Personal Jurisdiction in Cyberspace:
Passive Web Sites

Jay Kesan
University of Illinois at Urbana-Champaign, College of Law

TABLE OF CONTENTS

  1. Brief Summary of Personal Jurisdiction Law
  2. Interactive Web Sites and Persistent Contacts
  3. Passive Web Sites
  4. Nature of Defendant's Activity
  5. Nature of Plaintiff's Claim
  6. Suggested Class Room Discussion Topic

C. Passive Web Sites

MILLENNIUM ENTERPRISES, INC. v. MILLENNIUM MUSIC, LP
United States District Court, D. Oregon. 1999.
33 F.Supp.2d 907

Aiken, District Judge:


Plaintiff files suit seeking damages and injunctive relief for alleged trademark infringement under the Lanham Act, 15 U.S.C. 1051-1127. Plaintiff also alleges state statutory claims for unlawful trade practices, trademark infringement and dilution, and common law claims of unfair competition and trademark infringement. Defendants seek dismissal for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). For the reasons discussed below, defendants' motion is granted.


I. FACTUAL BACKGROUND


Plaintiff, Music Millennium, is a business incorporated in Oregon with its principal place of business located in Portland, Oregon. Plaintiff opened its first retail outlet under the name "Music Millennium" in 1969. Plaintiff now operates two retail music stores in Portland and also sells products through mail and telephone orders and its Internet Web site.

Defendant Millennium Music, Inc., is a South Carolina corporation and general partner of defendant Millennium Music, L.P., a South Carolina limited partnership. Defendants operate retail music stores in South Carolina under the name "Millennium Music." Defendants sell products through their retail outlets and their Internet Web site, although the vast majority of sales occur at their retail stores. From March 1998 through September 1998, defendants sold fifteen compact discs to nine separate customers in six states and one foreign country. The sales totaled approximately $225. During the same period, defendants' retail sales were $2,180,000. Defendants also offer franchising circulars through the Internet and have two franchised stores in North Carolina.

Defendants have purchased a small amount of compact discs from Allegro Corporation ("Allegro"), a distributor located in Portland, Oregon. Defendants' purchases from Allegro in 1994-1997 totaled approximately one-half of one percent of defendants' inventory purchases for those years. On or about July 7, 1998, plaintiff received a credit document from Allegro. The credit was mailed to plaintiff in error; the document apparently was intended for defendants.

On August 21, 1998, an Oregon resident, Linda Lufkin, purchased a compact disc from defendants through their Web site. During oral argument on defendants' motion to dismiss, the court learned from defendants that an attorney at the law firm for which Ms. Lufkin works requested that she purchase a compact disc from defendant. Apparently, the attorney is an acquaintance of plaintiff's counsel. Plaintiff did not dispute these facts. Defendants have sold no other merchandise to any Oregon resident.

Plaintiffs filed suit on August 28, 1998. According to plaintiff's complaint, defendants' use of the name "Millennium Music" in connection with the sale of goods in interstate commerce violates plaintiff's state and common law trademark rights. Plaintiff further alleges that consumers familiar with plaintiff will likely be confused as to the source or origin of defendants' goods, thereby causing plaintiff harm.

In September of 1998, defendants added a disclaimer to their Web site indicating that their products and franchise circulars were not available in Oregon.


II. JURISDICTIONAL STANDARDS


Determining whether personal jurisdiction exists over an out-of-state defendant involves two inquiries: whether the forum state's long-arm statute permits the assertion of jurisdiction and whether assertion of personal jurisdiction violates federal due process. The relevant state statute applies even when the cause of action is purely federal. Oregon's long-arm legislation is found in Rule 4 of the Oregon Rules of Civil Procedure. Plaintiff maintains that Rules 4C and 4D confer personal jurisdiction over defendants.(1) However, Oregon's catch-all jurisdictional rule confers personal jurisdiction coextensive with due process. Or.R.Civ.P.4L. Thus, the analysis collapses into a single framework and the court proceeds under federal due process standards.

Due process requires that a defendant, if not present in the state, "have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 315, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Minimum contacts can be demonstrated through facts supporting either general or specific jurisdiction over the defendant. Plaintiff bears the burden of establishing personal jurisdiction through a prima facie showing of jurisdictional facts.


A. General Jurisdiction

General jurisdiction refers to the authority of a court to hear any cause of action involving a defendant, regardless of whether the cause of action arose from the defendant's activities within the forum state. In order for a court to assert general jurisdiction, the defendant must have "continuous and systematic" contacts with the forum state.

It is undisputed that defendants' business operations and retail outlets are located in South Carolina. Further, defendants have no physical presence within the state of Oregon. Defendants are not registered to conduct business in Oregon and have no registered agents, employees or sales representatives located in Oregon. No principles or personnel of defendants have ever traveled to Oregon. Defendants have never received a franchise inquiry from Oregon and have never offered a franchise to an Oregon resident or corporation. The only possible "contacts" defendant have had with Oregon include the sale of one compact disc to an Oregon resident, the purchase of inventory from an Oregon distributor and, according to plaintiff, the maintenance of an Internet Web site.

Plaintiff does not and cannot assert that any of these bases support general jurisdiction over defendants. Defendants' sale of one compact disc and sporadic purchases from a supplier are neither substantial nor "continuous and systematic" contacts with this forum. Further, the court is aware of no case in which a court asserted general jurisdiction based on the existence of an Internet Web site. * * * Thus, the sole issue is whether the court may assert specific jurisdiction over defendants.


B. Specific Jurisdiction

Specific jurisdiction refers to a situation in which the cause of action arises directly from a defendant's contacts with the forum state. The Ninth Circuit employs a three-part test to determine whether the exercise of specific jurisdiction comports with due process. First, the defendant must perform some act or consummate some transaction within the forum by which it "purposefully avails" itself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of the forum and having "fair warning" that a particular activity may subject it to jurisdiction. Second, the claim must be one which arises out of or results from the defendant's forum-related activities. Third, the court's exercise of jurisdiction must be reasonable.

Purposeful availment is shown "if the defendant has taken deliberate action within the forum state or if he has created continuing obligations to forum residents." Although contacts that are "isolated" or "sporadic" may support specific jurisdiction if they create a "substantial connection" with the forum, the contacts must be more than random, fortuitous, or attenuated. Furthermore, it is not required that a defendant be physically present within the forum, provided its efforts are purposefully directed toward forum residents. For example, jurisdiction may be properly asserted over a defendant who directs its tortious conduct toward the forum state, knowing the effects of the conduct will cause harm. Calder v. Jones, 465 U.S. 783, 789-90, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). However, contacts resulting from the "unilateral activity of another party or third person" are not attributable to a defendant. Burger King Corp. v. Rudzewicz, 471 U.S. 462 at 475 & n. 17, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). With these principles in mind, the court turns to the asserted conduct of defendants that plaintiff claims establishes minimum contacts with this forum.


1. Sale of Compact Disc

Plaintiff claims that defendants' sale of one compact disc to Ms. Lufkin constitutes purposeful availment of this forum, because the sale occurred after defendants "had solicited sales over the Internet in the state of Oregon." The court cannot agree.

During oral argument, plaintiff did not contest the fact that an acquaintance of plaintiff's counsel instructed Ms. Lufkin to purchase a compact disc from defendants. The court was gratified to learn that Ms. Lufkin, at least, was allowed to select the compact disc she was directed to purchase. Regardless, the court finds that the sale to Ms. Lufkin was nothing more than an attempt by plaintiff to manufacture a contact with this forum sufficient to establish personal jurisdiction.

Defendants cannot be said to have "purposely" availed themselves of the protections of this forum when it was an act of someone associated with plaintiff, rather than defendants' Web site advertising, that brought defendants' product into this forum. * * *

The court is dismayed by plaintiff's counsel's lack of candor. In submissions to this court, including the complaint, counsel repeatedly asserted that defendants' sale of goods in Oregon had caused plaintiff harm and "ascertainable loss." However, it is clear to the court that no confusion and no harm or loss resulted from one commercial sale orchestrated by plaintiff through an acquaintance of counsel. Such questionable and unprofessional tactics cannot subject defendants to jurisdiction in this forum. * * *


2. Purchases from Oregon Supplier

Likewise, defendants purchases from Allegro do not suffice to establish the requisite minimum contacts. It is well-established that sporadic purchases within a forum cannot support the assertion of personal jurisdiction unless the cause of action arises from or relates to those purchases. Plaintiff argues that its unlawful trade practices claim arises from the defendants' purchases, because confusion between plaintiff's and defendant trades' names resulted from defendants contacts with Allegro. See Or.Rev.Stat. 646.608(1)(c). In support of this argument, plaintiff presents a credit document from Allegro that was intended for defendants but mailed to plaintiff.

Plaintiff's reliance on section 646.608(1)(c) is misplaced. That statute defines an unlawful trade practice as including those which cause a "likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another." As defendants argue, the primary purpose of the Oregon Unlawful Trade Practices Act, which includes 646.608, is to protect consumers from misleading representations regarding the source of products, thus creating a "likelihood of confusion."

* * * Under the facts presented to this court, the party allegedly confused by the parties' similar trade names is a supplier, not a consumer, of defendants' products.

* * * Accordingly, plaintiff's cause of action for unfair trade practices does not arise or relate to defendants' purchase of inventory from Allegro and cannot confer personal jurisdiction over defendants.


3. Effects of Defendants' Conduct

During oral argument, plaintiff argument that the effects of defendant's alleging infringing activities cause harm in Oregon, plaintiff's principle place of business, thus subjecting defendants to this court's jurisdiction. In support for its invocation of the "effects test," plaintiff cites Indianapolis Colts, Inc. v. Metropolitan Baltimore Football Club, 34 F.3d 410 (7th Cir. 1994). The court is not persuaded.

In Indianapolis Colts, the Canadian Football League ("CFL") team in Baltimore attempted to call itself the "Baltimore CFL Colts." As anyone familiar with football knows, the "Baltimore Colts" of the National Football League ("NFL") was "one of the most illustrious-teams in the history of professional football." In 1984, the NFL team's owner moved the franchise to Indianapolis but kept the name "Colts." This action infuriated the city and citizens of Baltimore. Nine years later, the CFL granted a franchise in Baltimore, and the selection of the team's name, "Baltimore CFL Colts," led the Indianapolis Colts to file a lawsuit alleging trademark infringement against the Baltimore franchise and the CFL.

The Seventh Circuit asserted personal jurisdiction over the defendants, because the allegedly infringing trademark would cause harm in Indiana, the home of the Indianapolis Colts. The court further found that defendant had "entered" the state through broadcasts of football games within the state.

The facts of Indianapolis Colts are distinguishable from those before this court. Given the history between the two teams, it is reasonable to assume that the defendants were directing their infringing action at Indiana, specifically at the owner of the Indianapolis Colts, knowing that their actions likely would cause harm. And, presumably, television broadcasts of football games are aired in specific market areas.

Unlike Indianapolis Colts, plaintiff here offers no evidence that defendants intentionally directed its activities at Oregon knowing that plaintiff would be harmed.


4. Defendants' Internet Web Site

Plaintiff's remaining ground asserted in support of specific jurisdiction is defendants' Internet Web site through which persons can purchase compact discs, request franchising information and join a discount club. According to plaintiff, the fact that defendants maintain an interactive, rather than passive, Web site is a sufficient contact with this forum to establish personal jurisdiction. In other words, plaintiff argues that purposeful availment is satisfied by an Internet Web site which allows for the exchange of information between the Web user and the Web site, regardless of whether an actual exchange of information occurred with residents of this forum.

The facts of this case coupled with plaintiff's argument raise questions that have yet to be answered in this Circuit. Because the answers to these questions will have far-reaching implications for those who utilize the Internet for commercial purposes, the court takes a comprehensive look at the current state of the law with respect to personal jurisdiction and Internet contacts.

* * *

IV. ANALYSIS OF DEFENDANTS' INTERNET CONTACTS


The court first determines where defendants' Web site corresponds on the sliding scale of interactivity. Through defendants' Web site, Web users may purchase compact discs, join a discount club and request franchising information.

Arguably, the capability of selling compact discs through the Web site could constitute "doing business" over the Internet and confer personal jurisdiction almost as a matter of course. However, the court finds such designation intended for those businesses which conduct a significant portion of their business through ongoing Internet relationships.

* * *

Here, defendants have done nothing more than publish an interactive Web site. Defendants have not purposefully entered into contracts with Oregon residents through the Internet, other than Ms. Lufkin, nor have defendants otherwise exchanged files electronically with forum residents so as to create "repeated" or "ongoing obligations." Accordingly, defendants do not "conduct business" in Oregon over the Internet. * * *

Neither is defendants' Web site at the other end of the spectrum, passively providing information for those interested. Rather, an exchange of information can occur between defendants and users. Thus, defendants' Web site falls into the middle category, requiring further inquiry into the "level of interactivity and commercial nature of the exchange of information" to determine whether jurisdiction should be exercised.

Plaintiff contends that the nature of defendants' Web site confers jurisdiction; the crux of plaintiff's argument is that defendants' Web site solicits potential Oregon consumers and therefore establishes purposeful availment of this forum.

* * *

Here, defendants have "consummated no transaction" and have made no "deliberate and repeated" contacts with Oregon through their Web site. Defendants maintain a Web site which allows users to purchase products, thus rendering it foreseeable that residents of Oregon, or any other state or country for that matter, could purchase a product from defendants. However, it is well-established that foreseeability alone cannot serve as the constitutional benchmark for personal jurisdiction. "[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum state. Rather, it is that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

Defendants' Internet Web site, interactive though it may be, is not "conduct and connection" with Oregon giving defendants "fair warning" so that they would reasonably anticipate being "haled" into court here. Defendants have not taken action creating "a substantial connection" with Oregon, or deliberately engaged in "significant activities" within Oregon, or created "ongoing obligations" with residents of Oregon in a manner related to plaintiff's claims. Rather, defendants have published information on an Internet Web site that is accessible to whomever may find it. The fact that someone who accesses defendants' Web site can purchase a compact disc does not render defendants' actions "purposefully directed" at this forum. It is the conduct of the defendants, rather than the medium utilized by them, to which the parameters of specific jurisdiction apply.

Furthermore, plaintiff offers no evidence that defendants targeted Oregon residents with the intent or knowledge that plaintiff could be harmed through their Web site. * * * Likewise, plaintiff makes no showing that defendants' Web page was "aimed intentionally" at Oregon.

A review of defendants' Web site furthers the conclusion that defendants did not intentionally or purposefully target its activities at Oregon. The site proclaims "Come Visit Us!" and provides a map of the location of defendants' stores. The maps are local in nature, providing little more than a showing of the cross-streets surrounding the stores. Nothing published on the Web site suggests that defendants intended to target Oregon residents, some 3,000 miles away, any more than they intended to target residents of other states. Rather, from defendants' invitation to visit their retail outlets, one could reasonably infer that defendants intended to target residents in their area. In sum, the court finds that this, too, is a case where "something more" is required. Cybersell v. Cybersell, 130 F.3d 414, 418 (9th Cir. 1997).

The court recognizes that its reasoning is at odds with some cases addressing this new issue. Not surprisingly, plaintiff relies on * * * [cases which support] the proposition that jurisdiction over the operator of a Web site is proper if the site is interactive, i.e., capable of exchanging information with the computer user. However, the court finds lacking in [those prior cases] the principle that a defendant must "purposefully direct" its activities at or take "deliberate action" in or create "substantial connection" with the forum state so as to provide "fair warning" that such activities may subject defendant to jurisdiction in a distant forum.

The existence of a Web site, whether passive or interactive, does not rise to the requisite level of conduct. Publishing a Web site requires no "deliberate" action within the forum state. Furthermore, a Web site is not automatically projected to a user's computer without invitation as are advertisements in a newspaper or on the television and radio. Rather, the user must take affirmative action to access either a passive or interactive Web Site. The user must turn on a computer, access the Internet and the Web, and browse the Web for a particular site. Thus, contrary to the scenario described in Inset, information published on Web sites is not thrust upon users indiscriminately.

Likewise, the court declines to adopt the reasoning in cases like Hasbro, Inc. v. Clue Computing Inc., 994 F.Supp. 34 (D.Mass. 1997) where contacts unrelated to the plaintiff's claim are considered in conjunction with a Web site in order to assert specific jurisdiction. Specific jurisdiction is not proper unless the forum-related contacts give rise or relate to the plaintiff's cause of action. Accordingly, the court does not consider defendants' purchases from Allegro in conjunction with their Internet site for purposes of personal jurisdiction analysis. Those purchases do not give rise or relate to plaintiff's claims of trademark infringement and unfair competition.

Rather, the court views the better approach as that taken by the courts which refused to assert jurisdiction on the sole basis of an interactive Web site and finds most persuasive the reasoning of those which required contacts with forum residents relating to the plaintiff's claim. The court also agrees with the reasoning of those courts which have asserted jurisdiction on the basis that the defendant's Internet conduct was intended to reach residents of the forum.

Absent actual exchanges or transactions with residents of the forum or evidence that local residents were targeted, the distinctions between specific and general jurisdiction become blurred. As the courts * * * [have pointed] out, Web sites are accessible day and night to all who possess the necessary technological know-how and equipment. Thus, if an interactive Web site can constitute "purposeful availment" of a forum simply by being continuously accessible to residents of that forum, surely that contact can be considered "continuous and systematic" for purposes of general jurisdiction. Taking this reasoning to its logical conclusion, a plaintiff could sue a foreign defendant in any forum and claim jurisdiction based on the defendant's interactive Web site, even if the cause of action is unrelated to the Web site. Such results hardly conform with notions of "fair play and substantial justice." International Shoe, 326 U.S. at 320, 66 S.Ct. 154. The grasp of personal jurisdiction was never intended to reach so far and so wide.

Moreover, the imposition of broad territorial concepts of personal jurisdiction on the commercial uses of the Internet has dramatic implications, "opening the Web user up to inconsistent regulations throughout fifty states, indeed, throughout the globe." Digital Equipment Corp. v. AltaVista Technology, Inc., 960 F.Supp. 456, 463 (D.Mass.1997). The possibility of such overreaching jurisdiction raises the specter of "dramatically chilling what may well be the most participatory marketplace of mass speech that this country--and indeed the world--has yet seen." Id. Businesses offering products through the Internet, particularly small businesses, might forego this efficient and accessible avenue of commerce if faced with the "litigious nightmare of being subject to suit" in every jurisdiction in this country. Donnie L. Kidd, Jr., Casting the Net: Another Confusing Analysis of Personal Jurisdiction and Internet Contacts in Telco Communications v. An Apple a Day, 32 U. Rich. L.Rev. 505, 541 (1998).

For all of these reasons, this court will not abandon the basic principle that defendants must have taken some action to direct their activities in the forum so as to "purposely avail" themselves of the privilege of doing business within Oregon. The timeless and fundamental bedrock of personal jurisdiction assures us all that a defendant will not be "haled" into a court of a foreign jurisdiction based on nothing more than the foreseeability or potentiality of commercial activity with the forum state. World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559. Until transactions with Oregon residents are consummated through defendants' Web site, defendants cannot reasonably anticipate that they will be brought before this court, simply because they advertise their products through a global medium which provides the capability of engaging in commercial transactions. It is therefore "presumptively ... unreasonable to require [them] to submit to the burdens of litigations" in this forum. Burger King, 471 U.S. at 476, 105 S.Ct. 2174.


CONCLUSION


Due process requires that personal jurisdiction be based first and foremost on fairness. If defendants do not have "fair warning" that their Internet activities would render them subject to jurisdiction in this forum, personal jurisdiction may not be had, regardless of other considerations:

Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment. World-Wide Volkswagen Corp., 444 U.S. at 294, 100 S.Ct. 559.


Plaintiff fails to show that defendants have sufficient minimum contacts with this forum to allow the exercise of personal jurisdiction in accordance with federal due process. Therefore, defendants' Motion to Dismiss is GRANTED and all pending motions are DENIED as moot. Plaintiff's Complaint is HEREBY DISMISSED.

Footnotes:

1. Rules 4C and 4D provide authorize personal jurisdiction as follows:

4C Local act or omission.

In any action claiming injury to person or property within or without this state arising out of an act or omission within this state by the defendant.

4D Local injury; foreign act.

In any action claiming injury to person or property within this state arising out of an act or omission outside this state by the defendant, provided in addition that at the time of the injury, either:

D(1) Solicitation or service activities were carried on within this state by or on behalf of the defendant; or

D(2) Products, materials, or things distributed, processed, serviced, or manufactured by the defendant were used or consumed within this state in the ordinary course of trade.



NOTES FOLLOWING MILLENNIUM ENTERPRISES, INC. v. MILLENNIUM MUSIC, LP


1. If Millennium Music had an 800 number, how would this effect the jurisdictional analysis?


2. If Millennium Music had legitimately sold a CD for $10 in Oregon, would that have constituted purposeful availment? Or would it need more in sales?


3. Suppose Millennium Music was selling music that would be downloaded by the user. What would be more relevant the location of the billing address or where the music was downloaded?


4. Suppose Millennium Music had subcontracted out their web site to ACME Web Design of New York. ACME Web Design then placed the web site on a server in Oregon. The content of the site is the same, but now it is physically located in Oregon. Would this change the decision? Should it? Does it depend on Millennium's knowledge that the web site is in Oregon?


5. Is the physical location of a computer or web site relevant for jurisdiction?


6. Would Millennium Music be subject to suit in Florida? Would it depend on whether sales were via the Internet or whether Florida residents were ordering by phone or visiting in person? What facts would you need to establish?



BENSUSAN RESTAURANT CORPORATION v. KING
United States District Court, S.D. New York. 1996.
937 F.Supp. 295

Stein, District Judge:


Plaintiff Bensusan Restaurant Corp. ("Bensusan") brought this action against defendant Richard King, individually and doing business as The Blue Note, alleging that King is infringing on Bensusan's rights in its trademark "The Blue Note." King has moved to dismiss the complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). The issue raised by that motion is whether the existence of a "site" on the World Wide Web of the Internet, without anything more, is sufficient to vest this Court with personal jurisdiction over defendant pursuant to New York's long-arm statute and the Due Process Clause of the United States Constitution. For the reasons that follow, the motion to dismiss the complaint is granted.


I. BACKGROUND


Bensusan, a New York corporation, is the creator of a jazz club in New York City known as "The Blue Note." It also operates other jazz clubs around the world. Bensusan owns all rights, title and interest in and to the federally registered mark "The Blue Note." King is an individual who lives in Columbia, Missouri and he owns and operates a "small club" in that city which is also called "The Blue Note."

In April of 1996, King posted a "site" on the World Wide Web of the Internet to promote his club. This Web site, which is located on a computer server in Missouri, allegedly contains "a fanciful logo which is substantially similar to the logo utilized by [Bensusan]." The Web site is a general access site, which means that it requires no authentication or access code for entry, and is accessible to anyone around the world who has access to the Internet. It contains general information about the club in Missouri as well as a calendar of events and ticketing information. The ticketing information includes the names and addresses of ticket outlets in Columbia and a telephone number for charge-by-phone ticket orders, which are available for pick-up on the night of the show at the Blue Note box office in Columbia.

At the time this action was brought, the first page of the Web site contained the following disclaimer: "The Blue Note's Cyberspot should not be confused with one of the world's finest jazz club[s] [the] Blue Note, located in the heart of New York's Greenwich Village. If you should find yourself in the big apple give them a visit." Furthermore, the reference to Bensusan's club in the disclaimer contained a "hyperlink" which permits Internet users to connect directly to Bensusan's Web site by "clicking" on the link. After Bensusan objected to the Web site, King dropped the sentence "If you should find yourself in the big apple give them a visit" from the disclaimer and removed the hyperlink.

Bensusan brought this action asserting claims for trademark infringement, trademark dilution and unfair competition. King has now moved to dismiss the action for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).


II. DISCUSSION


At this stage of the litigation--prior to an evidentiary hearing or discovery--Bensusan may defeat a motion to dismiss the complaint for lack of personal jurisdiction by making merely a prima facie showing of jurisdiction. In that regard, Bensusan is entitled to have its complaint and affidavits interpreted, and any doubts resolved, in the light most favorable to it. This burden is satisfied even when the moving party makes contrary allegations that place in dispute the factual basis of plaintiff's prima facie case. Furthermore, where, as in this case, discovery has not commenced on this issue or any other, plaintiff is entitled to rely on mere factual allegations to make its prima facie showing of jurisdiction. Matters outside the pleadings, however, may also be considered in resolving a motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) without converting it into one for summary judgment.

Knowing that personal jurisdiction over a defendant is measured by the law of the jurisdiction in which the federal court sits, Bensusan relies on subdivisions (a)(2) and (a)(3)(ii) of N.Y.C.P.L.R. 302, New York's long-arm statute, to support its position that personal jurisdiction exists over King in this action. Each provision will be addressed in turn.


A. C.P.L.R. 302(A)(2)

C.P.L.R. 302(a)(2) permits a court to exercise personal jurisdiction over any non-domiciliary who "commits a tortious act within the state" as long as the cause of action asserted arises from the tortious act.

* * * [C]ourts have found that an offering for sale of even one copy of an infringing product in New York, even if no sale results, is sufficient to vest a court with jurisdiction over the alleged infringer. Accordingly, the issue that arises in this action is 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 the product in New York.

Even after construing all allegations in the light most favorable to Bensusan, its allegations are insufficient to support a finding of long-arm jurisdiction over * * * [the defendant]. A New York resident with Internet access and either knowledge of King's Web site location or a "search engine" capable of finding it could gain access to the Web site and view information concerning the Blue Note in Missouri.

It takes several affirmative steps by the New York resident, however, to obtain access to the Web site and utilize the information there. First, the New York resident has to access the Web site using his or her computer hardware and software. Then, if the user wished to attend a show in defendant's club, he or she would have to telephone the box office in Missouri and reserve tickets. Finally, that user would need to pick up the tickets in Missouri because King does not mail or otherwise transmit tickets to the user. Even assuming that the user was confused about the relationship of the Missouri club to the one in New York, such an act of infringement would have occurred in Missouri, not New York. The mere fact that a person can gain information on the allegedly infringing product is not the equivalent of a person advertising, promoting, selling or otherwise making an effort to target its product in New York. Here, there is simply no allegation or proof that any infringing goods were shipped into New York or that any other infringing activity was directed at New York or caused by King to occur here.

Accordingly, C.P.L.R. 302(a)(2) does not authorize this Court to exercise jurisdiction over King.


B. C.P.L.R. 302(a)(3)(ii)

Bensusan also contends that personal jurisdiction is established pursuant to C.P.L.R. 302(a)(3)(ii), which permits a court to exercise personal jurisdiction over any non-domiciliary for tortious acts committed outside the state that cause injury in the state if the non-domiciliary "expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce."

As an initial matter, Bensusan does not allege that King derives substantial revenue from interstate or international commerce. Instead, it relies on arguments that King participates in interstate commerce by hiring and showcasing bands of national stature. Section 302(a)(3)(ii), however, explicitly states that substantial "revenue" is required from interstate commerce, not mere participation in it. King has submitted an affidavit stating that 99% of his patronage and revenue is derived from local residents of Columbia, Missouri (primarily students from the University of Missouri) and that most of the few out-of-state customers have either an existing or a prior connection to the area, such as graduates of the University of Missouri.

Moreover, Bensusan's allegations of foreseeability, which are based solely on the fact that King knew that Bensusan's club is located in New York, is insufficient to satisfy the requirement that a defendant "expects or should reasonably expect the act to have consequences in the state." That prong of the statute requires that a defendant make "a discernable effort ... to serve, directly or indirectly, a market in the forum state."

Finally, Bensusan's conclusory allegation of a loss in New York is nothing more that an allegation of an "indirect financial loss resulting from the fact that the injured person resides or is domiciled in New York," which is not the allegation of a "significant economic injury" required by section 302(a)(3).

Accordingly, C.P.L.R. 302(a)(3) does not authorize this Court to exercise jurisdiction over King.

Bensusan's primary argument in support of both statutory bases for personal jurisdiction is that, because defendant's Web site is accessible in New York, defendant could have foreseen that the site was able to be viewed in New York and taken steps to restrict access to his site only to users in a certain geographic region, presumably Missouri. Regardless of the technical feasibility of such a procedure, mere foreseeability of an in-state consequence and a failure to avert that consequence is not sufficient to establish personal jurisdiction.


C. Due Process

Furthermore, even if jurisdiction were proper under New York's long arm statute, asserting personal jurisdiction over King in this forum would violate the Due Process Clause of the United States Constitution. * * *

The following factors are relevant to this determination: "(1) whether the defendant purposefully availed himself of the benefits of the forum state; (2) whether the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there; and (3) whether the defendant carries on a continuous and systematic part of its general business within the forum state." Independent Nat'l Distributors, Inc. v. Black Rain Communications, Inc., No. 94 Civ. 8464, 1995 WL 571449, at * 5-6 (S.D.N.Y. Sept. 28, 1995)

As set forth above, King has done 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. There are no allegations that King actively sought to encourage New Yorkers to access his site, or that he conducted any business--let alone a continuous and systematic part of its business--in New York. There is in fact no suggestion that King has any presence of any kind in New York other than the Web site that can be accessed worldwide. Bensusan's argument that King should have foreseen that users could access the site in New York and be confused as to the relationship of the two Blue Note clubs is insufficient to satisfy due process.

Although CompuServe Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), a recent decision of the United States Court of Appeals for the Sixth Circuit, reached a different result, it was based on vastly different facts. In that case, the Sixth Circuit found personal jurisdiction proper in Ohio over an Internet user from Texas who subscribed to a network service based in Ohio. The user, however, specifically targeted Ohio by subscribing to the service and entering into a separate agreement with the service to sell his software over the Internet. Furthermore, he advertised his software through the service and repeatedly sent his software to the service in Ohio. This led that court to conclude that the Internet user "reached out" from Texas to Ohio and "originated and maintained" contacts with Ohio. This action, on the other hand, contains no allegations that King in any way directed any contact to, or had any contact with, New York or intended to avail itself of any of New York's benefits.

Accordingly, the exercise of personal jurisdiction over King in this case would violate the protections of the Due Process Clause.


III. CONCLUSION


For the reasons set forth above, defendant's motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction is granted and the complaint is dismissed.


SO ORDERED.


BENSUSAN RESTAURANT CORPORATION v. KING
United States Court of Appeals, Second Circuit. 1997
126 F.3d 25

Van Graafeiland, Circuit Judge:

Bensusan Restaurant Corporation, located in New York City, appeals from a judgment of the United States District Court for the Southern District of New York (Stein, J.) dismissing its complaint against Richard B. King, a Missouri resident, pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. We affirm.

* * *

The district court dismissed the complaint in a scholarly opinion that was published in 937 F.Supp. 295 (1996). Although we realize that attempting to apply established trademark law in the fast-developing world of the internet is somewhat like trying to board a moving bus, we believe that well-established doctrines of personal jurisdiction law support the result reached by the district court.

In diversity or federal question cases the court must look first to the long-arm statute of the forum state, in this instance, New York. If the exercise of jurisdiction is appropriate under that statute, the court then must decide whether such exercise comports with the requisites of due process. Because we believe that the exercise of personal jurisdiction in the instant case is proscribed by the law of New York, we do not address the issue of due process.

The New York law dealing with personal jurisdiction based upon tortious acts of a non-domiciliary who does not transact business in New York is contained in sub-paragraphs (a)(2) and (a)(3) of CPLR 302, and Bensusan claims jurisdiction with some degree of inconsistency under both sub- paragraphs. Because King does not transact business in New York State, Bensusan makes no claim under section 302(a)(1). The legislative intent behind the enactment of sub-paragraphs (a)(2) and (a)(3) best can be gleaned by reviewing their disparate backgrounds. Sub-paragraph (a)(2), enacted in 1962, provides in pertinent part that a New York court may exercise personal jurisdiction over a non-domiciliary who "in person or though an agent" commits a tortious act within the state. The New York Court of Appeals has construed this provision in several cases. In Feathers v. McLucas, 15 N.Y.2d 443, 458, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965), the Court held that the language "commits a tortious act within the state," as contained in sub- paragraph (a)(2), is "plain and precise" and confers personal jurisdiction over non-residents "when they commit acts within the state.". Feathers adopted the view that CPLR 302(a)(2) reaches only tortious acts performed by a defendant who was physically present in New York when he performed the wrongful act. The official Practice Commentary to CPLR 302 explains that "if a New Jersey domiciliary were to lob a bazooka shell across the Hudson River at Grant's tomb, Feathers would appear to bar the New York courts from asserting personal jurisdiction over the New Jersey domiciliary in an action by an injured New York plaintiff." C302:17. The comment goes on to conclude that:

As construed by the Feathers decision, jurisdiction cannot be asserted over a nonresident under this provision unless the nonresident commits an act in this state. This is tantamount to a requirement that the defendant or his agent be physically present in New York.... In short, the failure to perform a duty in New York is not a tortious act in this state, under the cases, unless the defendant or his agent enters the state.

* * *

* * * Applying these principles, we conclude that Bensusan has failed to allege that King or his agents committed a tortious act in New York as required for exercise of personal jurisdiction under CPLR 302(a)(2). The acts giving rise to Bensusan's lawsuit-- including the authorization and creation of King's web site, the use of the words "Blue Note" and the Blue Note logo on the site, and the creation of a hyperlink to Bensusan's web site--were performed by persons physically present in Missouri and not in New York. Even if Bensusan suffered injury in New York, that does not establish a tortious act in the state of New York within the meaning of 302(a)(2).

Bensusan's claims under sub-paragraph (a)(3) can be quickly disposed of. Sub-paragraph (a)(2) left a substantial gap in New York's possible exercise of jurisdiction over non-residents because it did not cover the tort of a non-resident that took place outside of New York but caused injury inside the state. Accordingly, in 1966 the New York Legislature enacted sub- paragraph (a)(3), which provides in pertinent part that New York courts may exercise jurisdiction over a non-domiciliary who commits a tortious act without the state, causing injury to person or property within the state. However, once again the Legislature limited its exercise of jurisdictional largess. Insofar as is pertinent herein it restricted the exercise of jurisdiction under sub-paragraph (a)(3) to persons who expect or should reasonably expect the tortious act to have consequences in the state and in addition derive substantial revenue from interstate commerce. To satisfy the latter requirement, Bensusan relies on the arguments that King participated in interstate commerce by hiring bands of national stature and received revenue from customers--students of the University of Missouri--who, while residing in Missouri, were domiciliaries of other states. These alleged facts were not sufficient to establish that substantial revenues were derived from interstate commerce, a requirement that "is intended to exclude non-domiciliaries whose business operations are of a local character."


For all the reasons above stated, we affirm the judgment of the district court.


NOTES FOLLOWING BENSUSAN RESTAURANT CORPORATION v. KING


1. Is Panavision consistent with Bensusan?


2. Suppose Warren Buffett published a newsletter on stock tips for $1,000 a year and libeled an Illinois resident. His only contact with Illinois is his 60 subscribers in Illinois which make up about 2% of his total subscribers. Buffett also has an interactive web site that allows people to sign up for a short electronic newsletter. Would he be subject to jurisdiction in Illinois? What do Drudge and Bensusan tell us?


3. What if the Blue Note club in Missouri had mailed tickets to New York?


4. Suppose the Blue Note of Missouri was not located in Missouri but in New Jersey? Would the court now have jurisdiction? What facts would you need?


5. What if the Blue Note of Missouri web site allowed people to submit their addresses, to which Blue Note would mail information about upcoming bands? Could this be enough for a New York court?


MARITZ, INC. v. CYBERGOLD, INC.
United States District Court, E.D. Missouri, Eastern Division. 1996.
947 F.Supp. 1328

Webber, District Judge:


This matter is before the Court on the motion of defendant to dismiss for lack of personal jurisdiction and improper venue, on the motion of defendant to dismiss for failure to state a claim and lack of subject matter jurisdiction, and on the motion of defendant to stay the proceedings .

Plaintiff Maritz, Inc., has brought this action alleging that defendant Cybergold, Inc., is violating Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a), in connection with Cybergold's internet activities. Plaintiff seeks a preliminary injunction to enjoin Cybergold's alleged trademark infringement and unfair competition. Plaintiff also seeks an expedited hearing on the preliminary injunction hearing. Because of plaintiff's requests for an expedited hearing on plaintiff's motion for a preliminary injunction, the Court ordered expedited briefing on defendant's motions to dismiss and to stay, in order to resolve threshold jurisdictional questions in this action.


I. Personal Jurisdiction and Venue

Defendant has moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), asserting that this Court cannot exercise personal jurisdiction over it. Defendant argues that plaintiff's first amended complaint fails to allege any facts on which personal jurisdiction over defendant can be based.

Whether the Court can exercise personal jurisdiction over defendant requires a two-part inquiry. The Court first examines whether personal jurisdiction exists under Missouri's long-arm statute. Next, the Court must determine whether the exercise of personal jurisdiction is consistent with due process.

In considering a motion under Rule 12(b)(2), the Court views the facts in a light most favorable to plaintiff, the party opposing the motion. However, the burden remains on plaintiff to establish that jurisdiction exists. Because the Court is ruling on the submissions of the parties, and is not conducting an evidentiary hearing on the matter, plaintiff is required to make a prima facie showing of personal jurisdiction over the defendant at this time.

Viewed in the light most favorable to plaintiff, defendant's contacts with Missouri are as follows. CyberGold maintains an internet site on the World Wide Web. The server for the website is presumably in Berkeley, California. The website is at present continually accessible to every internet-connected computer in Missouri and the world. CyberGold's website can be accessed at "www.cybergold.com" by any internet user.

It is estimated that there are 20 to 30 million users of the internet. * * * There are at least 12,000 persons in Missouri who have internet access, although the number may be much higher. Any internet user can access any website, of which there are presumably hundreds of thousands, by entering into the computer the internet address they are seeking. Internet users can also perform searches on the internet to find websites within targeted areas of interest. Via telephone lines, the user is connected to the website, and the user can obtain any information that has been posted at the website for the user. The user can also interact with and send messages to that website. Upon connecting to a website, the information is transmitted electronically to the user's computer and quickly appears on the users screen. This transmitted information can easily be downloaded to a disk or sent to a printer.

CyberGold's website, located at "www.cybergold.com," is operational. The website provides information about CyberGold's new upcoming service. The website explains that the forthcoming service will maintain a mailing list of internet users, presumably including many residents of Missouri. An internet user who wants to be on CyberGold's mailing list provides CyberGold with his or her particular areas of interest. CyberGold will then provide the user with a personal electronic mailbox and will forward to the user advertisements that match the users selected interests. CyberGold plans to provide users incentives for reading the advertisements. CyberGold plans to charge advertisers for access to the internet users on its mailing list. CyberGold's actual service is not yet in operation.

Plaintiff asserts that this website acts as a state-wide advertisement for CyberGold's forthcoming internet service. Plaintiff asserts that the website "invites Missourians to put their names on CyberGold's mailing list and get up- to-date information about the company and its forthcoming Internet service." Plaintiff also asserts that through this website "CyberGold is also actively soliciting advertising customers" from Missouri.

Since CyberGold has set up its website, the website has been accessed through internet users located in Missouri at least 311 times, although 180 of the 311 times were by Maritz and its employees. CyberGold attests that, other than maintaining the website "www.cybergold.com," it has no other contacts with the state of Missouri.

Missouri's long-arm statute allows the exercise of jurisdiction over non-residents to the extent permissible under the due process clause. The Missouri long-arm statute, Mo.Rev.Stat. 506.500, provides, in relevant part:

Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts:

(1) The transaction of any business within this state

...

(3) The commission of a tortious act within this state

...


Plaintiff asserts first that defendant meets the "transaction of any business" within the state test. Plaintiff compares defendant's activities with those of the defendant in Danforth v. Reader's Digest Ass'n, Inc., 527 S.W.2d 355 (Mo. banc 1975). In Danforth, the Missouri supreme court held that the "transaction of any business" requirement was satisfied where defendant conducted promotional activities directed towards recipients located in Missouri. The defendant in Danforth had mailed into Missouri, on two occasions, thousands of solicitations for magazine subscriptions.

Missouri courts have not addressed the issue of whether internet transmissions involving advertising meet the "transaction of any business" test. Plaintiff's comparison of the maintenance of a website to the active solicitation through mass mailings is to some extent unsatisfactory in resolving the question of whether defendant's internet activities amount to the "transaction of any business." As discussed below, there are considerable differences in the two mediums of communication and information exchange. Because the Missouri courts construe the Missouri long-arm statute to confer jurisdiction to the extent allowed by the Due Process Clause, this Court will resolve the long-arm statute question in the context of the due process clause.

It is unnecessary to decide whether defendant's activities satisfy the "transaction of any business" test because the Court concludes that defendant is amenable to service under the "commission of a tortious act" provision in Missouri's long-arm statute. Mo.Rev.Stat. 506.500.1(3). Plaintiff argues that CyberGold is infringing on Maritz's trademark in violation of the Lanham Act, 15 U.S.C. 1125(a), and that this infringement is causing economic harm and injury to Maritz. Plaintiff asserts that the injury from infringement is occurring in Missouri, as Maritz is located in Missouri.

A violation of the Lanham Act is tortious in nature. In Peabody Holding Co. Inc., v. Costain Group PLC, 808 F.Supp. 1425, 1433-34 (E.D.Mo.1992) (J. Limbaugh), and in May Dep't Stores Co. v. Wilansky, 900 F.Supp. 1154, 1159-60 (Ed.Mo.1995) (J. Shaw), the courts determined that the "commission of a tortious act" provision of Missouri's long-arm statute permitted jurisdiction over a defendant corporation where the sole basis for jurisdiction was an extraterritorial act of tortious interference with a contract which produced an effect in the State of Missouri. Based on these decisions, the Court concludes that Missouri's long- arm statute reaches the defendants, even assuming CyberGold's allegedly infringing activities were wholly outside of Missouri, because the allegedly infringing activities have produced an effect in Missouri as they have allegedly caused Maritz economic injury.

Both Peabody Holding Co. Inc., 808 F.Supp. at 1436-38, and May Dep't Stores Co., 900 F.Supp. at 1161, relied upon by plaintiffs, however, concluded that, while Missouri's long-arm statute extended to the defendants, exercising jurisdiction over the defendant corporations would violate due process. In both cases, the plaintiffs could point to no contacts other than the impact of the defendants' alleged tortious activity upon plaintiffs in the form of economic damages. Such limited contact alone, was "so attenuated that the maintenance of a suit would offend traditional notions of fair play and substantial justice."

Thus, the Court must turn to the issue of whether the Court's exercise of personal jurisdiction over defendant CyberGold under the facts of this case would violate due process. Due process requires that there be "minimum contacts" between the nonresident defendant and the forum state before a court can exercise personal jurisdiction over the defendant. The Eighth Circuit has articulated that

Sufficient contacts exist when the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there, and when the maintenance of the suit does not offend traditional notions of fair play and substantial justice. In assessing the defendant's "reasonable anticipation," there must be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits of its laws. Soo Line R.R. Co. v. Hawker Siddeley Canada, Inc., 950 F.2d 526, 528-29 (8th Cir.1991).


The Eighth Circuit has set forth a five-part test for measuring minimum contacts:

(1) the nature and quality of the contacts with the forum state;

(2) the quantity of those contacts:

(3) the relation of the cause of action to the contacts;

(4) the interest of the forum state in providing a forum for its residents;

(5) the convenience of the parties.

The first three factors are the most important.


Whether maintaining a website, such as the one maintained by CyberGold, which can be accessed by any internet user, and which appears to be maintained for the purpose of, and in anticipation of, being accessed and used by any and all internet users, including those residing in Missouri, amounts to promotional activities or active solicitations such as to provide the minimum contacts necessary for exercising personal jurisdiction over a non-resident corporation, presents an issue of first impression to this Court. The internet, a new and rapidly developing means of mass communication and information exchange, raises difficult questions regarding the scope of court's personal jurisdiction in the context of due process jurisprudence.

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 website in the form of an advertisement or solicitation, one has done everything necessary to reach the global internet audience.

A company's establishment of a telephone number, such as an 800 number, is not as efficient, quick, or easy way to reach the global audience that the internet has the capability of reaching. While the internet does operate via telephone communications, and requires users to place a "call" to a website via the user's computer, a telephone number still requires a print media to advertise that telephone number. Such media would likely require the employment of phone books, newspapers, magazines, and television. Even then, an 800 number provides a less rapid and more limited means of information exchange than a computer with information downloading and printing capabilities. With a website, one need only post information at the website. Any internet user can perform a search for selected terms or words and obtain a list of website addresses that contain such terms or words. The user can then access any of those websites.

In analyzing the first factor articulated by the Eighth Circuit--the Court finds that the nature and quality of contacts provided by the maintenance of a website on the internet are clearly of a different nature and quality than other means of contact with a forum such as the mass mailing of solicitations into a forum.

CyberGold's posting of information about its new, up-coming service through a website seeks to develop a mailing list of internet users, as such users are essential to the success of its service. Clearly, CyberGold has obtained the website for the purpose of, and in anticipation that, internet users, searching the internet for websites, will access CyberGold's website and eventually sign up on CyberGold's mailing list. Although CyberGold characterizes its activity as merely maintaining a "passive website," its intent is to reach all internet users, regardless of geographic location. Defendant's characterization of its activity as passive is not completely accurate. By analogy, if a Missouri resident would mail a letter to CyberGold in California requesting information from CyberGold regarding its service, CyberGold would have the option as to whether to mail information to the Missouri resident and would have to take some active measures to respond to the mail. With CyberGold's website, CyberGold automatically and indiscriminately responds to each and every internet user who accesses its website. Through its website, CyberGold has consciously decided to transmit advertising information to all internet users, knowing that such information will be transmitted globally. Thus, CyberGold's contacts are of such a quality and nature, albeit a very new quality and nature for personal jurisdiction jurisprudence, that they favor the exercise of personal jurisdiction over defendant.

As to the second factor--the quantity of contacts--the Court finds that defendant has transmitted information into Missouri regarding its services approximately 131 times.(1) The information 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.

As to the third factor articulated by the Eighth Circuit, the litigation in this action against CyberGold results from alleged injuries that, at least in part, arise out of or relate to CyberGold's website and the information posted at the website. The website invites internet users to use CyberGold's new service when it becomes operational. This service and the promotional efforts that CyberGold is employing by posting the information its website are allegedly infringing on plaintiff's alleged trademark. While CyberGold has not yet set up its service of sending advertisements to internet users on its mailing list, CyberGold's acts of developing a mailing list through its acceptance of addresses on its website are also part of the allegedly infringing activity about which plaintiff complains.

Whether sufficient minimum contacts to obtain personal jurisdiction over a defendant can be established solely through the use of computers and electronic communications is a new issue under due process jurisprudence. Courts addressing the issue have recognized that such communications via computer are of a different nature. In California Software Inc. v. Reliability Research, Inc., 631 F.Supp. 1356, 1363 (C.D.Cal.1986), the court, in addressing whether a defendant's communication by posting allegedly false statements about plaintiff on an interstate computer network could create personal jurisdiction, stated:

Not only did defendants act intentionally but, by communicating through the [computer] network, they made their messages available to an audience wider than those requesting the information ... Through the use of computers, corporations can now transact business and communicate with individuals in several states simultaneously. Unlike communication by mail or telephone, message sent through computers are available to the recipient and anyone else who may be watching. Thus, while modern technology has made nationwide commercial transactions simpler and more feasible, even for small businesses, it must broaden correspondingly the permissible scope of jurisdiction exercisable by the courts. Id.

Similarly, in Inset Systems, Inc. v. Instruction Set, Inc., 937 F.Supp. 161, 165 (D.Conn.1996), the district court found that personal jurisdiction existed over a defendant corporation that made its toll-free 800 number available over the internet to the residents of the forum state. In addressing the issue of "purposeful availment," the Court stated:

[Defendant] 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. [Defendant] therefore, purposefully availed itself of the privilege of doing business within Connecticut. Id.


Similarly, the Court concludes that defendant CyberGold, through its internet activities, has purposefully availed itself of the privilege of doing business with this forum such that it could reasonably anticipate the possibility of being haled into court here.

The Court also concludes that traditional notions of "fair play and substantial justice" do not dictate against exercising personal jurisdiction over defendant in Missouri. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-478, 105 S.Ct. 2174, 2184-85, 85 L.Ed.2d 528 (1985). "Considerations include the burden on defendant, the interest in the forum state in adjudicating type dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies." Id. at 477, 105 S.Ct. at 2184-85. The State of Missouri has an interest in resolving this case and determining whether a Missouri corporation's trademark is being infringed in violation of a federal statute. Plaintiff likewise has a strong interest in adjudicating this action in Missouri. Defendant, who has availed itself to this forum has not shown that it is so burdened by defending itself in this forum that traditional notions of fair play and substantial justice are implicated.

Defendant's argument that venue is improper must also be denied. Because the Court has concluded it has personal jurisdiction over defendant, venue is proper in this judicial district.


* * *


IT IS HEREBY ORDERED that the motion of defendant to dismiss for lack of personal jurisdiction and improper venue is DENIED.

Footnotes:

1.      The Court does not consider, for purposes of establishing personal jurisdiction, the 180 times that plaintiff accessed defendant's website. If such contacts were to be considered, a plaintiff could always try to create personal jurisdiction. Further, in the context of this case, plaintiff could not argue that it is in any way being damaged by CyberGold's sending of an advertisement or solicitation of its allegedly infringing service to Maritz.



NOTES FOLLOWING MARITZ, INC. v. CYBERGOLD, INC.


1. Is jurisdiction over Cybergold just merely a consequence of its ability to have more customers? Is it fair for Cybergold to be dragged into jurisdictions around the United States because it does business with people from all over the United States, unlike the Blue Note of Missouri?


2. Apparently, in Minnesota, -- if you can see it, you can sue it!


Consider the following excerpt from a memo on the Minnesota Attorney General's Home Page:


It states in pertinent part: "persons outside of Minnesota who transmit information via the Internet knowing that information will be disseminated in Minnesota are subject to jurisdiction in Minnesota courts for violations of State criminal and civil laws." Memo on Jurisdiction, Minn. Att'y Gen. (visited Aug. 3 1999) <http://www.ag.state.mn.us/home/consumer/consumernews/OnlineScams/memo.html>.

Is this law likely to satisfy constitutional Due Process requirements? Is this law as broad it seems?


3. Problem of unforeseeability with Maritz and the State of Minnesota


An article by Sheehan criticizes existing personal jurisdiction law because it fails to meet its own requirements of protecting a defendant from burden of litigating in a distant forum. Katherine C. Sheehan, Predicting the Future: Personal Jurisdiction for the Twenty-First Century, 66 U. Cin. L. Rev. 385 (1998). Sheehan then puts forward a proposal to modify personal jurisdiction law with three main points. First, she argues there should be limits on the ability of states to have jurisdiction over out of state defendants. She argues these limits should be clearly defined with a bright line test. Such definite limits would allow people to foresee whether various actions may subject them to an inconvenient forum. Once people can adequately foresee where they may be subject to jurisdiction they can tailor their conduct accordingly. Sheehan's second point is that a state's jurisdictional power should be based on the limits of state sovereignty, not the subjective defendants' expectation. Her last point is that the protection of inconvenient litigation should have real meaning. For example, courts should allow a defendant to submit a statement to substantiate claims that a distant forum is too burdensome.

4. How relevant is it that the court disapproves of Cybergold's behavior much as the court disapproved of Toeppen's conduct in Panavision?

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