Deliberate exploitation of market subjects GoDaddy to personal jurisdiction in Illinois

uBid v. GoDaddy, — F.3d —, 2010 WL 3768075 (7th Cir. September 29, 2010)

uBid sued GoDaddy in federal court in Illinois, alleging cybersquatting. uBid claimed that GoDaddy — an Arizona-based company — intended to profit in bad faith by registering on behalf of its customers certain domain names that were similar to uBid’s trademarks. uBid alleged that GoDaddy would set up parked pages at those domains, displaying sponsored links to sites run by uBid’s competitors.

The district court dismissed the case, finding that the court lacked personal jurisdiction over GoDaddy. uBid sought review with the Seventh Circuit. On appeal, the court reversed, holding that the exercise of personal jurisdiction over GoDaddy would not violate due process.

Contact with the forum state

The court held that GoDaddy’s activities in Illinois were not continuous or systematic enough for the exercise of general jurisdiction. But applying the standards set forth in Keeton v. Hustler, the court found that GoDaddy’s efforts to exploit the Illinois marketplace were done so thoroughly, deliberately and successfully that it would not be unfair for GoDaddy to appear in court in Illinois.

After all, in part through its ads at Wrigley Field, the United Center and Joliet Speedway, not to mention the numerous Super Bowl ads seen in Illinois, GoDaddy had acquired hundreds of thousands of customers in the state.

Relatedness of claims

In finding that GoDaddy’s contacts with Illinois were sufficiently related to the claims in the case, the court similarly looked to the extent and nature of GoDaddy’s advertising and marketing. The court couched the relatedness in terms of a quid pro quo:

[O]ut-of-state residents may avail themselves of the benefits and protections of doing business in a forum state, but they do so in exchange for submitting to jurisdiction in that state for claims arising from or relating to those activities.

In this case, GoDaddy’s connection with Illinois and uBid’s claims made the relatedness quid pro quo “balanced and reasonable.” GoDaddy’s contacts with Illinois alleged in the complaint and the alleged wrongs committed were so “intimately related” that GoDaddy should not have been surprised to find itself sued in Illinois.

Fair play and substantial justice

Finally, the court examined the question of whether the exercise of personal jurisdiction would comport with traditional notions of fair play and substantial justice. Again, the court’s finding relied on the thoroughness with which GoDaddy had exploited the Illinois marketplace.

Race car image courtesy Flickr user Jr 88 Rules under this Creative Commons license.

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Internet transactions support exercise of personal jurisdiction over out of state cigarette seller

Seal of the United States Court of Appeals for...
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Illinois v. Hemi Group LLC, — F.3d —, 2010 WL 3547647 (7th Cir. September 14, 2010)

Seventh Circuit declines once again to adopt the Zippo test for personal jurisdiction in internet cases.

The State of Illinois filed a civil suit in federal court in Illinois against a New Mexico-based online cigarette seller. The trial court denied the defendant’s motion to dismiss for lack of personal jurisdiction. The defendant sought review with the Seventh Circuit. On appeal, the court affirmed the denial of the motion, holding that the defendant’s website satisfied the minimum contacts requirement for the exercise of personal jurisdiction.

The mechanics of the website were important in the minimum contacts analysis. The site expressly said that the company would sell to consumers in any state except those in New York. The court interpreted this to relate to the personal jurisdiction question in two ways. First, such a statement implicitly said that the defendant would do business in Illinois. Second, it revealed that the defendant knew that it could be subject to the jurisdiction of out-of-state courts (i.e., New York) and also knew how to prevent such an exercise (by not selling there).

In this analysis, the court expressly declined to adopt the well-known Zippo sliding scale test, which evaluates the interactivity of a website in the personal jurisdiction analysis.

Restating a hesitancy “to fashion a special jurisdictional test for Internet-based cases,” the court applied the traditional constitutional approach of the “effects test” found in Calder v. Jones. It made the interesting observation, as it did in Jennings v. AC Hydraulic A/S, that “although technological advances may alter the analysis of personal jurisdiction, those advances may not eviscerate the constitutional limits on a state’s power to exercise jurisdiction over nonresident defendants.”

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Website terms of service provide basis for exercise of personal jurisdiction

CoStar Realty Information, Inc. v. Field, — F.Supp.2d —-, 2009 WL 841132 (D.Md. March 31, 2009)

Personal jurisdiction cases — even ones that involve the internet — are generally not all that interesting. But the case of CoStar Realty Information, Inc. v. Field is worth noting because of the way the personal jurisdiction analysis was tied to a provision found in online terms of service.

CoStar provides its paying customers with access to a proprietary database via the web. It claimed that certain defendants, who were residents of Texas and Florida, accessed the database using another customer’s password. So CoStar sued these defendants in federal court in Maryland.

These defendants moved to dismiss arguing, among other things, lack of personal jurisdiction. The court denied the motion.

It found that in the four or so years that the defendants accessed the database without authorization, they would have been presented with the online terms of service from time to time. Those terms of service contained a clause which provided that any litigation over use of the database would be conducted in Maryland. The court found that the defendants assented to these terms, and that the forum selection clause was valid and enforceable.

Map photo courtesy Flickr user Marxchivist under this Creative Commons license

No personal jurisdiction over Australian defendant in Flickr right of publicity case

Chang v. Virgin Mobile USA, LLC, 2009 WL 111570 (N.D.Tex. January 16, 2009)

Allison Chang (through her mother, since Allison is a minor) and Justin Ho-Wee Wong sued Australian-based Virgin Mobile Pty Ltd. alleging a number of tort claims including misappropriation of Chang’s right of publicity. Plaintiffs claimed that Virgin wrongfully used Chang’s picture in an Australian advertising campaign.

What makes the case intriguing is that Virgin got the photo off of Flickr. Wong took the picture and uploaded it there, attaching a Creative Commons Attribution 2.0 license to it. [See the ad]

Virgin moved to dismiss the action for lack of personal jurisdiction, arguing that it lacked minimum contacts with the forum state of Texas to satisfy constitutional due process. The court granted the motion and dismissed the case.

Chang argued that the court could exercise personal jurisdiction based on three contacts between Virgin and Texas: (1) Virgin’s accessing a Flickr server located in Texas; (2) Virgin’s contract (i.e., the Creative Commons license) with Wong, a Texas resident; and (3) the intrastate effects of Virgin’s use of Chang’s photograph in the advertising campaign.

The court found that Chang failed to establish the downloaded photo was on a server located in Texas. Though Flickr does maintain servers there, the photo could have been on another server located in either Virginia or Texas. The court rejected Chang’s argument that because Virgin directed its conduct to Flickr.com, it could be haled into court anywhere there are Flickr servers.

The court similarly found that any purported agreement with Wong via the Creative Commons license was not sufficient to establish personal jurisdiction. The Creative Commons license did not require Virgin to perform any of its obligations in Texas. Instead, the license permitted the photograph to be used anywhere in the world. Furthermore, Chang failed to show that Virgin performed any of its obligations in Texas. It used the photograph solely in Australia, the one place that, according to Virgin’s evidence, it was authorized to sell its products and services. Finally, because Virgin only used the photograph in Australia, the license that permitted its use was centered in Australia, not Texas.

Chang’s final argument was that she felt the injurious effects of the alleged misappropriation in Texas and therefore, under the holding of Calder v. Jones, a court in Texas could hear the case. The court rejected this argument finding that even though Chang may have shown she was affected in Texas, plaintiffs failed to show that Virgin’s conduct was intentionally directed into the forum.

Australian flag image courtesy Flickr user euthman under this Creative Commons license.

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