Re: DEC vs AltaVista

On 5/31/97, Carl Oppedahl <carl[_at_]oppedahl.com> wrote:
>
> On 05/30/97, John Noble <jnoble[_at_]dgsys.com> wrote:
> >
> > On 5/29/97, Bob Stock <bstock[_at_]ucla.edu> wrote:
> > >
> > > . . . [DEC v. ATI] is simply repeating that the site is accessible
> > > to MA residents, and that, in itself, says nothing at all, no matter
> > > how many times it is repeated.
> >
> > What I think it says is that when you use an infringing trademark on
> > the "world wide web" you are committing a tort in each jurisdiction
> > in which it is in fact displayed, and that is sufficient to establish
> > jurisdiction. ... When you put
> > your business on the web you are, it seems to me, "purposely availing"
> > yourself of the opportunity to do business everywhere (first due
> > process consideration). ... And if you
> > do something on the web that's intrinsically tortious, eg. libel,
> > trademark infringement, copyright infringement, then you're going to
> > satisfy the "relatedness" test, i.e. the claim is related to the
> > contact, however minimal the contact (second DP consideration).
> > Bingo -- you're in court in Alaska. Unless (third consideration), it
> > would be manifestly unreasonable beause (unlike Alta Vista) you can't
> > in fact afford a ticket to Alaska.
>
> No, sorry, but DEC v Altavista says nothing of the sort.

Perhaps I have overstated the case, but it certainly says something of the sort.

> Anyone who is reading the case must pay close attention to the fact that
> it is a contract case, not a tort case. Alta Vista entered into a
> contract with someone in Massachusetts (DEC). They are alleged to have
> breached it, and the Massachusetts court decided it had jurisdiction over
> both contract parties given that one of them was in the forum state.

DEC's suit alleged breach of the license agreement, but also alleged trademark infringement, and unfair competition under the Lanham Act and common law.

Concluding that ATI had sufficient contacts with the state of Massachusetts to support the exercise of personal jurisdiction, the Court said:

"I find the following jurisdictional facts necessary and sufficient to support personal jurisdiction over ATI is likely to exist: ATI entered into a contract with DEC that includes a clause requiring this contract to be interpreted "under and in accordance" with the laws of Massachusetts; this contract (the "AltaVista" license) and ATI's alleged breach of it gives rise to the present litigation; ATI operates a Web-site accessible to Massachusetts computer-users; it solicits advertising and its own products through the site; it made at least three sales to Massachusetts residents of software products in the course of and related to its operation of a Web-site; finally, DEC alleges ATI's Web-site has infringed its trademark and caused considerable confusion in Massachusetts."

The Court rejected ATI's contention that its contacts with DEC in Massachusetts were inconsequential because DEC solicited the contract, negotiations were conducted in California and by phone, ATI never traveled to Massachusetts, and maintain no presence in Massachusetts except through its website. According to the Court:

"Nevertheless, those contacts, especially when viewed in the context of ATI's conduct after the contract with DEC was executed -- increasing similarities between the appearance of Altavista' s Web site and DEC's, ATI's apparent belief that the licensing agreement gave it free rein to capitalize on DEC's Altavista's popularity in Massachusetts and elsewhere, the sales to Massachusetts residents -- make it clear that its contract with the plaintiff was one part of a broader range of activities that, literally, amounted to the transaction of business in Massachusetts."

At the same time, alternatively, the Court concluded that the Massachusetts long-arm statute authorized the exercise of jurisdiction based on an alleged tort caused by acts in Massachusetts. The Court stated that "misrepresentations made 'in' Massachusetts can be an alternative basis for jurisdiction under Section 3(c)," and concluded that "using the Internet under the circumstances of this case is as much knowingly 'sending' into Massachusetts the allegedly infringing and therefore tortious uses of DEC's trademark as is a telex, mail, or telephonic transmission . . . ."

Massachusetts law also authorizes the exercise of jurisdiction for a tort committed in Massachusetts based on acts committed elsewhere, coupled with either regular solicitation of business, or continuing contacts, or the derivation of substantial revenue from Massachusetts. Noting that the alleged trademark infringement occurs in Massachusetts, the Court found that the additional requirements were also satisfied:

"ATI's Web-site, generally accessible twenty-four hours a day and seven days a week to all Massachusetts residents who can access the Web, plainly solicits business in Massachusetts. It also constitutes continuing contacts with this state insofar as ATI sells advertising space and software through the Web site to citizens of Massachusetts. When software is sold (or even given away so that users will visit the site) through the Web-site, the software can be transmitted via the Internet directly to a computer located in Massachusetts; as such, it plainly comprises doing business here. At least three such sales have taken place."

In the Court's due process analysis, it concluded that the relatedness element was satisfied "_both_ in the form of its contract with DEC, and in its subsequent maintenance of a Web-site which allegedly breached that contract and caused torts in Massachusetts." (my emphasis)

As for purposeful availment, the court acknowledged that "ATI may well have done everything possible to avoid jurisdiction in terms of its contract and non-Web contacts with Massachusetts." In this case though:

"ATI's Web-site, its design, the extent to which it infringed DEC's trademark, and breached the contract . . . necessarily changes the equation: This Web-site, in context, creates minimum contacts."

"Here, when ATI posted a Web-site which over time more and more mirrored that site of a Massachusetts corporation, arguably in violation of DEC's trademark rights and the licensing agreement, a site that plainly would attract Massachusetts residents, and did so, it, like the petitioners in Calder, should have anticipated being haled into a Massachusetts court to answer for its acts. Every day, potentially thousands of Massachusetts residents visit ATI's Web-site; and each "call" is "answered" by the display of allegedly tortious materials that cause harm here, there, and everywhere (but especially here). Since ATI knows that DEC is located here, the purposeful availment prong is met: ATI's conduct, by allegedly causing trademark infringement that it knows will have an effect on consumers in this state, and an especially harmful effect on DEC, whose trademark rights are at issue, see Panavision Int'l L.P. v. Toeppen . . . satisfies the constitutional "purposeful availment" due process tests.

> The classic tort case that Mr. Noble imagines is one in which the
> defendant has no pre-existing relationships, contractual or otherwise,
> with anyone. Instead, the defendant has only a web site. The plaintiff
> in such a case understandably hopes the law would develop that personal
> jurisdiction can be had in any form in which it is possible to type in
> the URL and view the web site; such law would be good for plaintiffs.

You give me credit for more imagination than I have, and I think you're whistling past the graveyard if you don't read the case to support the exercise of jurisdiction based solely on an allegation of trademark infringement occurring in the forum state. The alternative, independent bases supporting jurisdiction -- doing business in Mass, _and_ a tort causing damage in Mass, together with the Court's emphasis on the web activity in its purposeful availment analysis, I think supports my reading of the case.

> The fact is that:
>
> (1) it would be folly to suggest that PJ can be had everywhere you can
> click on a web site (i.e. everywhere the Internet goes). This would
> mean the web site operator could be sued in any country of the world,
> and, given packet radio, could be sued in space.

The case doesn't purport to address the exercise of personal jurisdiction by extranational (or extraterrestrial) tribunals, and I suspect the third prong of the due process analysis -- reasonableness -- may provide some protection (at least from the latter). And as a practical matter, the full faith and credit clause is what makes the exercise of personal jurisdiction by another state meaningful. I'm simply unfamiliar with the jurisdictional requirements for enforcing international judgments. Must the foreign tribunal do more than satisfy the minimum contacts due process test in order to enforce its judgment in the U.S.? My point is that I'm not sure we apply the minimum contacts test to determine the enforceability of international judgments, but I'm sure that DEC v. ATI, however we read it, doesn't speak to the exercise of jurisdiction by courts in foreign countries -- that would be a matter of their law, not ours.

> (2) courts have uniformly (with the exception of the Inset case) rejected
> this "sue them anywhere their web site can be clicked on" theory. The
> Blue Note case and the the Esqwire case are the first that come to mind.

Its early yet, Blue Note is on appeal, and don't forget Panavision. Also I think Blue Note is kind of unique in that the nature of its business, operating a club at a single location in MO, countered the inference that its use of the web was to "do business" in NY. Many (most?) commercial uses of the web are by nature more likely to give rise to the inference that the alleged infringer is soliciting business from foreign jurisdictions beyond its geographic location. Even in that case, if the famous Blue Note were located in Kansas City, KS, and the alleged infringer was across the river in Kansas City, MO, the result might have been different. Don't you think?

John Noble
<jnoble[_at_]dgsys.com> Received on Mon Jun 02 1997 - 15:37:52 GMT