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The Law of the Internet in Florida Personal Jurisdiction in the Internet World Ury Fischer, Esq. - Lott & Friedland, P.A. www.lfiplaw.com © 2002, Ury Fischer.

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Presentation on theme: "The Law of the Internet in Florida Personal Jurisdiction in the Internet World Ury Fischer, Esq. - Lott & Friedland, P.A. www.lfiplaw.com © 2002, Ury Fischer."— Presentation transcript:

1 The Law of the Internet in Florida Personal Jurisdiction in the Internet World Ury Fischer, Esq. - Lott & Friedland, P.A. © 2002, Ury Fischer

2 2 Jurisdiction Personal Jurisdiction vs. Subject Matter Jurisdiction

3 3 Personal Jurisdiction Power by a court to: -Compel appearance by defendant -Adjudicate claims between parties -Enforce judgments No personal jurisdiction = dismissal May be waived - failure to timely raise

4 4 Subject Matter Jurisdiction Is the Court authorized by law to adjudicate a particular dispute? Depends on subject matter, not parties Considerations: -Federal Question (Patent, Trademark, © ) -$$$ Limits -Diversity

5 5 Jurisdiction and the Internet Subject Matter Jurisdiction - Generally not affected by Internet considerations Personal Jurisdiction - Laws thrown on their head by the Internet and e-Commerce

6 6 Personal Jurisdiction The Good Old Days Pennoyer v. Neff - 95 U.S. 714 (1877) The authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to exercise authority beyond those limits … [is] an illegitimate assumption of power, and be resisted as mere abuse.

7 7 Modern Jurisprudence Two Step Analysis - Step 1: Statutory Authority - Step 2: Due Process

8 8 Step 1: Statutory Authority States Long Arm Statute 2 Types of Long Arm Statute –Co-Extensive with Due Process (i.e. CA) –Narrower, Explicit Acts Defined (i.e. FL)

9 9 Step 1: Statutory Authority Floridas Long Arm Statute (Sec ): (See p. 114 of book for complete text) Any person doing any of the following submits to personal jurisdiction in FL: Operating a business in the state Having an office in the state Causing injury to someone or something while soliciting in the state Breaching a contract by failing to perform acts inn the state

10 10 Step 1: Statutory Authority Broad application of the Long Arm Statute is the norm in Florida. Case-by-case factual analysis is necessary Commercial activity directed at citizens of the state is generally sufficient to establish jurisdiction under the Long Arm Statute No reported opinions specifically discussing the Long Arm Statute in context of purely online activity

11 11 Step 2: Due Process International Shoe Co. v. Washington In order to satisfy Due Process under the Constitution, defendant must have sufficient minimum contacts with the forum state so as not to offend traditional notions of fair play and substantial justice

12 12 Step 2: Due Process Minimum Contacts: –Defendant must purposefully avail itself of privilege of conducting activities in the state; –Based on its activities, defendant should reasonably anticipate being haled into court in the state; and –Personal jurisdiction in the state must be reasonable

13 13 Step 2: Due Process Burden imposed on defendant States interest in adjudicating dispute Plaintiffs interests and convenience Efficiency considerations of interstate judicial system Shared interests of the states in furthering fundamental social policies Reasonableness Factors:

14 14 Step 2: Due Process Jurisdiction can be General or Specific –Specific Jurisdiction: activities by defendant in the forum are limited but are directly related to subject matter of the controversy –General Jurisdiction: although defendants activities are unrelated to the controversy, they are continuous and systematic

15 15 Minimum Contacts and the Internet Internet has created genuine risk of borderless jurisdiction: –Contacts are extremely easy to create –It is nearly impossible, from a technological standpoint, to limit the spread of such contacts

16 16 Minimum Contacts and the Internet Critical Question: What constitutes sufficient minimum contacts in the Internet world?

17 17 Minimum Contacts and the Internet Inset Systems First case to address minimum contacts in the Internet context: Inset Systems v. Instruction Set, Inc., 937 F.Supp. 161 (D.Conn. 1996) Facts of Inset: –Plaintiff owned a TM for INSET was a resident of CT. –Defendant owned domain name INSET.COM was resident of MA and had no offices, employees or regular business in CT.

18 18 Minimum Contacts and the Internet Inset Systems Facts of Inset (cont.): –Defendant had a website which operated solely as an advertisement –Defendants website was accessible to residents of CT (and rest of the world) –Lawsuit for TM infringement was filed in federal court in CT

19 19 Minimum Contacts and the Internet Inset Systems Outcome of Inset = Court found that personal jurisdiction over defendant was proper in CT. Courts Reasoning = because the defendants website was accessible to citizens of CT, defendant had purposefully availed itself of privilege of doing business in the state.

20 20 Minimum Contacts and the Internet Inset Systems Court believed that publishing a website was worse that broadcasting radio or TV advertising because it was available continuously to all citizens in the state with Internet access. Court focused on pervasiveness of the contacts and ignored the defendants intent to target its website to the forum state

21 21 Minimum Contacts and the Internet Inset Systems Inset was highly criticized, and essentially ignored because its outcome was too harsh and probably did not pass Constitutional muster Inset was a BAD decision

22 22 Minimum Contacts and the Internet Inset Systems Under the Inset Courts logic, the mere act of publishing a website, regardless of its level of interactivity, subjects the publisher to jurisdiction everywhere there is Internet access. Although Inset was never explicitly overruled, it is not considered good law today.

23 23 Minimum Contacts and the Internet Zippo Mfg. After Inset, the next major case was Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp (W.D.Pa. 1997) Facts of Zippo: –Plaintiff was manufacturer of Zippo lighters, a resident of PA –Defendant was the publisher of a website and Internet news service. Domain names all contained the word ZIPPO

24 24 Minimum Contacts and the Internet Zippo Mfg. Facts of Zippo (cont.): –Defendants website had a subscriber base of 140,000, of which about 3,000 (2%) were located in PA. –Outside of PA-based subscribers, defendant had no contacts with PA –Plaintiff sued for TM infringement and dilution

25 25 Minimum Contacts and the Internet Zippo Mfg. Outcome of Zippo = jurisdiction was proper in PA Courts reasoning = the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet

26 26 Minimum Contacts and the Internet Zippo Mfg. Unlike the Inset court, Zippo concentrated on the quality, not the quantity, of the contacts between the defendant and the forum. Zippo established a sliding scale of website interactivity to help analyze the quality of contacts

27 27 Minimum Contacts and the Internet Zippo Mfg. Zippo sliding scale: –Commercial websites - jurisdiction always OK –Passive websites - jurisdiction never OK –Interactive websites - jurisdiction depends on the level of interactivity

28 28 Minimum Contacts and the Internet The Sliding Scale Commercial Websites: –Websites used by their operators to enter into contracts with residents of the forum. –Involve the knowing and repeated transmission of computer files over the internet –Clearly used to transact business over the internet

29 29 Minimum Contacts and the Internet The Sliding Scale Passive Websites: –Purely informational in nature. –No interactivity with the user. Content is essentially static. –Equivalent to an Internet billboard

30 30 Minimum Contacts and the Internet The Sliding Scale Interactive Websites: –In between Passive and Commercial websites –Provide some interactivity but not the ability to enter into contracts –Allows users to affect the nature of the content that is delivered

31 31 Minimum Contacts and the Internet The Sliding Scale The Zippo sliding scale approach has been adopted by almost every federal circuit (see pp of text for cites) including the Florida district courts. Gray Areas - Notwithstanding its widespread acceptance, Zippo still allows for unpredictable results, especially with regard to websites that are neither Commercial nor Passive.

32 32 Minimum Contacts and the Internet Florida Cases JB Oxford v. Net Trade, 76 F.Supp. 2d 1363 (S.D.Fla. 1999) –Defendants contacts with FL: (a) 3 interactive websites; (b) national toll-free number listed on websites; (c) pending application to do business in FL. –Result = no jurisdiction in FL –Court adopted Zippos analysis to label websites interactive –Court ruled that contacts required for jurisdiction must tie the defendant to a particular state not merely link it with equal strength to other states.

33 33 Minimum Contacts and the Internet Florida Cases Nida Corp. v. Ken Nida, F.Supp. 2d 1223 (M.D.Fla. 2000) –Defendants contacts with FL: (1) sales to FL residents of $27,500 over 5 year period; and (2) website which the parties stipulated was neither commercial nor passive –Result = jurisdiction proper in FL –Court reasoned that combination of (a) actual product sales directed at FL, (b) over an extended period of time, and (c) an interactive website promoting the sales was sufficient minimum contacts

34 34 Minimum Contacts and the Internet Florida Cases Miami Breakers Soccer Club v. Womens United Soccer Assoc., 140 F.Supp. 2d 1325 (S.D.Fla. 2001) –Court refused to exercise jurisdiction over defendant who had a website which acted as an online catalog but which required users to place orders over the telephone. –Court stated that under the Zippo framework, the website had to be classified as passive and thus could not form the basis of personal jurisdiction.

35 35 How to Avoid Borderless Jurisdiction Unless absolutely necessary, do not allow for the formation of a contract online. Require some sort of offline interaction for the contract to become binding. For example, require a voice communication or execution of an offline software application to formalize the contractual relationship.

36 36 How to Avoid Borderless Jurisdiction If formation of contract is unavoidable, obtain a modicum of protection by including a forum selection clause in the contract. Minimize the commercial appearance of a website by providing large areas which are purely informational

37 37 How to Avoid Borderless Jurisdiction Avoid the appearance that the website in question is directed at residents of foreign states. Avoid toll-free numbers Maintain accurate logs with enough detail to determine percentage of visitors from other states

38 38 How to Avoid Borderless Jurisdiction If concerned with particularly suit happy jurisdiction, block or restrict access to the website for visitors from such jurisdiction.

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