Zippo Sliding Rule

Cybersell, Inc. Woodrow W. Smith Inset Sys. Maritz v. CyberGold

David Mink
Rannoch Ty Inc. Sports Authority
Bailey v. Turbine Designs, Inc. First Financial Resources Berthhold Types People's Solutions, Inc. Hockerson v. Costco Tech Heads Online, Inc.
Perry Amberson Holdings Bensusan  Uncle Sam's Butler v. Beer Across America Hsin Ten Euromarket Designs



Courts look into the jurisdiction from the point of view of both Internet and non-Internet activities and ultimately, try to analyze whether the culmination of these activities of the defendant leads to alleged harmful effects to plaintiff like infringement or dilution of trademark, loss of business, unfair trade and competition, etc. Generally, Courts are reluctant to favor personal jurisdiction solely on the basis of existence of a web site and cautiously approach the area lest they open up the way for whole set of litigation only this ground. Courts are always on the look out for "something more" than a mere website in terms of some defendant's non-Internet connections. The importance of the website is assessed on the basis of Zippo ruling. Then both the activities are analyzed together and conclusions drawn.

At one side of the Scale, we find passive website. If the website contains only information and nothing more and even the non-Internet activities do not hint much at the contacts of the defendants with the forum-State, Courts reject personal jurisdiction (Perry v., Rannoch, Inc.). Further, even if the posted words are allegedly defamatory in nature, Courts look for some sort of "targetting" as in the intention of the defendnat to get the message across to a particular state and making attempts towards that, absense whereof might be a rejection of personal jurisdiction (Bailey v. Turbine). Use of state host server has been held to be insufficient to be a ground of personal jurisdiciton in absence of any other other connection with the state. (Amberson Holdings)

The middle ground is the most complicated one and courts analysis of "something more" becomes stricter. Providing of information like toll-free telephone number, mailing address or allowing email interaction (David Mink, Ty Inc., First Financial Resources) or providing on-line service manuals of the product and updated license agreements without actual sales (Berthhold Types) and without any further connected non-Internet activity or without targetting the forum state (Bensusan) have been held to be no consequence for maintaing personal jurisdiction. Even where there is a clear intention of the defendants of future online ordering facilities, courts have declined jurisdiction for trademark infringement since that will not be sufficient unless other activities are also proved (Uncle Sam's).

Another set of cases are those involving advertisements on the Internet and whether they alone. Though intially the Courts did allow personal jurisdiction by comparing internet advertisement and other media advertisement and finding purposeful availment of the privilege of doing business in forum state (Inset, Maritz), in later cases, we find the Courts rejecting this argument on ground of absence of non-internet activities like not encouraging people to access site, no contracts with the forum state, no sales, no telephone calls or income earned from the forum state (Cybersell). In Woodrow Smith, it was held that mere advertisement on internet with nothing more is insufficient to exercise personal jurisdiction over a foreign entity though the product concerned might have been put in the stream of commerce.

As we move, we come within the domain of more acceptable "personal jurisdiction" cases. Cases where there is an active website that is offering goods for sales are generally categorized for exercise of personal jurisdiction if other connections like targetting the forum (Sports Authority), even a single contract in the forum state which was initiated due to the existence of a website (Tech Heads) or participation in trade shows (Hsin Ten) is proved. However, Court rejected personal jurisdiction where inspite of online sales of a product, it was found that the the contract was concluded outside the forum state and the product was then transported by a carrier-agent thereby no connection being established between the defendant and the forum state expect the active website. Further, there was no proof that defendant was registered to do business in the forum state, had property or office there or had any agent or any key personnel visited the state. (Butler v. Beer Across America). On the same line was the personal jurisdiction rejected in Hockerson, where no evidence of bank accounts, agents, property, offices was shown and the internet sales orginating from the state was so minuscule that it was held to be fortuituous and not complying with the minimum contacts test of Due Process analysis.

At the extreme of the scale, are cases which are not only active in terms of online sales and e-commerce but alo very much direct their activities to the particular form state where the plaintiffs have substantial business and which would cause confusion and infringment of trademark. Here, defendants are engaged in such a conduct like, pursuing the same vendors who also work with the plaintiff, that are intended to and do result in harmful effects to plaintiff (Online, Inc., Euromarket Designs).

On analysis of the above cases, we can reflect a few factors relevant for our purpose of determining the personal jurisdiction:

The list is merely illustrative and a cumulation of various factors the Courts have been addressing while determining the question of personal jurisdiction.