Pavlovich v. Superior Court

• Decision Date: 25 November 2002
• Docket Number: No. S100809.,S100809.
• Court: California Supreme Court
• Parties: Matthew PAVLOVICH, Petitioner, v. The SUPERIOR COURT of Santa Clara County, Respondent; DVD Copy Control Association, Inc., Real Party in Interest.

127 Cal.Rptr.2d 329

29 Cal.4th 262

58 P.3d 2

Matthew PAVLOVICH, Petitioner, v. The SUPERIOR COURT of Santa Clara County, Respondent;

DVD Copy Control Association, Inc., Real Party in Interest.

No. S100809.

Supreme Court of California.

November 25, 2002.

Ornah Levy; Huber Samuelson; HS Law Group; Hopkins & Carley, Arthur V. Plank, San Jose, and Allonn E. Levy for Petitioner.

Richard S. Wiebe, San Francisco, for the Computer & Communications Industry Association and the Student Press Law Center as Amici Curiae on behalf of Petitioner.

Ann Brick and Stephen McG. Bundy for the American Civil Liberties Union of Northern California as Amicus Curiae on behalf of Petitioner.

Weil, Gotshal & Manges, Jared Ben Bobrow, Christopher J. Cox, Robert G. Sugarman, Jeffrey L. Kessler, Geoffrey D. Berman, and Gregory S. Coleman for Real Party in Interest.

BROWN, J.

"The Internet is an international network of interconnected computers" which "enable[s] tens of millions of people to communicate with one another and to access vast amounts of information from around the world." (Reno v. American Civil Liberties Union (1997) 521 U.S. 844, 849-850, 117 S.Ct. 2329, 138 L.Ed.2d 874.) "The best known category of communication over the Internet is the World Wide Web, which allows users to search for and retrieve information stored in remote computers, as well as, in some cases, to communicate back to designated sites. In concrete terms, the Web consists of a vast number of documents stored in different computers all over the world." (Id. at p. 852, 117 S.Ct. 2329.) On the Web, "documents, commonly known as Web `pages,' are ... prevalent." (Ibid.) These pages are located at Web sites and have addresses marking their location on the Web. (See ibid.) If a Web page is freely accessible, then anyone with access to a computer connected to the Internet may view that page. With its explosive growth over the past two decades, the Internet has become "`a unique and wholly new medium of worldwide human communication.'" (Id. at p. 850, 117 S.Ct. 2329.)

Not surprisingly, the so-called Internet revolution has spawned a host of new legal issues as courts have struggled to apply traditional legal frameworks to this new communication medium. Today, we join this struggle and consider the impact of the Internet on the determination of personal jurisdiction. In this California court exercised personal jurisdiction over a defendant based on a posting on an Internet Web site. Under the particular facts of this case, we conclude the court's exercise of jurisdiction was improper.

I

Digital versatile discs (DVD's) "provide high quality images, such as motion pictures, digitally formatted on a convenient 5 inch disc...." Before the commercial release of DVD's containing motion pictures, the Content Scrambling System (CSS), a system used to encrypt and protect copyrighted motion pictures on DVD's, was developed. The CSS technology prevents the playing or copying of copyrighted motion pictures on DVD's without the algorithms and keys necessary to decrypt the data stored on the disc.

Real party in interest DVD Copy Control Association, Inc. (DVD CCA) is a nonprofit trade association organized under the laws of the State of Delaware with its principal place of business in California. The DVD industry created DVD CCA in December 1998 to control and administer licensing of the CSS technology. In September 1999, DVD CCA hired its staff, and, in December 1999, it began administering the licenses. Soon thereafter, DVD CCA acquired the licensing rights to the CSS technology and became the sole licensing entity for this technology in the DVD video format.

Petitioner Matthew Pavlovich is currently a resident of Texas and the president of Media Driver, LLC, a technology consulting company in Texas. During the four years before he moved to Texas, he studied computer engineering at Purdue University in Indiana, where he worked as a systems and network administrator. Pavlovich does not reside or work in California. He has never had a place of business, telephone listing, or bank account in California and has never owned property in California. Neither Pavlovich nor his company has solicited any business in California or has any business contacts in California.

At Purdue, Pavlovich was the founder and project leader of the LiVid video project (LiVid), which operated a Web site located at "livid.on.openprojects.net." The site consisted of a single page with text and links to other Web sites. The site only provided information; it did not solicit or transact any business and permitted no interactive exchange of information between its operators and visitors.

According to Pavlovich, the goal of LiVid was "to improve video and DVD support for Linux and to ... combine the resources and the efforts of the various individuals that were working on related things...." To reach this goal, the project sought to defeat the CSS technology and enable the decryption and copying of DVD's containing motion pictures. Consistent with these efforts, LiVid posted the source code of a program named DeCSS on its Web site as early as October 1999. DeCSS allows users to circumvent the CSS technology by decrypting data contained on DVD's and enabling the placement of this decrypted data onto computer hard drives or other storage media.

At the time LiVid posted DeCSS, Pavlovich knew that DeCSS "was derived from CSS algorithms" and that reverse engineering these algorithms was probably illegal. He had also "heard" that "there was an organization which you had to file for or apply for a license" to the CSS technology. He did not, however, learn that the organization was DVD CCA or that DVD CCA had its principal place of business in California until after DVD CCA filed this action.

In its complaint, DVD CCA alleged that Pavlovich misappropriated its trade secrets by posting the DeCSS program on the LiVid Web site because the "DeCSS program ... embodies, uses, and/or is a substantial derivation of confidential proprietary information which DVD CCA licenses...." The complaint sought injunctive relief but did not seek monetary damages. In response, Pavlovich filed a motion to quash service of process, contending that California lacked jurisdiction over his person. DVD CCA opposed, contending that jurisdiction was proper because Pavlovich "misappropriated DVD CCA's trade secrets knowing that such actions would adversely impact an array of substantial California business enterprises—including the motion picture industry, the consumer electronics industry, and the computer industry." In a brief order, the trial court denied Pavlovich's motion, citing Calder v. Jones (1984) 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (Calder,) and Panavision Intern., L.P. v. Toeppen (9th Cir.1998) 141 F.3d 1316 (Panavision.)

Pavlovich petitioned the Court of Appeal for a writ of mandate. After the Court of Appeal summarily denied the petition, we granted review and transferred the matter back to the Court of Appeal with directions to vacate its denial order and issue an order to show cause. The Court of Appeal then issued a published opinion denying the petition. Because Pavlovich knew that posting DeCSS on the LiVid Web site would harm the movie and computer industries in California and because "the reach of the Internet is also the reach of the extension of the poster's presence," the court found that he purposefully availed himself of forum benefits under the Calder effects test. The court also concluded that the exercise of jurisdiction over Pavlovich was reasonable.

We granted review to determine whether the trial court properly exercised jurisdiction over Pavlovich's person based solely on the posting of the DeCSS source code on the LiVid Web site. We conclude it did not.

II

California courts may exercise personal jurisdiction on any basis consistent with the Constitutions of California and the United States. (Code Civ. Proc., § 410.10.) The exercise of jurisdiction over a nonresident defendant comports with these Constitutions "if the defendant has such minimum contacts with the state that the assertion of jurisdiction does not violate `"traditional notions of fair play and substantial justice."'" (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, 58 Cal.Rptr.2d 899, 926 P.2d 1085 (Vons), quoting Internal Shoe Co. v. Washington (1945) 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (Internat. Shoe).

)

Under the minimum contacts test, "an essential criterion in all cases is whether the `quality and nature' of the defendant's activity is such that it is `reasonable' and `fair' to require him to conduct his defense in that State." (Kulko v. California Superior Court (1978) 436 U.S. 84, 92, 98 S.Ct. 1690, 56 L.Ed.2d 132, quoting Internat. Shoe, supra, 326 U.S. at pp. 316-317, 319, 66 S.Ct. 154.) "[T]he `minimum contacts' test ... is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite `affiliating circumstances' are present." (Kulko, at p. 92, 98 S.Ct. 1690, quoting Hanson v. Denckla (1958) 357 U.S. 235, 246, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (Hanson).) "[T]his determination is one in which few answers will be written `in black and white. The greys are dominant and even among them the shades are innumerable.'" (Kulko, at p. 92, 98 S.Ct. 1690, quoting Estin v. Estin (1948) 334 U.S. 541, 545, 68 S.Ct. 1213, 92 L.Ed. 1561.)

In making this determination, courts have identified two ways to establish personal jurisdiction. "Personal jurisdiction may be either general or specific." (Vons, supra, 14 Cal.4th at p. 445, 58 Cal.Rptr.2d 899, 926 P.2d 1085.) In this case, DVD CCA does not contend that general jurisdiction exists. We therefore need only consider whether specific jurisdiction exists.

When determining whether specific jurisdiction exists, courts consider the "`relationship among the defendant, the forum, and the...