Is Your Company's Website At Risk?
On August 22, 2000, Judge Politan, JDC issued the first published decision in New Jersey setting forth standards whereby out-of-state companies can determine when maintaining a website in New Jersey generates sufficient contact in this state to allow personal jurisdiction under the law. None of the parties appealed Judge Politan’s decision to the Third Circuit and thus, it remains the preeminent decision in New Jersey on this issue.
In Amberson Holdings LLC, et al v. Westside Story Newspaper, et al., 110 F.Supp. 2d. 332 (D.N.J. 2000), defendant, a California company, registered the name “westsidestory.com” with Network Solutions, Inc. Defendant subsequently entered into a contract with a New Jersey company to provide it with a “host server” (a computer connected to a network which provides data and services to other computers). Defendant’s website enabled New Jersey residents not only to browse the site, but also to obtain information about defendant’s company and advertisements of outside vendors with the ability to “click-through” to the vendor, but nothing more. Westsidestory.com did not sell or offer for sale any of the defendant’s products through its website. Defendant’s only source of income from the site was generated by the “click-through” option.
The sole issue before the court was whether defendant’s activity in New Jersey was sufficient to allow personal jurisdiction under the law. (Although the plaintiff’s sued for trademark infringement, that issue was never reached by the court.) In deciding this issue, the court first determined that established traditional notions of personal jurisdiction applied in the Internet context. Thus, the plaintiff had to establish, “some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Amberson Holdings, quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Under established federal law, entry into a contract in New Jersey, without more, is insufficient to find minimum contacts with this state to allow personal jurisdiction on unrelated issues. Thus, plaintiff could not sue defendant for trademark infringement in New Jersey based solely on defendant's entry into a contract with a New Jersey company.
However, the court then examined whether defendant’s Internet activities established sufficient contact with New Jersey residents that notions of “fair play” would not be violated by requiring it to be hauled into court in this state. This issue was novel to the Third Circuit. Using opinions decided in other jurisdictions as a guide, Judge Politan distinguished Internet sites into three different categories: (1) interactive sites, used to conduct business over the web; (2) semi-interactive sites, those which allow for exchange of information with the host computer; and (3) passive sites, those with which only disseminate information . Amberson Holdings, citing Mink V. AAAA Development, LLC., 190 F.3d 333, 336 (5th Cir. 1999). If the site is determined to be interactive, jurisdiction is always appropriate. Conversely, with a passive site, jurisdiction is never appropriate. The exercise of personal jurisdiction with semi-interactive sites, however, is less clear and determined on a case-by-case basis. Something more than mere advertisement or solicitation for sale of goods is clearly needed.
In this case, the court found defendant's only possible connection to New Jersey was use of a “host server” that channeled the flow of information to its website. The website allowed the option to contact outside vendors through the “click-through” without more. The site did not sell or offer for sale any of defendant’s products. This site did not fall into the category of cases where defendant conducted business over the Internet, or even allowed users to exchange information through the Internet. Thus, the court held that:
when the level of interactivity of a site is limited to receiving a browser’s name, address and an indication of interest, without an option to sign up for the service, an exercise of personal jurisdiction would not be appropriate.
(110 F. Supp. 2d 332 at 336.)
The court dismissed plaintiff’s complaint for lack of personal jurisdiction. In so doing, the District Court followed the majority of established case law, declining jurisdiction over entities conducting business in a foreign jurisdiction whose only contact with the forum state is the establishment of a website which essentially acts an advertising tool. Although Judge Politan’s decision is not binding on out-of-state courts, New Jersey companies which conduct business over the Internet are on notice that they may be sued in another state if their website does more than merely disseminate information over the web.
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