Category Archives: Commercial

Internet Advertisement on a Passive Website is Not Generally a Basis for Personal Jurisdiction in a Lawsuit

On August 16, 2010, the Federal District Court of the District of New Jersey upheld the prevailing view of personal jurisdiction as it relates to internet advertisements.  The Court in Morilla v. Laser Spine Institute, LLC, 2010 WL 3258312 (D.N.J.) stated that “[a] website that has only information and a generic contact information input form falls at the passive end of the Zippo scale.  Id. at 5.  The Court held defendant’s website to be passive and declined to exercise jurisdiction over defendant.  In the analysis of the operation of the defendant’s website, The Court stated:

“In the past fifteen years, the increasing popularity of the internet has led courts to examine a defendant’s internet activity as a potential basis for jurisdiction, but the Supreme Court has not yet spoken on this subject.   Zippo Manufacturing Company v. Zippo Dot Com, 952 F.Supp. 1119 (W.D.Pa.1997), a seminal case endorsed by the Third Circuit, considered whether a defendant’s operation of a website could satisfy a federal court’s exercise of personal jurisdiction over that defendant.  The Zippo court created a “sliding scale”, whereby the quality of contacts between a web host and a forum is evaluated by examining the website’s nature and functions.  At one end of the scale are those web hosts who actively solicit business over the internet by using their websites to enter contracts or exchange data files.  If they engage in such activity knowing that their would-be customers are in another forum, jurisdiction over the web hosts in that forum is proper.  On the other end of the scale are passive hosts with purely informational websites that allow no interaction through the site-these websites do not themselves create sufficient contacts between the web host and other forums to justify an extra-territorial court’s exercise of jurisdiction.  In the middle are websites that allow the visitor to ex-change information with the host, but do not affirmatively seek business from other states. For such sites, jurisdiction must be determined on a case-by-case basis by looking at just how “interactive” and commercial in nature the exchange of information through the website is.”

“When a website is passive or falls in the middle of the Zippo sliding scale, plaintiffs may have to prove “something more” to justify the exercise of personal jurisdiction-that is, plaintiffs must show that the defendant purposefully (albeit electronically) directed his activity in a substantial way to the forum state.  The “something more” can include evidence of non-internet contacts, such as ongoing communications with customers in the state, business trips to the state, advertisements in local publications, and business records of sales in the state.”

Id. at 5.

The Court granted defendant’s motion to dismiss plaintiffs’ complaint because the plaintiffs failed to allege sufficient facts to show that defendant’s website was interactive.  Thus, the Court refused to exercise personal jurisdiction over defendant.  


© 2009 Nissenbaum Law Group, LLC

Court Orders That the Identities of Anonymous Internet Posters be Disclosed

Under certain circumstances, people who defame others anonymously on the Internet may lose their anonymity.   A recent example is a  case decided on July 12, 2010,  In re: Anonymous Online Speakers, Anonymous Online Speakers, v. United States District Court for the District of Nevada Reno, 611 F.3d 653, 10 Cal. Daily Op. Serv. 8774, 2010 Daily Journal D.A.R. 10,795 (Ninth Cir. 2010). That matter involved Quixtar, a “[m]ultilevel marketing business [that]  brought suit alleging that [a] competitor [TEAM] orchestrated [an] Internet smear campaign via anonymous postings and videos disparaging it and its business practices. As part of discovery process, the [lower Court] , ordered [the] competitor's online content manager to disclose identity of three of five online speakers who allegedly made the defamatory comments.” Id.


Examples of the alleged defamatory statements included the following:  “Quixtar has regularly, but secretly, acknowledged that its products are overpriced and not sellable”; “Quixtar refused to pay bonuses to IBOs in good standing”; Quixtar “terminated IBOs without due process”; “Quixtar currently suffers from systemic dishonesty”; and “Quixtar is aware of, approves, promotes, and facilitates the systematic noncompliance with the FTC's Amway rules.”  Id. at 656.


The Court acknowledged that First Amendment protections involving anonymous speech apply to the Internet, as well. “ First Amendment protection for anonymous speech was first articulated a half-century ago in the context of political speech, Talley v. California, 362 U.S. 60, 64-65, 80 S.Ct. 536, 4 L.Ed.2d 559 (1960), but as the Supreme Court later observed, the Talley decision hearkened back to “a respected tradition of anonymity in the advocacy of political causes.” McIntyre v. Ohio Elections Comm'n, 514 U.S. 334, 343, 115 S.Ct. 1511, 131 L.Ed.2d 426 (1995). Undoubtedly the most famous pieces of anonymous American political advocacy are The Federalist Papers, penned by James Madison, Alexander Hamilton, and John Jay, but published under the pseudonym “Publius.” Id. at 344 n. 6, 115 S.Ct. 1511. Their opponents, the Anti-Federalists, also published anonymously, cloaking their real identities with pseudonyms such as “Brutus,” “Centinel,” and “The Federal Farmer.” Id... Although the Internet is the latest platform for anonymous speech, online speech stands on the same footing as other speech-there is “no basis for qualifying the level of First Amendment scrutiny that should be applied” to online speech. Reno v. Am. Civil Liberties Union, 521 U.S. 844, 870, 117 S.Ct. 2329, 138 L.Ed.2d 874 (1997). As with other forms of expression, the ability to speak anonymously on the Internet promotes the robust exchange of ideas and allows individuals to express themselves freely without “fear of economic or official retaliation … [or] concern about social ostracism.” McIntyre, 514 U.S. at 341-42, 115 S.Ct. 1511.” Id. at 656-7.


    The Court also acknowledged that just because this was commercial speech, not political speech, that did not mean it lacked First Amendment protection. “The Internet postings and video at issue in the petition and cross-petition are best described as types of ‘expression related solely to the economic interests of the speaker and its audience’ and are thus properly categorized as commercial speech. Central Hudson Gas & Elec. Corp., 447 U.S. at 561, 100 S.Ct. 2343. The claimed disparagement goes to the heart of Quixtar's commercial practices and its business operations. However, this characterization alone does not determine the First Amendment protections for the anonymous commercial speech central to this case. The Supreme Court has underscored that “an author's decision to remain anonymous, like other decisions concerning omissions or additions to the content of a publication, is an aspect of the freedom of *658 speech protected by the First Amendment.” McIntyre, 514 U.S. at 342, 115 S.Ct. 1511.” Id. at 657.


 The Court concluded that “[t]he district court here appropriately considered the important value of anonymous speech balanced against a party's need for relevant discovery in a civil action. It also recognized the “great potential for irresponsible, malicious, and harmful communication” and that particularly in the age of the Internet, the “speed and power of internet technology makes it difficult for the truth to ‘catch up’ to the lie.” Id. at 661


Accordingly, the Court of Appeals held  that because the lower Court’s ruling was not clearly erroneous, they would not disturb it on appeal.