Internet Law Outline

Outline for Internet Law
Professor Jennings
 
I.       Jurisdiction, Choice of Law and the Internet
A. Jurisdiction and the Internet:  The Internet jurisdiction cases decided thus far, while reaching different results on the facts, all agree that unless and until Congress or the state legislatures enact Internet-specific jurisdictional legislation, courts will continue to apply existing long-arm statutes and the constitutional “minimum contacts” test to decide jurisdictional issues. Thus, they are likely to continue to analogize non-Internet personal jurisdiction case law to jurisdictional disputes involving the Internet.[1] B. Jurisdiction—The Traditional Model:[2] Personal jurisdiction is a fundamental concept in litigation. A judgment rendered by a court lacking personal jurisdiction is void.[3] 1.   To determine whether personal jurisdiction is proper, courts will generally apply a two-step analysis:
a.  First, the court must determine whether the forum state’s long-arm statute is applicable;[4] b.   Second, the court must determine whether the exercise of personal jurisdiction comports with the Due Process Clause of the United States Constitution—the “minimum contacts” test.
C.  “Minimum Contacts” Analysis:  In International Shoe Co. v. Washington, 326 U.S. 310 (1945), the Supreme Court articulated the idea of “minimum contacts”:  “For a state to subject a non-resident to in personam jurisdiction, due process requires that he have certain minimum contacts with [the forum state] such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.” The Court further held that courts should consider an “estimate of inconveniences” that would result to the defendant by having to defend in trial away from his (or its) home or place of business.  To simplify, as the court in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997), put it, there is a three-prong test for the exercise of personal jurisdiction :
1. The defendant must have sufficient “minimum contacts” with the forum state—that is the defendant “reached out beyond one state and creat[ed] continuing relationships and obligations with the citizens of another state. . . .” Int’l Shoe, and ;
2. The claim asserted by the plaintiff must arise out of those contacts—that is, the contacts “proximately result from action by the defendant himself that creates a substantial connection with the forum state”[5] ; and
3. The exercise of jurisdiction must be reasonable—that is, it must comport with “traditional notions of fair play and substantial justice.” Int’l Shoe. “Reasonableness” Factors:  In World-Wide Volkswagen v. Woodson, 444 U.S. 286 (1980), the Court identified factors relevant to whether an otherwise justified exercise of personal jurisdiction is “reasonable:”
a.  The burden on the defendant;
b.  The interests of the forum state in deciding the controversy;
c.  The plaintiff’s interest in obtaining relief;
d.  The interstate judicial system’s interest in obtaining an efficient resolution of disputes;
e.  The shared interest of the several states in furthering substantive policy goals.
 
D.   Developing Principles Regarding Personal Jurisdiction And The Internet: From the application of foregoing jurisdiction principles, there have emerged two competing lines of analysis, the Zippo- Cybersell approach, and the Inset Systems approach. In addition, at least as to some species of cases, there is an emerging “effects” test.
E.    The Majority View: The Zippo-Cybersell Approach:  
1. The Zippo “Sliding Scale” of Internet Activity: In Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997) the court upheld jurisdiction in an action for trademark infringement by a Pennsylvania plaintiff against a California defendant, which was an on- line Internet access and newsgroup provider. The defendant had no offices or employees in Pennsylvania but had entered into agreements with seven Internet access providers in Pennsylvania to allow their subscribers access to defendant's news service. About 3000 subscribers (2% of the total) were Pennsylvania residents. However, the mere fact that the defendant operated a web site that was accessible from Pennsylvania was not sufficient of itself.
The Court reasoned that the likelihood that personal jurisdiction can be constitutionally exercised based on entity's presence on Internet computer networks is directly proportionate, in the manner of a sliding scale, to the nature and quality of commercial activity that the entity conducts over Internet.
The Zippo Court articulated three different levels that may be used to determine whether personal jurisdiction may be constitutionally exercised—this is the “Zippo Sliding Scale:”
(1) The Easy Case—Purposefully Doing Business: Jurisdiction is proper if the defendant sells products or services into the forum jurisdiction or is otherwise actively doing business on the Internet.
(2) The Middle Ground: If the defendant maintains interactive web pages where users in the forum can exchange information with the host computer—jurisdiction is possible, but the court must examine the “level of interactivity and [the] commercial nature of the exchange of information. . . .”
(3) The Passive Poster: Jurisdiction is improper if the defendant merely maintains a “passive” web site that simply provides information or advertisements; there is no interactivity with Internet surfers. 
 
 
Note—“Registers or “Guest Books” on Otherwise Passive Websites:  At   least one court has held that a website that merely registers people who visit it to get an email list, has conducted sufficiently “interactive and commercial” activity to warrant personal jurisdiction because, while there is no fee charged or actual sale occurring at the defendant’s website, the nonetheless has received an economic benefit.[6] a. Validating Zippo—The Ninth Circuit’s Decision in Cybersell, Inc. v. Cybersell, Inc[7].:  Cybersell,  the first Court of Appeals case to address Zippo, was a domain name infringement case. The court, following Zippo, characterized the case as a type (3) “passive” case and held against jurisdiction. It noted that the defendant had conducted no commercial activity in the forum, Arizona; that “(a)ll that it did was post an essentially passive home page on the Web. . . .”  and it “did nothing to encourage people in Arizona to access its site, and there is no evidence that any part of its business … was sought or achieved in Arizona …[;] [it] entered into no contracts in Arizona, made no sales in Arizona, received no telephone calls from Arizona, earned no income from Arizona, and sent no messages over the Internet to Arizona.” The Court concluded that to allow jurisdiction in an action alleging trademark infringement on the Internet against an essentially passive web site “would automatically result in personal jurisdiction wherever the plaintiff's principal place of business is located.”[8]  
F.   A Minority View: The Inset Systems Approach: In Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D. Conn. 1996), a Connecticut corporation sued a Massachusetts corporation in a federal court in Connecticut for trademark infringement. The court upheld personal jurisdiction on the ground that the defendant had advertised its goods on its web site that reached as many as 10,000 Internet users in Connecticut. The court treated a web site as it would active advertisements circulating in Connecticut. It held that it was immaterial whether any resident of Connecticut had actually done business with the defendant or accessed its web site. Thus, any website accessible to persons within a state becomes grounds for personal jurisdiction because the court treats the web ads just like newspaper of television ads on local stations.
1.  Cases Following Inset Systems Approach:   The Inset Systems approach has been followed in several cases, e.g., Telco Communications v. An Apple A Day, 977 F. Supp. 404, 406 (E.D. Va. 1997) (this was a defamation case, but rather than focus on where the “effect” of the tortious conduct was located to support jurisdiction (see infra), the court held that jurisdiction was proper because the website postings “circulated in Virginia”); Haelan Prods. Inc. v. Beso Biological Research Inc., 43 U.S.P.Q. 2d (BNA) 1672, 1676 (E.D. La. 1997) (action claiming trademark infringement, false representation, false designation of origin, and unfair competition); Humphrey v. Granite Gate Resorts, Inc., 568 N.W.2d 715, 721 (Minn. Ct. App.), aff'd 576 N.W.2d 747 (Minn. 1998) (action for deceptive trade practices, false advertising, and consumer fraud).
G. The “Effects” Test for Tortious Conduct or Content on the Web:  As noted supra, a problem with the Inset Systems approach is that jurisdiction might be upheld based on a passive website even if there was no harm in the forum jurisdiction.  However, a  problem with the Zippo/Cybersell approach is that even a passive web site can cause harm to persons in the forum jurisdiction. For example, if a “passive,” non-interactive website were to post a page any of the following it may cause harm simply by being read:  defamatory statements; a person’s name or likeness in violation of a right of publicity or privacy; a competitor's trade secrets; a trademark or trade dress conf