Volume I

Issue : 2: July 24, 2003

• CryptoLogic Subsidiary Settles Cross-Border On-line Patent Dispute
• U.S. Court of Appeals Formulates Test For Website Operator Liability
• Newfoundlander Convicted of Trafficking in Moose Antlers On the Internet
• Australian Court Grants Damages For Invasion of Privacy In Landmark Case
• Secondary Disclosure of Subscribers Personal Information Contravenes PIPEDA
• Ontario Company Launches Suit Against ICANN Over the Wait List Service
• U.S. Federal Court of Appeals Refuses Jurisdiction Over Semi-Interactive Website
• Music Industry Subpoenas ISP Investigates Users At University
• P2P: Survey Released & Proposed U.S. Legislation With Criminal Provisions
• Original Registrant Losses Acrobat.ca

Home > Volume I > Issue 2: July 24, 2003 > U.S. Federal Court of Appeals Refuses Jurisdiction Over Semi-Interactive Website

U.S. Federal Court of Appeals Refuses Jurisdiction Over Semi-Interactive Website

In Carefirst Maryland v. CPC, the latest installment of U.S. Internet jurisdiction cases to grapple with "semi-interactive" websites, the U.S. 4th Circuit Court of Appeals affirmed a decision dismissing a trade-mark infringement action for lack of specific personal jurisdiction. Carefirst of Maryland, a large healthcare insurance company operating primarily in the mid-Atlantic region of the U.S., and the registered owner of the service mark "CAREFIRST", brought suit against Carefirst Pregnancy Centers, Inc. ("CPC"), an Illinois non-profit, evangelical and pro-life advocacy organization. CPC's website primarily provided information on, and advertising of, CPC's services, but also solicited on-line donations from anyone viewing the site.

Initially, the District Court had dismissed the case without prejudice for lack of personal jurisdiction over CPC. In concluding that CPC did not have sufficient contacts with Maryland to support personal jurisdiction in the Maryland courts, the District Court had found that CPC operated primarily in Chicago; had no office, telephone listing, employees, agents or sales representatives in Maryland; never directly solicited funds from Maryland residents or otherwise targeted the forum; received a minimal portion of its charitable contributions from Maryland residents and received almost all of those contributions by mail rather than through the website. The District Court determined that CPC's only connections to Maryland arose because: (i) its website could be accessed from anywhere, including Maryland; and (ii) CPC used NetImpact, Inc., a web hosting and web development company headquartered in Maryland to obtain its domain names and host the site.

In affirming the District Court's decision, the Court of Appeals held that CPC could only be subject to specific jurisdiction in Maryland if (i) CPC had purposefully conducted activities in Maryland; (ii) Carefirst's claims arose out of those activities; and (iii) the exercise of personal jurisdiction would be constitutionally "reasonable".

Following its holdings in ALS Scan, Inc. v. Digital Service Consultants, Inc. and Young v. New Haven Advocate, the Court of Appeals stated that in order for CPC's website to bring CPC within the jurisdiction of Maryland courts, the company must have done something more than merely place information on the Internet. While the CPC's sites was "semi-interactive", containing features that made it possible for a user to exchange information with the host computer, the website's content was strongly local in character, emphasizing that CPC's mission was to assist Chicago-area women in pregnancy crises. The only "reach" to Maryland on the site was a generalized request for donations from all users. As such, the Court found that CPC did not direct electronic activity into Maryland with the "manifest intent" of engaging in business or other interactions within that state in particular. The website failed to furnish a Maryland contact adequate to support personal jurisdiction over CPC in the Maryland courts, despite Maryland's strong interest in adjudicating disputes involving the alleged infringement of trademarks owned by resident corporations.

Lastly, the Court of Appeals also dismissed Carefirst's argument that CPC's relationship with the Maryland web hosting company, NetImpact, is sufficient to ground specific jurisdiction. On the facts, NetImpact merely facilitated the registration of CPC's domain names and rented CPC space on its servers (which were actually located in Massachusetts). The Court found that it was "unreasonable" to expect that, merely by using servers owned by a Maryland-based company, CPC should have foreseen that it could be held to account for the contents of its website in Maryland. In sum, the Court found that given the limited contacts between CPC and Maryland, to require CPC to defend its interests in that state would "offend traditional notions of fair play and substantial justice."

For a copy of the case, visit:

http://pacer.ca4.uscourts.gov/opinion.pdf/021137.P.pdf