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Personal Jurisdiction and the Internet

A Web page as a single factor

The U.S. Court of Appeals for the Ninth Circuit recently held that a Web site does not, by itself, subject the owner of a business to litigation in the courts of every state in which the site can be accessed.¹³ Thus, in Cybersell Inc. v. Cybersell Inc., a Florida corporation that advertised by using a Web page on the Internet could not be sued for trademark infringement in an Arizona federal court, despite the fact that the Web page was accessed in Arizona by the party claiming infringement.

In rejecting the claim of personal jurisdiction under the facts in that case, the court in Cybersell noted that "no court has ever held that an Internet advertisement alone is sufficient to subject the advertiser to jurisdiction in the plaintiff's home state."¹⁴ In holding that a Web page was not, in itself, sufficient to impose jurisdiction on a defendant, the court noted that the defendant in that case lacked any other contacts with Arizona, and had not, therefore, purposefully availed itself of the privilege of conducting activities in Arizona.

The Ninth Circuit's holding that a Web page does not, by itself, establish minimum contacts is consistent with prior cases addressing similar issues. For example, in Bensusan Restaurant Corp. v. King,¹⁵ a federal district court likewise held that the Missouri owner of a jazz club known as "The Blue Note" could not be sued in New York for trademark infringement merely because he posted a site on the World Wide Web to promote his club. It reasoned that creating a Web site was similar to placing a product into the stream of commerce. Although a potential impact anywhere is arguably foreseeable, it is not an act purposefully directed at any particular state.¹⁶

Although Cybersell and Bensusan represent an emerging majority view, contrary precedent does exist. In Inset Systems Inc. v. Instruction Set Inc., another federal district court held that posting a Web page did create minimum contacts.¹⁷ Rather than the stream of commerce analogy used in Bensusan, the court reasoned that a Web page was akin to a television advertisement that is "available continuously to any Internet user."¹⁸

Although the sufficiency of a Web page, by itself, still is an open issue, it is clear that, at a minimum, a Web page will be one factor to consider as part of the minimum contacts analysis. Thus, in Heroes Inc. v. Heroes Foundation,¹⁹ the court upheld personal jurisdiction in the District of Columbia based upon the use of a Web page plus a newspaper advertisement published in a local paper.

Content and interactive features

Web pages vary in the extent to which they actively solicit business and allow Internet users to interact. Some Web pages merely post information that can be reviewed. Others publish toll-free telephone numbers or solicit contracts or applications. Still others allow an immediate response by email, or include hypertext links that allow transfer to another Web site by clicking on highlighted text.

The cases addressing these issues indicate that a Web site is more likely to create minimum contacts if it actively solicits business or has interactive features. Thus, in Minnesota v. Granite Gate Resorts Inc.,²⁰ the Minnesota Court of Appeals upheld a finding of personal jurisdiction over a Nevada corporation that published a Web site advertising online betting services. The court found it significant that the Web page at issue consisted of direct solicitation, rather than the mere posting of information, and included a toll-free telephone number to contact the owner of the Web site.

A similar result was reached in Maritz Inc. v. Cybergold Inc.,²¹ where the court held that a Web site that actively solicited customers, and invited a response by email, was sufficient to satisfy the minimum contacts standard. Likewise, in Zippo Manufacturing Co. v. Zippo Dot Com Inc.²² the court noted the difference between a "passive" Web site and an "interactive Web site where a user can exchange information with the host computer." Where a Web site is interactive, the court stated that "the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site."²³

Popularity of the Web page

Steven P. Means, Iowa 1987, is a partner in the law firm of Michael, Best & Friedrich LLP. He practices in the firm's Madison office in commercial litigation including antitrust, business torts, class action defense and environmental litigation.

In contrast, the Minnesota Court of Appeals, in upholding personal jurisdiction in Granite Gate Resort, made a specific finding that "at least 248 Minnesota computers accessed and received transmissions from appellant's Web sites," during a two-week period.²⁴ Likewise in the Zippo Manufacturing case, the court relied on evidence that the Web site at issue had resulted in more than 3,000 subscriber contracts within the forum state.

Conclusion

An article such as this generally would conclude with a list of specific recommendations on reducing legal exposure. However, in this situation, there is a strong tension between reducing legal exposure and maximizing business opportunity. Given the newness of the issue, there is simply no cookbook answer that fits the needs of every business.

The features that make a Web site successful from a business standpoint, that is, interactive capability, promotional content, and the ability to generate actual revenue, are the same features that likely will increase the risk of litigation in a remote forum. In other words, businesses and their attorneys need to be aware that attempts to expand one's business over the Internet also can expand the risk of out-of-state litigation. Thus, the decision of whether to advertise over the Internet should be made with full consideration of the risks and the benefits involved.

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Endnotes

¹ Zeran v. America Online Inc., 129 F.3d 327, 328 (4th Cir. 1997) (quoting Reno v. ACLU, 117 S. Ct. 2329, 2334, 138 L. Ed. 2d 874 (1997)).

² Zaitlen & Victor, The New Internet Domain Name Guidelines: Still Winner-Take-All, 13 Computer L. 12 (1996).

³ See, e.g., Wis. Stat. § 801.05.

⁴ Internat'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 2d 95 (1945); Omni Capital Int'l v. Rudolph Wolff & Co., 484 U.S. 97, 104, 108 S. Ct. 404, 98 L. Ed. 2d 415 (1987); Brown v. LaChance, 165 Wis. 2d 52, 66-67, 477 N.W.2d 296 (Ct. App. 1991), rev. denied, 479 N.W.2d 173 (1991).

⁵ Pennoyer v. Neff, 95 U.S. 714, 733, 24 L. Ed. 565 (1878).

⁶ 326 U.S. 310, 316 (1945).

⁷ Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985); Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958).

⁸ 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957).

⁹ 471 U.S. at 476.

¹⁰ 89 F.3d 1257 (6th Cir. 1996).

¹¹ Id. at 1266.

¹² Reno v. ACLU, 117 S. Ct. 2329, 138 L. Ed. 2d 874, 885 (1997).

¹³ Cybersell Inc. v. Cybersell Inc., 130 F.3d 14 (9th Cir. 1997).

¹⁴ Id. at 418.

¹⁵ 937 F. Supp. 295 (S.D.N.Y. 1996), aff'd, 126 F.3d 25 (2d Cir. 1997).

¹⁶ Id. (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112 (1992)).

¹⁷ 937 F. Supp. 161 (D. Conn. 1996).

¹⁸ Id. at 165.

¹⁹ 958 F. Supp. 1 (D.D.C. 1996).

²⁰ 568 N.W.2d 715 (Minn. Ct. App. 1997).

²¹ 947 F. Supp. 1328 (E.D. Mo. 1996).

²² 952 F. Supp. 1119 (W.D. Pa. 1997).

²³ Id. at 1124.

²⁴ 568 N.W.2d at 218.