Internet Jurisdiction: Where Are We Now? John D. Gregory Toronto Computer Lawyers Group November 24, 2005

Internet Jurisdiction:Where Are We Now?

John D. GregoryToronto Computer Lawyers’ Group

November 24, 2005

TCLG November 24, 2005 2

Internet Jurisdiction “Cyberspace is not a no-law land” Finding jurisdiction

What the tribunals do Managing jurisdiction

What private parties do Indirect jurisdiction

Reintermediation Legislated jurisdiction Now what?


Finding Jurisdiction Finding jurisdiction

Making the case When does a decision-making body take jurisdiction?

Enforcing the result What difference does it make if a decision cannot be

enforced? Civil, regulatory and criminal actions Choice of forum vs choice of law

Here: mainly forum, law assumed to go with it e.g. “normal” contract clauses here illegal elsewhere


Finding Jurisdiction Making the case: civil Background:

Jurisdiction arising out of service ex juris

Morguard shift: real and substantial connection – the Canadian standard

Hunt: Morguard is constitutional rule Beals: Morguard is international rule


Finding Jurisdiction Muscutt v. Courcelles (2002), 60 O.R. (3d) 20

Factors for a Real and Substantial Connection“no factor is determinative”

Connection between forum and P’s claim Connection between forum and D Unfairness to D in assuming jurisdiction Unfairness to P in refusing jurisdiction Involvement of other parties to suit Court’s willingness to enforce extraprov jgt on same

ground Interprovincial or international case Comity and standards of jurisdiction, recognition and

enforcement prevailing elsewhere


Finding Jurisdiction Internet jurisdiction – history

“Availment” test – Compuserve (US) Active/passive test – Zippo (US),

Braintech (Canada) Targeting test – effects test (how

subjective?) Real and substantial connection test

Different law: different applications?


Finding Jurisdiction Defamation – the most visible test Ontario: Bangoura (C.A.)

Law: Muscutt factors evaluated one by one

Policy: do not expose publishers to worldwide liability

Fact: Connection was a problem Plaintiff came to Ontario after publication


Finding Jurisdiction Defamation: BC: Burke (BCSC) Law: based on Bangoura motion

judge Law: balance factors of convenience

Witnesses, travel Policy: protect reputation where it is

affected Fact: P had real connection to B.C.

D should have known wide reach on Net


Finding Jurisdiction Defamation: Australia: Gutnick (HC) Law: no new principles expressed Policy: protect reputation where P was. Policy: did not expose publisher to

worldwide liability, just where damage done

Fact: Guttnick had reputation in Victoria Barron’s had 1700 Australian subscribers


Finding Jurisdiction Defamation: UK: Lewis v King (CA 2004)

Law: no new principles agreed that P was defamed in the UK

and had a reputation there Limit claim to harm done in forum Not only one action therefore one forum

May be multiple actions in many jurisdictions Not a “free-for-all” for claimants libelled on

Net


Finding JurisdictionLewis v King (2) Targeting theory disapproved

“in truth [the publisher] has targeted every jurisdiction where his text may be downloaded.”

Targeting is too subjective, leads to uncertainty

Connecting factors are not legal rules “juridical advantage” vs “substantial

justice”


Finding Jurisdiction Non-defamation actions

“targeting” more attractive with voluntary connection on both sides

Strategic litigation Take advantage of local laws by

initiating suit (no different from offline world?)

E.g. Cairo v CMS (Calif.) web scraper brought pre-emptive suit


Finding Jurisdiction Trade mark litigation

Trade marks are national, web and web addresses are international

Courts in forum of issuer of trade mark tend to take the cases (e.g. Google ads)

Patent litigation Again national law vs international trade RIM v NTP: enforcement of national patent

against foreign (alleged) use of the patent? Should US court do that? Should patent extend so

far?


Finding Jurisdiction Civil jurisdiction: NOTE: jurisdiction “simpliciter” vs

forum (non) conveniens Theory: decide jurisdiction first,

appropriateness afterwards Practice: hard to keep them apart

Lewis v King did pretty strict job but shows difficulty of doing so


Finding Jurisdiction Making the case: Regulatory law No single rule, no consistent practice Different kinds of connecting factors

sought when state (regulator) is a party, when non-court is tribunal

Creeping real and substantial connection? Different substance to reality?


Finding Jurisdiction Trendsetter case: Socan (Tariff 22) (SCC 2004) Copyright Appeal Board – rates for

downloaded music held: R&S C between source of music & jdn

Note: NOT location of server Why not? Users can’t know; doesn’t matter in practice But: privacy (Lebel) – intrusiveness of inquiry But: civil standard (divorce!) OK for regulation? Alternatives: Impact? Targeting?

Cf. IcraveTV case in US – jdn taken over Cdn business, activity was not illegal in Canada


Finding Jurisdiction Regulatory jurisdiction taken: Human Rights Tribunal

Citron v Zundel (CHRC 2002) Server in US, controlling mind (and telecom

network) in Canada Securities commission (Alberta)

World Stock Exchange (1999) No one else to do it Defendants personally in AB, server abroad


Finding Jurisdiction Regulatory jurisdiction taken (2) Language laws Office de la langue française

Business in QC, targeting QC: easy Server location not relevant Guidelines on web site Success in several court cases

Cf Loi Toubon in France


Finding Jurisdiction Regulatory jurisdiction declined Privacy Commissioner of Canada

Abika.com (letter Nov 18/05) Parliament did not intend to legislate

extraterritorially Can’t collect evidence from U.S. party No “real and important” link between operations

and Canada Pushing for multilateral and bilateral assistance

Outsourcing to US data processors Can’t keep Cdn companies from doing this Companies here must inform customers


Finding Jurisdiction Regulatory jurisdiction: open question Taxation

“permanent establishment” question OECD work on location of server

Factors one way or the other Software alone won’t create jurisdiction

General concern about learning of transactions

Sales taxes harder than income taxes Study papers by Canada Revenue Agency: fear?


Finding Jurisdiction Making the case: criminal law Few extraterritorial criminal laws Traditional tools at investigative stage Extradition to stand trial in offended jurisdiction Impact on residents may draw jurisdiction to

forum High point (US) Granite Gates – gaming

Query: defence of local gaming vs Net? Offensive content cases

Spam: Microsoft vs Canadian spammers Nazi material: Yahoo France – battling courts


Finding Jurisdiction Enforcing the result: civil cases What is the point of asserting jurisdiction if

results will not be enforced against the wrongdoer?

Basic rule in Canada: Morguard: full faith and credit – enforce from place that takes jurisdiction based on R&S Connection.

Supreme Court ensures integrity of national system Burke court dismissed unenforceability argument So courts take a chance

E.g. Barrick v Lopehandia: injunction in Ontario, hope in “this post-Morguard era” that B.C. would enforce it.


Finding Jurisdiction For foreign judgments: public policy

defence U.S. example: first amendment vs enforcement

of foreign defamation judgments (lots of cases) Discussed in Lewis v King: not determinative

Muscutt factor: (golden rule) If we take jurisdiction over them and expect them to enforce our judgments, then we will have to enforce judgments that they give based on similar ground of jurisdiction.


Finding Jurisdiction Enforcing the result: regulatory cases Human rights: Zundel

Hoped that order would encourage local ISPs to block site

Hoped that some respect paid in US Securities Commission: WSE

Defendants were in AB Hoped for impact of message re conduct


Finding Jurisdiction Enforcing the result: regulatory cases (2) Privacy Commissioner of Canada

Can’t compel appearance of main party Can’t enforce the result Question of best use of limited resources, too?

More of a question for regulators than for courts BUT: any intent inferable from statute? Educational function in Canada Impact is on Canadians i.e. felt here Connecting factors: collection, use, disclosure Wrong-doing is easy to prove without party Comparison of privacy laws would be useful “Prescriptive jurisdiction” vs enforcement power


Finding Jurisdiction Enforcing the result: criminal cases Little or no direct enforcement of foreign

criminal penalties Trials in absentia are known – absence of

accused/defendant is not fatal to process Combination of forces e.g. “sweeps” of

Internet fraud by regulators in many countries so can lay charges where needed.


Managing Jurisdiction Private sector action on jurisdiction (and

governmental for itself) ABA/ICC survey (2003/4):

North American businesses much more concerned with jurisdiction than European or Asian business

N.A. businesses expected things to get worse Managing jurisdiction mainly means

avoiding jurisdiction, but may mean submitting to one to avoid others.


Managing Jurisdiction Managing by law Anti-suit injunctions (more or less effective)

Our courts tell your courts to stay out Restrict by contract the use of site to those in

acceptable places Terms of use to do so: enforceable?

First Canadian click-through case is on point: Rudder v Microsoft

Browsewrap terms: harder to enforce vs good faith party

Local laws with mandatory jurisdiction EU, Quebec, ULCC draft terms on consumer jurisdiction

Works only where some agreement can be alleged, i.e. not for all kinds of law


Managing Jurisdiction Managing by technology Geolocation – early days

but: NSA patent Sept 2005 – uses and limits Reading of country codes

UNCITRAL: no presumptions from cc:tlds Blocking technology

Chinese lead? Adaptable to commercial uses? Preferred servers

E.g. google, amazon – follow the codes Local proxies for efficiency and law too?

Digital rights management/tech protection measures


Managing Jurisdiction Managing by practice Registration requirements for access to

web site (accept from “good” places) Credit cards as proxies for location ID Targeting desired markets:

Server location (efficiency, name) Language (exposes to regulation) Domain names, country codes Content appropriate for local interests


Managing Jurisdiction Managing by practice (2) Virtual communities

Rules and special services for members only Offer online dispute resolution

Delocalizes DR principles Avoids downsides of foreign jurisdictions’ rules May be more efficient too International arbitral awards widely

enforceable (subject to writing requirements) But: no universal method for complex disputes


Indirect jurisdiction Who is accessible if the primary target

is not? “by indirection find direction out” the reintermediation of the Internet

Not necessarily comfortable for the targeted intermediaries

Sometimes intermediaries are direct targets, sometimes used for evidence, sometimes for pressure on the real targets


Indirect jurisdiction Communications intermediaries Internet Service Providers

Attempt to hold liable for copyright infringement seems to have failed

Notice-and-takedown vs notice-and-notice Used in search for evidence (subject to privacy)

Pressure to use quasi-public filters to block child pornography sites

Tension between use and statutory protection of ISPs Internet portals

Yahoo France – Nazi materials Yahoo has taken Nazi materials off its service


Indirect jurisdiction Internet portals (2)

Yahoo.com has agreed to close chat rooms to those under 18 (Oct 2005)

deal with Elliot Spitzer Other portals have closed chat rooms

altogether to avoid child luring Telecoms

Modernization of Investigative Techniques Act (Bill C-74) makes CSPs use techniques that allow interception of data if so ordered, to keep info, to make it available

US – CALEA – frequent pressure to do likewise Cybercrime Convention – source of such ideas


Indirect jurisdiction Financial intermediaries Credit card companies

Consumer protection: mandatory chargebacks Gaming debts and winnings targeted by law

enforcement Private actions for contributing to gaming

addiction have failed (so far) PayPal

Criminal charges under Patriot Act for facilitating gambling payments (settled by large payment)


Indirect jurisdiction Financial intermediaries (2) Auction houses (e.g. eBay)

Pressure to decline Nazi memorabilia, other “offensive” items

Babies, etc

Big merchants Use to collect personal information

How much legal pressure needed to extract PI


Indirect jurisdiction Libraries (in US so far)

Source of information about what people read USA Patriot Act requires secret collaboration

with FBI Child protection statute requires libraries to

filter material not appropriate for minors, on threat of losing federal funding (rule upheld in appeal court)

Not all libraries are complying, but it’s expensive to refuse


Indirect jurisdiction Transportation companies

Records used by states to see who has been buying out-of-state liquor and tobacco over the Internet

for tax purposes usually


Legislated jurisdiction Not unique to Cyberspace Not widely successful Probably least important aspect of

jurisdiction these days But watch particular examples

General or special application


Legislated jurisdiction General application Hague Convention on Choice of Court

Final result of long more ambitious project Attempt to exclude click-through contracts Will enforce choice of forum clauses Far from in force yet NOTE: MANY more conventions (bilateral or

multilateral) on recognition and enforcement of judgments that apply to cases on Cyberspace


Legislated jurisdiction Cybercrime Convention

and protocol on hate literature (signed by Canada in 2005)

Promotes collection and sharing of information (duties on ISPs)

Uniform Court Jurisdiction and Proceedings Transfer Act (UCJPTA) Aims to codify Morguard R&S C principle


Legislated jurisdiction UCJPTA – some presumptions of jurisdiction

Rights in real property in forum Contract to be performed in forum Contract expressly chooses forum Contract solicited in forum Tort committed in forum Business carried on in forum Injunction about doing something in forum

Enacted in several provinces (not ON yet)


Legislated jurisdiction Special application Consumer protection

Quebec, France: cannot prevent consumer from suing in jurisdiction of residence

Treaty of Rome (EU): ditto (and law) Telecommunications Act (Canada)

Amended after Zundel case to ensure that computer network was included in federal jurisdiction over telecom networks


Legislated jurisdiction Blocking statutes

The other side of the jurisdiction coin Purport to prevent suit within

jurisdiction including cooperation with foreign courts even where would normally do so

Not valid within Canada: Hunt (SCC) Precedents for ignoring their effect on

enforcement when taking jurisdiction (examples in Burke)


Legislated jurisdiction Legislated harmony of law A way that governments consciously

attempt to avoid problems of diversity of jurisdiction is to harmonize the law applicable across jurisdictions, so that it will not matter whose law applies or what forum will apply it. UNCITRAL Model Laws on Electronic Commerce Template on Internet Sales Harmonization UCJPTA, UECA, UEEA, UETA Many EU Directives on e-this-and-that


Conclusion (interim) Complexity of

Who wants to connect (assert legal jurisdiction) Connecting factors Reasons to connect Ways to manage – to avoid, to impose

Do not claim to mention all methods or all cases Some foreign examples may be borrowed here in

the future Techniques, technology and reasoning are all

evolving, maybe even legislation Fact + Policy = jurisdiction “Solving Legal Problems in Electronic Government: Jurisdiction,

Regulation, Governance”, (2002), 1 Can Jl of Law and Tech. No 3 p.1http://cjlt.dal.ca/vol1_no3/pdfarticles/gregory.pdf

Documents

Internet Jurisdiction: Where Are We Now? John D. Gregory Toronto Computer Lawyers Group November 24, 2005