III. Copyrights and the Internet

As a matter of practicality, e-commerce liability is a direct function of Internet jurisdiction: if the forum state whose substantive law has been violated by specific Internet conduct lacks jurisdiction over the offender, the prospects for legal remedy are essentially nil. However, inasmuch as anyone who has access to a computer in any "brick and mortar" locale can reach any cyber-destination (and the products and services offered thereat) it comes as no surprise that questions of forum jurisdiction have been of paramount importance in addressing e-commerce disputes.

In Digital Equipment Corp. v. Altavista Technology, Inc. 960 F. Supp. 456 (D. Mass. 1997) the Massachusetts District Court was one of the first courts to confront the question of Internet forum jurisdiction. Digital, the owner of the Altavista mark, brought an action against its licensee Altavista Technology ("ATI") interposing claims for trademark and servicemark infringement, unfair competition and trademark dilution in connection with ATI's use of the Altavista mark on the Internet. Non-resident ATI opposed the complaint on grounds of, inter alia, lack of forum jurisdiction. Denying ATI's motion, the court found ATI's Internet activity in Massachusetts sufficient to support personal jurisdiction under Massachusetts' long-arm statute. The court focused on ATI's license agreement with Digital (a Massachusetts corporation) which agreement expressly applied Massachusetts substantive law, together with the occurrence of at least three actual sales in Massachusetts obtained through ATI's website:

Using the Internet under the circumstances of this case is as much knowingly 'sending' into Massachusetts the allegedly infringing and therefore tortious uses of Digital's trademark as is a telex, mail or telephonic transmission; the only difference is that the transmission is not 'singularly' directed at Massachusetts, in the way a letter addressed to the State, or a telephone or fax number with a Massachusetts area code would be. But ATI 'knows' that its web site reaches residents of Massachusetts who choose to access it, just as surely as it 'knows' any letter or telephone call is likely to reach its destination, and it presumably 'knows' the contents of its website. ATI is a corporation whose primary business is providing Internet software; it is charged with the knowledge that its website is accessible through the Internet in Massachusetts.

960 F. Supp. at 462. The court was careful to point out however, that its ruling should not be construed to permit jurisdiction solely on the basis of an Internet presence:

This case does not reach the issue of whether any web activity, by anyone, absent commercial use, absent advertising and solicitation of both advertising and sales, absent a contract and sales and other contacts with the forum state, and absent the potentially foreseeable harm of trademark infringement, would be sufficient to permit the assertion of jurisdiction over a foreign defendant.

960 F. Supp. at 463 (emphasis in original). See also CompuServe, Inc. v. Patterson, 89 F. 3d 1257, 1264 (6th Cir. 1996) (finding that defendant created sufficient connection with Ohio for jurisdictional purposes when he subscribed to CompuServe's Ohio based computer information service, uploaded his own software onto the CompuServe system for other subscribers to review and purchase, and consequently marketed and sold his software in Ohio); American Network, Inc. v. Access America, 975 F. Supp. 494 (S.D.N.Y. 1997) (finding that foreseeable injury occurred in New York when computer users viewed allegedly infringing Web page on their home screens, which when coupled with defendant's signing up six New York subscribers, provided a sufficient basis for jurisdiction under New York's long arm statute, notwithstanding the court's acknowledgment that "a defendant should not be subjected to jurisdiction in New York simply because its home page could be viewed by users there."); but cf. Playboy Enterprises, Inc. v. Chuckleberry Publishing, Inc., 939 F. Supp. 1032, 1039 (S.D.N.Y. 1996) (display of magazine on Internet to American users constitutes distribution of magazine in the United States).

Some of the other early Internet jurisdiction decisions, however, were not as carefully analyzed, and often resulted in a finding of jurisdiction on little more than the presence of an Internet website. Perhaps the principal basis for these decisions was that in many of the early cases, lack of jurisdiction was raised in connection with various Internet misconduct, such as "cyber-squatting". For example, in Panavision Intern L.P. v. Toeppen, 938 F. Supp. 616 (CD. Cal. 1996) the court concluded that an Illinois cyber-squatter was subject to California long-arm jurisdiction when he registered the Internet domain name "panavision.com." The registration was part of a scheme to register corporate company names as domain names and then extort an exorbitant price from each company when it sought to acquire the domain name for use on the Internet. The court held that Toeppen had "directed" tortious conduct at the state of California, plaintiff's place of incorporation:

Toeppen identified Panavision (and other businesses), as a business whose trademarks were not registered as domain names. Toeppen then registered Panavision's trademarks as his domain names. Toeppen registered Panavision's trademarks because he believed that Panavision would eventually decide to create its own web address using its trademarks, that Panavision would discover that Toeppen had previously registered the trademarks as domain names, and that Panavision would pay Toeppen to relinquish his domain registration rather than incur the expense and delay inherent in suing him... Toeppen allegedly registered Panavision's trademarks as domain names ... with the intent to interfere with Panavision's business. [Therefore] Toeppen expressly aimed his conduct at California.

938 F. Supp. at 621. The court distinguished prior decisions which based forum jurisdiction on the defendants actually doing at least some business in the forum state, by characterizing his scheme as being aimed at California. 938 F. Supp. at 622. See also Animation Station, Ltd. v. The Chicago Bulk, L.P., 992 F. Supp. 382 (S.D.N.Y. 1998) (unauthorized posting on the Internet of copyrighted animation sequence featuring the Chicago Bulls supported Illinois long-arm jurisdiction, on the grounds that defendant "would have had to know that many, if not most [Bulls] fans reside in [the Chicago area] which would therefore be a prominent place in which the Illinois-based plaintiff ... would suffer injury ..."); accord, Bunn-O-Matic Corp v. Bunn Coffee Service, 46 U.S.P.Q. 2d 1375 (CD. Ill. 1998). See further Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161, 164 (D. Conn. 1996) (mere advertising on the Internet which can be viewed from computers resident in the forum state, constitutes solicitation towards forum state sufficient to sustain long-arm jurisdiction); Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328, 1330 (E.D. Mo. 1996) (advertisement on the Internet of the intention to start a business in the forum state constituted jurisdictional activity therein, notwithstanding the fact that defendant had not yet done any business, any where).

While Toeppen's overall scheme may have been tortious in nature, it is debatable whether it was "aimed" at California, any more than it was aimed at any other state, in as much as he targeted businesses all over the country, or if you will, throughout cyberspace. Moreover the court failed to observe that the mere registration of a domain name is not itself prima facie tortious conduct:

Domain names present a special problem...because they are used for both a non-trademark technical purpose, to designate a set of computers on the Internet, and for trademark purposes, to identify an Internet user who offers goods or services on the Internet... when a domain name is used only to indicate an address on the Internet the domain name is not functioning as a trademark... [thus] something more than the registration of the name is required before the use of a domain name is infringing.