Jurisdiction in a World Without Walls
Where Can You Sue Someone in CyberSpace?
Suppose you want to sue someone based upon their electronic action, for example, you allege their domain name infringes your trademark. Where do you go? Their home state, your home state, some central cyberspace locale? Can current caselaw concerning jurisdiction cope with a world without walls? Or, must the courts craft new caselaw to govern cyberspace?
In the first few cases concerning online liability (for defamation and copyright infringement), the courts didn’t consider jurisdiction because the defendants didn’t challenge it. Consequently, these defendants all were forced to fly to out-of-state courts to litigate. In the past year, however, defendants in three lawsuits have contested the court’s jurisdiction over them based upon their actions in cyberspace. The courts’ rulings contain hints to help us all to be able to publish globally, but to be prosecuted locally.
Don’t Mess With Your ISP
Richard Patterson, a Texas resident, was the first defendant to challenge personal jurisdiction. He complained that his online service provider, CompuServe, Inc., marketed some software which constituted trademark infringement and deceptive trade practices. He allegedly demanded CompuServe pay him $100,000 to settle his potential claims. Instead, CompuServe filed a complaint against him in the District Court of Columbus, Ohio, CompuServe’s headquarters. CompuServe asked the Court to declare that it didn’t engage in infringement or deceptive practices. The District Court considered Patterson’s contacts with the State of Ohio and dismissed CompuServe’s complaint because the Court ruled it had no personal jurisdiction over Patterson in Ohio.
CompuServe appealed. The U.S. Court of Appeals reversed the District Court on July 22nd, CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), saying four factors, combined, favored CompuServe’s jurisdiction over Patterson in its hometown of Columbus. (Oddly, Patterson, an attorney, filed no appellate papers and didn’t even appear at the argument). The Court ruled that Patterson was a CompuServe subscriber, had advertised and sold software through CompuServe for three years, had sold software to 12 Ohio residents, and had threatened trademark infringement against CompuServe. The Court also noted that Patterson’s Service and Shareware Registration Agreements with CompuServe contained clauses saying they were "entered in Ohio" and "governed by and construed in accordance with" Ohio law.
If you’re an AOL subscriber, this doesn’t mean you’ll be flying to Vienna, Virginia for disputes about service or pricing. The Court of Appeals specifically said that merely being a subscriber doesn’t confer jurisdiction upon CompuServe in Ohio. The Court also said that selling goods and services via CompuServe, without more, would be dubious grounds for jurisdiction in Ohio. But, add in some spice like Patterson had, and you may find yourself using your frequent flier miles for disputes with your ISP.
To defeat jurisdiction in far-off states, act judiciously. If you conduct business in cyberspace, consider using a local ISP to ensure those disputes will stay local. If you can, keep records of states where your services or goods are sent; you may need to provide these to prove you have no contacts with a court’s jurisdiction. Some states like New York have based jurisdiction on the sale of just one copy of an allegedly infringing product. So, if you’re mailing merchandise willy-nilly over the United States, you should expect to be hauled into court just about anywhere. Think carefully before you threaten someone with a claim; they may beat you to the courthouse and get a hometown advantage. Finally, if you’re a corporation with clout, request a jurisdiction clause in your ISP service agreements which is equitable – you’ll sue them in their hometown and they’ll sue you in your hometown. This type of provision always provides an incentive for both parties to settle potential disputes, because no one wants to waste resources flying around defending disputes.
And, If You’re in Connecticut . . .
In April, the District Court in Connecticut, Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D. Conn. 1996), ruled that Connecticut-based Inset Systems, Inc. could sue Massachusetts-based Instruction Set, Inc. for trademark infringement based upon Instruction’s Set’s 800 telephone number and domain name, inset.com. The Court ruled that Connecticut citizens could purchase Instruction Set’s products via the Net or the 800 number, and Connecticut wasn’t very far from Massachusetts, so Inset Systems could haul Instruction Set into court in Hartford. Without proof that any Connecticut citizens ever purchased Instruction Set’s services or goods, the company’s contacts with Connecticut are minimal, and this jurisdiction ruling appears dubious outside of Connecticut. If you’re in Hartford, however, this is the case to cite to haul your cyberspace violators into court.
The Blue Note Sings the Blues
In September, the District Court in New York filed the only opinion, Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996), which dismissed a defendant for lack of jurisdiction based upon a cyberspace presence. The Blue Note, a legendary jazz club in Manhattan, sued The Blue Note, a small club in Columbia, Missouri, in New York for alleged Net-based trademark violations. The Missouri club has a website which contains a fanciful logo the New York claims infringes their federally registered mark on "The Blue Note."
The Court ruled that without more contacts, the website wasn’t sufficient to justify jurisdiction in New York. The Court found the Missouri club didn’t mail tickets out of state, 99 percent of the club’s patronage derived from local residents, and its few out-of-state customers claimed prior connections with the state (for example, they were University of Missouri alums). In addition, its website contained a disclaimer that it wasn’t to be confused with the "world’s finest jazz club The Blue Note" with a hyperlink to the latter’s website.
Honey is Better Than Vinegar
The lessons to be learned? Try to ensure your products, services, and domain name aren’t confusingly similar to those of another company. If you think your website could be confused with another’s site or services, add a disclaimer at the end. Perhaps provide a hyperlink to their site. Finally, say something nice about them, because even in cyberspace, you can catch more bees (and impress more judges) with honey than with vinegar.
Courtesy of Marie D’Amico of Digital Media.
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