TechLaw

GoDaddy Not Subject to Trademark Infringement Suit in Illinois

In the case of uBID Inc. v. The GoDaddy Group Inc., No. 09-cv-2123 (N.D. Ill., Nov. 5, 2009), a federal district court in Illinois ruled late last week that the Big Daddy of domain name registrars, Godaddy.com, is not subject to the jurisdiction of Illinois courts and need not defend a trademark infringement suit filed there. This is an interesting ruling, though "interesting" in the area of internet jurisdiction is a relative term to say the least.

The plaintiff's trademark infringement theory is a novel one, and the case is well-known in cyberlaw circles. The plaintiff alleged that Godaddy.com is unlawfully profiting from domain name registrations that infringe the plaintiff's UBID trademark -- because Godaddy.com sells advertising on web pages for parked domains. For example, if a person registers a domain name, like <ubidhigherthanme.com>, but does not immediately link the the domain name to a website under the registrant's control, Godaddy.com will temporarily associate the domain name with a web page under Godaddy.com's control and then sell advertising on that web page.

GoDaddy: Everywhere and Yet Nowhere at All (Except Arizona)

Godaddy.com, based in Arizona, is the leading ICANN-accredited registrar of domain names by a wide margin, with reportedly over 32 million domains registered. The court acknowledged that Godaddy.com received 3.19 percent of its revenues from Illinois, a not-inconsiderable sum. Add to that Godaddy.com's pervasive national advertising campaigns and sponsorships in the sport of auto-racing, including events that took place in Illinois. Yet the court found that all of this commercial activity was not enough to subject Godaddy.com to suit in Illinois.

In this court's view, it was important that Godaddy.com's national advertising campaign was not specifically directed to Illinois residents. "Without demonstration of an Illinois-specific focus, GoDaddy's sporadic contacts with Illinois as a result of its national advertising campaign to not support an exercise of general jurisdiction," the court said.

The idea of targeting came up again in the court's discussion of specific jurisdiction, where it ruled that the thousands of transactions (and domain registration contracts) processed by Godaddy.com's website with Illinois residents were not sufficient to create jurisdiction over Godaddy.com. The court seemed to weigh in Godaddy.com's favor the fact that these transactions were automated. Also in Godaddy.com's favor was the fact that Godaddy.com's automated contacts with Illinois residents were initiated by Illinois residents not by Godaddy.com. They were the product of "unilateral activity of a third person," the court wrote.

Asserting jurisdiction over Godaddy.com on the basis of these automated contacts would violate constitutional due process, the court held. It also rejected the Calder "effects test" as a basis for assertion jurisdiction here.

The court also mentioned favorably Godaddy.com's registration contract, which provides for jurisdiction in Arizona, though it didn't make too much of this fact.

I wonder if this ruling is an outlier or a turning point in how courts view jurisdiction over internet sites. If an entity as commercially large and pervasive as Godaddy.com is not subject to the jurisdiction of Illinois courts then, by this court's reasoning, Godaddy.com is not likely to subject to the general jurisdiction of any other forum -- save for Godaddy.com's home state of Arizona. Smaller domain name registrars (all of the others are smaller than Godaddy.com!) should also take comfort from the court's ruling.

Trademark owners alleging infringement tend to prevail on these sorts of jurisdiction challenges, inasmuch as the harm allegedly inflicted by the defendant's infringing activities is felt most keenly in the trademark owner's home jurisdiction. On this point too the court's ruling was somewhat surprising.

The Targeting Trend

Internet jurisdiction cases tend to be all over the map as far as reasoning as each court takes a whack at the novel issues presented, and they are "fact-intensive" as well, which is lawyer-speak meaning that the court's ruling is pretty well tied to the case before it. It is not terribly difficult to distinguish one case, or several cases, and build a good argument for ruling the other way. Myself, I could find a couple dozen cases where scant commercial activity was held to support the assertion of jurisdiction over an out-of-state defendant. That doesn't mean this judge was wrong in uBID v. Godaddy or that this ruling isn't a rational way to look at internet-based jurisdiction problems. It is entirely possible to see this case a part of the recent trend of "targeting" analysis in jurisdiction cases, which is scaling back expansive 1996-2000 era views on internet jurisdiction. In the end, though, I think it just means that the cases are all over the map.

(This doesn't have anything do to with jurisdiction, but I found it interesting that the court's opinion mentioned that Godaddy.com has filed a patent application for a domain registration system that examines the text of a domain name and then prevent advertisements from companies with similarly worded names from appearing on the parked page.)

Finally, a trivial tidbit. The judge in the uBID v. Godaddy case, Charles P. Kocoras, is the same judge who entered a $11.7 million default judgment against United Kingdom-based Spamhaus in a defamation case brought by a company claiming to have been wrongfully tagged by Spamhaus as a spammer. Spamhaus didn't challenge the court's jurisdiction in that case, and I bet they wish they did. Spamhaus's connections with Illinois seem awfully slight in comparison to Godaddy.com's connections. Spamhaus is still trying to get out from under that default judgment. The Seventh Circuit subsequently ruled that Spamhaus was entitled to a hearing on the size of the judgment, and that part of the case has been dragging on for the past two years. On Oct. 8, Judge Kocoras rejected Spamhaus's request for a jury trial on the damages question.

The bottom line for the uBID v. Godaddy case, however, is that if uBID wants to pursue Godaddy.com on trademark infringement claims, it is going to have to do so in Arizona.

Justice Sotomayor's Potential Cyberlaw Influence? Not Much

It was pleasant to note the other day that Judge Sonia Sotomayor, President Obama's choice for Associate Supreme Court Justice, has written a few opinions relating to Internet law during her time as judge in the lower federal courts. A first, apparently, and a sign of the centrality of the Internet in our business and personal affairs. From now on, the high court nominee who doesn't have a few cyberlaw decisions on his or her resume will be the remarkable case.

But does a Justice Sotomayor mean anything for the future direction of the laws that regulate online activity? No, not really. Not in the near future.

Consider this:

The Supreme Court has never reviewed a case involving the Computer Fraud and Abuse Act.

The Supreme Court has never reviewed a case involving the Electronic Communications Privacy Act.

The Supreme Court has never reviewed a case involving Section 230 of the Communications Decency Act (which gives interactive computer services immunity from most claims arising from the publication of third-party content), though it did consider, and strike down, the prohibitions against indecent online speech contained in another part of the CDA in Reno v. American Civil Liberties Union, 521 U.S. 844 (1997).

The Supreme Court has never reviewed a case involving the CAN-SPAM Act or the Digital Millennium Copyright Act.

The Supreme Court has never reviewed a case involving electronic contracting, jurisdiction arising from online activities, cybersquatting or any other domain name-related dispute.

Aside from Doe v. Chao, a case involving standing to sue the federal government under the Privacy Act, the Supreme Court has never taken a case involving online privacy or security (GLB, COPPA, FTC Act, you name it). If you want to count Bartnicki v. Vopper, go ahead, though I don't think that obscure decision in any way undermines the point I am trying to make here.

So that covers that vast majority of what I consider to fall under the general heading of cyberlaw. None of it is even on the Supreme Court's radar. And I don't see that situation changing anytime soon. The Web is a welter of contracts (a state law issue), and all of the afore-mentioned statutes need many more years of intermediate appellate scrutiny before they'll make good candidates for Supreme Court review. Sure, there are plenty of prosecutorial and judicial missteps to feed our blogs. But, as the Supreme Court often reminds us (see Rule 10), the Supreme Court is not in the business of correcting erroneous applications of settled law.

What's left? Copyright, patent, and First Amendment law. The last (and only) time the high court decided a digital copyright case was Metro-Goldwyn-Mayer Studios Inc. v. Grokster, 545 U.S. 913 (2005), a case in which Justice Souter (whom Judge Sotomayor will replace) wrote for a unanimous court that Grokster, a distributor of peer-to-peer file-sharing software, was a secondary infringer of the movie studios' copyrights. Not only did Grokster lose the case, but it inspired the high court to create a new theory of secondary liability -- "inducing" copyright infringement -- along the way. Given the apparently entrenched views already on the court, Judge Sotomayor's ascent to the Supreme Court offers little hope of benefiting copyright fair use advocates anytime soon, if at all.

First Amendment issues have traditionally been a leading source of Supreme Court activity, and it is not too far-fetched to imagine high court review of a case involving a federal government (FCC?) attempt to impose broadcast-style regulation on Internet transmissions. Here alone, I think, we have an area where Judge Sotomayor could exert some influence on cyberlaw issues. Without question, the Internet would be a far different -- and worse -- place if Reno v. American Civil Liberties Union had come out the other way. On First Amendment issues, Judge Sotomayor appears to have a rather unremarkable though liberal-leaning view of the First Amendment. About the same as the departing Justice Souter. No gain or loss for free speech proponents.

That leaves patents. In re Bilski, No. 08-964 (certiorari petition filed Jan. 28, 2009), is an important case in which the Federal Circuit curtailed the patentability of software-implemented business methods. According to SCOTUSBlog, there is a good chance the Supreme Court will grant review of the Bilski decision. Bilski was up for discussion yesterday at the Supreme Court's private cert-consideration conference, so we could know as early as Monday if Judge Sotomayor will have that one facing her in the fall. I have no idea what Judge Sotomayor's views are on the patentability of software-implemented business method patents, and I don't think anyone else does either. The Inventive Step blog unearthed a couple district court decisions. Not much there to go on.

Feel free to e-mail me (as usual) all the cases I've missed!

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Ohio Decision Bucks Trend in Online Jurisdiction Rulings

A decade ago, back when the commercial Internet was young, cases about jurisdiction were all over the map. Predicting which sorts of online activities would subject a person or a business to the jurisdiction of a foreign court was a hazardous occupation.

Leading pre-2000 cases tended to take a broad view of what the Due Process Clause permitted in the way of "haling" an out-of-state miscreant into court to answer a local resident's complaint. Cases like Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998), which held that the assertion of jurisdiction over an out-of-state cybersquatter comported with federal due process, and Inset Systems Inc. v. Instruction Set Inc., 937 F. Supp. 161 (D. Conn. 1996), which held that merely operating a Web site accessible to forum residents and having a toll-free telephone number (Imagine that. A telephone number has jurisdictional significance.), drew skeptical reviews from cyberlaw specialists. If these cases were correct, a Web site operator could be sued any place that had Internet connectivity.

Things look different today. Courts have become more sophisticated when deciding jurisdiction challenges. Rarely will the mere accessibility of a Web site in the forum be enough to support jurisdiction. Nor will a blog post or two be sufficient to force the poster to defend a libel action in the post subject's home state. And nearly all courts analyzing e-commerce transactions have ruled the a single sale or two into the forum does not amount to "doing business in" or "purposeful availment of" the forum state.

Courts tend to make a determined effort to assess the quality and nature of a Web site's contacts, frequently borrowing from the "interactivity" test created in Zippo Mfg. Co. v. Zippo Dot Com Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). Broad language used by the U.S. Supreme Court in Calder v. Jones, 465 U.S. 783 (1984), cited by many online plaintiffs for the proposition that jurisdiction is proper wherever the "effects" of the alleged libel are felt, has been whittled down to size by repeated judicial insistence that the defamatory online publication must have been "expressly aimed" at the forum state. Not aimed at the plaintiff. Aimed at the forum. The Fourth Circuit's opinion in Young v. New Haven Advocate, 293 F.3d 707, 711 (4th Cir. 2002), is a good example. In Young, the court held that the Due Process Clause did not permit a Virginia court to exercise jurisdiction over a state resident's libel claim against two newspapers based in Connecticut. The "effects" of the alleged libel may have been felt in Virginia where the plaintiff resided, the court said, but the defendants' Web sites were not targeted and focused on Virginia readers.

I doubt that the Ninth Circuit would decide Toeppen the same way today, even though the court has passed up several opportunities to repudiate that case. I can't remember the last time a court even mentioned let alone followed Inset Systems.

Here are several other examples of what seem to me to be correct, defensible outcomes in jurisdiction disputes:

In Malone v. Berry, No. 07ap128 (Ohio Ct.App. Dec. 6, 2007), the court held that a single eBay sale of a motor vehicle could not constitutionally support the assertion of jurisdiction by a court in the state where the plaintiff resided.

In Marschke v. Wratislaw, No. 07SD125 (S.D., Dec. 5, 2007), the South Dakota Supreme Court reached the same conclusion: a single eBay sale to a forum resident was not a constitutionally permissible basis for a state court to assert jurisdiction over the out-of-state seller.

Other cases make the same point: Shamsuddin v. Vitamin Research Prods., 346 F. Supp.2d 804 (D. Md. 2004), Machulsky v. Hall, 210 F. Supp.2d 531 (D. N.J. 2002). But see Crummey v. Morgan, No. 2007 CW 0087 (La. Ct.App., Aug. 8, 2007), in which the court cited the interactivity of the eBay Web site to conclude that the defendants had purposely availed themselves of the forum where the plaintiff resided.

Similarly, in the defamation area, blog postings and other online comments are rarely found to support jurisdiction in the forum where the allegedly defamed plaintiff resides.

In Ajax Enter. Inc. v. Szymonak Law Firm, No. 05-5903 (D. N.J., April 10, 2008), the court rejected an argument based on the Calder "effects test," ruling that because the defendants did not expressly aim their Web-published remarks at New Jersey, New Jersey courts could not constitutionally assert jurisdiction over them.

Another recent case, Internet Solutions Corp. v. Marshall, No. 07-cv-1740 (M.D. Fla., April 8, 2008), the court found no purposeful availment of the forum where the defendant authored several unflattering blog posts about the forum-based defendant. Here again, the court rejected an argument based on the Calder "effects test." All that the plaintiff had demonstrated was that the blog posts were accessible everywhere, the court said. That fact "does not amount to purposeful availment" of the forum.

Which leads me to Kauffman Racing Equipment v. Roberts, No. 07-CA-14 (Ohio Ct. App., April 18, 2008). In Kauffman, the defendant, a Virginia resident, believed that the plaintiff had sold him a defective engine block. He made four disparaging comments on Internet Web sites about the plaintiff, and the plaintiff responded by suing for defamation and intentional interference with business relationships. The trial court dismissed the case for lack of jurisdiction, but the court of appeals reversed in what was the weakest attempt at getting a jurisdiction issue right that I have witnessed in many years. The court, motivated by a poorly disguised dislike of the defendant, ignored a decade's worth of judicial effort in this area, misused the mostly irrelevant cases it did cite, and in the process sowed uncertainty in an area of the law that has been developing nicely.

The court's opening notes are sour: "The development of the law concerning the permissible scope of personal jurisdiction based on Internet use is in its infant stages. The cases are scant." The court is just plain wrong here. Cases on Internet jurisdiction are legion. BNA's Electronic Commerce & Law Report, which I edit, has summarized nearly 100 online jurisdiction cases since January 2007. Looking all the way back to 1997, I count over 400 online jurisdiction cases. In terms of cases decided, online jurisdiction is the richest source of judicial lawmaking in the entire field of cyberlaw. No other cyberlaw topic has received as much judicial attention.

In any event, the Kauffman court apparently believed that the caselaw was scant. It cited barely a speck of it, and what was cited was either misused or treated in a superficial, impressionistic manner. Surprisingly, the court fails to mention a single online defamation case. Calder is mentioned but not discussed; no mention is made of the dozens of cases that have attempted to apply Calder to online communications. Instead, the court lifted fragments from a handful of older cases involving interstate commercial activity. Young? Never heard of it.

The U.S. Supreme Court's decision in Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), a case involving one of world's largest restaurant chains, with over 3,000 outlets in all 50 states at the time, is cited by Kauffman for the proposition that "when an entity intentionally reaches beyond its boundaries to conduct business with foreign residents, the exercise of specific jurisdiction is proper." The Burger King quote is followed by this non sequitur from Zippo: "Different results should not be reached simply because business is conducted over the Internet."

Mind you, Kauffman has nothing to do with conducting business over the Internet. No matter. This court isn't going to reason from these cases anyhow. It is done with case analysis and is ready to rule:

The Internet knows no state boundaries. The Internet has also become accessible at virtually every coffee shop in the world. A non-resident who avails himself of the expansive reach of the Internet should not be able to use his non-residency as a shield against defending tortious activity against a plaintiff harmed in a different state. ... ... Ohio is the focal point both of the defamation and of the harm suffered. Jurisdiction over Roberts is, therefore, proper in Ohio based upon the "effects" of his Virginia conduct in Ohio. ... Today, thanks to the accessibility of the Internet, the barriers to generating publicity are slight, and the ethical standards regarding the acceptability of certain discourse have been lowered. As the ability to do harm has grown, so must the law's ability to protect the innocent.

You almost never see an unadorned "effects" test anymore. An "effects" analysis always leads to the conclusion that jurisdiction is proper wherever the plaintiff resides. Which means that, for all intents and purposes, it is an argument for jurisdiction in every forum that has an Internet connection. We're back to Inset Systems, and almost nobody believes that that was the right outcome.

Clearly, the Kauffman court's motivation was to bring justice to lawless cyberspace. But decisions like this also bring needless uncertainty to the Internet. Attorneys ought to be able to say with confidence that a couple blog postings or a single eBay sale will not subject the speaker or seller to jurisdiction in any forum where the plaintiff resides. Courts and attorneys ought to have a workable analysis for deciding jurisdiction issues for online communications and online business transactions. Sure, an Ohio court will not be able to mete out justice to the defendant in Kauffman. But a whole lot of other online speakers will suffer too, because they will have to deal with desperate arguments for jurisdiction bootstrapped by this decision.

Attorneys Not Subject to Suit Wherever Adware Carries Their Ads

Strike the possibility of being haled into a far-flung jurisdiction from the list of reasons why attorneys should not promote their practices with adware. An odd decision from North Carolina held recently that attorneys who advertised their practices with adware were not subject to the court's jurisdiction merely because the advertisements were displayed on the computer screen of an irate North Carolina resident.

The plaintiff contended that the defendants hired "some Internet firm" to plant "a bug or virus or worm" on his computer, thus damaging the computer and invading his privacy. The plaintiff took down the names of the attorneys displayed on his computer, and he sued them.

None of the numerous attorney defendants admitted to marketing their services in such a crass fashion, but all of them declared that they were not licensed to practice law in North Carolina and they were not attempting to market their services there.

"It makes absolutely no sense that [the defendants], all of whom operate law or dental practices in states far removed from North Carolina, would have any interest in soliciting [the plaintiff], or any other North Carolina resident," the court said. The court held that jurisdiction over the attorneys was not proper under the state long-arm statute, because they were not soliciting or providing services in the state. Even if jurisdiction was proper under the long-arm, it added, the attorneys did not purposefully direct their activities toward North Carolina, so federal due process would not permit North Carolina courts to assert jurisdiction over them.

The case is Burgess v. Vitola, No. 07 CVS 4679 (N.C. Super.Ct., Buncombe Cty., Feb. 26, 2008)