Personal Jurisdiction and the Web

Another great American tradition has begun to emerge - lawsuits involving online businesses and service providers. If you want to sue someone over an online issue, where do you do it? Where you live? Where they live? In some cyberjurisdiction?

The net may be a global network, but you may not have the right to haul someone into court in the state of your choice. To sue someone in your home state, you have to prove they have enough contacts there. Some recent court decisions expose the complex intersection between the net and jurisdiction.

Sixth Circuit: CompuServe v. Patterson

In July, a U.S. appeals court allowed Columbus, Ohio-based CompuServe to sue Texas resident Richard Patterson in its home state (the suit was in response to Patterson's threatening trademark litigation against CompuServe). The Court ruled a combination of factors forced Patterson to defend himself in Ohio - he had subscribed and for three years advertised and sold shareware via CompuServe, he had sold software to 12 Ohio residents, and he had threatened trademark litigation against CompuServe. In addition, the Court was influenced by CompuServe Service and Shareware Registration Agreements, which said the contracts were entered into in Ohio, and "governed by and construed in accordance with Ohio law."

This decision doesn't mean a service provider always can sue someone in its home state, nor does it mean a service provider always can sue someone in its hometown for selling products via its service. The Court specifically said merely being a CompuServe subscriber or solely selling software via CompuServe, without more contacts, wouldn't be sufficient to establish jurisdiction in Ohio. Add in more facts, however, and you may find yourself racking up frequent flyer miles.

Another lesson illustrated by these cases is the importance of carefully reviewing your service provider agreements. If you're a corporation with clout, request an equitable jurisdiction clause, which requires you to sue your service provider in its home state and requires them to sue you in your home state. If you advertise and sell a significant amount of goods or services through an online service provider, consider using a local provider. This way, legal problems with your service provider will probably stay within your state's borders.

The Blue Note Case

Another case involved two nightclubs with the same name in two different states, both with Web sites. In September, the Blue Note, in New York City, tried to sue the Blue Note, in Columbia, Mo., for trademark infringement of its registered name. The U.S. District Court in New York ruled that advertising and selling solely Missouri-based services on a Web site didn't justify New York jurisdiction. The Court cited as helpful the Missouri site's disclaimer saying it shouldn't be confused with the Blue Note in New York, with a link to the latter's Web site.

So, if you own a Web site whose name may conflict with another, provide a disclaimer and a link to their Web site. Unless, of course, you want to check out courthouses around the country.

Courtesy of Marie D'Amico of Digital Media.