Beware of the Long Arm of the Law, p.4

The law is still evolving, and just last December a Massachusetts court said that a French company had to defend itself in Massachusetts. The court relied on just two asserted facts for the conclusion that the French company was doing business in Massachusetts. First, a search feature on the French company’s website showed retailers who sold its products in Massachusetts, and second, the injured plaintiff had selected the product based, in part, on the French company’s website. The court’s conclusion that those were enough to be hauled into court in a foreign country has already been criticized in the blogosphere, and whether the decision will be reversed or followed by other courts remains to be seen.

The hardship and inconvenience of defending a case in a distant state does not usually make personal jurisdiction so unreasonable that it violates traditional notions of fair play. In one case, an Arizona resident who moonlighted from her full-time job by selling skincare products through an eBay virtual store and Google Checkout had to go to California to defend herself even though that would be burdensome. The plaintiff alleged that the defendant’s business infringed its trademark, among other things. The Arizona business had less than $50,000 in revenues and less than $7,000 in sales to California during the prior year. That revenue from sales to California was enough to show that the Arizona company intentionally engaged in business transactions with California residents. The California court said that the ease of communication and travel, and the fact that many lawyers practice in multiple states, reduce the inconvenience of defending a suit in a distant state compared to what those burdens used to be. Unless the inconvenience is so great that it deprives the defendant of due process, then it will not outweigh the other factors in favor of exercising personal jurisdiction.

JURISDICTION BASED ON IN-STATE HARM

Companies that set out to cause damage can be sued in the state where the damage occurs, even if they don’t do other business there. For example, a California court decided that an Illinois resident who registered Panavision’s name as a domain name as part of a scheme to sell the domain name to Panavision could be sued in California where Panavision had its offices. The court concluded that the defendant knew his actions would likely injure Panavision in California. The court was careful to note that the defendant’s deliberate targeting of a California company was an important factor in its decision.