A California court has held that communications over the Internet can support the exercise of jurisdiction over out-of-state entities. The recent appellate court case, Hall v. LaRonde (Second Appellate District, August 7, 1997), illustrates a trend in courts across the nation to cite the increased scope of Internet communications as justification for requiring corporations and individuals to defend litigation in distant states where they otherwise do no business.
The appellate court in Hall reversed a lower court's dismissal of a breach of contract action brought by a California software developer against a New York entity. According to the court, the defendant had no physical contacts with California; all communications between the two entities -- including, apparently, transmission of the subject software module itself -- were performed by electronic mail or by telephone. The court acknowledged the existence of an earlier case holding that jurisdiction cannot be maintained over an out-of-state purchaser merely because it does business with a seller located in California, if the purchaser has no physical presence in California and all communications with the seller were conducted by means of "out-of-state agents or interstate mail and telephone." Interdyne Co. v. SYS Computer Corporation, 31 Cal.App.3d 508, 511-12 (2d Dist, 1973). But the Hall court joined a growing number of courts around the country citing to the increased power and speed of Internet communications as justifying a more expansive view of personal jurisdiction. "Much has happened in the role that electronic communication plays in business transactions since Interdyne was decided 20 years ago," said the court. "The speed and ease of such communications has increased the number of transactions that are consummated without either party leaving the office. There is no reason why the requisite minimum contacts [for jurisdiction over an out-of-state party] cannot be electronic." Hall, at 3.
The past year has seen a small explosion of opinions from courts around the country discussing whether Internet contacts are sufficient to support the exercise of jurisdiction over out-of-state defendants. In some of those cases, the reference to Internet communications appears to be a makeweight; other contacts between the parties, such as the interstate delivery of goods or services or execution of a contract between the parties, would justify jurisdiction over the defendant without any reference to the Internet. Indeed, this is probably true of the Hall case itself. But in areas such as trademark infringement or defamation, courts have stressed the increased power and reach of the Internet to support jurisdiction over distant defendants. The results do not always appear well-founded.
In one trademark infringement case based on a web page, the court cited to the total number of citizens in the forum state subscribing to Internet services to demonstrate the extent of the defendant's "contacts" with the forum state, ignoring the fact that only a few of those Internet customers were likely ever to have visited the site. Inset Systems, Inc. v. Instruction Set, Inc. 937 F.Supp. 161 (D.Conn. April 17, 1996). Other courts have drawn a distinction between a web page and other types of nationwide advertising based on the perceived greater power of Internet communication -- for example, the fact that web pages can be accessed 24 hours a day, and that, unlike publications in periodicals, they persist over time rather than appearing in only a single, ephemeral issue of a publication. See e.g., Heroes, Inc. v. Heroes Foundation, et al., 958 F.Supp. 1 (D.D.C., December 19, 1996). There is plainly a view among some judges that companies taking advantage of the worldwide reach of the Internet to solicit business must also expect to defend cases in distant jurisdictions when their web pages run afoul of local laws or impair local rights.
The law of the Internet is still young, and it is too early to tell the extent to which courts in general will base the exercise of personal jurisdiction purely on "passive" web pages, for example, absent other more traditional contacts. This will remain an area to watch for any company doing business over the Internet.
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