 Nothing Personal?
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by Stephen T. Maher [1]
From the Law Products Magazine (forthcoming).
The concept of personal jurisdiction is fundamental to American law. Due process, the
basic fairness guaranteed in all court proceedings by the Constitution, is offended when
someone is sued in a state with which they have no "minimum contacts," or is
sued where the exercise of jurisdiction would offend "traditional notions of fair
play and substantial justice."
The courts traditionally have looked to things like physical presence in the state and the
business a company has done in the state to determine the existence of minimum contacts.
However, the courts have not required physical presence, recognizing that "...in
modern commercial life that a substantial amount of business is transacted solely by mail
and wire communications across state lines..." If minimum contacts are found, the
courts next look to see whether the exercise of jurisdiction would be fair and reasonable
under the circumstances.
The emergence of the Internet, however, is clouding the question. This uncertainty is
partly a function of new technology, which has created a virtual realm that is both
everywhere and nowhere. But it also results from the fact that the legal question of
personal jurisdiction will now likely touch the lives of ordinary people as they interact
over the Internet.
On the Internet, anyone can be a publisher in a mass media or a shopkeeper to the world.
The reach of a state's jurisdiction over the people engaged in these pursuits is no longer
a problem that concerns only publishers of national magazines or large commercial
enterprises.
Is it fair and reasonable to hold everyone who posts a Web page or who participates in an
on-line discussion to the same jurisdictional standards as a national magazine or a large
commercial venture? Should they be able to be sued, anywhere in the country for any
content related mistake that they make online? Will a rule subjecting everyone to suit
everywhere discourage people from placing content on the Internet or from conducting
personal business over the Internet?
We are just starting to see courts address this issue, and the decisions so far have not
created clear answers to the questions it is reasonable to ask. Here's how the landscape
looks thus far.
In Bensusan Restaurant Corporation v. King, suit was prompted by King's World Wide Web
site, which advertised his Columbia, Missouri Blue Note jazz club on the World Wide Web.
Bensusan held the trademark to "The Blue Note" and was doing business as The
Blue Note, a famous jazz club in Greenwich Village. Bensusan sued King for trademark
infringement and related causes of action in Federal District Court in New York.
King moved to dismiss the suit, claiming lack of personal jurisdiction in New York. The
court agreed there was no personal jurisdiction. It stated the issue as "whether the
creation of a Web Site, which exists either in Missouri or in cyberspace _i.e. anywhere
the Internet exists _ with a telephone number to order the allegedly infringing product,
is an offer to sell in New York."
The court noted that King was not deriving significant revenue from interstate commerce.
It found Bensusan's allegation that King should have foreseen that people from New York
would access his Web site and be confused to be insufficient. The court specifically
addressed the due process concerns, finding that King did nothing to purposefully avail
himself of the benefits of New York. "King, like numerous others, simply created a
Web site and permitted anyone who could find it to access it. 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."
A federal district court in Connecticut reached a different result in a somewhat similar
case, Inset Systems, Inc. v. Instructional Set, Inc. This also was a suit for trademark
infringement, dilution and unfair competition, but unlike Bensusan, it involved a domain
name dispute. The defendant, a Massachusetts company, obtained "inset.com" as
its Internet domain address and used that address to advertise its goods and services over
the Internet. The plaintiff holds the trademark for "inset." It sued in
Connecticut and the defendant moved to dismiss, alleging a lack of personal jurisdiction.
The court there employed the following analysis on the question of minimum contacts:
"In the present case, Instruction has directed its advertising activities via the
Internet and its toll-free number toward not only the state of Connecticut, but to all
states. The Internet as well as toll-free numbers are designed to communicate with people
and their businesses in every state. Advertisement on the Internet can reach as many as
10,000 Internet users within Connecticut alone. Further, once posted on the Internet,
unlike television and radio advertising, the advertisement is available continuously to
any Internet user. ISI has therefore, purposefully availed itself of the privilege of
doing business within Connecticut." This logic, if followed, could expose those who
simply post information on the Internet to content-based lawsuits all over the country. In
Maritz, Inc. v. Cybergold Inc., a case involving domain names and trademark infringement,
a federal court in Missouri also found personal jurisdiction based upon the existence of
the Web site, a site with very few actual "hits" from that state.
In CompuServe v. Patterson, the on-line company filed an essentially defensive declaratory
judgment action in Ohio, guaranteeing it home court advantage in an evolving trademark,
copyright and unfair competition controversy with Patterson. The Sixth Circuit reversed a
District Court ruling that there was no personal jurisidicition. Almost all of the
devendant's contact with Ohio was electronic.
The Sixth Circuit concluded, from a review of several Supreme Court decisions in the area,
that "there is less perceived need today for the federal constitution to protect
defendants from `inconvenient litigation' because all but the most remote forums are
easily accessible for the pursuit of both business and litigation." The court found
the Internet to be "perhaps the latest and greatest manifestation of these
historical, globe-shrinking trends. It enables anyone with the right equipment and
knowledge _ that is, people like Patterson _ to operate an international business cheaply,
and from a desktop." It found the case to be one in which it must "reconsider
the scope of our judicial reach." Unfortunately, this review was a bit one-sided as
Patterson did not file a brief in the case or participate in oral argument.
The argument could be made, but was not, that because the Internet is bringing
unsophisticated and poorly capitalized people into new situations where they are more
likely than ever to make innocent mistakes and be sued for them, due process guarantees
should be more robust in this new environment than they have been in more traditional
commercial settings. Mistakes will be made concerning the content of web sites, the
content of electronic communications, and in connection with the development of nascent
Web enterprises. Lawsuits for defamation, copyright and trademark infringement and for
relief in connection with other content related claims will be made. Many of these suits
are likely to be filed by big companies against unsophisticated and undercapitalized
individuals. While it might make sense to allow big commercial outfits to be sued in any
major American city, it might not be a good idea to develop a rule that allows large
corporations to drag individuals far across the country to defend themselves from content
related claims based upon a few hundred hits on a Web site in that state. In the
commercial area, it might not make sense to find minimum contacts where a hobbyist sells a
few coins from his or her collection over the Internet, if personal jurisdiction is based
on the fact his or her Web site appeared on a several hundred computer screens in that
distant state, and he or she made one sale there. However, some of the cases suggest that
the courts may not be willing to make such distinctions.
A robust due process guarantee could actually discourage litigation and encourage
settlement of minor controversies, as those with minor claims may decide not to cross the
country to where the defendant resides to bring them. If they do, undercapitalized novices
will have better chance of defending themselves in their home town. This might be a good
thing. It could give the relatively unsophisticated individual who suddenly finds himself
running an "international business from a desktop" a reasonable measure of
protection from the mistakes that he or she will make. Just because a person is good with
computers does not mean they know the law or have the knowledge or resources to check
their content, or to develop their commercial routines, as a larger, more established
operation would.
It is not clear how the law in this area will develop, but as courts develop the law of
personal jurisdiction and Internet, they should look closely, not only at this new medium,
but also at those who are sending the messages though it.
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