Thursday, April 05, 2007

eBay and Personal Jurisdiction

One might think that in cases of copyright infringement, where the federal courts are granted original and exclusive jurisdiction, issues of personal jurisdiction would be a matter of federal law too. Personal jurisdiction is, though, instead intertwined with service of process, which is, in turn, determined by state law.

While Fed. R. Civ. P. 4(k)(1)(D) states that service of a summons is effective to establish personal jurisdiction when authorized by a federal statute, the Copyright Act (like many federal statutes) does not specify the manner of service of process. This lack of specification has been construed as precluding nationwide service of process. As a result, Fed. R. Civ. P. 4(e)(1) requires that service must be effected in any federal district “pursuant to the law of the state in which the district is located, or in which service is effected, for the service of a summons upon the defendant in an action brought in the courts of general jurisdiction of the State.

Service of process by itself does not confer personal jurisdiction; instead, personal jurisdiction is determined by the law of the state in which service is effectuated, tempered, however, by federal constitutional due process concerns. That state will typically be plaintiff’’s forum state with service of process being made under a long-arm statute. For those who do not regularly transact business in the forum state, personal jurisdiction is usually asserted under the purposeful availment prong of specific jurisdiction.

Courts which have considered whether commercial transactions over eBay and other internet auction sites are sufficient to confer specific jurisdiction over the seller have noted that the seller had no control over who would ultimately be the highest bidder, and determined that the seller did not purposefully avail himself of the privilege of doing business in the forum state. A recent example is Great Notions, Inc. v. Thomas Danyeur, 2007 WL 944407 (N.D.Tex.) in which a pro se defendant successfully moved to have a complaint of copyright infringement dismissed (without prejudice) due to lack of subject matter jurisdiction.

According to the complaint, the plaintiff Great Notions, Inc. (“Great Notions”) owns U .S. copyrights to thousands of embroidery designs. Danyeur allegedly counterfeited and sold Great Notions' designs through his online auction account with www.ebay.com and other interactive websites. Great Notions argued that the transactions over eBay were sufficient to establish jurisdiction. Siding with numerous other courts involving eBay transactions, the Court held that the typical online auction process is insufficient to confer specific jurisdiction over the defendant.

3 comments:

Berne Baby, Berne said...

The court seemed to adopt the rulings in several other eBay cases and, to the best of my knowledge, did not look at jurisidiction in the context of a copyright infringement claim. One way to meet the “purposeful availment” requirement for specific jurisdiction is the “effects” doctrine established in Calder v. Jones, 465 U.S. 783 (1984). Under the effects doctrine, the defendant does not need to directly contact the forum district so long as the effects of its conduct are felt in that district. Personal jurisdiction exists if the defendant: (1) commits an intentional act; (2) that is expressly aimed at the forum state; and (3) must have known the brunt of the harm is likely to be suffered in the forum state. Panavision Intern. LP v. Toeppen, 141 F.3d 1316, 1321 (9th Cir. 1998)(trademark infringement case). In the Ninth Circuit, an allegation of willful copyright infringement is sufficient to satisfy this requirement because willful infringement constitutes an intentional tort that is knowingly directed at a forum resident. Columbia Pictures Television v. Krypton Broadcasting of Birmingham, Inc., 106 F.3d 284 (9th Cir. 1997), overruled on other grounds by Feltner v. Columbia Pictures Television, 523 U.S. 340 (1998). I know that you are not the biggest fan of the Ninth Circuit but it seems that a willful infringement claim would put the jurisdiction issue on a different plain than the typical "I got ripped off on eBay" claim.

William Patry said...

Dear Berne:

I do have problems with the Ninth Circuit's approach to this issue. At the infringement stage, the Ninth Circuit as well as all courts have held intent is not an element of the tort. Since personal jurisdiction is challenged at the onset of a case, permitting an allegation of willfulness to suffice for jurisdiction seems odd since it is not an element of the tort and the allegation can't be proved by the pleadings alone, and will lead to rapid, widespread abuse: every complaint will include an allegation of willfulness in order to assert jurisdiction that is otherwise inappropriate.

Courts that have examined willful infringement as providing a basis for personal jurisdiction are split over whether the willfulness must have been proved, whether defendant must have willfully directed its conduct toward plaintiff knowing it resided in the forum, or at the most liberal, whether allegations of willful infringement are by themselves sufficient. There is no happy medium, and we are best, therefore, avoiding the mess entirely.

Find Friend said...

Courts that have examined willful infringement as providing a basis for personal jurisdiction are split over whether the willfulness must have been proved, whether defendant must have willfully directed its conduct toward plaintiff knowing it resided in the forum, or at the most liberal, whether allegations of willful infringement are by themselves sufficient. There is no happy medium, and we are best, therefore, avoiding the mess entirely.

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