Wednesday, April 11, 2007

By the Muddy Waters of Internet Jurisdiction

As you may have heard, the Internet is an information revolution. It is a global market place of ideas that creates the opportunity for anyone anywhere to publish to everyone everywhere. [ACLU v Reno] It also creates the opportunity for anyone to be sued by everyone everywhere. Oh goody!

There are great stories of a reporter in New York City, writing an article which was hosted on a web server in New Jersey, getting hauled into court in Australia. [Dow Jones v Gutnick] Stories like this are enough to cause one to fear the slings and arrows of outrageous Internet fortune, and head for the safe refuge of the couch where the only risk is whether your TIVO captured all four showings of the Simpsons today.

It hardly seems fair. If I, in Texas, want to inform the world of the benefits of mixing Mentos and diet coke, why should I be subject to suit in Ohio, a state in which I have never dared set foot. Mine is just a passive website; if someone in Ohio should read it, follow my example, and cause diet coke to explode all over the basement, should I have to face lawsuit in a state I can’t even find on a map?

Fortunately, recently there has been a plethora of Internet jurisdiction cases that provide perfect clarity on this troubling question; and by perfect clarity I of course mean that the waters are as murky as the mighty Mississippi that blocks the path between Ohio and Texas.

Our story starts in 1954, which would be 15 B.I. (Before Internet) for you young’uns, and an international shoe. Now if I am in Ohio, and you are in Ohio, it’s a pretty easy case that an Ohio court has jurisdiction over the both of us. But what if I am in Texas, and you, in Ohio, want to sue me on the grounds of my lousy hockey playing. In 1954, the Supreme Court stated that a court can have jurisdiction over me, an out-of-state defendant, if I have 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." International Shoe Co. v. Washington, 326 US 310, 316 (1945). Then a few years later we learn that this jurisdiction can be specific or general. Specific is where the jurisdiction over me, the defendant, relates specifically to my lousy hockey playing (specifically to the cause of action). General jurisdiction is where I have had “continuous and systematic” ties with the forum state, Ohio, such as say going to school for the last four years at Oberlin – a fact not directly related to my lousy hockey playing (or maybe it is!?!).

If you know this much, you can get an A in first year law school civil procedure; I got a C.

So what about the Internet which is present everywhere all-the-time? If I write a blog in Texas, hosted on a server in New York City, about hockey that is read in Ohio, do I have to face the man in Ohio?

The answer is something called the “Calder Test.” Only some courts call it the “Effects Test.” And other courts call it the “Sliding Scale Test.” You see, we are already off to a bad start. Our story is about Hockey so we will call it the Icing Test.

In the Icing Test, the courts have set out a sliding scale for the effect that a website might have in a forum, as set forth by the Supreme Court in Calder v. Jones. At one end of the scale are those passive websites that have no interactivity that just present information…. Has anyone ever seen one of these?? Even my website, Cybertelecom, which is about the most amateur site in the world, has an email link, a Google Search Button, Google Ads, an RSS feed, and displays a secret message to visitors from Canada. There are court cases which conclude that the mere presence of an email link makes a website “interactive.” So one end of the scale is “passive websites,” but then according to court cases, these websites only exist in mythology. Muddy water.

At the other end of the Sliding-Scale-Effects-Icing test are websites which engage in commercial transactions over the Internet. In these cases, the courts state, “jurisdiction is almost always proper.” Cybersell, Inc. v. Cybersell Inc, 130 F3d 414, 415 (9th Cir 1997). “Almost”? If these cases are “almost always” proper, do we ever get to a point where it is “always always” proper? Is there an end to this scale that gives a definitive answer? Or do we just have more muddy water?

Well maybe it would help if we look at the facts of some of the recent cases (then again, maybe not).

In Columbia Pictures Industries, Inc., v Fysh, Case No 5:06-CV-37, Sec. III.A (WDMi Feb. 16, 2007), Columbia Pictures tried in Michigan to sue Fysh, who was apparently in England where he ran a website that distributed copyrighted material. Fysh’s website reportedly had indexed hash files of movies and television programs that visitors could download, and visitors could upload their own hash files. And visitors could login! The web server of the site was located in Michigan. So it was clear in the Michigan court’s mind that “Defendant's website was interactive to such a degree that it is clear he specifically intended interaction with Michigan residents.”

As you read over these cases, think to yourself about Web2.0. These court cases traditionally deal with judges that are struggling with the notion of website owners subject to jurisdiction everywhere - and that being bad. Judges have attempted to draw this magical line in the sand called “interactive websites.” These are judges who have dealt primarily with Web1.0 where some amateurish websites simply presented information, and other interactive sites sell any book in all of creation. But what about Web2.0, where interactivity of all participants is the norm? What about my hockey blog post in Texas that permits comments, RSS feeds, trackbacks, digs, and has embedded videos. However much the judges wanted to stick fingers in the dyke and hold back universal jurisdiction at “passive websites,” the whole thing comes tumbling down with the interactivity of Web2.0. Under the rules of Web1.0, the blogger, attempting to simply present passive information, could be subject to jurisdiction everywhere all the time.

Anyway, on to the next beacon of clarity: Optimal Beverages Co., Inc., v United Brands Co., Inc., Civil Action No H-06-1386 , Sec. IV (SDTex Feb. 27, 2007). This case involved conflicting diesel. Plaintiff Optimal Beverages out of Houston had an energy drink “Deezel” that it sells nationwide and for which it has a trademark. In the other corner, Defendant United Brands out of California has an energy drink “Diesel” that it also sells nationwide - where nationwide apparently does not include Texas. As seems to be the way in these situations, plaintiff sued defendant.

The Texas court took note that the Defendant has no presence in Texas, and that there was no evidence that Defendant sold its drink in Texas, or that there was any confusion between brands in Texas. The court did note that Defendant’s website was one of those interactive websites where one can come, review defendant’s products, and place orders for defendant’s drinks. Pursuant to the Sliding-Scale-Effects-Icing test, this seems like one of those interactive websites that could be sufficient to get sued everywhere all the time, almost.

This is a case of general jurisdiction, not specific jurisdiction. If it were specific, defendant’s presence in Texas would have to be directly related to the cause of action. But defendant’s only presence in Texas is the website – no one has bought drinks in Texas and apparently no one in Texas is confused (at least with regard to the Diesel drink). So jurisdiction must be general. And defendant has no presence in Texas, hasn’t sold drinks in Texas, and Texas is not confused. The court reviews the Sliding-Scale-Effects-Icing test and some precedent, but comes back to the fact that no one in Texas has bought drinks, and concludes that it has no general long arm jurisdiction over defendant.

This case seems to elucidate the word “almost.” Here we learn that “almost” seems to mean that the existence of the interactive website is irrelevant where the court can look at real word evidence of “minimum contacts.” Interactive or not, this case turned on whether anyone anywhere in the real world of Texas had bought one Diesel Drink.

Well, what if the defendant had one sale in the forum state? This next case reportedly involves an MP3-FM Transmitter thingy for which Plaintiff claimed a patent. Netalog, Inc. v Tekkeon, Inc., No 1:05CV00980 (MD NC Feb. 15, 2007). Defendant allegedly (if I forget to use the word “allegedly,” just assume everything is “allegedly” and I have no idea if it is true – and don’t wanna get sued) had an interactive website and sold an infringing device in the forum of North Carolina. This is a specific jurisdiction case where an infringing product has been sold and delivered in the forum, and therefore the alleged patent infringement occurred in North Carolina. Based on that one sale from the interactive website, this court concluded that the defendant purposefully directed activities at the forum.

What’s the difference between defendant Tekkeon and defendant United Brands? One sale. Is this the factor that helps elucidate “almost” – indicating when interactive websites may be subject to jurisdiction and when they might not? Well, what if the defendant had 17 sales in the forum state? Would that make things clearer?

In this last case – actually decided in 2002 but cited frequently in the collection of recent cases - Plaintiff Oliver “Buck” Revell believed that he had been defamed by Hart Lidov on an online bulletin board operated by Columbia University School of Journalism. Defendant Lidov apparently wrote a lengthy article concerning the bombing of Pan Am Flight 103 which exploded over Scotland. The troubling part of the article was an accusation of conspiracy and cover-up against Plaintiff and one-time Associate Deputy Direct of the FBI Revell. Once again, according to the way these things go, plaintiff sued defendant. Once again, the forum was Texas.

Plaintiff argued that defendant Columbia University ran a highly interactive website where the public can subscribe to the Columbia Journalism Review (17 Texans had subscribed to the journal - but this has nothing to do with this cause of action), purchase advertising (which has nothing to do with this cause of action), or submit an application for admission (which again has nothing to do with this cause of action). Where the interactive website has nothing to do with the cause of action, this falls under “general jurisdiction.” For “general jurisdiction” contacts to be sufficient, they must constitute “continuous contacts” with the forum of the court. Once again citing the rule and looking at a bunch of precedent, the court comes to the gut conclusion that this is just not purposeful continuous contacts and does not qualify for long arm jurisdiction.

Okay, but part of the website was the bulletin board where the offending article was published. What about specific jurisdiction based on the harm caused by that article? First, we have to take off the table the subscribing to the journal, the ordering advertisements, and the submission of applications. They have nothing to do with the cause of action and therefore cannot substantiate a finding of specific jurisdiction. This leaves a “passive” bulletin board website where articles are posted. It is interactive, that’s true, because people can post articles. But the court notes that the article written by the defendant contains no reference to Texas, does not refer to Texas activities of Revell, does not rely upon Texas sources, and it’s not directed at readers in Texas. The Court specifically references the Calder test, concludes that this activity was not aimed at Texas, and therefore the court lacks jurisdiction.

Boy there are so many things you could say about these cases, and the handful of others I did not even get to. See Sayeedi v. Walser, 2007 NY Slip Op 27081 (Civil Court of the City of New York, Richmond County Feb. 27, 2007) (one sale on eBay didn’t constitute minimum contacts to support jurisdiction). An online presence can subject a defendant to litigation anywhere – even if defendant prevails on a motion to dismiss for lack of jurisdiction – the defendant still had to deal with the litigation. Texas (a technology state) seems resistant to over-extending long arm jurisdiction to out of state websites; other states seem to have less of a problem with it. Where the jurisdictional analysis involves a mix of real world and virtual world facts, courts seem to emphasize the meat-space facts. And finally, a jurisdictional analysis which barely gave clarity with Web1.0 gives nothing but muddy water for Web2.0.
Post a Comment