Personal Jurisdiction Based On An
Out-Of-State Defendant's Presence
And Activity On The Internet
by David M. Steckel, Esquire

Introduction
"The exponential growth of the Internet, the arrival of the World Wide Web as a business medium, and the jurisdiction-confounding nature of cyberspace have spawned new strains of jurisdictional analysis." Morantz, Inc. v. Hang & Shine Ultrasonics, Inc., 79 F. Supp.2d 537, 539 (E.D. Pa. 1999). However, as is the case with all personal jurisdiction issues, "'[t]he constitutional touchstone' of the determination whether an exercise of personal jurisdiction comports with due process remains whether the defendant purposefully established 'minimum contacts' in or purposely directed its activities toward residents of the forum state." Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102, 108 (1987). In Internet cases, this inquiry focuses on the nature and quality of the out-of-state defendant's activities generated by and through its Web site.

Discussion
One of the leading cases on this issue is Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). In Zippo, Zippo Manufacturing Company ("Manufacturing"), a Pennsylvania corporation, brought a trademark infringement and trademark dilution suit against Zippo Dot Com, Inc. ("Dot Com"), a California corporation. Dot Com operated an Internet Web site and an Internet news service, the two of which constituted the extent of Dot Com's contacts with Pennsylvania. Dot Com's Web site offered information about the company, advertisements and an application for its Internet news service. All of Dot Com's offices, employees and Internet servers were located in California. Approximately two percent (3,000) of Dot Com's Web site subscribers were Pennsylvania residents. Those subscribers contracted to receive Dot Com's service by visiting its Web site and filling out the application. In addition, Dot Com had entered into agreements with seven Internet access providers in Pennsylvania to permit their subscribers to access Dot Com's news service. The court held that the defendant's contacts with the forum state constituted a purposeful availment of the privileges of doing business in the state and, thus, subjected it to the court's personal jurisdiction.

The court in Zippo adopted a "sliding scale" under which "the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet." 952 F. Supp. at 1124. The court explained this "sliding scale" as follows:

At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, 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.

The principles set forth in Zippo, which help eliminate some of the doubt surrounding personal jurisdiction in many Internet cases, are applicable regardless of whether the personal jurisdiction at issue is general, specific, or both. Molnlycke Health Care AB v. Dumex Med. Surgical Prods. Ltd., 64 F. Supp.2d 448, 451 (E.D. Pa. 1999) (citing Desktop Tech., Inc. v. Colorworks Reprod. & Design, Inc., 1999 U.S. Dist. LEXIS 1934, Civ. A. No. 98-5029 (E.D. Pa. Feb. 25, 1999)). The majority of these cases deal with issues of specific personal jurisdiction, where the plaintiff must show that its claims are related to or arise out of the defendant's contacts with the forum state - often exclusively through its Web site. See, e.g., Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984); Dollar Sav. Bank v. First Sec. Bank of Utah, 746 F.2d 208, 211 (3d Cir. 1984). General personal jurisdiction, on the other hand, is more difficult to show because it requires a finding that the defendant's contacts with the forum are continuous, systematic and substantial. See, e.g., Provident Nat'l Bank v. California Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987).

Highly Commercial Web Sites: Regarding the first Zippo principle, courts uniformly exercise personal jurisdiction when Internet activity involves business over the Internet, including on-line contracts with residents of a foreign jurisdiction or substantial interactivity of a commercial nature with the Web site. See Standard Knitting, Ltd. v. Outside Design, Inc., 2000 U.S. Dist. LEXIS 8633, Civ. A. No. 00-2288 (E.D. Pa. June 21, 2000) (finding personal jurisdiction was proper where the defendant operated a fully interactive Web site through which it sold catalogues to residents of foreign jurisdictions); Thompson v. Handa-Lopez, Inc., 998 F. Supp. 738 (W.D. Tx. 1998) (personal jurisdiction could be exercised when the defendant entered into on-line contracts for commercial purposes with residents of the forum state); Gary Scott Int'l, Inc. v. Baroudi, 981 F. Supp. 714 (D. Mass. 1997) (personal jurisdiction could be exercised because the defendant solicited and sold his product via his Web site to Massachusetts residents and had a major deal with a Massachusetts business); Superguide Corp. v. Kegan, 987 F. Supp. 481 (W.D.N.C. 1997) (personal jurisdiction may be exercised under the assumption that citizens of the forum state via the Internet have utilized the commercial services and acquired products from the defendant).

Passive Web Sites: The second Zippo principle - that personal jurisdiction should not be exercised when a Web site is passive and merely provides information regarding the defendant's products or services - is overwhelmingly followed by the courts. See Morantz, 79 F. Supp.2d 537 (refusing to exercise personal jurisdiction where the defendant's Web site provided only an email link and access to a form for placing orders); ESAB Group, Inc. v. Centricut, L.L.C., 34 F. Supp.2d 323 (D.S.C. 1999) (minimum contacts element of personal jurisdiction not satisfied where the defendant maintained its Web site simply to sell products); CFOS 2 GO, Inc. v. CFO 2 GO, Inc., 1998 U.S. Dist. LEXIS 8886, No. C-97-4676 SI (N.D. Cal. June 5, 1998) (declining to exercise personal jurisdiction where the defendant's Web site contained only a description of the defendant's business and contact information); Transcraft Corp. v. Doonan Trailer Corp., 1997 U.S. Dist. LEXIS 18687, No. 97-C-4943 (N.D. Ill. Nov. 17, 1997) (no personal jurisdiction where the defendant's Web site contained an advertisement with an email address for inquiries); Smith v. Hobby Lobby Stores, Inc., 968 F. Supp. 1356 (W.D. Ark. 1997) (an advertisement in a trade publication on the Internet without a contract to sell any goods or services with citizens of the forum state is insufficient to trigger jurisdiction); Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997) (an Internet advertisement alone is not sufficient to subject an advertiser to jurisdiction).

The minority view regarding the second Zippo principle is that even "passive" Web sites are sufficient to trigger personal jurisdiction. This view can be found in such cases as Telco Communications v. An Apple A Day, 977 F. Supp. 404 (E.D. Va. 1997); Inset Sys., Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (D. Conn. 1996); and Heroes, Inc. v. Heroes Found., 958 F. Supp. 1 (D.D.C. 1996). In Inset Sys., the court found that merely maintaining a Web site and a phone number is sufficient to establish personal jurisdiction in every state in the country. Similarly, the court in Heroes found that the defendant was subject to nationwide jurisdiction because its Web site solicited donations and provided users with a toll-free number. Again, it is important to note that these holdings represent that minority view - and these cases have been heavily criticized in numerous jurisdictions.

Interactive Web Sites: The third category of cases Zippo addressed are those where the level of interactivity of the defendant's Web site involves a free exchange of information between the user and the host computer. In cases such as this, "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." Zippo, 952 F. Supp. at 1124.

A frequently cited case that is representative of this Zippo principle is Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328 (E.D. Mo. 1996). In Maritz, the court exercised personal jurisdiction where the defendant's Web site provided information about the company's new upcoming services and explained that the forthcoming services will include maintenance of a mailing list of Internet users. The defendant's Web site further solicited information from users regarding their areas of interest, which information would then be used by the company for purposes of forwarding to the user, via a personal electronic mailbox, advertisements that matched the users' selected interests. In addition, the defendant planned to provide the users with incentives for reading the advertisements.

In Tech Heads, Inc. v. Desktop Serv. Center, Inc., 105 F. Supp.2d 1142 (D. Or. 2000), the court exercised personal jurisdiction where the defendant encouraged interactivity by users through the offering of certain services via its Web site, including offering help with technical projects and questions, and allowing users to search a database of resumes and even post a resume. The court also considered the fact that the defendant engaged in Internet commerce with at least one forum resident through its Web site.

In GTE New Media Servs., Inc. v. Ameritech Corp., 21 F. Supp.2d 27 (D.D.C. 1998), the court asserted personal jurisdiction over companies providing national "Yellow Pages" directory services over the Internet. The plaintiff alleged that the defendants formed agreements with Web browsers to prevent users from accessing their competitors' Web sites through essential Internet access points. The court found the Web sites highly interactive and the quality and nature significant so as to allow the assertion of personal jurisdiction. The court also emphasized that the defendants derived substantial advertising revenues from the directory sites when residents of the forum accessed and utilized the defendants' Internet Yellow Pages.

The case of Uncle Sam's Safari Outfitters, Inc. v. Uncle Sam's Army Navy Outfitters-Manhattan, Inc., 96 F. Supp.2d 919 (E.D. Mo. 2000) is an example of an interactive Web site case where the court did not exercise personal jurisdiction. In Uncle Sam's Safari, the defendants operated a potentially interactive Web site due to its future on-line ordering capabilities. There was no evidence, however, that anyone from Missouri had accessed the Web site or attempted to purchase any of the defendant's products via the Web site. The court held it would be improper to exercise personal jurisdiction based on the defendant's de minimis contacts with the forum state.

In Edberg v. Neogen, 17 F. Supp.2d 104 (D. Conn. 1998), the court did not exercise personal jurisdiction because it found that, despite the fact that the defendant's Web site allowed users to order product information and send electronic mail to the defendant's representatives, the court found no evidence suggesting that any user in the forum state actually accessed the defendant's Web site, purchased products based on the Web site, or that the defendant specifically directed its Web site at residents of the forum. See also Hurley v. Cancun Playa Oasis Int'l Hotels, 1999 U.S. Dist. LEXIS 13716, Civ. A. No. 99-574 (E.D. Pa. Aug 31, 1999) (refusing to exercise general or specific personal jurisdiction where the defendant's Web site accepts and confirms reservations for hotels, publicizes a 1-800 telephone number for voice reservations, and provides an email address by which viewers of the site can contact the company).

Web Site Plus Non-Internet Contacts: A final category that has emerged in the cyberspace era of personal jurisdiction is one where the defendant's non-Internet contacts are being factored into the court's decision regarding whether the exercise of personal jurisdiction is proper. For example, in Blumenthal v. Drudge, 992 F. Supp. 44 (D.D.C. 1998), the court held that the exercise of personal jurisdiction was proper because of the defendant's interactive Web site, as well as the defendant's travel to the District of Columbia to promote his Web site. Notably, the defendant had also made contacts and solicitations via email, telephone and mail with District of Columbia residents.

Other cases where the court considered the defendant's non-Internet contacts include: Hasbro, Inc. v. Clue Computing, Inc., 994 F. Supp. 34 (D. Mass. 1997) (defendant's performance of work for a Massachusetts company coupled with an Internet site to attract customers was sufficient to trigger personal jurisdiction); American Network, Inc. v. Access America/Connect Atlanta, 975 F. Supp. 494 (S.D.N.Y. 1997) (personal jurisdiction invoked as a result of the defendant's Web page advertisement and services agreements delivering software packages to six New York subscribers); Digital Equip. Corp. v. Altavista Tech., 960 F. Supp. 456 (D. Mass. 1997) (exercising personal jurisdiction where there existed a contract agreement to apply Massachusetts law and the solicitation of Massachusetts business through the defendant's Web site); Edias Software Int'l, L.L.C. v. Basis Int'l, Ltd., 947 F. Supp. 413 (D. Ariz. 1996) (holding that a contract, the defendant's longstanding relationship with the plaintiff, and the defendant's defamatory statements about the plaintiff via email and through its Web page was sufficient to trigger personal jurisdiction).

Conclusion
The abundance of recent case law on this issue has, in many instances, helped to define the parameters of when it is proper to exercise personal jurisdiction over an out-of-state defendant based on the defendant's presence on the Internet. At the same time, the current state of the law in this area has prompted at least one commentator to declare that the "current hodgepodge of case law is inconsistent, irrational, and irreconcilable." Howard B. Stravitz, Personal Jurisdiction in Cyberspace: Something More is Required on the Electronic Stream of Commerce, 49 S.C. L. Rev. 925, 939 (1998). Like the World Wide Web itself, this area of the law should continue to evolve and become more crystallized as a greater number of circuit courts and, possibly, the United States Supreme Court decide to squarely address and provide helpful guidance on this issue.