Cybersell, Inc. v. Cybersell, Inc.

• Decision Date: 02 December 1997
• Docket Number: No. 96-17087,96-17087
• Citation: 130 F.3d 414
• Parties: , 97 Cal. Daily Op. Serv. 9006, 97 Daily Journal D.A.R. 14,545 CYBERSELL, INC., an Arizona corporation, Plaintiff-Appellant, v. CYBERSELL, INC., a Florida corporation; Webhorizons, Inc., a Florida corporation; Websolvers, Inc., a Florida corporation; Samuel C. Certo, husband; Jane Doe Certo, wife; Matt Certo, husband; Jane Doe II Certo, wife; Cybergate, Inc., a corporation; Sprintnet, a corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 414

130 F.3d 414

44 U.S.P.Q.2d 1928, 97 Cal. Daily Op. Serv. 9006,

97 Daily Journal D.A.R. 14,545

CYBERSELL, INC., an Arizona corporation, Plaintiff-Appellant, v. CYBERSELL, INC., a Florida corporation; Webhorizons, Inc.,

a Florida corporation; Websolvers, Inc., a Florida

corporation; Samuel C. Certo, husband; Jane Doe Certo,

wife; Matt Certo, husband; Jane Doe II Certo, wife;

Cybergate, Inc., a corporation; Sprintnet, a corporation,

Defendants-Appellees.

No. 96-17087.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 6, 1997.

Decided Dec. 2, 1997.

Connie J. Mableson, Phoenix, AZ, for plaintiff-appellant.

Michael R. Levin and Christopher T. Hill, Rumberger, Kirk & Caldwell, Orlando, FL, for defendants-appellees.

Appeal from the United States District Court for the District of Arizona; Earl H. Carroll, District Judge, Presiding. D.C. No. CV-96-00089-EHC.

Before: WOOD, Jr., ^* RYMER, and TASHIMA, Circuit Judges.

RYMER, Circuit Judge.

We are asked to hold that the allegedly infringing use of a service mark in a home page on the World Wide Web suffices for personal jurisdiction in the state where the holder of the mark has its principal place of business. Cybersell, Inc., an Arizona corporation that advertises for commercial services over the Internet, claims that Cybersell, Inc., a Florida corporation that offers web page construction services over the Internet, infringed its federally registered mark and should be amenable to suit in Arizona because cyberspace is without borders and a web site which advertises a product or service is necessarily intended for use on a world wide basis. The district court disagreed, and so do we. Instead, applying our normal "minimum contacts" analysis, we conclude that it would not comport with "traditional notions of fair play and substantial justice," Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1485 (9th Cir.1993) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)), for Arizona to exercise personal jurisdiction over an allegedly infringing Florida web site advertiser who has no contacts with Arizona other than maintaining a home page that is accessible to Arizonans, and everyone else, over the Internet. We therefore affirm.

I

Cybersell, Inc. is an Arizona corporation, which we will refer to as Cybersell AZ. It was incorporated in May 1994 to provide Internet and web advertising and marketing services, including consulting. The principals of Cybersell AZ are Laurence Canter and Martha Siegel, known among web users for first "spamming" the Internet. ¹ Mainstream print media carried the story of Canter and Siegel and their various efforts to commercialize the web.

On August 8, 1994, Cybersell AZ filed an application to register the name "Cybersell" as a service mark. The application was approved and the grant was published on October 30, 1995. Cybersell AZ operated a web site using the mark from August 1994 through February 1995. The site was then taken down for reconstruction.

Meanwhile, in the summer of 1995, Matt Certo and his father, Dr. Samuel C. Certo, both Florida residents, formed Cybersell, Inc., a Florida corporation (Cybersell FL), with its principal place of business in Orlando. Matt was a business school student at Rollins College, where his father was a professor; Matt was particularly interested in the Internet, and their company was to provide business consulting services for strategic management and marketing on the web. At the time the Certos chose the name "Cybersell" for their venture, Cybersell AZ had no home page on the web nor had the PTO granted their application for the service mark.

As part of their marketing effort, the Certos created a web page at http://www.cybsell.com/cybsell/index.htm. The home page has a logo at the top with "CyberSell" over a depiction of the planet earth, with the caption underneath "Professional Services for the World Wide Web" and a local (area code 407) phone number. It proclaims in large letters "Welcome to CyberSell!" A hypertext link ² allows the browser to introduce himself, and invites a company not on the web--but interested in getting on the web--to "Email us to find out how!"

Canter found the Cybersell FL web page and sent an e-mail on November 27, 1995 notifying Dr. Certo that "Cybersell" is a service mark of Cybersell AZ. Trying to disassociate themselves from Canter and Siegel, the Certos changed the name of Cybersell FL to WebHorizons, Inc. on December 27 (later it was changed again to WebSolvers, Inc.) and by January 4, 1996, they had replaced the CyberSell logo at the top of their web page with WebHorizons, Inc. The WebHorizons page still said "Welcome to CyberSell!"

Cybersell AZ filed the complaint in this action January 9, 1996 in the District of Arizona, alleging trademark infringement, unfair competition, fraud, and RICO violations. On the same day Cybersell FL filed suit for declaratory relief with regard to use of the name "Cybersell" in the United States District Court for the Middle District of Florida, but that action was transferred to the District of Arizona and consolidated with the Cybersell AZ action. Cybersell FL moved to dismiss for lack of personal jurisdiction. The district court denied Cybersell AZ's request for a preliminary injunction, then granted Cybersell FL's motion to dismiss for lack of personal jurisdiction. ³ Cybersell AZ timely appealed.

II

The general principles that apply to the exercise of personal jurisdiction are well known. As there is no federal statute governing personal jurisdiction in this case, the law of Arizona applies. Under Rule 4.2(a) of the Arizona Rules of Civil Procedure, an Arizona court

may exercise personal jurisdiction over parties, whether found within or outside the state, to the maximum extent permitted by the Constitution of this state and the Constitution of the United States.

The Arizona Supreme Court has stated that under Rule 4.2(a), "Arizona will exert personal jurisdiction over a nonresident litigant to the maximum extent allowed by the federal constitution." Uberti v. Leonardo, 181 Ariz. 565, 569, 892 P.2d 1354, 1358, cert. denied, --- U.S. ----, 116 S.Ct. 273, 133 L.Ed.2d 194 (1995). Thus, Cybersell FL may be subject to personal jurisdiction in Arizona so long as doing so comports with due process.

A court may assert either specific or general jurisdiction over a defendant. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984). Cybersell AZ concedes that general jurisdiction over Cybersell FL doesn't exist in Arizona, so the only issue in this case is whether specific jurisdiction is available.

We use a three-part test to determine whether a district court may exercise specific jurisdiction over a nonresident defendant:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections[;] (2)[t]he claim must be one which arises out of or results from the defendant's forum-related activities[; and] (3)[e]xercise of jurisdiction must be reasonable.

Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir.1995) (citations omitted).

Cybersell AZ argues that the test is met because trademark infringement occurs when the passing off of the mark occurs, which in this case, it submits, happened when the name "Cybersell" was used on the Internet in connection with advertising. Cybersell FL, on the other hand, contends that a party should not be subject to nationwide, or perhaps worldwide, jurisdiction simply for using the Internet.

A

Since the jurisdictional facts are not in dispute, we turn to the first requirement, which is the most critical. As the Supreme Court emphasized in Hanson v. Denckla, "it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). We recently explained in Ballard that

the "purposeful availment" requirement is satisfied if the defendant has taken deliberate action within the forum state or if he has created continuing obligations to forum residents. "It is not required that a defendant be physically present within, or have physical contacts with, the forum, provided that his efforts 'are purposefully directed' toward forum residents."

Ballard, 65 F.3d at 1498 (citations omitted).

We have not yet considered when personal jurisdiction may be exercised in the context of cyberspace, but the Second and Sixth Circuits have had occasion to decide whether personal jurisdiction was properly exercised over defendants involved in transmissions over the Internet, see CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir.1996); Bensusan Restaurant Corp. v. King, 937 F.Supp. 295 (S.D.N.Y.1996), aff'd, 126 F.3d 25 (2d Cir.1997), as have a number of district courts. Because this is a matter of first impression for us, we have looked to all of these cases for guidance. Not surprisingly, they reflect a broad spectrum of Internet use on the one hand, and contacts with the forum on the other. As CompuServe and Bensusan seem to represent opposite ends of the spectrum, we start with them. ⁴

CompuServe is a computer information service headquartered in Columbus, Ohio, that contracts with individual subscribers to provide access to computing and information services via the Internet. It also operates as an electronic conduit to provide computer software products to its subscribers. Computer software generated and distributed in this way is often referred to as "shareware." Patterson is a Texas resident who subscribed to CompuServe and placed items of "shareware" on the CompuServe...