Als Scan, Inc. v. Digital Service Consultants, 01-1812.

• Citation: 293 F.3d 707
• Decision Date: 14 June 2002
• Docket Number: No. 01-1812.,01-1812.
• Parties: ALS SCAN, INCORPORATED, Plaintiff-Appellant, v. DIGITAL SERVICE CONSULTANTS, INCORPORATED, Defendant-Appellee, and Robert Wilkins; Alternative Products, Incorporated, d/b/a abpefarc.net, individually, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 707

293 F.3d 707

ALS SCAN, INCORPORATED, Plaintiff-Appellant, v. DIGITAL SERVICE CONSULTANTS, INCORPORATED, Defendant-Appellee, and Robert Wilkins; Alternative Products, Incorporated, d/b/a abpefarc.net, individually, Defendants.

No. 01-1812.

United States Court of Appeals, Fourth Circuit.

Argued April 4, 2002.

Decided June 14, 2002.

ARGUED: Robert Lawrence Lombardo, Jr., Columbia, Maryland, for Appellant. Benjamin I. Fink, Freed & Berman, P.C., Atlanta, Georgia, for Appellee. ON BRIEF: Linda Woolf, Goodell, Devries, Leech & Gray, L.L.P., Baltimore, Maryland, for Appellee.

Before NIEMEYER, Circuit Judge, HAMILTON, Senior Circuit Judge, and W. Craig BROADWATER, United States District Judge for the Northern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Senior Judge HAMILTON and Judge BROADWATER joined.

OPINION

NIEMEYER, Circuit Judge.

The question presented in this appeal is whether a Georgia-based Internet Service Provider subjected itself to personal jurisdiction in Maryland by enabling a website owner to publish photographs on the Internet, in violation of a Maryland corporation's copyrights. Adapting the traditional due process principles used to determine a State's authority to exercise personal jurisdiction over out-of-state persons to the Internet context, we hold that in the circumstances of this case, a Maryland court cannot constitutionally exercise jurisdiction over the Georgia Internet Service Provider. Accordingly, we affirm the district court's order dismissing the complaint against the Internet Service Provider for lack of personal jurisdiction.

I

ALS Scan, Inc., a Maryland corporation with its place of business in Columbia, Maryland, commenced this action for copyright infringement against Digital Service Consultants, Inc. ("Digital"), and Digital's customers, Robert Wilkins and Alternative Products, Inc. (collectively, "Alternative Products"). ALS Scan, which creates and markets adult photographs of female models for distribution over the Internet, claims that Alternative Products appropriated copies of hundreds of ALS Scan's copyrighted photographs and placed them on its websites, www.abpefarc.net and www.abpeuarc.com, thereby gaining revenue from them through membership fees and advertising. ALS Scan further alleges that Digital, as the Internet Service Provider ("ISP") for Alternative Products, "enabled" Alternative Products to publish ALS Scan's copyrighted photographs on the Internet by providing Alternative Products with the bandwidth service¹ needed to maintain its websites. ALS Scan thus alleges that all of the defendants have infringed and are infringing its copyrights within Maryland and elsewhere by selling, publishing, and displaying its copyrighted photographs.

Digital filed a motion to dismiss the complaint against it under Federal Rule of Civil Procedure 12(b)(2), asserting that the district court lacked personal jurisdiction over it. In support of its motion, Digital provided affidavits demonstrating that Digital is a Georgia corporation with its only place of business in Atlanta. Digital asserts that it is an ISP which provided bandwidth service to Alternative Products as a customer but that it is not affiliated in any way with Alternative Products except through an arms-length customer relationship. In addition, Digital states that it did not select the infringing photographs for publication; it did not have knowledge that they were posted on Alternative Products' website; and it received no income from Alternative Products' subscribers. Digital acknowledges that it does maintain its own website, www.dscga.com, but asserts that its website "contains no means for any person to enter into a contract with, transfer funds to, or otherwise transact business with, Digital."

Digital also states that, other than through the Internet, it has no contacts with the State of Maryland. It avers that it conducts no business and has no offices in Maryland; that it has no contracts with any persons or entities in Maryland; that it derives no income from any clients or business in Maryland; that it does not advertise in Maryland (other than through its website); and that it owns no property in Maryland.

In a responding affidavit, ALS Scan asserts that copies of its copyrighted photographs have appeared on Alternative Products' two web-sites, www.abpefarc.net and www.abpeuarc.com. It also alleges that one of its employees in Maryland purchased an "on-line" membership to www.abpefarc.net, using a credit card, and, by obtaining that membership, the employee received a "user name" and a "password" to access the website. That website, it asserts, displayed ALS Scan's copyrighted photographs, allegedly in violation of the Copyright Act.

The district court granted Digital's motion to dismiss for lack of personal jurisdiction. The court found that it had neither specific nor general jurisdiction over Digital because "Digital does not engage in any continuous and systematic activities within Maryland, and there is no evidence that [ALS Scan's] claim arises out of any contacts which Digital may have with Maryland."

From the district court's ruling, ALS Scan filed this interlocutory appeal.²

II

The district court's decision to dismiss the complaint against Digital for lack of personal jurisdiction presents a legal question that we review de novo, see Christian Science Bd. of Dirs. of the First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir.2001), although we review any underlying factual findings for clear error, see In re Celotex Corp., 124 F.3d 619, 627 (4th Cir.1997).

Under Federal Rule of Civil Procedure 4(k)(1)(A), a federal court may exercise personal jurisdiction over a defendant in the manner provided by state law. See ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 622 (4th Cir.1997). Maryland courts have concluded that the State's longarm statute, Md.Code Ann., Courts & Jud. Proc. § 6-103, expands Maryland's exercise of personal jurisdiction to the extent allowed by the Due Process Clause of the Fourteenth Amendment. See Androutsos v. Fairfax Hosp., 323 Md. 634, 594 A.2d 574, 576 (1991). "Because the limits of Maryland's statutory authorization for the exercise of personal jurisdiction are coterminous with the limits of the Due Process Clause, the statutory inquiry necessarily merges with the constitutional inquiry, and the two inquiries essentially become one." Stover v. O'Connell Assocs., Inc., 84 F.3d 132, 135-36 (4th Cir.1996). Thus, we apply the constitutional limitations on state service of process incorporated in Rule 4(k)(1)(A), and our inquiry coalesces into the question of whether Digital has sufficient minimum contacts with Maryland. See Diamond Healthcare of Ohio, Inc. v. Humility of Mary Health Partners, 229 F.3d 448, 450 (4th Cir.2000); Ciena Corp. v. Jarrard, 203 F.3d 312, 317 (4th Cir.2000).

Historically, the limits on personal jurisdiction were grounded in a court's power over the actual person of the defendant. Thus, a person's "presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (citing Pennoyer v. Neff, 95 U.S. 714, 733, 24 L.Ed. 565 (1877)). Over time, however, and with the introduction of personal service of summons or other forms of notice, the Supreme Court recognized that "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Int'l Shoe, 326 U.S. at 316, 66 S.Ct. 154 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). With respect to corporations, the Court has recognized that "unlike an individual, its `presence' without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it." Id. Thus, "the terms `present' or `presence' are used merely to symbolize those activities of the corporation's agent within the state which courts will deem to be sufficient to satisfy the demands of due process." Id. at 316-17, 66 S.Ct. 154.

Although the courts have recognized that the standards used to determine the proper exercise of personal jurisdiction may evolve as technological progress occurs, it nonetheless has remained clear that technology cannot eviscerate the constitutional limits on a State's power to exercise jurisdiction over a defendant. In Hanson v. Denckla, 357 U.S. 235, 78 S.Ct.1228, 2 L.Ed.2d 1283 (1958), the Court explored the problem of reconciling technological advances with the limits of personal jurisdiction and stated:

As technological progress has increased the flow of commerce between States, the need for jurisdiction over nonresidents has undergone a similar increase. At the same time, progress in communications and transportation has made the defense of a suit in a foreign tribunal less burdensome. In response to these changes, the requirements for personal jurisdiction over nonresidents have evolved from the rigid rule of Pennoyer v. Neff to the flexible standard of International Shoe Co. v. State of Washington. But it is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. Those restrictions are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States. However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the "minimal contacts" with that State that are a prerequisite...