraging customers in the forum to attend a Chicago boat show; this was a major step in targeting the forum. Also, defendant sold to a dealer who defendant knew sold in the forum, and this constituted placing the goods into the stream of commerce. The Vitullo court acknowledged that merely placing the goods into the stream is not alone sufficient under Justice O'Connor's Asahi test, even if the defendant knows that the goods will arrive in the forum. According to Asahi, there must be something more than general foreseeability. The court in the Vitullo case held that the Internet advertisement which focussed locally on the forum and encouraged customers to go to the Chicago boat show constituted additional conduct by which, in conjunction with sales to a distributor who the defendant knew sold in Chicago, constituted sufficient "targeting' of the forum to satisfy the more stringent O'Connor stream of commerce test.115 Alternatively, the court reasoned that the solicitation of forum residents to attend a local boat show for a "hands on" viewing supplied the something extra to the stream of commerce foreseeability that would enable the forum to exercise long arm jurisdiction.116
Thompson v. Handa-Lopez117 was a case that involved sale of services in which the court expressly adopted the Zippo approach. In the Thompson case, a California corporation operated an Internet site for gambling. Customers would enter an e-contract with defendant, purchase game tokens with a credit card, then gamble in defendant's "Internet arcade." The e-contract which plaintiff Thompson entered included an arbitration clause that provided California law would apply, and which laid venue exclusively in California. Plaintiff, from Texas visited defendants web site, purchased game tokens, then gambled and won tokens worth $200,000 in winnings according to defendant's rules. The defendant refused to pay. Plaintiff brought an action in Texas for breach of contract, fraud and violation of theTexas deceptive trade practices statute. The court adopted the Zippo sliding scale and held that this was a class 3 case: the defendant continuously conducted business over Internet with Texas residents. Therefore, the Texas exercise of jurisdiction met the International Shoe minimum contacts test. The power prong of the International Shoe minimum contacts analysis was met because defendant "continuously interacted" with Texas residents by: exchanging information, entering contracts, and sending winnings to Texas for commercial gain.118 The court held that the reasonableness prong of the International Shoe test was met, interestingly, in spite of the California choice of law and choice of venue provisions. In this case the court reasoned that Texas had a strong interest in resolving a dispute such as this one to protect its citizens from fraud & deceptive practices; and further that "due regard must be given to plaintiff's choice to seek relief in Texas."119 These two factors outweigh any inconvenience to defendant from having to defend in the forum.
In Blumenthal v. Drudge and AOL120 the court held that the Communications Decency Act insulated AOL from liability as a third party provider of Internet services, but also held that the other party was liable under the category three Zippo test. In Blumenthal, White House employees sued plaintiff columnist and AOL an on-line provider for defamation in the District of Columbia. Defendant, a California resident, operated e magazine gossip column. Defendant's web site contained hyperlinks and had e-subscribers to whom he sent the e-magazine. Defendant entered a license agreement with AOL which provided that defendant's report would be available to all AOL subscribers.
After dismissing AOL on the basis of provisions of the Communications Decency Act, under Zippo sliding scale test the court held that this was a category 3-transacting business-case with Internet and non-internet contacts which together make the exercise of jurisdiction proper. The maintenance of a fully interactive web site which can be continuously accessed by forum residents plus other non-Internet contacts which targeted the forum were sufficient to meet the International Shoe test. In this case numerous subscriptions and a constant exchange of e-mail made this the "epitome" of interactivity.121 In this case the entire focus of the e-report involved was the forum: Washingon D.C inside the beltway gossip is all that defendant writes about. Further, the defendant made e solicitation of contributions from Washington D.C.
In GTE New Media Services, Inc. v. Ameritech Corp.122 the D.C. federal court reiterated its approval and adoption of the Zippo test. That case was an action under the Clayton Antitrust Act for alleged anti competitive injuries in monopolizing Internet Yellow Pages. The court held that forum exercise of jurisdiction over defendants was consistent with due process under the Zippo sliding scale The defendant web sites seek an exchange of information with subscribers to find telephone listings, which is interactive behavior under the Zippo test. Defendant also sold advertisements that generated a high volume of revenue for their Yellow Pages. The court reasoned that this was a highly commercial activity for due process purposes under the Zippo rationale, as was defendant chanelling of subscribers into the Washington D.C. Yellow Pages in order to generate a higher volume of advertising revenue. So the nature of the defendant acts involved economic benefit purposely aimed at the forum. Thus, there was Zippo category 2, fairly extensive interactivity, and that interactivity was focused upon the forum for commercial gain. To the court these factors coalesced to create a clear case of minimum contacts over the Internet.
Another interesting Zippo case was Park Inns International v. Pacific Plaza Hotels.123 In that trademark infringement suit, defendant maintained a web site on which customers could make, amend and cancel hotel reservations, and there was evidence that a number of forum-resident customers had booked and stayed at the defendant's hotels as result of reservations made over defendant's web site. Following Zippo, the court reasoned that the web site was Zippo Class 3 interactive because business was transacted over the web site between the customers and operator of the site. The court added that interactive solicitation of business in the forum which results in business transactions constitutes purposeful availment.
Another recent case which adopted the Zippo approach was International Star v. Bowman Haight.124 In this trademark infringement action defendant conducted business through a web site at which customers could purchase service and pay for it. The defendant also used the telephone to conduct business. Evidence disclosed twenty-two hits from forum residents. The court held that the exercise of jurisdiction was proper because business was actually transacted over the Internet . Here, the defendant web site invited inquiries by e-mail from potential customers and actually entered into contracts and sales of its service with twenty-two forum residents over the Internet. This was clearly a Zippo category three case that permitted the exercise of jurisdiction.
Another recent case which relied upon Zippo, Resuscitation Technologies v. Continental Health,125 involved interactivity and the existence of a contract. In the Resuscitation case a professional investor defendant from Michigan found an interactive web site on which the plaintiff Indiana corporation stated that it was seeking startup capital. Defendant sent an e-mail to plaintiff, after which a long series of about eighty e-mails, faxes and conference calls were exchanged. The parties negotiated to form a joint venture or partnership to raise capital for the plaintiff , and several confidentiality agreements were executed. A draft of a letter of intent provided many details of the transaction and provided for an initial public offering of stock. There were delays, and plaintiff brought this action for a declaratory judgement that there was no contract between the parties, for breach of the confidentiality agreement, and for intentional interference with business relationship in Indiana.
Following Zippo, the court explained that the test for the exercise of jurisdiction in a cyberspace case is the level of interactivity and the commercial nature of the web site. The court further explained that in applying this Zippo test "The quality of those electronic contacts is measured with reference to the intended object of that activity."126 This gloss on the Zippo test is particularly important in contract cases: it makes clear that the content of the Internet communications important is a factor to be considered.
Applying these principles to the case before it, the court reviewed the e-mail communications between the parties and the object of those communications. From the solicitation to the initial contact and continuing through all of the later contacts between the parties, the court concluded that the object of the communications was the combining of financial resources of the parties and the formation of a "continuing and long-term relationship" that would have a substantial impact in Indiana.127 The defendant objective was to make the plaintiff, an Indiana corporation, an operating subsidiary of a new non-Indiana corporation. This was contracting and transacting business over the Internet in Indiana that justified the exercise of Indiana jurisdiction.
Cases Adopting Zippo Analysis Holding Jurisdiction Not Proper-Specific Jurisdiction
Although many cases have employed the Zippo analysis to clarify the situations in which a forum can exercise jurisdiction consistent with the International Shoe due process criteria, many cases have also used Zippo to identify situations where jurisdiction should not be exercised. It may well be that the Zippo categories have helped courts who are relatively unfamiliar with the Internet to more fully understand the various characteristics of different types of Internet activity and their implications for the exercise of jurisdiction.
One leading case is Cybersell v. Cybersell.128 Cybersell AZ was an Arizona web services marketing firm that owned a registered trademark, Cybersell. Cybersell FL was a small Florida business providing business consulting services for web marketing. Cybersell FL used a web page that employed the mark Cybersell with a hyperlink to allow the viewer to e-mail messages back to the company. The court identified the general International Shoe test as: 1. Defendant purposefully availing herself of the benefits of forum law; 2. cause of action arising out of or resulting from the defendant's forum-related activities; and 3. the exercise of jurisdiction is reasonable. Drawing on Zippo, the court articulated the International Shoe test in the Internet situation as principally dependent upon the web site level of interactivity and observed that the precedents analyzed in Zippo used the level of interactivity and commercial nature of the exchange of information that occurs on the Web site as the principal factors to decide if sufficient contacts exist to warrant the exercise of jurisdiction. Applying this test to the facts of this case, the court held that the defendant had not not purposefully availed itself of forum benefits, so jurisdiction could not be exercised. The court explained that mere advertisement on a web site is not enough; "something more" is required for the purposeful availment test to be met. In the present case there was no defendant commercial activity in the forum: a passive web site posting alone does not create deliberate activity in a forum. Further, there had been no actual contacts with forum: no forum resident had signed up for the defendant web services; no e-mail messages or other Internet communications had been exchanged between the defendants and any forum residents; and there had been no contracts, sales , phone calls or income from forum or with residents of the forum . Finally, the court also reasoned that the defendant didn't target the forum by directing activity to forum or by encouraging forum residents to access the web site; and there were no hits from the forum.
Millennium Enterprises v. Millennium Music is a major case that employs the Zippo analysis.129 The case is important because in it the court reviews all Internet cyberspace jurisdiction precedents carefully and places Zippo in the context of other approaches in order to explain why Zippo is the approach most consistent with International Shoe and the nature of cyberspace. Millenium was a copyright infringement case. Defendant maintained an allegedly infringing web site which was interactive: customers could purchase CD's, request franchise information and join a discount CD club at the site. The only direct contact with the forum was a single (probably feigned) purchase of a CD by a forum resident from defendant over Internet at the request of the plaintiff's lawyer. The court held that it would follow the Zippo precedent, because that case correctly applied International Shoe principles to Internet contacts. Applied here, the Zippo approach does not permit the exercise of jurisdiction because there had been no actual interaction between residents of the forum and the web site. The court made several important additions or clarifications of the Zippo test in its opinion. For example, while it is well-recognized that under the Zippo test a passive web site not sufficient for forum exercise of jurisdiction, Zippo recognized that earlier precedents had recognized that a passive web site could justifiy the exercise of forum jurisdiction if it were joined with other non-Internet defendant contacts. On review, however, the Millenium court concluded that this was a middle Zippo category case, for it was not clear that the defendant was doing business over the Internet. Instead, the court identified this case as one involving an interactive web site plus non-Internet contacts. Drawing on Zippo, the Millennium court held that jurisdiction could not be exercised. In the process of reaching this holding, the court explained that the Zippo test needs refinement or further development, which court then performed.130 The court observed that the level of potential interactivity of defendant's web site was not insubstantial, and the potential exchange of information between defendant web site and customers would be commercial in nature.131 The existence of these two factors are the major elements of the Zippo test for satisfaction of International Shoe criteria. The "refinement" that the Zippo test needs is inclusion of actual deliberate or purposeful defendant activity within the forum state in the form of transactions between the defendant and residents of the forum or conduct of the defendant purposefully directed at residents of the forum state. The Ninth Circuit requires "something more" than mere advertisement on Internet and these deliberate transactions within forum are what the circuit meant when it used the term. In the present case, there were no actual contacts between defendant and any forum resident other than the feigned transaction of plaintiff here.
Another major case which continued the development begun in Millenium was Origin Instruments v. Adaptive Computer Systems132. In that trademark infringement action defendant maintained a web site on which users could obtain product information, use a hyperlink to download a product purchase program, and communicate via e-mail . However, there was no evidence that there had been any hits from the forum, or that any forum user had ever done any interactive act at defendant's web site. The court held that, although Defendant's web site is interactive and falls into the Zippo middle category, jurisdiction cannot be exercised because the level of interactivity is moderate and plaintiff had not produced any evidence of forum hits or actual interactivity. The court explained that, in applying the Zippo approach, with a middle category interactive web site, a court must analyze the level of interactivity and actual actions of defendant and forum users. The mere possibility that a defendant may be able to do business with forum residents, standing alone, cannot form the basis for the exercise of forum jurisdiction. Possibility does not establish that a defendant purposefully availed itself of the benefits of the forum state and its laws. For due process requirements to be satisfied, "something more" (that is not Internet related) must have occurred which, when combined with the web site, shows purposeful availment. That "something more" is not present in this case: here there was no evidence of any actual defendant interaction with anyone from the forum and the evidence shows no sales to anyone from the forum.
Another major case that follows the Zippo approach is Scherr v. Abrahams.133 This case is puzzling because it purports to follow the Zippo approach, but applies it to reach a conclusion which on the facts of the case is questionable. In the Scherr case, the plaintiff was a magazine publisher. Defendant was a former employee, who, after leaving plaintiff's employ, started a magazine that allegedly infringed plaintiff's trademark, and also committed fraud and slander. Defendant maintained a web site on which subscribers could receive an electronic copy of defendant's magazine by transmitting their Internet address. The court held that the forum could not exercise jurisdiction because the level of interactivity was low and there was no targeting of the forum. This was a case in which users can access the web site, then transmit their e-mail addresses and receive an e-mail copy of defendant's publication. Hence, it is interactive under the Zippo test. However, in examining the nature of the interactivity and actual contacts, the court's application of the Zippo test is not highly persuasive. In denying the exercise of jurisdiction, the court relied on the fact that no money was exchanged between defendant and users and the only commercial information involved were advertisements. The court was also influenced by the absence of any information on the web site specifically targeted at forum consumers.
This case is problematic, at least in terms of application of the Zippo test. In fact, Scherr appears to contradict the Zippo approach, or to misapply it. There are at least two arguable contradictions of the Zippo approach in Scherr. First, the contacts (the e-magazine transmissions) involved here are commercial to the extent that they contain advertisements that produce revenue for defendant from users who see the ads, or at least that produce revenue for defendant from advertisers to the extent that there are hits on defendant web site. Second, there is substantial interactivity (in spite of the court characterization of the fact as "low" interactivity). Here, the defendant transmitted an e-magazine to customers who registered on a regular basis. The Zippo decision describes the doing business category, which permits the exercise of jurisdiction, as one involving contracts entered over the Internet and the repeated transmission of files over the Internet.134 Sherr involves the repeated transmission of computer files (the e-magazines) over the Internet; such transmission is the result of agreement or contract between defendant and customers; and, as has already been pointed out, there are commercial aspects to the e-magazine. This case thus includes both contracting and interactive exchanges over the Internet.
Another case, Transcraft v. Doonan Trailer,135 was a trademark infringement action by Illinois manufacturer against a Kansas manufacturer. The case adopted a Zippo approach, but made clear that the basis of Zippo remained the Asahi-World Wide Volkswagen purposeful availment rationale with category two-interactive web site cases. Defendant operated an Internet site which contained advertisements and in return to a customer e-mail request, would give the names of local dealers who carried defendant's line of trailers and their phone numbers. Plaintiff also alleged that the trailers came into Illinois. The court held that the exercise of long arm jurisdiction was not proper on the basis of the Zippo categories as they were modified by the Hasbro case. Generally, the court concluded that this was a Zippo passive category (advertising) or middle category (interactive, but not clearly transacting business over Internet) case. The Zippo approach is supplemented or modified by the Asahi stream of commerce test as it was explained in the Hasbo case: if the advertising intends to draw residents of forum or targets forum, then the exercise of jurisdiction may be proper. As applied here: where the customer can exchange information with web site, the test is the level of interactivity and the commercial nature of the web site. Using the Hasbro stream of commerce analogy to measure the defendant web site activity, the court concluded that there was no evidence that defendant had used the web site to encourage contact by Illinois residents. Instead, the advertisements were characterized as national ones, and there was no evidence of any Illinois contacts or hits.136
The final case applying Zippo and refusing the forum exercise of jurisdiction is Decker v. Circus Circus.137 In the Decker case, the plaintiff, a New Jersey resident, was injured at defendant's hotel in Las Vegas, Nevada. The defendant advertised nationally over cable television and in national magazines, sent promotional letters to former guests, and operated an Internet site over which customers could make reservations. The court interpreted Zippo as holding that Internet contacts will permit the exercise of jurisdiction consistent with International Shoe in two situations: 1. Where the defendant is doing business over the Internet; and 2. "where a user can exchange information with the host computer."138 In the second circumstance the level of interactivity and commercial nature of the exchange will determine whether jurisdiction may be exercised by the forum. In a puzzling explanation, the court explained that preliminarily the Zippo test was met, because the ability to make reservations placed the defendant in the "endless stream of commerce" which (the court explained) was all that was necessary under World Wide Volkswagen for the exercise of jurisdiction.139 However, the defendant web site contains a forum selection clause, and such clauses must be honored. Therefore, New Jersey cannot exercise jurisdiction on the basis of Internet contacts.
Discussion And Analysis Of Hypothetical Problem 3
United States courts would split on the facts of Hypothetical 3(a): some would hold that California could exercise jurisdiction; but others would hold that it could not.
Let us consider the analysis of courts that would approve of the exercise of jurisdiction. These courts might hold that California can exercise jurisdiction on the same basis as in the Inset and Maritz decisions. These courts would reason that S has put his advertisement into the stream of commerce. S is aware that an advertisement on the Internet it is accessible nationally, and he therefore assumes the risk of defending in all jurisdictions. As the courts in Inset and Maritz stated, the advertisement could be accessed by thousands of persons in the forum on a continuing basis. Thus, on the Inset and Maritz courts the nature of the Internet means access to numerous residents of the forum, and for them that was enough. Maritz followed the same approach, except that there were hits in that case.
There are powerful and persuasive arguments that the Inset and Maritz decisions are incorrect applications of the International Shoe criteria in cyberspace. One major problem with the Inset approach is that it does not take into account or examine purposeful availment or notice or indeed any contact with the forum except the potential number of persons who might access the web site of defendant. If this same rationale were applied to a national magazine advertisement, then an advertiser could could be sued in any jurisdiction that the magazine reached. By similar reasoning, if this approach were accurate, then the defendant in World Wide Volkswagen could have been brought into any jurisdiction that the plaintiff's auto entered. But that, of course, is not what World Wide Volkswagen held. The same analysis and observation could be made about Asahi: if the Supreme Court in Asahi had followed the Inset/Maritz analysis, then the Asian manufacturer could have been haled into any jurisdiction that the product reached. But that is not what Asahi held either. Both cases made it clear that there must be deliberate action by the defendant which focuses upon the forum. There must be actual defendant contacts sufficient to put defendant on notice that he is doing business or conducting activities or generating contacts with and in the forum, or else the defendant must target the forum . In other words, defendant must have sufficient notice of actual forum contact and activity or else of be targeting or focusing on the forum; these activities will give such notice that defendant has the opportunity to make a choice to do business in that jurisdiction or not. The courts did not make an analysis of this type in Inset and Maritz.
There is a second, more persuasive, approach for the California exercise of jurisdiction in hypothetical 3. That is a Zippo analysis. Under the Zippo approach, this is a category two case: there is some interactivity in the hypothetical, but it is not clear that the defendant is doing business over the Internet. In this intermediate category the Zippo approach calls for further examination of the quality and amount of interactivity and the commercial nature of the contacts. Here, if the test is bare notice, the defendant had notice of the California contact. Defendant received a request for information from a person whom defendant knew was from California and then sent that information to a forum resident. Plaintiff can argue that defendant purposefully availed itself of the California economy by giving product information to a California resident. Plaintiff can argue that defendant was thus creating a demand for his goods in California, which is a form of targeting or focussing on the forum. Thus, under this argument Defendant had notice of the California contacts and an opportunity not to do business there but chose nevertheless to do so. Therefore, California may exercise jurisdiction.
However, although this argument can plausibly (and certainly more persuasively than the precedent-ignoring approach of the Inset and Maritz courts) be maintained under Zippo, several courts following the Zippo approach under these circumstances have held that long arm jurisdiction cannot be exercised . For example, in the Millenium case140 defendant maintained a web site which was more interactive than this hypothetical: customers could obtain product information, and they could also join a discount CD club, which was a form of ongoing sales arrangement. There was also a single interactive CD purchase by a forum resident in Millenium. Nevertheless, the court held long arm jurisdiction could not be exercised consistent with International Shoe. These cases have suggested that there must be some minimum number of transactions between the web site operator and residents of the forum. A single sale in Millennium was not sufficient. The Origen case 141reached a similar holding. The facts of the Transcraft case142 are remarkably similar to this hypothetical, and that opinion also concluded that the forum could not exercise jurisdiction. There, after seeing the advertisements at defendant's web site, the customer could request by e-mail the names and addresses of local distributors of defendant's products. The court held that the forum could not exercise jurisdiction because the defendant was not targeting the forum. However, there is a major factual difference between Transcraft and hypothetical 3: in Transcraft there was no evidence of any actual interaction between defendant and forum. Such interaction is present in our hypothetical. That fact supports the argument that defendant has purposefully availed itself of forum benefits.
Hypothetical 3 (a), Variation 1 makes this change clear. When defendant actually gives dealer information to a resident interactively, there is a strong argument that not only does defendant have knowledge of the location of the user, but also that defendant is acting to create demand in the specific forum. Thus, this is not a kind of general stream of commerce argument or test like the courts used in Inset and Maritz, and which the Supreme Court rejected in World Wide Volkswagen and Asahi. Through the use of the Zippo analysis, a persuasive argument that is consistent with International Shoe has been made. These facts are quite similar to the facts of the Vitullo case143, in which, following a Zippo analysis, the court held that jurisdiction could be exercised. In the Blumenthal144 case the constant exchange of e-mail and other sales in the forum were held under Zippo to constitute adequate grounds for the forum exercise of long arm jurisdiction.
Some courts may not be willing to accept this argument. But they should, because Justice O'Connor's concern in Asahi about notice has been satisfied. This hypothetical and similar situations present recurrent cyberspace sales problems for plaintiffs in situations where a defendant does business through independent brokers or distributors, or where defendant sells a product incorporated into another product. At least in the independent broker/distributor situation, interactive response which gives defendant notice that she is dealing with a forum resident, especially coupled with local forum sales information, ought to be sufficient to satisfy the International Shoe standards.
Hypothetical 3 (b) is much easier to resolve. Applying a Zippo analysis, the crucial inquiry is the degree and quality of interactivity and the commercial nature of the web site. In this hypothetical we have at least a category 2 and arguably a category 3 Zippo case for the following reasons. First, the web site is substantially interactive. It contains e-mail capability. That capability was used for personalized communications with customers from the forum here. Second, the nature of the communications is much more than mere advertisement. There are actual exchanges of questions from the customer and responses about the product by the web site operator. Also, the customer actually places her order through the web site. Standing alone, these are persuasive indicators of defendant purposeful availment. Now, instead of working through brokers and distributors, the defendant is dealing directly with the public. A sequence of advertisement, followed by personalized response to encourage the sale with a known resident of the forum and solicitation that results in an e-order fully support a conclusion of targeting or focusing on the forum, of commercial activity, of notice to defendant, of substantially interactive web site activity and purposeful availment. Many courts correctly would conclude on these facts alone that the defendant can be forced to defend in California. If we add to that sequence defendant sending the goods into the forum in response to the Internet order, several additional strong reasons for permitting the California exercise of jurisdiction appear. Sending the goods to the forum is an additional contact with the forum. Zippo used a totality of circumstances test to measure the effect of mixed Internet and non-Internet defendant activity. Sending goods into the forum is a contact which clearly indicates notice to defendant of taking advantage of the benefits and law of the forum, but it is also in response to an Internet order for the exact goods sent. Thus, it is intertwined with the cause of action, and would also be considered by many courts applying Article Two of the Uniform Commercial Code to be either an acceptance of an offer made by the plaintiff or an offer to sell (made in the forum) by the defendant. Either way, the defendant is doing business in the forum.
And in fact on similar fact several of the Zippo line of cases have reached that result. The Park Inns Case145 held that a web site that permits making reservations is highly interactive under Zippo category two. That is less interactivity than in the present case. In the Resuscitation Technologies146 case the court held that the existence of interactivity and the execution of a contract was enough for the forum to exercise jurisdiction under Zippo. Resuscitation also made clear that if the subject of the e-mail is the goods sent or ordered, that is a telling contact under Zippo.147
Hypothetical 3 © makes the California exercise of jurisdiction inescapable. When the additional facts that the plaintiff paid for the order by credit card over the Internet through defendant's web site, and the defendant subsequently filled the order and sent it to the forum are taken into account, there is no doubt that the forum can exercise long arm jurisdiction over defendant. Those facts move the case into a Zippo category three: defendant is doing business over the Internet with notice of contact with the forum. At the time that credit card payment is taken or sooner, there is a contract between the plaintiff and defendant to deliver goods (or with a slight change in the facts, services) to the forum, with notice. Making a contract with a forum resident has traditionally been a ground for the exercise of jurisdiction; and here it has occurred over the Internet and, even in the absence of the Zippo guidance, should be adequate as premise for the exercise of long arm jurisdiction. Just in case there were any doubt about the matter Zippo clarifies it: making a contract over the Internet is doing business in category three and justifies forum jurisdiction. The Internet contacts alone justify the exercise of jurisdiction: defendant has negotiated and reached a contract for sale on the Internet through his web site. That is purposeful availment. Defendant also shipped the goods into the forum in performance of the sales contract. Sending goods into the forum is a non-Internet contact. The Zippo case also involved non-Internet contacts, and used a totality of circumstances test148 to measure the effect of the mixed contacts. The same situation exists here, and, when the totality of circumstances are examined, it is clear that California can exercise long arm jurisdiction consistent with International Shoe. Virtually all of the cases reviewed above which followed Zippo and reached a positive result contain facts which are similar to this hypothetical.
The Fully Interactive Web Site Or Interactive Web Site And Non Internet Contacts And General Jurisdiction149
As reviewed above,150 virtually no cases have held that Internet contacts can create general jurisdiction. The test for general jurisdiction , it will be recalled, requires continuous and systematic contacts151; those contacts must also be substantial152; the test for evaluating contacts in a general jurisdiction case is rigorous.153 Several cases have reasoned that it is virtually impossible to establish general jurisdiction solely through Internet contacts.154 However the earlier discussion involved hypotheticals and cases in which the web site was passive. Will the result change if the case involves a Zippo category two or three web site? The following hypothetical poses this problem.
Same facts as Hypothetical 3(c): S operates a fully interactive web site and is doing business in California. S engages in 300 sales of Electromows by Internet per year with customers in California and ships the Electromow directly to those California customers. X, a California resident, purchases an ElectroPerk at a California discount store, which goes out of business shortly after the sale. The ElectroPerk which X purchased destroys the electrical system in X's house and starts a fire. X brings an action for breach of warranty in California. S appears specially to contest the California exercise of jurisdiction
Many cases have refused to hold that general jurisdiction exists even in apparently fully interactive/doing business situations. For example, in Millennium Enterprises v. Millennium Music,155 which has been discussed above for purposes of specific jurisdiction, the court also considered a general jurisdiction argument. Even though the web site was interactive, the court held that was insufficient to establish general jurisdiction. The court explained that it was unable to find any cases in which the requirements for establishing general jurisdiction had been satisfied by Internet contacts.156 Another case explained that general jurisdiction cannot be established solely through Internet contacts because the subsequent "easy world-wide access" would "eviscerate the personal jurisdiction requirement as it currently exists."157 Yet another case held that an interactive web site over which a customer could fill out order forms and even purchase goods after a toll-free telephone call to set up an account and $80,000 worth of sales in the forum were not sufficient to justify exercise of general jurisdiction.158 The court explained that, "Notably, the threshold level of minimum contacts necessary to confer general jurisdiction is significantly higher than that required for specific jurisdiction."159
An Aberration: The Mieczkowski Case
Only one case has held that general jurisdiction can be established, at least in part, by Internet contacts. That case is Mieczkowski v. Masco Corp.160 which held that general jurisdiction could be exercised where the contacts were primarily over the Internet. In the Mieczkowki case, Plaintiffs son was killed by a bunk bed manufactured by defendant. The bed had been purchased by other private individuals in Washington D.C. for use in a residence in Virginia. These persons sold the bed to the Plaintiffs in North Carolina. On the first night that the son of Plaintiffs used the bed, he hung himself attempting to climb down from the top bunk. Plaintiffs brought an action in Texas against the defendant, which had its plant in North Carolina. The contacts on which the plaintiffs relied were: 5.7 million dollars worth of sales in Texas by defendant in the past 6 years; 250 transactions with Texas residents in 1997 which created $717,000.00 in sales; in the past 4 years Texas sales constituted 3.4% of defendant's total sales; the defendant maintained a web site accessible to all persons in Texas; the defendant bought .2% of its materials from a Texas supplier in El Paso; and the defendant sent a direct mailing to all persons who had purchased from it in the past twice each year. At the defendant's web site customers could: 1. Browse through a section which displayed pictures, construction and prices of furniture for sale; 2. Customers could fill out an order form; 3. Customers could check the status of their orders; 4. Customers could communicate via email through the web site with defendant representatives.
The court held that the contacts could not establish specific jurisdiction, but that a combination of non-Internet and internet contacts was sufficient to satisfy the constitutional test for the exercise of general long arm jurisdiction.
Specific jurisdiction could not be exercised because the World Wide Volkswagen test could not be satisfied. According to the court in the Mieczkowski case, the test for specific jurisdiction in Texas is the stream of commerce test as explained by Justice O'Conner in World Wide Volkswagen, and that test requires the plaintiffs to establish prima facie that the defendant foresaw that the bed would make its way into Texas while in the stream of commerce.161
General jurisdiction was constitutional because of the combination of non-Internet and internet contacts. In applying the test for general jurisdiction in a case with internet elements, the court purported to adopt and follow the approach of the Zippo case.162 Following Zippo, the Mieczkowski court found that the case before it fell into the second category of interactive web site, where long arm jurisdiction is sometimes proper. Accordingly, the court conducted a more detailed and careful examination of the contacts.163 The court opined that the web site activities of the defendant went far beyond traditional notions of advertising. The court focussed on the fact that the defendant "indiscriminately" responded to every inquiry about its products, and maintained a level of interactivity "greater" than in some other cases in which jurisdiction was held to exist.164 The court stated that it found the level of interactivity to be similar to the Maritz case165, and would also rely on that case. However, it is important to note that the court did not rest its holding on the internet contacts alone, a factor which the court itself explained.166 Rather, the court held that, under the authority of the Zippo and Maritz cases, the combination of traditional, physical contacts combined with the interactive web site was sufficient to establish general jurisdiction.167
The Mieczkowski case is puzzling, and can be questioned on several counts. First, what is the significance of the court's reliance on the Maritz case? Maritz was an early case which probably incorrectly applied International Shoe to an Internet case. It will be recalled that in Maritz the court simply held that a passive web site, because there had been 180 hits on it, supported the exercise of jurisdiction. The Mieczkowski court holds that the combination of Zippo and Maritz somehow operates to make an interactive web site in the absence of any evidence of actual activity on the web site sufficient to create general jurisdiction.
On the other hand, there is nothing inherent in the nature of the test for general jurisdiction which makes it impossible for general jurisdiction to be exercised on the basis of exclusive internet contacts. For example, if a vendor located in an adjacent state targeted a particular state with a highly interactive web site and pursuant to that site shipped in a very large percentage of its sales by number in the target state, and also received a large amount of its total sales from the target state, then it might be possible to find general jurisdiction and exercise jurisdiction over an unrelated cause of action (such as, for example, if the cause of action did not arise out of a contact with the web site). It would seem that a strong argument on these facts would exist to justify the exercise of general jurisdiction.
However, does that situation meet the International Shoe requirements for general jurisdiction? In spite of the strong argument, those requirements are quite difficult to satisfy. General jurisdiction requres contacts which approach presence, of which domicile is the best example. The contacts must be such that the defendant can be said to be present or to maintain such substantial, continuous and systematic contacts with the state that he is as a practical matter virtually present, so that it is not unfair to exercise jurisdiction over any cause of action.168 Given this definition, it would appear that, if a nonresident defendant is merely doing business in the state, there are significant problems of interpretation about what constitutes sufficiently systematic contacts to justify general jurisdiction.169 In the principal Supreme Court cases on general jurisdiction, the court's explanation of the terms "continuous" and "systematic" and its description of the type of activities which would justify the exercise of long arm jurisdiction over an unrelated cause of action were vague and led to speculation about the meaning of sufficient contacts in general jurisdiction analysis, but appeared to set a very high standard.170
Given these difficult hurdles for the exercise of general jurisdiction, it is not clear that the court correctly found general jurisdiction could be exercised in the Mieczkowski case. One way to test the validity of the court's finding of justification for general jurisdiction is to ask: what if Texas wanted to litigate a suit over a completely unrelated cause of action? That is, after all, the definition of the effect of a finding of general jurisdiction: that a state may exercise jurisdiction over any cause of action against the defendant, and that doing so will not come as a surprise, or will not be unfair in the sense of forcing the defendant to defend in the forum. So consider this: what if the suit in Mieczkowski had been over a contract formed between the Mieczkowskis and the defendant at a time when the Mieczkowskis lived in the District of Columbia, and formed by traditional correspondence between them and the defendant in North Carolina and which was to be performed in Virginia. Would it be constitutionally permissible for the Texas courts to exercise long arm jurisdiction over defendant? A strong argument can be made that it would not, because the contacts of the defendant with Texas are simply not sufficient to act as a virtual substitute for presence. That suggests that the court in the Mieczkowski case was using general jurisdiction to supply a convenient forum for its residents in a situation Texas had a strong interest in supplying a forum. Since the requirements for specific jurisdiction could not be satisfied, the court used the concept of general jurisdiction to provide a forum for its resident. When these problems with the decision are taken into account, it becomes clear that the Mieczkowski decision is probably a weak precedent.
About ILPF | To Join ILPF | Working Groups & Publications
- *11 OLD DOCTRINES ON A NEW FRONTIER: DEFAMATION
AND JURISDICTION IN CYBERSPACE R. Timothy Muth Copyright (c) 1995 by the
State Bar of Wisconsin; R. Timothy Muth
It [the Internet] all began in 1969 as an
experimental computer network project of the Advanced Research Projects
Agency ("ARPA"). This project, called ARPAnet, linked computers and
computer networks owned by the military, defense contractors, and university
laboratories conducting defense-related research. Designed as a
decentralized, self-maintaining series of redundant links, the network
could automatically re-route communications in the event of malfunction,
war, or catastrophe. The network evolved to include links with
universities, corporations, and global users. As faster, more efficient
networks developed, network traffic moved away from the ARPA-NET. The
series of links and networks that remain make up what we now know as the
Internet. Tammy S. Trout-McIntyrePERSONAL JURISDICTION AND
THE INTERNET: DOES THE SHOE FIT? 21 Hamline L. Rev. 223 (1997) note at
*224. The Internet will be hereafter referred to as the Net.
The World Wide Web is a hypertext-based
system for finding and accessing any resource the Internet offers. The
individual computers connected to the Internet contain all the information
available on the World Wide Web. When information is available on the Web,
it is said to be "published" on a Web site. Furthermore, once this
information is published on a Web site, it is available for access by other
Internet users worldwide. Surfing the World Wide Web is as easy as a
point-and-click with a mouse, allowing Web users to navigate the network in
an intuitive, logical manner.Id. At *226. The World Wide Web
will be hereafter referred to as the Web.
- Christopher W. Meyer, 1269 ,WORLD WIDE WEB
ADVERTISING: PERSONAL JURISDICTION AROUND THE WHOLE WIDE WORLD? 54 Wash. &
Lee L. Rev. 1269 (1997).at *1280.
The Internet allows anyone connected to
it to disseminate information, statements, gossip, and so on, to millions of
people with a few strokes on a computer keyboard. Thus millions of people
now have their own electronic printing presses -- capable of inexpensively
communicating with millions of others worldwide. 68-SEP Wis.
Law. 10) Wisconsin Lawyer September, 1995 Feature *11 OLD DOCTRINES ON A NEW
FRONTIER: DEFAMATION AND JURISDICTION IN CYBERSPACE R. Timothy Muth at *12.
- Walter A. Effross, THE LEGAL ARCHITECTURE OF VIRTUAL
STORES: WORLD WIDE WEB SITES AND THE UNIFORM COMMERCIAL CODE, 34 San Diego
L. Rev. 1263 (1997) at 1263
A major "selling point" of the World Wide
Web is its ability to offer a "virtual storefront" to anyone, from an
individual to a multinational corporation, with a product to market.
Commercially available software packages enable even those computer users
who are not versed in the intricacies of programming to create customized
Web sites quickly and at a relatively low cost. The swift development of
this technology and a cultural shift towards encouraging on-line
commercehave led to dramatic growth in the demographics and dollar amounts
of the on-line marketplace, which in turn offers a challenging new context
for the application of the Uniform Commercial Code's ("U.C.C.'s")
established and emerging concepts of the sale of "goods." Id
With the ability to reach millions of
Internet users simply by establishing a web site, tens of thousands of
companies are expected to take advantage of electronic commerce, redefining
and restructuring the distribution of goods and
services.Brian K. Epps, MARITZ, INC. V. CYBERGOLD, INC.:
THE EXPANSION OF PERSONAL JURISDICTION IN THE MODERN AGE OF INTERNET
ADVERTISING, 32 Ga. L. Rev. 237 (1997) note at *239.
- Effross, supra n.6 at *1271.
- 51 Ark. L. Rev. 429) Arkansas Law Review 1998 *429
PERSONAL JURISDICTION VIA E-MAIL: HAS PERSONAL JURISDICTION CHANGED IN THE
WAKE OF COMPUSERVE, INC. V. PATTERSON? [FN1] David D. Tyler at *441-442.
- Id. At * 442.
- Id. It should also be noted that the author points
out that the auto example does not go far enough. The problems of the legal
system with cyberspace are worse because it is a non physical medium which
can cross all political boundaries. This, of course, is another way of
stating the proposition that there will be many difficult problems of
jurisdiction involved with cyberspace cases.
- 68-SEP Wis. Law. 10) Wisconsin Lawyer September,
1995 Feature *11 OLD DOCTRINES ON A NEW FRONTIER: DEFAMATION AND
JURISDICTION IN CYBERSPACE R. Timothy Muth
- 520 PLI/Pat 975) Practising Law Institute
Patents, Copyrights, Trademarks, and Literary Property Course Handbook
Series PLI Order No. G0-0001 New York City June 8-9, 1998 San Francisco,
July 20-21, 1998 Second Annual Internet Law Institute *975 PERSONAL
JURISDICTION AND THE INTERNET Dale M. Cendali Rebecca L. Weinstein at
- 65 Fordham L. Rev. 2241) Fordham Law Review April,
1997 Note *2241 FROM THE INTERNET TO COURT: EXERCISING JURISDICTION OVER
WORLD WIDE WEB COMMUNICATIONS Gwenn M. Kalow
- 6 CommLaw Conspectus 101) ctus 1998 Comment *101
PERSONAL JURISDICTION AND CYBERSPACE: ESTABLISHING PRECEDENT IN A BORDERLESS
ERA Timothy B. Nagy Copyright (c) 1998 Catholic University of America;
Timothy B. Nagy
- "The structure of the Net is such that
there is often no real means of avoiding contact with a specific
jurisdiction, except to stay off the Internet completely." 529 PLI/Pat 189)
Practising Law Institute Patents, Copyrights, Trademarks, and Literary
Property Course Handbook Series PLI Order No. G0-0030 August, 1998 Advanced
Issues in Copyright Law *189 COPYRIGHT AND THE INTERNET PERSONAL
JURISDICTION AND SECONDARY LIABILITY James P. Donohue
- 65 Fordham L. Rev. 2241) Fordham Law Review April,
1997 Note *2241 FROM THE INTERNET TO COURT: EXERCISING JURISDICTION OVER
WORLD WIDE WEB COMMUNICATIONS Gwenn M. Kalow
- 15 J. Marshall J. Computer & Info. L. 819) John
Marshall Journal of Computer and Information Law Summer 1997 Comment *819
PERSONAL JURISDICTION IN CYBERSPACE: THE CONSTITUTIONAL BOUNDARY OF MINIMUM
CONTACTS LIMITED TO A WEB SITE David L. Stott at n.50; 71 St. John's
L. Rev. 403 1997 Note *403 WORLD-WIDE VOLKSWAGEN, MEET THE
WORLD WIDE WEB: AN EXAMINATION OF PERSONAL JURISDICTION APPLIED TO A NEW
WORLD Corey Ackerman At *423 (failure to understand nature of web
page led to misapplication of due process law in two cases examined).
Another writer stated:
From the above cases, it is clear that the
courts are not adequately examining e-mail. By equating e-mail to
traditional mail *450 and the telephone, the courts are
mislabeling and misapplying e-mail in the minimum contacts analysis for
- 51 Ark. L. Rev. 429 Arkansas Law Review 1998
*429 PERSONAL JURISDICTION VIA E-MAIL: HAS PERSONAL JURISDICTION
CHANGED IN THE WAKE OF COMPUSERVE, INC. V. PATTERSON? David D.
Tyler at *449.
- 54 Wash. & Lee L. Rev. 1269) Washington and Lee Law
Review Summer, 1997 Note *1269 WORLD WIDE WEB ADVERTISING: PERSONAL
JURISDICTION AROUND THE WHOLE WIDE WORLD? Christopher W. Meyer .
- 41-DEC B. B.J. 8) Boston Bar Journal
November-December, 1997 Legal Issues/ Computer Technology *8 PERSONAL
JURISDICTION IN CYBERSPACE: HOW MANY HITS ON A WEB SITE DOES IT TAKE TO
SATISFY THE DUE PROCESS CLAUSE? David Lee Evans [FNa1] Robyn J. Bartlett at
- 54 Wash. & Lee L. Rev. 1269) Washington and Lee Law
Review Summer, 1997 Note *1269 WORLD WIDE WEB ADVERTISING: PERSONAL
JURISDICTION AROUND THE WHOLE WIDE WORLD? Christopher W. Meyer at *1272.
- 6 Alb. L.J. Sci. & Tech. 339) Albany Law Journal
of Science and Technology 1996 Comment *339 JURISDICTION AND THE INTERNET:
FUNDAMENTAL FAIRNESS IN THE NETWORKED WORLD OF CYBERSPACE Richard S. Zembek
- 529 PLI/Pat 189) Practising Law Institute Patents,
Copyrights, Trademarks, and Literary Property Course Handbook Series PLI
Order No. G0-0030 August, 1998 Advanced Issues in Copyright Law *189
COPYRIGHT AND THE INTERNET PERSONAL JURISDICTION AND SECONDARY LIABILITY
James P. Donohue at *198
- 73 Ind. L.J. 297 Indiana Law Journal Winter 1997
Note *297 THE PRESENCE OF A WEB SITE AS A CONSTITUTIONALLY PERMISSIBLE BASIS
FOR PERSONAL JURISDICTION Christine E. Mayewski [FNa1] at *322 (unique
characteristics of web site prevent analogy to earlier technologies);
Maritz, Inc. v. CyberGold, Inc., 947 F. Supp. 1328, 1332 (E.D. Mo. 1996).
(Internet new and revolutionary technology which dissimilar to earlier
technology); 6 Alb. L.J. Sci. & Tech. 339 Albany Law Journal of Science and
Technology 1996 Comment *339 JURISDICTION AND THE INTERNET: FUNDAMENTAL
FAIRNESS IN THE NETWORKED WORLD OF CYBERSPACE Richard S. Zembek at *343
(traditional notions and analogies inadequate for use in defining cyberspace
- PLI/Pat 189) Practising Law Institute Patents,
Copyrights, Trademarks, and Literary Property Course Handbook Series PLI
Order No. G0-0030 August, 1998 Advanced Issues in Copyright Law *189
COPYRIGHT AND THE INTERNET PERSONAL JURISDICTION AND SECONDARY LIABILITY
James P. Donohue at *198.
- 73 Ind. L.J. 297 at *322.;51 Ark. L. Rev. 429 at
*441-442; 35 Hous. L. Rev. 453 at *497.
- Although there are several other traditional
methods, merely considering the commentators' rejection of the telephone
analogy demonstrates the difficulty with analogizing to traditional
communication mediums by courts unfamiliar with the new technology:
The unique characteristics of Web site communications resist
analogy to more familiar means several courts have considered and rejected
analogies to telephone, radio, television, and newspaper. The Hearst court's
comparison of a Web site to an advertisement in a nationally distributed
magazine is only partially satisfactory. The similarity between these two
mediums ends with the observation that both are available to a national,
even global, audience while the content of either is rarely, at least
initially, directed at any particular forum. Magazines are distributed only
periodically, and are typically disposed of quickly. Meanwhile, Web sites
are distributed once to all who use the Web, and are then available
continuously until removed by the Web site operator. Web users may, in
addition, "bookmark" a Web site so that they may return to it frequently
without having to remember its exact whereabouts. Further, magazine
advertisements are one-dimensional and require an additional step to be
taken to contact the advertiser. In contrast, Web sites are capable of
providing much more interesting content, including sound and video. Web
sites also allow an immediate response by enabling users to contact the
advertiser directly from the Web site via electronic mail. The likelihood
that an individual will see, remember, return to, and respond to an
advertisement in a magazine is therefore likely to be significantly lower
than with a Web site. These factors, combined with the immense diversity of
the global Web audience, greatly increase the odds that a Web site will
produce business for the Web advertiser. As evidence, many commercial
entities now view their Web sites as an essential part of doing business.
73 Ind. L.J. 297 at *322.
telephone may be the most useful analogy, it is not perfect. On a conceptual
level, some would contend that the telephone analogy is wholly inadequate
because the Internet does more than merely facilitate communication. [FN344]
The telephone lacks the broad variety of uses that the Internet possesses.
[FN345] In Maritz, the court found analogies to the mail and telephone "less
than satisfactory" because the Internet is more efficient and quicker in
reaching a national (if not global) audience. [FN346] Furthermore, although
the telephone is as pervasive as the Internet, its invasive characteristics
vary depending upon the Internet function to which it is compared.
35 Hous. L. Rev. 453 at *497.
- Unlike traditional telephone solicitation,
the commercial side of the Internet provides businesses with a unique
opportunity to reach customers in a passive manner. Similar to a fisherman
on the bank with his line in the water, a web site is established, a product
is offered, and the business waits for customers. 987 F.Supp. 481
(Cite as: 987 F.Supp. 481)
Daniel KEGAN, d/b/a Elan Associates, Defendant.
United States District Court, W.D. North Carolina, Shelby
Oct. 8, 1997. At *486; Because the internet is an entirely new
means of information exchange, analogies to cases involving the use of mail
and telephone are less than satisfactory in determining whether defendant
has "purposefully availed" itself to this forum. Unlike use of the mail,
the internet, with its electronic mail, is a tremendously more efficient,
quicker, and vast means of reaching a global audience. By simply setting
up, and posting information at, a web site in the form of an advertisement
or solicitation, one has done everything necessary to reach the global
internet audience. 947 F.Supp. 1328
40 U.S.P.Q.2d 1729
(Cite as: 947
MARITZ, INC., Plaintiff,
No. 4:96CV01340 ERW.
United States District Court, E.D.
Aug. 19, 1996. At *1332
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. 568 N.W.2d 715)
Minnesota by its Attorney General Hubert H. HUMPHREY, III, Respondent, v.
GRANITE GATE RESORTS, INC., d/b/a On Ramp Internet Computer Services;
et al., Appellants.
Court of Appeals of Minnesota.
Sept. 5, 1997. At *720
"One method of communication on the Internet
is via electronic mail, or 'e- mail,' comparable in principle to sending a
first-class letter." ACLU v. Reno, 929 F.Supp. at 834; see also, e.g.,
Shea v. Reno, 930 F.Supp. at 927.
ESQWIRE Internet web site thus is most analogous to an advertisement in a
national magazine. Like such an ad, Goldberger's Internet web site may be
viewed by people in all fifty states (and all over the world too for that
matter), but it is not targeted at the residents of New York or any other
particular state.1997 WL 97097 (S.D.N.Y.))
The HEARST CORPORATION, Plaintiff,
No. 96 Civ. 3620 (PKL)(AJP).
United States District
S.D. New York.
Feb. 26, 1997.
Cyberspace requires a system of rules
quite distinct from the laws that regulate physical, geographically-defined
territories. Cyberspace challenges the law's traditional reliance on
territorial borders; it is a "space" bounded by screens and passwords rather
than physical markers.48 Stan. L. Rev.
Stanford Law Review
Surveying Law and Borders
*1367 LAW AND
BORDERS--THE RISE OF LAW IN CYBERSPACE
David R. Johnson
David Post [FNaa]
Copyright (c) 1996 Board of Trustees of the
Leland Stanford Junior University;
David R. Johnson, David
1996 UCHILF 519
(Cite as: 1996 U. Chi.
Legal F. 519) at 520;
This traditional test for jurisdiction,
however, has lost some of its relevance in a world increasingly reliant on
electronic modes of communication. Courts facing these changing
circumstances must adapt and contemporize their former analytic approaches
to *717 accommodate modern society, much in the same way the International
Shoe court confronted the evolving commercial realities of postwar America.
31 Loy. L.A. L. Rev. 691)
Loyola of Los Angeles Law Review
Note and Comment
*691 CYBERSPACE AND PERSONAL
JURISDICTION: THE PROBLEM OF USING INTERNET CONTACTS TO ESTABLISH MINIMUM
Sam Puathasnanon at *717.
See also 15 Ariz. J. Int'l &
Comp. L. 635, 653 (Minimum contacts are obsolescent).
- 48 Stan. L. Rev. 1367 *1375. See also Leif
Swedlow, Note, Three Paradigms of Presence: A Solution for Personal
Jurisdiction on the Internet, 22 Okla. City U. L. Rev. 337, 337-39 (1997).
- Id. At *1401.
In order to achieve predictable results
in future jurisdictional disputes, a foundational approach requires that
courts understand that the "cyberspace realm" is merely a form of
communication, and similar jurisdictional issues have been addressed by
other forms of communication and interaction. 6 Alb. L.J. Sci.
& Tech. 339Albany Law Journal of Science and Technology 1996 Comment *339
JURISDICTION AND THE INTERNET: FUNDAMENTAL FAIRNESS IN THE NETWORKED WORLD
OF CYBERSPACE Richard S. Zembek at *354: 4 Roger Williams U. L. Rev.
293Roger Williams University Law Review Fall 1998 Notes and Comments *293
DOWNLOADING A DEFENDANT: IS CATEGORIZING INTERNET CONTACTS A DEPARTURE FROM
THE MINIMUM CONTACTS TEST? Christopher E. Friel at *305 (Court should treat
internet contacts just as they would communication over any other medium).
- 35 Hous. L. Rev. 453 Houston Law Review Summer 1998
Comment MINIMUM CONTACTS IN CYBERSPACE: A TAXONOMY OF THE CASE LAW Andrew E.
The fact that online users are "real"
people engaging in "real" transactions draws the obvious conclusion that
traditional legal doctrines for personal jurisdiction are applicable.
[FN121] Even those who argue that traditional legal paradigms should not
apply to cyberspace communities acknowledge that interactions in cyberspace
have effects in real world jurisdictions. 6 CommLaw Conspectus
101CommLaw Conspectus Winter 1998 Comment PERSONAL JURISDICTION AND
CYBERSPACE: ESTABLISHING PRECEDENT IN A BORDERLESS ERA Timothy B. Nagy at
- 6 Alb. L.J. Sci. & Tech. 339 Albany Law Journal of
Science and Technology 1996 Comment JURISDICTION AND THE INTERNET:
FUNDAMENTAL FAIRNESS IN THE NETWORKED WORLD OF CYBERSPACE Richard S. Zembek
- 8 Seton Hall Const. L.J. 763 Seton Hall
Constitutional Law Journal Summer 1998 Comment PERSONAL JURISDICTION AND THE
INTERNET: "SHOEHORNING" CYBERSPACE INTO INTERNATIONAL SHOE Michele N. Breen
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472
(1985) where the court summarized World Wide, Shaffer v. Heitner :
By requiring that individuals have "fair warning that a
particular activity may subject [them] to the jurisdiction of a foreign
sovereign," Shaffer v. Heitner, 433 U.S. 186, 218, 97 S.Ct. 2569, 2587, 53
L.Ed.2d 683 (1977) (STEVENS, J., concurring in judgment), the Due Process
Clause "gives a degree of predictability to the legal system that allows
potential defendants to structure their primary conduct with some minimum
assurance as to where that conduct will and will not render them liable to
suit," At *472.
Taken together, two of the Court's most
recent personal jurisdiction cases, Asahi v. Superior Court and Burnham v.
Superior Court, suggest that the Court will place a renewed emphasis on two
aspects of the evolving jurisdictional formula: the foreseeability of
litigation in the forum state, from the point of view of the defendant
challenging jurisdiction; and the importance of the intentional crossing of
territorial boundaries in order to enhance the predictability-and thus,
presumably, the fairness-of personal jurisdiction. 66 U. Cin.
L. Rev. 385)
University of Cincinnati Law Review Winter 1998
PREDICTING THE FUTURE: PERSONAL JURISDICTION FOR THE TWENTY-FIRST CENTURY
Katherine C. Sheehan [FNa1] at *394.
- Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414 (1984) at 415.
- Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).
- Weber v Jolly Hotels, 977 F.Supp. 327 (D. N.J.
1997); Santana Products, Inc. v. Bobrick Washroom Equipment 14 F. Supp2d.
710 (M.D. PA. 1998); Osteotech v. Gensci Regeneration Sciences, Inc. 6 F.
Supp.2d 349 (D. N.J. 1998); Ids Life Insurance Company v. Sunamerica, Inc.,
958 F.Supp. 1258 (N.D. Illinois, 1997); McDonough v. Fallon McElligott,
Inc., 40 U.S.P.Q.2d 1826, 1996 WL 753991 (S.D.Cal.1996); Millennium
Enterprises, Inc. v. Millennium Music, LP , 1999 WL 27060 (D. Or. 1999).
There is one case that has held that general jurisdiction may be established
by use of a web site. See Mieczkowski v. Masco, 997 F. Supp. 782 (E.D.
Texas 1998) described supra at . Mieczkowski involved however, a highly
interactive web site plus other non Internet contacts.
- Digital Equipment v. Altavista Technology, 960
F.Supp. 456 (D. Mass., 1997); Zippo v. Zippo Dot Com, 952 F.Supp. 1119 (W.D.
Pa, 1997); Edias Software v. Basis International, 947 F.Supp. 413 (D.C. Az.,
1996); Panavision v. Toeppen, 938 F.Supp. 616 (C.D. Cal., 1996).
- Digital Equipment v. Altavista Technology, 960
F.Supp. 456 (D. Mass., 1997) at *469 (emphasis added).
- Osteotech, supra n.47 at *353.
- Santana, supra n.1 at *714.
- Osteotech, supra n. 47at *353.
- Ids Life Insurance Company v. Sunamerica, Inc.,
supra n. 1 at *1268:
It cannot plausibly be argued that any
defendant who advertises nationally could expect to be haled into court in
any state, for a cause of action that does not relate to the advertisements.
Such general advertising is not the type of purposeful activity related to
the forum that would make the exercise of jurisdiction fair, just or
- Weber v. Jolly Hotels, supra n. 1 at *333-334,
citing Giangola v. Walt Disney World Co., 753 F.Supp. 148, 156 (D.N.J.1990).
- Weber v. Jolly Hotels, supra n.1. In the Weber
case, defendant was Italian hotel that advertised on the internet.
Plaintiff booked a room through a travel agent who was licensed by defendant
in New Jersey, and was injured while guest in defendant hotel in Italy.
Case held that New Jersey could not exercise general jurisdiction.
- Osteotech v. GenSci Regeneration Services, supra
- Bensusan v. King, 937 F.Supp. 295 (S.D. N.Y. 1996)
affd 126 F.3d 25 (2d Cir. 1997); Santana Products, Inc. v. Bobrick Washroom
Equipment 14 F. Supp2d. 710 (M.D. PA. 1998) ; d) Hearst v. Goldberger,
1997 WL 97097 (S.D.N.Y.); Cybersell v. Cybersell, 130 F.3d 414 (9th Cir.
- Bensusan at *301.
- Bensusan, 937 F.Supp. at 301 (citing the plurality
opinion in Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112, 107
S.Ct. 1026, 1032, 94 L.Ed.2d 92 (1992)).
- Bush v. Tidewater Marine, 1998 WL 560048, (E.D. Tex.
- Osteotech v. Gensci Regeneration Sciences, Inc. 6 F.
Supp.2d 349 (D. N.J at *354.
- 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d
- Dan L. Burk, Federalism in Cyberspace, 28 Conn. L.
Rev. 1095, (1996)at *1108; Compuserve v. Patterson, 89 F.3d 1257 (6th Cir,
1996) *1264; International Star Registry v. Bowman-Haight, 1999 WL 300285
(N.D.Ill.)(Fair warning required); Note, Darren McCarthy, Internet Contacts
and Forum Notice, 39 Wm. & Mary L. Rev. 557 (1998).
- Hearst v. Goldberger, 1997 WL 97097 (S.D.N.Y.)
- Hearst at *20 [Observe that each of these criteria
are grounded in the concept of the existence of, and/or adequacy of, notice
to the provider].
- 937 F.Supp. 161 (D.Connecticut,1996.
- 947 F.Supp. 1328 (E.D. MO.1996).
- Inset, 937 F.Supp. at *161.
- Inset, 937 F.Supp. at *165. [The reasoning is the
court's, not the author of this article].
- Id. The language is primarily the court's.
Although the exact meaning is not clear, it appears to be an argument that
by choosing a medium that is national in scope an advertiser on the internet
subjects herself to jurisdiction in every state.
- Id. at *165.
- supra n. 23.
- Maritz at *1332.
- Id. at *1333.
- The court stated:
transmitted is clearly intended as a promotion of CyberGold's upcoming
service and a solicitation for internet users, CyberGold's potential
customers. This factor suggests that defendant is purposefully availing
itself to the privilege of conducting activities in
Missouri.Id. at *1333,
- Shapiro v. Santa Fe Gaming, 1998 WL 102677
(N.D.Ill.); Ragonese v. Rosenfeld, 318 N.J.Super. 63, 722 A.2d 991 (1998);
Pheasant Run v. Moyse, 1999 WL 58562 (N.D.Ill.); Graphic Controls Corp. v.
Utah Medical Products, 1997 WL 27632 at *3 (W.D.N.Y.1997).
- Shapiro at *2.
- Ragonese at *994 (Foreign airline maintained a web
site with general information such as history of airline and information
about flights and a toll-free telephone number for ticketing).
the exercise of personal jurisdiction is
contingent upon the web site involving more than just the maintenance of a
home page; it must also allow browsers to interact directly with the web
site on some level. In addition, there must also be some other non-Internet
related contacts between the defendant and the forum state in order for the
court to exercise personal jurisdiction.Blumenthal v. Drudge,
992 F.Supp. 44 (D.C. 1998) at *56.
- Pheasant Run v. Moyse, 1999 WL 58562 (N.D.Ill.) at
- McDonough v. Fallon McElligott, Inc., 1996 WL
753991, *3 (S.D.Cal.1996).
- Vitullo v. Velocity Powerboats, 1998 WL 246152
- Esab v. Centricut, 1999 WL 27514 (D.S.C.) at *6.
- 958 F.Supp. 1 (D.C. 1996)
- Id. at *5.
- For example, in World Wide Volkswagen the Supreme
Court said that due process Due process
. . .gives a degree of
predictability to the legal system that allows potential defendants to
structure their primary conduct with some minimum assurance as to where that
conduct will and will not render them liable to suit.
World-Wide, 444 U.S. at 297, 100 S.Ct. at 567
- Smith v. Hobby Lobby v. Boto, 968 F.Supp. 1356 (W.D.
Ark. 1997). In the Smith case, the plaintiff's decedent was burned to
death in a fire allegedly caused by the manufacturer of the tree, a Hong
Kong manufacturer. The court held that the defendant manufacturer was not
subject to Arkansas long arm jurisdiction because: 1. Distribution was to
national distributors and retailers; and 2. Manufacturer advertisement in
trade publication on the Internet was insufficient contact for the exercise
- American Network v. Access America, 975 F.Supp. 494
(S.D. N.Y. 1997); Hasbro Inc. v. Clue, Inc. 994 F.Supp. 34 (D.
Massachusetts, 1997); Gary Scott International v. Baroudi, 981 F.Supp. 714
(D. Massachusetts, 1997).
- 952 F.Supp. 1119 (W.D. Pa.1997).
- American Network v. Access America, 975 F.Supp. 494
(S.D. N.Y. 1997).
- 994 F.Supp. 34 (D. Massachusetts, 1997)
- 994 F.Supp. at *499.
If defendant sought to avoid subjecting
itself to suit in New York, it could have chosen not to send those materials
there. See World- Wide, 444 U.S. at 297, 100 S.Ct. at 567 (a party that
purposefully establishes contacts with a state "can act to alleviate the
risk of burdensome litigation by procuring insurance, passing the expected
costs on to customers, or, if the risks are too great, severing its
connection with the State"). Through its contacts with New York, defendant
availed itself of a commercial benefit, since it receives monthly payments
from its New York subscribers for the services it provides them. The
statements published by defendant on its home page that advertise its
ability to aid customers "across the U.S." further support the inference
that the New York subscriptions are not random or fortuitous, but are rather
the result of defendant's purposeful efforts to avail itself of the benefits
of New York as part of a nationwide market.994 F.Supp. at *499.
- 981 F.Supp. 714 (D. Massachusetts, 1997).
- 981 F.Supp.at *717.
- 952 F.Supp. 1119 (W.D. Pa.1997).
. . . [T]he development of the law
concerning the permissible scope of personal jurisdiction based on Internet
use is in its infant stages. . . . . Nevertheless, our review of the
available cases and materials reveals that the likelihood that personal
jurisdiction can be constitutionally exercised is directly proportionate to
the nature and quality of commercial activity that an entity conducts over
the Internet. This sliding scale is consistent with well developed personal
jurisdiction principles.Id. at *1124.
- 952 F.Supp. at *1124.
- Id at *1124.
- Id. at *1125, quoting Pres-Kap, Inc. v. System One,
Direct Access, Inc., 636 So.2d 1351 (Fla.App.1994).
- Id at *1124.
- Id at *1126.
- Id at *1126.
- Id. at *1127.
- Id. at *1127, quoting International Shoe and McGee
There can be no question that
Pennsylvania has a strong interest in adjudicating disputes involving the
alleged infringement of trademarks owned by resident corporations. We must
also give due regard to the Plaintiff's choice to seek relief in
Pennsylvania. Kulko, 436 U.S. at 92, 98 S.Ct. at 1696-97. These concerns
outweigh the burden created by forcing the Defendant to defend the suit in
Pennsylvania, especially when Dot Com consciously chose to conduct business
in Pennsylvania, pursuing profits from the actions that are now in question.
The Due Process Clause is not a "territorial shield to interstate
obligations that have been voluntarily assumed." Burger King, 471 U.S. at
474, 105 S.Ct. at 2183.Id at *1127.
- 89 F.3d 1257 (6th Cir, 1996).
- E.g. Comment, Michele N. Breen, Personal
Jurisdiction in Cyberspace , 8 Seton Hall Const. L.J. 763 (1998); Note,
Christine E. Mayewski, The Presence of a Web Site as a Constitutionally
Permissible Basis for the Exercise of Jurisdiction, 73 Ind. L.J. 297 (1997);
Note, Corey B. Ackerman, World Wide Volkswagen Meet the World Wide Web, 71
St. John's L. Rev. 403 (1997); Comment, Timothy B. Nagy, Personal
Jurisdiction and Cyberspace, 6 CommLaw Conspectus 101 (1997); Note, Gwenn M.
Kalow, From the Internet to Court, 65 Fordham L. Rev. 2241 (1997); Note,
Sean M. Flower, When Does Internet Activity Establish the Minimum Contact
Necessary to Confer Jurisdiction, 62 Mo. L. Rev. 84 (1997).
- 952 F.Supp. at *1124.
- 1998 WL 246152 (N.D.Ill.).
. . . Even if sale of their boats to
Modern Marine is insufficient under the narrow stream of commerce theory,
this court finds that the Powerboat Defendants' web page, with its explicit
solicitation of Illinois residents to attend the Chicago Boat Show and see
Velocity powerboats, may serve as the "additional conduct" called for by
Justice O'Connor. Such a solicitation, expressly informing residents to
attend their "local boat show" and giving information about the Chicago Boat
Show, is sufficient to show that the Powerboat Defendants did not merely
send their products out into the stream of commerce to be floated about
haphazardly to land where they would. Rather, the Powerboat Defendants took
affirmative steps to target Illinois as a landing site for their
products.1998 WL 246152 at *6.
- 998 F.Supp. 738 (W.D. Tex. 1998)
- Id. at *744.
- 992 F. Supp. 44, (D.C. 1998).
- Id. at *56.
- 21 F. Supp. 2d 27 (D.C. 1998).
- 5 F.Supp.2d 762 (D. Arizona, 1998).
- 1999 WL 300285 (N.D.Ill.).
- 1997 WL 148567 (S.D.Ind.)
- 1997 WL 148567 at *4.
- Id at *5.
- 130 F.3d 414 (9th Cir, 1997).
- 1999 WL 27060 (D. Or. 1999) .
. . . [T]he court finds that the middle
interactive category of Internet contacts as described in Zippo needs
further refinement to include the fundamental requirement of personal
jurisdiction. . . .1999 WL 27060 at *15.
- 1999 WL 76794 (N.D.Tex.)
- 1998 WL 299678, (N.D. Ill. 1998)
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. Zippo, 952
- 1997 WL 733905 (N.D.Ill.)
- There are numerous cases which follow Zippo and
conclude that a passive web site that merely advertises does not justify the
exercise of jurisdiction. See: CFO v. CFO 2 Go, 1998 WL 320821 (N.D.Cal.)
(test web site with advertisement does not satisfy Zippo); SF Hotel Company
v. Energy Investments, 985 F.Supp. 1032 (D. Kansas, 1997) (Mere general
advertisement is passive web site and does not meet Zippo test); Pheasant
Run, Inc., v. Moyse No. 98 C 4202, 1999 WL 58562 (N.D. Ill. ) (Passive web
site, even with telephone number does not meet Zippo test for exercise of
jurisdiction); Patriot Systems, Inc v. C-Cubed Corporation, 21 F. Supp. 1318
(D. Utah 1998) (passive web site without discussion).
- 1999 WL 319056 (D.N.J.)
- 1999 WL 319056 at *4.
- Id at *4. The language is the court's. The author
disagrees about the court's interpretation of World Wide Volkswagen. In
fact, the author's understanding is that World Wide Volkswagen held exactly
- See supra n. 129 and accompanying text.
- See supra n. 132 and accompanying text.
- See supra n 135 and accompanying text.
- Supra n. 114.
- Supra n. 120.
- Supra n. 123.
- Supre n. 125
- Supra n. 126
- Under a totality of circumstances test all contacts
are evaluated together.
- Hypotheticals 1 & 1(a) and n. 45-56 supra dealt
with general jurisdiction and the passive web site.
- Heliocopteros Nacionales de Columbia v. Hall, supra
- Osteotech v. Gensci Regeneration Sciences, Inc,
supra n. 47.
- See cases cited supra, n. 48.
- Supra n. 128.
- 1999 WL 27060 at *3.
- McDonough v. Fallon McElligott, 1996 WL 753991
(S.D.Cal.) at *1828.
- Esab v. Centricut, 1999 WL 27514 (D.S.C.).
- Id. at *4. However, it should be noted that in the
ESAB case, the actual Internet contacts were few, although the defendant
site was fully interactive. So an alternate reading of the case could be
that there can be no general jurisdiction without actual defendant
interactive Internet activity. This reading would leave open the question
of whether, if there were a large amount of actual Internet interaction
between defendant and forum, general jurisdiction could be exercised.
also, Grutkowski v. Steamboat Lake Guides & Outfitters, 1998 WL 962042 (E.D.
Pa. 1998). Interactive web site, but actual contacts did not occur in
forum. Held: no general jurisdiction.
- 997 F. Supp. 782 (E.D. Texas 1998).
- Id at *785.
- Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp.
- It should be noted that the court was aware that
the flexible test was used in Zippo to measure the constitutionality of
specific jurisdiction. However, the court stated that it saw no reason why
the test could not equally apply to the exercise of general jurisdiction.
- The court specifically relied on the case of
Maritz, Inc. v. Cybergold, Inc., 947 F.Supp. 1328 (E.D.Mo.1996).
- Maritz v. Cybergold, 947 F.Supp. 1328 (E.D.
MO.1996), discussed supra n. 67, 72-75 and accompanying text.
The Court need not decide today
whether standing alone the Web site maintained by the defendant is
sufficient to satisfy a finding of general jurisdiction. Nor must it look
only to the traditional business contacts that the defendant has with the
State of Texas. Rather, it is the combination of the two that leads the
Court to the conclusion that the defendant maintains substantial, continuous
and systematic contacts with Texas sufficient to subject it to personal
jurisdiction.Mieczkowski at *788.
- The court explicitly stated that it was not
deciding whether the web site standing alone was sufficient to justify the
exercise of general jurisdiction. Mieczkowski at *788.
- Helicopteros Nacionales de Colombia, S.A., 466 U.S.
- 49 S.C. L. Rev. 925 South Carolina Law Review
Summer 1998 Symposium: Conducting Business Over the Internet *925 PERSONAL
JURISDICTION IN CYBERSPACE: SOMETHING MORE IS REQUIRED ON THE ELECTRONIC
STREAM OF COMMERCE Howard B. Stravitz [FNaa1] at *928
- 101 Harv. L. Rev. 610Harvard Law
Review January, 1988 *610 THE MYTH OF GENERAL JURISDICTION
Mary Twitchell at *926.
Member Resources | Events | Home