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Borders in Net Space
National Law Journal - June 14, 1999

The term "cyberspace" conjures up images of a big, open place-- something between the early American frontier and outer space, with very liberal spelling rules and other developing local customs, called Netiquette, that guide online behavior.

But when it comes to filing a lawsuit that arises in or from cyberspace, where should the suit be brought?

The Internet spawns fierce jurisdictional battles

Jurisdictional battles involving Internet offenses are fierce, and their outcomes are uncertain. If a person living in Oregon claims to have been defamed on a Web site belonging to a resident of Pennsylvania using an account hosted by America Online (AOL), which is based in Virginia, where should the libel suit be filed?

Suppose the statements are not made on a Web site, but in an e-mail discussion group distributed nationally or internationally? If a person in Illinois orders a compact disc from an online store based in England, and the price is not as advertised on the Web site, where does the consumer turn to pursue a false-advertising claim? The answer until recently was: Your guess is as good as mine.

However, a recent libel decision, Stephen Barrett, M.D. v. The Catacombs Press, Civ. No. 99-736, (E.D. Pa., April 12, 1999), provides thorough, well-written guidance to Internet jurisdictional matters. As to dealing with English law, only time will tell.

A debate surrounding the fluoridation of water spurred Dr. Barrett, a resident of Allentown, Pa., to file suit in U.S. district court in Pennsylvania. An Oregon resident had posted allegedly defamatory messages on her Web site and on e-mail discussion groups, known as list servers, about the doctor, who maintains a well-known Web site, called Quackwatch, at www.quackwatch.com, dedicated to medical fraud and other issues.

U.S. District Judge Franklin Van Antwerpen, of Philadelphia, ruled that no legal basis existed to exercise personal jurisdiction over the Oregon defendant. The messages posted on e-mail discussion groups and on Web sites were not targeted at the state and were akin to "passive" Web sites that do not solicit business from or direct their activities at Pennsylvania residents.

Even though the doctor may have suffered damage in Pennsylvania, where he lived, the comments were part of a larger public debate on issues that were not specific to the commonwealth of Pennsylvania. The decision is online.

Familiar federal two-step test in cyberspace

Although the dispute arose in cyberspace, the court applied the familiar federal two-step test to determine if personal jurisdiction was proper: First, did the defendant's conduct amount to systemic and continuous contact with Pennsylvania? If so, personal jurisdiction would be found. Second, would exercising personal jurisdiction over the defendant comport with due process under the U.S. Constitution?

The answer to both questions was no, the court ruled.

Posting messages on a Web site or on an e-mail discussion list, where they are nationally or even internationally available, did not constitute continuous and substantial contact with the forum state.

The court then turned to the question of whether the defendant had sufficient minimum contacts with the state to anticipate being called into court there.

The case that has become the touchstone of the "minimum contacts inquiry" in the Internet context is Zippo Manufacturing Co. v. Zippo Dot Com. Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997). Zippo uses a spectrum of activity and contacts to determine whether exercising jurisdiction is proper in the Internet context.

The court must analyze the nature and quality of activity that a defendant conducts over the Internet to determine whether a party has purposefully availed himself or herself of the state's residents or resources.

Net knowledge on the bench is key

It is in this area that it becomes most important that the judge understand the Internet in its various forms: Web sites, newsgroups, e-mail discussion lists and private e-mail messages.

Judge Van Antwerpen had a clear grasp of the medium:

"Personal jurisdiction clearly exists, for example, 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 Zippo, 952 F. Supp. at 1125-26, which held that jurisdiction may be exercised because the defendant contracted with approximately 3,000 individuals and seven Internet access providers in Pennsylvania.

More recently, in PurCo Fleet Services Inc. v. Towers, 1999 U.S. Dist. Lexis 2877 (D. Utah March 9), a Utah court exercised personal jurisdiction over Florida defendants who had used their Web site to solicit business from a Utah resident and also had attempted to extort money from the Utah-based plaintiff in exchange for a domain name.

The judge also distinguished CompuServe Inc. v. Patterson, 89 F.3d 1257, 1264 (6th Cir. 1996), in which the U.S. Court of Appeals for the 6th Circuit held that online contracts between the defendant and plaintiff were sufficient to exercise personal jurisdiction over the defendant, who had repeatedly transmitted his software from Texas to CompuServe's headquarters in Ohio. These contacts formed a "substantial connection" with the forum state.

By contrast, in Origin Instruments Corp. v. Adaptive Computer Systems, Inc., 1999 U.S. Dist. Lexis 1451 (N.D. Texas Feb. 3), the court held that an Iowa corporation could not be sued in Texas based on its Web site alone. The site contained product information and price lists, as well as an e-mail contact.

Applying the Zippo test, the court classified the defendant's Web site as interactive because orders or contacts with the forum state were possible, but "something more" was still required for personal jurisdiction.

In Barrett, the defendant posted statements such as: "If you think Quackwatch is a reliable source of information, I suggest you look at it more closely." The plaintiff argued that the defendant's messages on electronic news groups, with links back to her Web site, harmed his reputation among hundreds, if not thousands, of Pennsylvania residents.

But the judge held that, for jurisdictional purposes, these contacts were akin to a "passive" Web site that does not solicit or target Pennsylvania residents. "Every listserve or discussion group that the Defendant posted a message to was concerned with health care issues and was national in scope," the court found. "Plaintiff cannot point to any defamatory statements that attack him in his capacity as a Pennsylvania psychiatrist or any postings by the Defendant that intended to target Internet users in Pennsylvania."

Finally, the judge examined the additional two private e-mail contacts between the plaintiff and the defendant and found that they were insufficient to trigger personal jurisdiction, just as telephone calls or letters do not necessarily show purposeful availment.

Jurisdictional issues, even when a judge is plaintiff

Perhaps because of the explosion of public communication, the Internet has caused a boom in libel and defamation suits. But these suits also fall prey to jurisdictional difficulties--even when the plaintiff is a judge.

In early April, a Pittsburgh state court judge, Joan Orie Melvin, who maintains her own Web site at www.pagop.org/melvin.html, subpoenaed AOL, demanding the name of the author of anonymous accusations that appeared on another Web site hosted by AOL. The site accused the judge of lobbying on behalf of an attorney seeking a judgeship.

The suit was filed in Loudoun County state court in Virginia, where AOL is headquartered.

Pursuant to its policy in these matters, AOL notified the author of the anonymous posts that a subpoena had been issued. The American Civil Liberties Union joined the suit to shield the anonymity of the writer.

In May, the case was dismissed on jurisdictional grounds: The Virginia court had no jurisdiction over the matter. Both the judge and the "John Doe" defendant live in Pennsylvania. America Online Inc. was not a party to the suit, and although it was necessary to serve AOL to subpoena disclosure of the name of the Web site owner, there was no other contact with Virginia.

Academics and judges fall into two broad camps when discussing Internet discussion: those who feel that cyberspace is a separate place, almost a planet, which constitutes its own jurisdiction and demands its own rules, and those who feel that existing laws can stretch to fit the new domain.

The latter camp is facing more challenges as the wrinkles to Internet jurisdiction proliferate. Anonymous postings are only the beginning. Where is a "chat room" located, and where is jurisdiction proper if libelous statements are made, or typed?

A price dispute triggers a trans-Atlantic controversy

A trans-Atlantic controversy that never reached the courthouse raised international jurisdictional issues.

In January, David J. Loundy, a cybersavvy lawyer in Chicago, ordered a compact disc from a Web site called Rock Relics, which is hosted on a server in Surrey, England. The Web page listed the price as £8 and 99 pence, or about $15. Mr. Loundy received an e-mail acknowledgement of his order.

But then another e-mail message arrived from the manager of the compact disc's mail-order company, Victoria Bowles, informing him that the price on the Web page was incorrect, due to a typographical error. The actual price was £12 and 99 pence, or about $21. Did Mr. Loundy still want the CD?

Mr. Loundy did, but he wanted it at the listed price. Under American law, he had accepted an offer and received confirmation of it, and thus a valid contract had been formed. Raising the price for the product at this stage might constitute false advertising and breach of contract.

But under English law, e-mailed Ms. Bowles, who is a lawyer, there was no contract. The Web site's price was an "invitation to treat," and Mr. Loundy's order was the first offer. The seller was free to decline or renegotiate the deal.

At issue, aside from approximately $7, was where the transaction occurred, which would determine which country's law would govern. The questions consumed e-mail discussion lists for months. The ramifications were clear to those interested in how deals involving larger sums might be resolved.

The dispute was written up in the New York Times' weekly Cyberlaw Journal and it eventually reached the Surrey Trading Practices Council--roughly, the British equivalent of a Better Business Bureau.

At first, the council declined to exercise jurisdiction, as the advertisement had not been read in Surrey. It was forced to consider the matter when a sympathetic Surrey-based e-mail correspondent also tried to buy the compact disc, which was still listed on the Web at the incorrect, lower price, about a month after the dispute surfaced online.

The issue was never decided. Eventually, the company sent Mr. Loundy a free disc, and Mr. Loundy, who teaches a cyberlaw course at John Marshall Law School, could only pose the jurisdictional questions to his class. It was discovered, however, that Ms. Bowles, an elected member of the Surrey County Council, had been running her mail-order business from the county's server, a violation of the local laws.

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This article is reprinted with permission from the June 14, 1999 edition of The National Law Journal. © 1999 NLP IP Company. LawNewsNetwork.com.


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