Zippo Mfr. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997)
Summary prepared by Devashish Bharuka
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Plaintiff Zippo Manufacturing Co. is a Pennsylvania corporation which
makes, among other things, the well-known "Zippo"
tobacco lighters, and the holder of a trademark on the name ZIPPO.
Defendant Zippo Dot Com, Inc. is a California
corporation which operates a web site and Internet news service, and
the holder of the rights to the domain names
ZIPPO.COM, ZIPPO.NET, and ZIPPONEWS.COM. Plaintiff alleges that by
using the trademarked name Zippo in
numerous locations on its web site and news group messages, Defendant
has violated the Federal Trademark Act and various
state intellectual property laws. Defendant moves to dismiss for lack
of proper jurisdiction.
The court first described the nature of Defendant's Internet business: "Dot Com's Web site contains information about the company, advertisements and an application for its Internet news service. The news service itself consists of three levels of membership--public/free, "Original" and "Super." Each successive level offers access to a greater number of Internet newsgroups. A customer who wants to subscribe to either the "Original" or "Super" level of service, fills out an on-line application that asks for a variety of information including the person's name and address. Payment is made by credit card over the Internet or the telephone. The application is then processed and the subscriber is assigned a password which permits the subscriber to view and/or download Internet newsgroup messages that are stored on the Defendant's server in California."
Also relevant to the jurisdiction issue are the Defendant's contact with the state of Pennsylvania: "Dot Com's contacts with Pennsylvania have occurred almost exclusively over the Internet. Dot Com's offices, employees and Internet servers are located in California. Dot Com maintains no offices, employees or agents in Pennsylvania. Dot Com's advertising for its service to Pennsylvania residents involves posting information about its service on its Web page, which is accessible to Pennsylvania residents via the Internet. Defendant has approximately 140,000 paying subscribers worldwide. Approximately two percent (3,000) of those subscribers are Pennsylvania residents. These subscribers have contracted to receive Dot Com's service by visiting its Web site and filling out the application. Additionally, Dot Com has entered into agreements with seven Internet access providers in Pennsylvania to permit their subscribers to access Dot Com's news service. Two of these providers are located in the Western District of Pennsylvania."
After analyzing the traditional doctrine of personal
jurisdiction relating both to the state long arm statute and the US
Constitution, the court charted the precedents regarding the Internet
and personal jurisdiction:
"Enter the Internet, a global " 'super-network' of over 15,000 computer
networks used by over 30 million individuals,
corporations, organizations, and educational institutions worldwide."
Panavision Intern., L.P. v. Toeppen, 938 F.Supp. 616
(C.D.Cal.1996) (citing American Civil Liberties Union v. Reno, 929
F.Supp. 824, 830-48 (E.D.Pa.1996)). "In recent years,
businesses have begun to use the Internet to provide information and
products to consumers and other businesses." Id. The
Internet makes it possible to conduct business throughout the world
entirely from a desktop. With this global revolution looming
on the horizon, the development of the law concerning the permissible
scope of personal jurisdiction based on Internet use is in
its infant stages. The cases are scant. Nevertheless, our review of
the available cases and materials reveals that 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. This sliding scale
is consistent with well developed personal jurisdiction
principles. At one end of the spectrum are situations where a defendant
clearly does business over the Internet. If the defendant
enters into contracts with residents of a foreign jurisdiction that
involve the knowing and repeated transmission of computer files
over the Internet, personal jurisdiction is proper. E.g. CompuServe,
Inc. v. Patterson, 89 F.3d 1257 (6th Cir.1996). At the
opposite end are situations where a defendant has simply posted information
on an Internet Web site which is accessible to
users in foreign jurisdictions. A passive Web site that does little
more than make information available to those who are
interested in it is not grounds for the exercise personal jurisdiction.
E.g. Bensusan Restaurant Corp., v. King, 937 F.Supp. 295
(S.D.N.Y.1996). The middle ground is occupied by interactive Web sites
where a user can exchange information with the host
computer. In these cases, the exercise of jurisdiction is determined
by examining the level of interactivity and commercial nature
of the exchange of information that occurs on the Web site. E.g. Maritz,
Inc. v. Cybergold, Inc., 947 F.Supp. 1328
(E.D.Mo.1996)."
Applying the developing sliding scale doctrine to
the facts of the case, the court held that its assertion of personal jurisdiction
over the Defendant was appropriate. The court rejected Defendant's
attempt to analogize its acts as analogous to the passive
web site cases described above, placing it at the other extreme, the
"doing business over the Internet" class:
"we note that this is not an Internet advertising case in the line
of Inset Systems and Bensusan, supra. Dot Com has not just
posted information on a Web site that is accessible to Pennsylvania
residents who are connected to the Internet. This is not
even an interactivity case in the line of Maritz, supra. Dot Com has
done more than create an interactive Web site through
which it exchanges information with Pennsylvania residents in hopes
of using that information for commercial gain later. We are
not being asked to determine whether Dot Com's Web site alone constitutes
the purposeful availment of doing business in
Pennsylvania. This is a "doing business over the Internet" case in
the line of CompuServe, supra. We are being asked to
determine whether Dot Com's conducting of electronic commerce with
Pennsylvania residents constitutes the purposeful
availment of doing business in Pennsylvania. We conclude that it does.
Dot Com has contracted with approximately 3,000
individuals and seven Internet access providers in Pennsylvania. The
intended object of these transactions has been the
downloading of the electronic messages that form the basis of this
suit in Pennsylvania."