Jurisdiction

A court may not exercise personal jurisdiction over the out-of-state operator of a Web site, even if the site is fully interactive, unless there is a showing that the defendant has purposefully availed itself of the privilege of conducting activities in the forum state, the U.S. Court of Appeals for the Third Circuit ruled Jan. 27 (Toys "R" Us Inc. v. Step Two SA, 3d Cir., No. 01-3390, 1/27/03).

The decision appears to add an element requiring intentional targeting to the sliding scale set forth in Zippo Manufacturing Co. v. Zippo Dot Com, 952 F. Supp. 1119 (W.D. Pa. 1997) (2 ECLR 197, 2/14/97), which bases jurisdiction on the level of interactivity of a Web site.

The court noted more recent cases that demanded "something more" than just an accessible Web site before permitting an exercise of jurisdiction over the Web site operator. This "something more" may take the form either of "intentional targeting" or evidence that the site operator "knowingly conducts business" with the forum state through the Web site and that the conduct complained of in the suit arose from those Web-site-related activities.

The court focused its analysis on conduct on the part of the defendant that indicated that it did not intend to target New Jersey or consumers residing in New Jersey, such as the language used on the site and the format of the shipping address information, which did not fit U.S.-style addresses.

Spanish Company Franchised 'Imaginarium' Mark.

Toys "R" Us Inc., a Delaware corporation headquartered in Paramus, N.J., was the holder of the U.S. trademark for IMAGINARIUM and several related marks in connection with the retail sale of toys. Toys "R" Us had obtained ownership of the mark in 1999 from Imaginarium Toy Centers Inc., which first registered the mark in 1989. By the time of the suit, Toys "R" Us was operating 37 independent Imaginarium retail stores, 175 Imaginarium stores, and a Web site associated with the domain names imaginarium.com and imaginarium.net.

The defendant, Step Two SA, was a company based in Zaragoza, Spain, which in 1991 registered the IMAGINARIUM mark in Spain. By the time the suit was filed, Step Two had franchised the mark to 165 Imaginarium stores in Spain and in other countries. Step Two had registered the domain names imaginarium.es, imaginariumworld.com, imaginarium-world.com, imaginariumnet.com, imaginariumnet.net, and imaginariumnet.org, which were used in association with Web sites operated by a Step Two subsidiary.

Toys "R" Us filed suit against Step Two and its subsidiary, Imaginarium Net SL, charging trademark infringement, unfair competition, misuse of the trademark notice symbol, and cybersquatting. The defendant argued that it was not subject to the personal jurisdiction of the federal court in New Jersey.

Intent to Interact With Forum Necessary.

In concluding that the court not exercise personal jurisdiction over the defendant, Judge Louis F. Oberdorfer held that in order to support specific jurisdiction over an operator of a commercially interactive Web site accessible in the forum state, there must be additional evidence that the defendant had purposefully availed itself of the privilege of conducting business in the forum such that an intent to interact with the forum state is demonstrated.

This intent might be demonstrated by evidence that the site operator has either "intentionally targeted" the forum state or that the operator "knowingly conducts business" with residents of the forum state through the Web site.

The court noted the Fourth Circuit's decision in ALS Scan v. Digital Service Consultants Inc., 293 F.3d 707 (4th Cir. 2002) (7 ECLR 649, 06/26/02), which held that a court may exercise jurisdiction over an out-of-state defendant "when that person (1) directs electronic activity into the State (2) with the manifested intent of engaging in business or other interactions within the State, and (3) that activity creates, in a person within the State, a potential cause of action."

Similarly, in Cybersell Inc. v. Cybersell Inc., 130 F.3d 414 (9th Cir. 1997) (2 ECLR 1273, 12/10/97), the Ninth Circuit demanded "something more" that indicated "that the defendant purposefully (albeit electronically) directed his activity in a substantial way to the forum state."

Elements of Site Showed No Targeting.

This "something more" might be demonstrated by non-Internet contact, the court said. However, in this case there was no evidence that there were such contacts between the defendant that demonstrated that it had "intentionally and knowingly transacted business with residents of the forum state, and had significant other contacts with the forum besides those generated by its web site."

So far as the Web site itself was concerned, the fact that it was a fully operational retail Web site through which consumers could place orders was not enough to meet the "something more" requirement.

The court pointed to several factors demonstrating that the defendant had not targeted New Jersey or intentionally sought to transact business with New Jersey consumers:

• the Web site was in Spanish,

• prices for items sold through the site were in pesetas and euros, and

• the defendant shipped only to addresses within Spain.

This last point was underscored by the fact that the parts of the site designed to accept input of shipping addresses were not able to accept U.S.-style mailing addresses.

The plaintiff had managed to arrange for two purchases from the site that made their way to New Jersey, but these fit the category of "fortuitous," "random," and "attenuated" contacts. The court noted in a footnote that the defendant even had to ask for clarification regarding the location of the customer, who had not specified that the address was in the United States.

The appellant was represented by Patricia J. Clarke, Paul Fields, Robert S. Weisben, and Heather C. Wilde of Darby & Darby, New York. The appellee, Step Two, was represented by Mark G. Matuschak, Susan H. Farina, and Elizabeth M. Reilly of Hale & Dorr, Boston; and Howard A. Matalon of Hale & Dorr, Princeton, N.J.