Jurisdiction over Web Sites, or
"Where Will I be Sued Next?"
BY WARREN E. AGIN*
The widening reach of the Internet not only enables smaller businesses to sell wares at farther flung locations, but also can subject those same businesses to lawsuits in jurisdictions the site owner might never have even dreamed of. Though the law is still developing in this area, some inferences can be drawn from recent, and some not-so-recent, case law.
The wise site builder, therefore, will take jurisdictional concerns into account in the design of his site, since the location of his cyber-assets, where the Web site is hosted, and the location and nature of the target audience all can determine where the site owner may fall subject to suit.
Lessons from the Print Media
Lawsuits against magazines are analogous to those against Web sites: Writing and publishing activities in just a few locations may result in magazines that are distributed and read world wide; similarly, a Web site that is built and hosted in a single state may be viewed everywhere.
The United States Supreme Court held in the 1984 case of Keeton v. Hustler Magazine, Inc. that a New Hampshire court properly exercised personal jurisdiction over an Ohio company in a libel suit on the grounds that New Hampshire maintained an interest in discouraging libel against its citizens.
The Supreme Court also held in the companion case Calder v. Jones that a California court could exercise personal jurisdiction over an author and an editor, both resident in Florida, for libeling a California resident in an article published in the NATIONAL INQUIRER. The court found that the defendants purposely targeted California residents by publishing an article in a magazine that they knew would be sold and circulated in California and "must reasonably anticipate being haled into court" there. The tortious act in both Keeton and Calder was the knowing publication of libelous material within the jurisdiction.
The results may differ if a tortious act is unrelated to actual publication. In the 1997 case, IDS Life Insurance Company v. SunAmerica, Inc. the defendant merely advertised in nationally circulated journals and on national television, and also maintained an Internet site. The court in Illinois held that such advertising did not involve systematic and continuous contact with the forum state, Illinois, and held that it had no personal jurisdiction over the defendant.
In Gaingolo v. Walt Disney World Co., a New Jersey judge noted in 1990 that allowing advertising to subject a defendant to suit wherever the advertisement appeared would "substantially undermine the law of personal jurisdiction."
Jurisdiction Based on Internet Contacts
Based on IDS Life Insurance and Gaingolo, operating a Web site or advertising on the Internet should not, by itself, subject a party to global jurisdiction. Conversely, based on Keeton and Calder, committing a tortious act over the Internet should bring about jurisdiction within the state at whose residents the tortious act was directed.
A 1997 Pennsylvania decision, Zippo Mfg. Co. v. Zippo Dot Com, divided Web sites into three jurisdictional categories:
- If the defendant actively directed his Internet business at the state, the state can exercise jurisdiction over the defendant;
- Where a Web site allows the defendant merely to exchange information with customers, the court must assess the level of interactivity and commercial nature of the site to determine if sufficient contacts warrant jurisdiction; and
- If the defendant passively provided information or an advertisement on a Web site without any other contacts within the forum state, the forum state cannot exercise jurisdiction.
Many Internet-related jurisdictional holdings have involved cases of trademark infringement. In these cases, as in publishing, courts have held that the Web site owner must knowingly target potential buyers within the forum state in order to subject himself to infringement jurisdiction there.
Thus, an allegation of injury from the operation of a Web site may be insufficient to create jurisdiction if the Web site is not directed at the forum state's residents, and no other contacts are evident. Further, courts generally have exercised jurisdiction based on the presence of passive advertising on a Web site.
Design Sites with Jurisdiction in Mind
Some preventive measures may be useful as follows:
- Include click-through agreements or disclaimers to clarify or limit geographic reach.
- Perform trademark searches to assess the risk of an infringement suit resulting from the Web site and pinpoint the locations of potential plaintiffs.
- Where a potential trademark plaintiff is found, consider filing a preemptive lawsuit in the company's home state or wherever the domain name registrar is located.
- Conduct a global review of the laws affecting the business of your site in order to identify problem jurisdictions, and then obtain opinions concerning relevant statutes and case law.
- Where a potential problem arises, bring your business methods into compliance with a problem jurisdiction's laws, or else avoid the jurisdiction entirely.
While no Web site owner will be able to completely predict or prevent being sued in foreign courts, becoming aware of jurisdictional principles as they relate to the Internet will help minimize the risks that they present.
Comment: A little legal research and planning as to the content and target audience for your Web site may go a long way towards reducing the risks of being haled into a foreign court, even if definitive answers are not yet available.
* This article was condensed from an address before a meeting of the Business Law section of the American Bar Association, held in San Francisco on April 19, 1999. A complete copy, with case citations, is available upon request.
© ASSOCIATION OF INDEPENDENT GENERAL COUNSEL 1999; (all rights reserved). This article is not intended as legal advice. Consult a qualified attorney for assistance concerning a specific issue or problem.