The Law of the Internet in Florida Personal Jurisdiction in the Internet World Ury Fischer, Esq. - Lott & Friedland, P.A. © 2002, Ury Fischer

The Law of the Internet in Florida

Personal Jurisdiction in the Internet World

Ury Fischer, Esq. - Lott & Friedland, P.A.

www.lfiplaw.com

© 2002, Ury Fischer

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Jurisdiction

Personal Jurisdiction

vs.

Subject Matter Jurisdiction

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Personal Jurisdiction

• Power by a court to:- Compel appearance by defendant- Adjudicate claims between parties- Enforce judgments

• No personal jurisdiction = dismissal

• May be waived - failure to timely raise

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Subject Matter Jurisdiction

• Is the Court authorized by law to adjudicate a particular dispute?

• Depends on subject matter, not parties

• Considerations:- Federal Question (Patent, Trademark, © )

- $$$ Limits

- Diversity

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Jurisdiction and the Internet

• Subject Matter Jurisdiction - Generally not affected by Internet considerations

• Personal Jurisdiction - Laws thrown on their head by the Internet and e-Commerce

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Personal JurisdictionThe “Good Old Days”

Pennoyer v. Neff - 95 U.S. 714 (1877)

“The authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is

established. Any attempt to exercise authority beyond those limits … [is] an illegitimate assumption of power,

and be resisted as mere abuse.”

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Modern Jurisprudence

Two Step Analysis

- Step 1: Statutory Authority

- Step 2: Due Process

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Step 1: Statutory Authority

• State’s Long Arm Statute

• 2 Types of Long Arm Statute

– Co-Extensive with Due Process (i.e. CA)

– Narrower, Explicit Acts Defined (i.e. FL)

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Step 1: Statutory Authority

• Florida’s Long Arm Statute (Sec. 48.193):(See p. 114 of book for complete text)

Any person doing any of the following submits to personal jurisdiction in FL:

• Operating a business in the state• Having an office in the state• Causing injury to someone or something while soliciting

in the state• Breaching a contract by failing to perform acts inn the

state

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Step 1: Statutory Authority• Broad application of the Long Arm Statute is the

norm in Florida.

• Case-by-case factual analysis is necessary

• Commercial activity directed at citizens of the state is generally sufficient to establish jurisdiction under the Long Arm Statute

• No reported opinions specifically discussing the Long Arm Statute in context of purely online activity

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Step 2: Due Process

International Shoe Co. v. Washington

In order to satisfy Due Process under the Constitution, defendant must have

“sufficient minimum contacts” with the forum state so as not to “offend traditional notions of fair play and substantial justice”

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Step 2: Due Process

• Minimum Contacts:– Defendant must “purposefully avail itself of

privilege of conducting activities in the state;– Based on its activities, defendant “should

reasonably anticipate being haled into court” in the state; and

– Personal jurisdiction in the state must be “reasonable”

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Step 2: Due Process

• Burden imposed on defendant

• State’s interest in adjudicating dispute

• Plaintiff’s interests and convenience

• Efficiency considerations of interstate judicial system

• Shared interests of the states in furthering fundamental social policies

Reasonableness Factors:

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Step 2: Due Process

• Jurisdiction can be General or Specific– Specific Jurisdiction: activities by defendant in

the forum are limited but are directly related to subject matter of the controversy

– General Jurisdiction: although defendant’s activities are unrelated to the controversy, they are “continuous and systematic”

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Minimum Contacts and the Internet

• Internet has created genuine risk of “borderless jurisdiction”:

– “Contacts” are extremely easy to create

– It is nearly impossible, from a technological standpoint, to limit the spread of such contacts

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Minimum Contacts and the Internet

Critical Question:

What constitutes “sufficient minimum contacts” in the Internet world?

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Minimum Contacts and the InternetInset Systems

• First case to address “minimum contacts” in the Internet context: Inset Systems v. Instruction Set, Inc., 937 F.Supp. 161 (D.Conn. 1996)

• Facts of Inset:– Plaintiff owned a TM for “INSET” was a resident of

CT.– Defendant owned domain name “INSET.COM” was

resident of MA and had no offices, employees or regular business in CT.

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• Facts of Inset (cont.):– Defendant had a website which operated solely

as an advertisement – Defendant’s website was accessible to residents

of CT (and rest of the world)– Lawsuit for TM infringement was filed in

federal court in CT

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• Outcome of Inset = Court found that personal jurisdiction over defendant was proper in CT.

• Court’s Reasoning = because the defendant’s website was accessible to citizens of CT, defendant had “purposefully availed” itself of privilege of doing business in the state.

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• Court believed that “publishing” a website was worse that broadcasting radio or TV advertising because it was available continuously to all citizen’s in the state with Internet access.

• Court focused on pervasiveness of the contacts and ignored the defendant’s intent to target its website to the forum state

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• Inset was highly criticized, and essentially ignored because its outcome was too harsh and probably did not pass Constitutional muster

• Inset was a BAD decision

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• Under the Inset Court’s logic, the mere act of publishing a website, regardless of its level of interactivity, subjects the publisher to jurisdiction everywhere there is Internet access.

• Although Inset was never explicitly overruled, it is not considered good law today.

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Minimum Contacts and the InternetZippo Mfg.

• After Inset, the next major case was Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa. 1997)

• Facts of Zippo:– Plaintiff was manufacturer of Zippo lighters, a

resident of PA– Defendant was the publisher of a website and

“Internet news service”. Domain names all contained the word “ZIPPO”

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• Facts of Zippo (cont.):– Defendant’s website had a subscriber base of

140,000, of which about 3,000 (2%) were located in PA.

– Outside of PA-based subscribers, defendant had no “contacts” with PA

– Plaintiff sued for TM infringement and dilution

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• Outcome of Zippo = jurisdiction was proper in PA

• Court’s reasoning = “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”

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• Unlike the Inset court, Zippo concentrated on the quality, not the quantity, of the contacts between the defendant and the forum.

• Zippo established a “sliding scale” of website interactivity to help analyze the quality of contacts

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Zippo “sliding scale”:

– Commercial websites - jurisdiction always OK– Passive websites - jurisdiction never OK– Interactive websites - jurisdiction depends on

the level of interactivity

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Minimum Contacts and the InternetThe Sliding Scale

• Commercial Websites:

– Websites used by their operators to enter into contracts with residents of the forum.

– Involve the knowing and repeated transmission of computer files over the internet

– Clearly used to transact business over the internet

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• Passive Websites:

– Purely informational in nature.– No interactivity with the user. Content is

essentially static.– Equivalent to an “Internet billboard”

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• Interactive Websites:

– In between Passive and Commercial websites– Provide some interactivity but not the ability to

enter into contracts– Allows users to affect the nature of the content

that is delivered

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• The Zippo sliding scale approach has been adopted by almost every federal circuit (see pp. 125-126 of text for cites) including the Florida district courts.

• Gray Areas - Notwithstanding its widespread acceptance, Zippo still allows for unpredictable results, especially with regard to websites that are neither Commercial nor Passive.

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Minimum Contacts and the InternetFlorida Cases

• JB Oxford v. Net Trade, 76 F.Supp. 2d 1363 (S.D.Fla. 1999)

– Defendant’s contacts with FL: (a) 3 interactive websites; (b) national toll-free number listed on websites; (c) pending application to do business in FL.

– Result = no jurisdiction in FL

– Court adopted Zippo’s analysis to label websites “interactive”

– Court ruled that contacts required for jurisdiction must “tie the defendant to a particular state” not merely link it with equal strength to other states.

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• Nida Corp. v. Ken Nida, F.Supp. 2d 1223 (M.D.Fla. 2000)

– Defendant’s contacts with FL: (1) sales to FL residents of $27,500 over 5 year period; and (2) website which the parties stipulated was neither commercial nor passive

– Result = jurisdiction proper in FL

– Court reasoned that combination of (a) actual product sales directed at FL, (b) over an extended period of time, and (c) an interactive website promoting the sales was sufficient minimum contacts

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• Miami Breakers Soccer Club v. Women’s United Soccer Assoc., 140 F.Supp. 2d 1325 (S.D.Fla. 2001)

– Court refused to exercise jurisdiction over defendant who had a website which acted as an online catalog but which required users to place orders over the telephone.

– Court stated that under the Zippo framework, the website had to be classified as passive and thus could not form the basis of personal jurisdiction.

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How to Avoid Borderless Jurisdiction

• Unless absolutely necessary, do not allow for the formation of a contract online. Require some sort of offline interaction for the contract to become binding. For example, require a voice communication or execution of an offline software application to formalize the contractual relationship.

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• If formation of contract is unavoidable, obtain a modicum of protection by including a forum selection clause in the contract.

• Minimize the “commercial” appearance of a website by providing large areas which are purely informational

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• Avoid the appearance that the website in question is directed at residents of foreign states. Avoid toll-free numbers

• Maintain accurate logs with enough detail to determine percentage of visitors from other states

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• If concerned with particularly “suit happy” jurisdiction, block or restrict access to the website for visitors from such jurisdiction.

The End

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Documents

The Law of the Internet in Florida Personal Jurisdiction in the Internet World Ury Fischer, Esq. - Lott & Friedland, P.A. © 2002, Ury Fischer