Copyright (c) 1997 Henry M. Cooper. All Rights Reserved.
Jurisdictional Trends in Cyberspace
The Internet, also known as the National Information Infrastructure (NII), is not a tangible device. No one manufactures or produces the Internet. It is not owned or controlled by a corporation or government. It survives only by the continual use of computer networking by people around the world.
The Internet is the world's largest computer network that operates by the global connection of millions of smaller computer networks and host computers to each other. How these connections work is rather complicated, but can be analogized to how trains travel on train tracks. The information being communicated would be the train. This information is translated by the computer into a universal protocol, called TCP/IP, which uses a common name and address space so that other computers connected to the network can locate and understand the information being sent. The information travels through switches which are computers that establish the path that the information must take to reach its destination. These switches can be likened to the train's dispatch giving directions to the train's conductor on which tracks to travel on so that the train will reach its destination. The path itself is called a router. Just as a train will switch tracks when it can no longer use that track to reach its destination, the information will switch routers when that router can no longer deliver the information to its destination. The Internet is unique in that there are millions of routers to ensure that the information will reach its destination. [1]
The World Wide Web (WWW), a component of the Internet, is used primarily as a "method of organizing information distributed across the Internet." [2] A "website" is "an Internet address which permits users to exchange digital information with a particular host." [3] "Hyperlinks" are "highlighted text or images that, when selected by the user, permit him to view another, related Web document." [4] A websurfer traverses the web by using a web browser. A web browser incorporates the web's pointer standard or Universal Resource Locator (URL) to find a particular website on the WWW.
Cyberspace exists in a "virtual world" that is not regulated or controlled by a universal set of laws. The Internet and the World Wide Web operate in cyberspace. These two global communication mediums are testing the boundaries of how the law of personal jurisdiction that exists in the real world is applicable to cyberspace.
Personal jurisdiction is the power of a U.S. court over a person as a defendant. A U.S. court may exercise personal jurisdiction over a non-resident defendant if that defendant's conduct satisfies the forum state's long-arm statute and does not violate the Due Process Clause of the 14th Amendment. The U.S. Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310 (1945), created the "minimum contacts" test to determine whether a forum state would violate the Due Process Clause by asserting personal jurisdiction over a non-resident defendant. The Shoe Court held that a court's exercise of personal jurisdiction over a non-resident defendant is proper if that defendant has had "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice'." [5]
The Shoe test is applicable to both types of personal jurisdiction: general and specific. General jurisdiction is established when a non-resident defendant's contacts with the forum state are so pervasive and substantial that personal jurisdiction is established even though the cause of action is unrelated to the defendant's contacts with the forum. [6] Specific jurisdiction is more difficult to establish because the cause of action must be related to the defendant's contacts, and those contacts must meet three criteria. The three criteria are: the defendant must "purposeful avail" himself of the privilege of doing business with the forum, the cause of action arises from defendant's activities in the forum state, and the exercise of jurisdiction would be fair and reasonable. [7]
To fulfill the purposeful availment requirement of the "minimum contacts" test, a non-resident defendant's contacts must "proximately result from [his] actions that create a 'substantial connection' with the forum state." [8] The defendant does not create a substantial connection if he only performs casual or isolated activities with the forum state. If the defendant performs a single related act or several continuous or systematic activities with the forum state, he has "purposefully availed" himself of that state and "should reasonably anticipate being haled into court [there]." [9] In Hanson v. Denckla, 357 U.S. 235 (1958), the U.S. Supreme Court defined when a non-resident defendant should "reasonably anticipate" being haled into another jurisdiction. The court held that the defendant should reasonably anticipate being haled into another state's jurisdiction if he "purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." [10] The Court's reasoning behind this definition was that in cases where the "quality and nature" of the defendant's single related act or continuous activities with the forum were "so 'random,' 'fortuitous' or 'attenuated'," exercise of personal jurisdiction by the forum over a non-resident defendant would be improper. [11]
In Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), the U.S. Supreme Court broadened the "purposeful availment" requirement where the defendant is a "commercial actor" by adding the "stream of commerce" standard for personal jurisdiction analysis. The Court began by stating that "so long as a commercial actor's efforts are 'purposefully directed' toward residents of another state . . . an absence of physical contacts [within the forum state is not enough] to defeat personal jurisdiction there." [12] The Court further held that the "purposeful availment" requirement is satisfied if two elements of the "stream of commerce" standard are established. First, the non-resident defendant must have placed or delivered its product into the stream of commerce. Second, the non-resident defendant must have placed or delivered the product with the expectation that the product will be purchased by consumers in the forum state. [13]
However, in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987), the U.S. Supreme Court clarified its decision in Worldwide. The Court held that the "defendant's awareness that the stream of commerce may or will sweep the product into the forum state does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum state." [14] The defendant must perform some additional action that shows he intended to avail himself of the forum state's market. For instance, the defendant advertises his product in the forum state. [15] Once the "purposeful availment" requirement is satisfied, a court must then determine if the cause of action arises out the defendant's activities within the forum state. This requirement is achieved if the "defendant's contacts with the forum state are related to the operative facts of the controversy." [16]
The last step in personal jurisdiction analysis is determining whether the exercise of personal jurisdiction over the non-resident defendant would be "fair and reasonable". In Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), the U.S. Supreme Court interpreted the "notions of fair play and substantial justice" portion of the minimum contacts test. The Court stated that even if the "purposeful availment" and "arise from" requirements are established, before a court can assert personal jurisdiction over a non-resident defendant, the assertion must be "fair and reasonable" to the defendant. The Court held that courts may evaluate what is "fair and reasonable" by considering the "burden on the defendant, the forum state's interest in adjudicating the 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." [17]
The law of personal jurisdiction is well established in the real world where there are national borders. The court in the forum state has numerous precedent to rely on in determining whether it meets the three criteria of the "minimum contacts" test and how far it can reach to assert jurisdiction over a non-resident. Despite the fact that technological advances in transportation and communication have made it easier for non-resident defendant's to defend themselves in foreign jurisdictions, the Internet does not exist in the real world but in the borderless world of cyberspace. Thus, the issue arises as to whether the "minimum contacts" test derived in International Shoe is applicable to cyberspace activities between two parties residing in different states or if a new standard must be created.
CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), was the first case to address if the "minimum contacts" test could survive in cyberspace. CompuServe, the plaintiff, is a corporation located in Ohio that provides access to online services via the Internet. It also provides through its electronic services the opportunity for its subscribers to download "shareware". "Shareware" is computer software that is created by a "shareware provider" (the online service (CompuServe) or some other party) and is exclusively distributed on the Internet through an online service. Patterson, the defendant, is a resident of Texas, and is a "shareware provider" who placed his web navigation software on the CompuServe system for subscribers to download.
For Patterson to place his software on CompuServe's system he had to enter into a "Shareware Registration Agreement (SRA) with CompuServe." [18] The SRA is an online agreement or an electronic contract. The SRA contained a choice of law provision which stated that all suits would be subjected to Ohio law. Patterson agreed to the terms of the SRA by typing the word "agree" on the SRA from his Texas computer and transmitting the SRA back to the CompuServe's system in Ohio. For three years, Patterson electronically transmitted his shareware to CompuServe's system in Ohio. Soon afterward, CompuServe marketed its own web navigation software that closely resembled Patterson's shareware. Patterson emailed or sent an electronic message to CompuServe stating their new software were infringing on his common law trademarks and its marketing of the product constituted deceptive trade practices. He "demanded at least $100,000 to settle his potential claims." As a result of Patterson's demand, CompuServe filed a declaratory judgment in Southern District of Ohio seeking a declaration that it did not infringe on Patterson's trademarks nor that it engaged in deceptive trade practices. Patterson moved to dismiss for lack of personal jurisdiction. [19]
The Sixth Circuit Court of Appeals had to decide whether Patterson's electronic contacts with Ohio were sufficient for the exercise of specific personal jurisdiction over him by the Southern District Court of Ohio. The Appellate Court used the three-prong test for specific personal jurisdiction that was created in Burger King. In analyzing the first prong, it found that Patterson should have "reasonably have anticipated being haled into an Ohio court" for several reasons. First, Patterson repeatedly transmitted his software from his Texas based computer to CompuServe's system in Ohio. Second, Patterson marketed his software on the CompuServe system. Third, this software was accessed and used by Ohio subscribers. Finally, Patterson "knowingly reached out to CompuServe's Ohio home, and he benefited from CompuServe's handling of his software and the fees it generated." [20] The court found that these three factors created a substantial connection with Ohio, and therefore Patterson fulfilled the "purposeful availment" prong of the specific personal jurisdiction test.
After the court found that Patterson purposefully availed himself of CompuServe's system in Ohio, it easily found that the controversy arose from his contacts with that system. The court reasoned that any cause of action for trademark violation would have been created in Ohio because of Patterson's acts of placing and marketing his software exclusively on the Ohio system. Also, Patterson's email messages to CompuServe in Ohio seeking money and threatening a lawsuit if CompuServe did not pay were considered contacts with Ohio that created the controversy. [21] Therefore, the court held that Patterson met the "arise from" prong of the specific personal jurisdiction test.
The court next determined that Patterson met the third prong or the "fairness/reasonableness" requirement of the specific personal jurisdiction test. Patterson had substantial connections with Ohio, he gained benefit from his connection with Ohio, and he agreed in the SRA to be subjected to Ohio law. Further, Ohio "has a strong interest in resolving a dispute involving an Ohio company" which stands to suffer a tremendous financial loss. Therefore, the court found it was not burdensome for Patterson to defend his suit in Ohio and held that "someone like Patterson who employs a computer network service like CompuServe to market a product can reasonably expect disputes with that service to yield lawsuits in the service's home state." [22]
In finding that Patterson met all three prongs of the specific personal jurisdiction test, the court denied his motion to dismiss for lack of personal jurisdiction. The CompuServe court expanded the reach of a court's in personam power and broadened the scope of the "minimum contacts" test to include contacts that exclusively occur in cyberspace. This creates a whole new spectrum to evaluate a non-resident's cyberspace activities as it impacts on the jurisdictional power of a potential forum state. This "cyberspace contact" spectrum, of course, would be applied separately from the Shoe spectrum as it exclusively deals with matters occurring in cyberspace. CompuServe would be at one end of this "cyberspace contact" spectrum.
The "active contact" standard created by the CompuServe case has two criteria: First, is the non-resident defendant's "cyberspace" activities repeatedly and purposefully directed to the forum state. Second, are they also related to the cause of action. If these two criteria are met, then it is proper to exercise personal jurisdiction over the non-resident defendant.
The "active contact" standard was further defined by Maritz, Inc. v. Cybergold, Inc., 947 F.Supp. 1328 (E.D. Mo. 1996). Maritz, the plaintiff, is a corporation located in Missouri that has a registered trademark "cybergold." Cybergold, the defendant, is a corporation located in California with an Internet domain name "cybergold.com." It doesn't conduct any business, have any offices nor employees in Missouri. Through its website, the defendant promotes its upcoming Internet mailing service. The service would operate by an Internet user subscribing to Cybergold's mailing list through its website and Cybergold matching the user's profile with certain advertisements. [23] Maritz sued Cybergold for trademark infringement and Cybergold moved to dismiss for lack of personal jurisdiction.
The defendant's website contained an automatic email reply component that was indiscriminate in who would access the site and do business with Cybergold. Consequently, "Cybergold ha[d] consciously decided to transmit advertising information to all Internet users, knowing that such information will be transmitted globally." [24] Also, the plaintiff showed evidence of 131 Missouri residents who subscribed to the defendant's mailing list. For the above two reasons, the court found that Cybergold purposefully availed itself of doing business in Missouri. Due to the amount of contacts and that Cybergold purposefully availed itself of Missouri, the court found it to be fair for the corporation to defend itself in Missouri. [25]
Maritz just barely meets the "active contact" standard. It was a stretch for the court in that case to find that Cybergold purposefully directed its global advertisements to Missouri. The "automatic" reply and transmissions were deemed by the court to be enough contact with the forum state to properly exercise personal jurisdiction just because there was no screening process by which Cybergold could discriminate to whom it would provide its service. As a result, this case added to the "active contact" standard another element in which personal jurisdiction can be asserted over a non-resident defendant. This element is called "automated component". The "automated component" element is defined as a website that has an automated function, such as the "automated reply" in Maritz, that indiscriminately conducts business and actively solicits Internet users around the world. An owner of a website that contains an "automated component" should anticipate being haled into any court.
Panavision Int'l, L.P. v. Toeppen, 945 F.Supp. 1296 (C.D. Cal. 1996), added another element to the "active contact" standard. This case dealt with the assignment of Internet domain names. An Internet domain name is the "alphanumeric equivalent" to an Internet Protocol (IP) address (i.e., microsoft.com). A domain name is used to identify who operates and what type of organization owns the website located at that IP address. In my above example, the ".com" informs the internet user that the website is owned by a commercial entity. Other top-level domain names include ".edu" and ".net" which refer to educational organizations and networks, respectively. The second-level of the domain name, the "microsoft", informs the internet user that the website is operated by Microsoft. The second-level is usually the full or abbreviated company's name. [26]
In Panavision, the defendant (Toeppen), resides in Illinois. He owns several websites with second-level domain names that are real world company names (i.e., northwestairlines.com). Two of Toeppen's websites "panavision.com" and "panaflex.com" are Panavision's registered trademarks in the real world. [27] Toeppen does not have Panavision's permission to use their marks. Further, Toeppen, although he does not sell or advertise any Panavision products on his website, misleads an internet user into reasonably inferring that the website is owned by Panavision because "businesses frequently register their names and trademarks as domain names." [28]
The dispute in this case arises from the fact that Panavision wanted to use its company name as its domain name for its website and discovered that Toeppen already registered their name as his domain name. Consequently, Panavision contacted Toeppen asking him if they could use that domain name. Toeppen responded by demanding $13,000 from Panavision for him to give up the use of that domain name. Panavision refused and filed a trademark infringement and several tortious claims against Toeppen. Toeppen filed a motion to dismiss for lack of personal jurisdiction. [29]
The Panavision court based its personal jurisdiction analysis on Toeppen's tortious interference with Panavision's federally registered trademarks. Toeppen's tortious Internet domain name activities were purposefully directed toward California, and were related to the cause of action. The court decided the Internet is no exception, and held the exercise of personal jurisdiction is proper whenever a non-resident defendant's acts cause intentional harm and injury to a resident of the forum state. [30] "[A non-resident defendant] should not be permitted to take advantage of modern technology through an Internet Web page and forum and simultaneously escape traditional notions of jurisdiction." [31] Therefore, tortious interference claims that involve the Internet can be grouped with the "active contact" standard.
On the other end of the "cyberspace contact" spectrum are those cases dealing with the mere posting of information on a website. The first case is McDonough v. Fallon McElligott, Inc., No. 95-4037, 1996 U.S. Dist. LEXIS 15139, at *1 n.1 (S.D. Cal. Aug. 5, 1996), which established the extent to which a California court was willing to assert specific personal jurisdiction over a non-resident due to "cyberspace" contacts. McDonough, the plaintiff, is a sports photographer, residing in California, who took a picture of a basketball player ("photograph"). Fallon McElligott, the defendant, is an advertising agency located in Minnesota. McDonough sued Fallon for copyright infringement claiming Fallon, without McDonough's permission, reproduced the photograph and used it in its "Nikon camera advertisement." [32] Fallon moved to dismiss for lack of personal jurisdiction.
In analyzing Fallon's motion, the United District Court for the Southern District of California ("court") applied the "minimum contacts test" to the facts of the case. The court found that Fallon had no clients in California, had no offices or employees in California, and had not placed any of its products that have been purchased by residents of California into the stream of commerce. Therefore, the court held the exercise of general personal jurisdiction would be improper because Fallon does not have any substantial, systematic or continuous connection with California. [33]
Failing to find general personal jurisdiction, the court attempted to find specific personal jurisdiction. In analyzing the first prong, the court could not find sufficient facts that would support the conclusion Fallon purposefully availed himself of California. Fallon had no clients in California; thus, had never conducted any activities nor benefited from California. Also, Fallon did not purposefully direct this advertisement towards California. Therefore, the court held Fallon should not have reasonably anticipated being haled into a California court. [34]
The second and third prongs of the specific personal jurisdiction test also were not met. Fallon's activities were not directed toward California; thus, the plaintiff's copyright infringement claim does not arise from a California related activity. Consequently, the court held McDonough's claims do not arise from any "forum-related activity of Fallon." In determining if the third prong was met, the court held that because Fallon has no offices or employees in California and has absolutely no contact with California that is related to the plaintiff's cause of action, "litigating the matter in this [c]ourt would consequently be inefficient[,] inconvenient [and unfair]." [35]
McDonough opposed the court's reasoning, arguing that the fact Fallon has a website on the World Wide Web that is accessed by Californians should be considered sufficient contacts with California to establish personal jurisdiction over him. The court granted the defendant's motion to dismiss for lack of personal jurisdiction. It strongly disagreed with McDonough's argument stating that "[b]ecause the Web enables easy world-wide access, allowing computer interaction via the web to supply sufficient contacts to establish jurisdiction would eviscerate the personal jurisdiction requirement as it currently exists." [36] Thus, the other end of the "cyberspace contact" spectrum was created. This "passive contact" standard states that if a non-resident merely maintains a website on the Internet, a court cannot use the Internet as a means to establish sufficient contacts to support the exercise of personal jurisdiction over him.
The "passive contact" standard was strongly supported in Bensusan Restaurant Corp. v. King, 937 F.Supp. 295 (S.D. N.Y. 1996). In Bensusan, the plaintiff is a New York corporation that created "The Blue Note" jazz club, which is also located in New York. The term "The Blue Note" was federally registered by Bensusan. King, the defendant, lives in Missouri and is the owner of a club also called "The Blue Note." [37] King created a website that he used to promote his club. On his website, King placed the logo for his club, which is "substantially similar" to Bensusan's logo for his N.Y. jazz club. The website contains information regarding the club and tickets. These tickets can only be picked up in Missouri and cannot be purchased online through the website. The site also 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. The rest of the disclaimer and a hyperlink pointing to Bensusan's website were eventually removed by King. Bensusan filed an action claiming trademark infringement and unfair competition, and King moved to dismiss for lack of personal jurisdiction. [38]
In analyzing whether it could properly exercise personal jurisdiction over King, the Bensusan court had to determine whether a website that contains a telephone number, so that an Internet user could order the "infringing product," is a manifestation of the creator's intent to sell the product in the forum state (New York). The court found the telephone number belongs to the box office for the club in Missouri. If someone wanted to attend a show there, he would have to reserve the tickets at the box office and actually pick them up at the club in Missouri. There was no mailing of the tickets to the Internet users location. Hence, the court held that "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 his product in [the forum state]." [39] Further, the court found King had not purposefully availed himself of doing business in New York, and concluded that "creating a site . . . may be felt nationwide--or even worldwide--but, without more, it is not an act purposefully directed toward the forum state." [40]
The two extremes of the "cyberspace contact" spectrum have been created through case law. CompuServe, Maritz, and Panavision have formed the "active contact" standard. This standard will subject a non-resident owner of a website to personal jurisdiction in a forum state if his cyberspace activities are automatic/indiscriminate, continuous/purposefully directed, and/or tortiously interfere with a resident of the forum state. On the opposite end of the spectrum are McDonough and Bensusan, which created the "passive contact" standard. This standard will not subject a non-resident to personal jurisdiction in a forum state just because he creates a website that posts information, without doing anything more active. However, there have been cases that do not fall clearly within these two extreme standards. These cases make up the middle of the spectrum or the "gray area" in the jurisdictional analysis of cyberspace.
Inset Systems, Inc. v. Instruction Set, Inc., 937 F.Supp. 161 (D. Conn. 1996), is the first of these "gray area" cases. Inset Systems, the plaintiff, is a Connecticut corporation that owns a federally registered trademark "INSET." Instruction Set, the defendant, is a Massachusetts corporation that owns an Internet domain name "Inset.com" and has a toll free number, 1-800-US-INSET, both of which are used to advertise their services. The dispute arose when Inset tried to obtain "Inset.com" as their domain name and discovered that the defendant already owned it. As a result, Inset Systems filed a trademark infringement claim against Instruction Set. Instruction Set then made a timely motion to dismiss for lack of jurisdiction. [41]
The Inset court attempted to apply the "minimum contacts" test to the defendant's Internet activities to discover whether it would be proper for it to exercise personal jurisdiction over Instruction Set. The court found that Instruction Set had no regular business activities, offices or employees within Connecticut. [42] It then looked at Instruction Set's Internet activities and toll-free number. The court found the Internet was similar to the toll free number in that they both can be reached around the world; therefore, combined them in their personal jurisdiction analysis. Instruction Set's Internet activities satisfied the "minimum contacts" test, and they should have reasonably anticipated being haled into a Connecticut court. Because Instruction Set advertised their products on the Internet, which can be continuously accessed by any Internet user, and could reach "as many as 10,000 Internet users within Connecticut alone" Instruction Set purposefully availed itself of the benefits of Connecticut. The court further reasoned that it would not be burdensome for Instruction Set to defend itself in Connecticut due to the close geographical proximity between Massachusetts and Connecticut. [43]
Inset does not fall within either of the extremes of the "cyberspace contact" spectrum. Instruction Set was not merely posting information. Their website was interactive - they advertised their goods and services on their website, and the Internet user could view them by "interacting" with the website. Consequently, the "passive contact" standard is not met.
The "active contact" standard is also not met for several reasons. Instruction Set's advertisements on the Internet were not active solicitations to a resident of Connecticut. There was no evidence of repeated transmissions or mailings of the defendant's goods to Connecticut, nor did Instruction Set purposefully direct their advertisements to influence Connecticut residents. Despite the Inset court's rationale, an individual who has a website and advertises his goods or services should not reasonably expect to be haled into any court in the world just because his advertising medium is the Internet. Inset showed no evidence that a Connecticut resident used their website to buy their goods and services. The possibility of an Internet user accessing a website cannot be sufficient to satisfy the "cyberspace contact" test. Further, there was no tortious interference claim made by Inset against Instruction Set. Inset seems to lean closer to the "active contact" standard due to its interaction with Internet users through its product advertising. If the plaintiff had evidence that Connecticut residents interacted with the website, which would result in Instruction Set conducting business in Connecticut, it could be argued that Instruction Set meets the "active contact" standard.
The other "gray area" case is Minnesota v. Granite Gate Resorts, Inc., No. C6-95-7227, 1996 WL 767431 (D. Minn. Dec. 11, 1996). The Attorney General of Minnesota filed a consumer fraud action against Granite Gate Resorts, located in Belize, alleging the defendant's online betting website called "WagerNet" violates Minnesota gambling laws. [44] The fraud portion of the complaint stems from a WagerNet advertisement which states it will "provide fans with a legal way to bet on sporting events from anywhere in the world . . . 24 hours a day." [45] The defendant moved to dismiss for lack of personal jurisdiction.
The Minnesota court found that the defendant's advertisements reached all Internet users around the world all the time unless the defendant decided to remove the advertisement from his website. Due to the nature of the Internet, it was possible for residents of Minnesota to access this site. Further, residents of Minnesota had in fact accessed the website and were on the defendant's mailing list. [46] The court found this to be enough contacts to properly exercise personal jurisdiction over the defendant.
The Minnesota case clearly does not meet the "passive contact" standard. WagerNet is not merely posting information but is actively seeking Internet users to place bets through its website. To classify the case under the "active contact" standard would be too strict. The Minnesota court should not have held the defendant's purposefully directed their website toward Minnesota even though WagerNet actively solicited customers through their website. Granite Gate did not send advertisements specifically aimed at Minnesota. The Minnesota resident, knowing that betting was illegal, had to take certain active steps to gain access to WagerNet. They had to connect to their Internet provider, type in the IP address for WagerNet, and agree to all its terms and conditions before it could use WagerNet's services.
The owner of a website should not be held liable in cases where the controversy surrounds an act that may be illegal in some parts of the world but legal in other parts. If the Minnesota case continued to stand as good law, it would deter future entrepreneurs from establishing online businesses because they would be potentially liable anywhere their business would be illegal. For example, an online business that is located in Italy, sells "widgets" on its website. The selling of "widgets" is legal in Italy, Germany, England but not in the United States. The owner of the online business should not be liable in the United States because it unknowingly sold a "widget" to a person who is located in a geographic area where "widgets" are prohibited.
There is another technical solution to this problem. The owner of the website could install a program that would identify in which geographic region the Internet user is located. The program would then refuse the user access to the services of the site if he is located in an area where the product or service rendered would be illegal. This could be simply achieved by having the user type his name, address and state of residence before entering the site. [47] It should be the states', or countries', burden to inform the website owner that it is illegal to provide services to residents of that state. The owner would then be obligated to update its website program.
In conclusion, "these online disputes have taken place between parties whose only contact is through computer networks, against a backdrop that lacks physical and territorial boundaries." [48] The "minimum contacts" test created in International Shoe for personal jurisdiction analysis applies well in the real world, but must be modernized to take into account activities exclusively occurring in cyberspace. The "cyberspace contact" spectrum deals with this problem. The "active contact" standard of this spectrum deals with one extreme of cyberspace activities. When a website contains one or more of the requisite elements, the exercise of personal jurisdiction over a non-resident defendant is proper. The "passive contact" standard deals with the other extreme of cyberspace activities. When a website merely posts information without anything more, it would be improper for courts to exercise personal jurisdiction over a non-resident. The middle of the spectrum needs to be more defined by case law. The beginning two cases, Inset and Minnesota, if upheld, will cause detrimental affects worldwide. There are technical and legal solutions to these two cases. It is important to note that the Internet is an information superhighway, and you never know what the next exit is going to say.
| On my honor, I certify that this paper is my original work and that appropriate credit is given to others when they were used in this paper as references and authorities. |
[1] See Henry H. Perritt, Jr., Law and the Information Superhighway: Privacy, Access, Intellectual Property, Commerce, Liability 4-5 (J. Wiley & Sons ed., 1996).
[2] See Henry H. Perritt, Jr., Law and the Information Superhighway: Privacy, Access, Intellectual Property, Commerce, Liability 9-10 (J. Wiley & Sons ed., 1996).
[3] Bensusan v. King, 937 F.Supp. 295, 297 (S.D.N.Y. 1996) (quoting MTV Networks v. Curry, 867 F.Supp. 202, 203 (S.D.N.Y. 1994)).
[4] Shea v. Reno, 930 F.Supp. 916 (S.D.N.Y. 1996), 929.
[5] International Shoe Co. v. Washington, 326 U.S. 310 (1945), 317.
[6] See Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), 447.
[7] See Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), 472.
[8] Burger King Corp., 471 U.S. at 475.
[9] Burger King Corp., 471 U.S. at 486.
[10] Hanson v. Denckla, 357 U.S. 235 (1958), 253.
[11] See Burger King Corp., 471 U.S. at 486.
[12] Burger King Corp., 471 U.S. at 476.
[13] Worldwide Volkswagen v. Woodson, 444 U.S. 286 (1980), 298.
[14] Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987), 112.
[16] Reynolds v. Internat'l Amateur Athletic Federation, 23 F.3d 1110, 1119 (6th Cir. 1994).
[17] Burger King Corp., 471 U.S. at 477.
[18] See CompuServe Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), 1260.
[19] See CompuServe Inc., 89 F.3d at 1260-61.
[20] See CompuServe Inc., 89 F.3d at 1264, 1266-67.
[23] See Maritz, Inc. v. Cybergold, Inc., 947 F.Supp. 1328 (E.D. Mo. 1996), 1330.
[24] Maritz, Inc., 947 F.Supp. at 1333.
[26] See Panavision Int'l, L.P. v. Toeppen, 945 F.Supp. 1296 (C.D. Cal. 1996), 1299.
[27] See Panavision Int'l, L.P., 945 F.Supp. at 1298-99.
[28] See Panavision Int'l, L.P., 945 F.Supp. at 1299-1300.
[31] EDIAS Software Int'l, L.L.C. v. BASIS Int'l, Ltd., 947 F.Supp. 413 (D. Ariz. 1996), 420 (holding that tortious interference by sending defamatory email messages directed at EDIAS was sufficient for assertion of personal jurisdiction over BASIS).
[32] See McDonough v. Fallon McElligott, Inc., No. 95-4037, 1996 U.S. Dist. LEXIS 15139, at *2 (S.D. Cal. Aug. 5, 1996).
[33] See McDonough, 1996 U.S. Dist. LEXIS 15139, at *6, *8, *11.
[34] See McDonough, 1996 U.S. Dist. LEXIS 15139, at *13-14.
[35] See Id. at *17-18.
[36] Id. at *7.
[37] See Bensusan Restaurant Corp. v. King, 937 F.Supp. 295 (S.D. N.Y. 1996), 297.
[38] See Bensusan Restaurant Corp., 937 F.Supp. at 297-98.
[39] Bensusan Restaurant Corp., 937 F.Supp. at 299.
[41] See Inset Systems, Inc. v. Instruction Set, Inc., 937 F.Supp. 161 (D. Conn. 1996), 162-163.
[42] See Inset Systems, Inc., 937 F.Supp. at 164.
[44] See Minnesota v. Granite Gate Resorts, Inc., No. C6-95-7227, 1996 WL 767431, *2-3 (D. Minn. Dec. 11, 1996).
[45] Minnesota, 1996 WL 767431, at *4.
[47] See Robert A.Bourque, and Kerry L. Conrad, "Avoiding Remote Jurisdiction Based on Internet Web Site", 1 Law J. Extra 1, ¶ 37 (Dec. 10, 1996) http://www.ljx.com/internet/1210jurs.html.
[48] Richard Raysman, and Peter Brown, "Resolving Jurisdiction and Venue Issues on the Internet", 1 Law J. Extra 1, ¶ 1 (Sept. 10, 1996) http://www.ljx.com/internet/jurisnet.html.