Doing Business on the Web: Jurisdiction over Interactive Web Sites
By Jere M. Webb
The global reach of the Internet raises the possibility that on-line activities can subject businesses to the jurisdiction of courts in far-flung places. The rules for Internet-based jurisdiction are just now being spelled out by U.S. courts. The general rule emerging is that operation of an active Web site, where one actually transacts business through the Web site, is sufficient to confer "general jurisdiction" over the site's owner; that is, to subject it to all lawsuits of any sort, whether related to the Web site activities or not. The theory of general jurisdiction is that the defendant is constructively present in the state by reason of doing business with that state's citizens, albeit from a distant locale.
At the other end of the continuum are passive Web sites, which only advertise or provide information to on-line visitors. Most courts have held that passive Web sites do not provide a basis for jurisdiction. But what about Web sites that provide some limited level of interactivity, such as allowing e-mail exchanges or allowing or requiring visitors to submit personal information?
A court recently answered this question and held that such limited interactivity is not sufficient to confer jurisdiction. In Hurley v. Cancun Playa Oasis Int'l Hotels, No. CIV.A. 99-574, 1999 WL 718556 (E.D. Pa. Aug. 31, 1999), the plaintiff, a Pennsylvania resident, was injured while staying at a hotel in Cancun, Mexico. He sued the U.S. agent for the hotel, a Georgia corporation, in his home state of Pennsylvania.
The defendant moved to dismiss based on lack of personal jurisdiction. In the ruling on the motion to dismiss, the court said that Web sites fall under three categories: (1) those that actually conduct business over the Internet, (2) those that allow exchange of information with the host site, and (3) those that merely post information or advertisements.
The court held that jurisdiction generally exists in the first category and does not exist in the third. However, in the second category whether jurisdiction exists "is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site."
The court examined the particular site's level of interactivity and the extent of its contacts with Pennsylvania residents and held that these contacts were not sufficient to confer general jurisdiction. The site accepted and confirmed reservations on-line, advertised an 800 number for telephone reservations, and allowed e-mail exchanges with the site's owner. The court found no evidence in the record that these interactive contacts with Pennsylvania residents were sufficiently "continuous, systematic, and substantive" to support general jurisdiction.
Note that this case might have come out differently had the plaintiff's claim arisen out of contacts with the Web site, but the court was not called upon to reach this issue because the plaintiff had never visited the defendant's site. What if the plaintiff had booked his reservation on the site? What if he had read the on-site ads and then called the 800 number to book his room? Questions such as these will have to await future cases.
For two other cases involving limited interactivity Web sites, see Molnlycke Health Care AB v. Dumex Med. Surgical Prod. Ltd., 64 F. Supp. 2d 448 (E.D. Pa. 1999) (no jurisdiction in patent infringement case where defendant advertised his products on its site and allowed purchase directly from site, but no evidence of significant sales in Pennsylvania), and Mink v. AAAA Development LLC, 190 F.3d 333 (5th Cir. 1999) (no jurisdiction over copyright infringement case where defendant's site advertised allegedly infringing software code but had made no sales into Texas).
For now, the lesson is this: If you operate an interactive Web site, you are submitting yourself to the possibility of having to defend lawsuits in distant jurisdictions, both in the United States and abroad.
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