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Zippo Manufacturing Co. v. Zippo Dot Com, Inc.

Plaintiff, Zippo Manufacturing Company, a Pennsylvania corporation which manufactures lighters and holds the trademark in the mark "Zippo" brought a trademark infringement and dilution claim against the defendant. The defendant moved to dismiss the complaint for want of personal jurisdiction. The court denied the motion, holding that defendant had sufficient contacts with the forum to permit the exercise of jurisdiction over it. The defendant was a California based company with neither offices or employees in Pennsylvania. Its contact with Pennsylvania residents was limited to and telephone communications. Defendant operated a World Wide website hosted on a California server which was available to Pennsylvanian residents. The site advertised the services defendant offered to its clientele. These included permitting access to various newsgroup messages stored on a computer in California. To obtain access, the user completes online an application, and pays for the service by credit card, either online or via telephone. The user then receives a password, which permits the user to access the newsgroup messages. Defendant had entered into subscription contracts with some 3000 Pennsylvanians (which represented 2% of its clientele), as well as contracts with 7 Pennsylvanian based Access Providers to give defendant's customers access to the information in question. These contacts, found the court, were sufficient to permit the exercise of jurisdiction over the defendant.

Said the court:

Dot Com repeatedly and consciously chose to process Pennsylvania residents' applications and to assign them passwords. Dot Com knew that the result of these contracts would be the transmission of electronic messages into Pennsylvania. The transmission of these files was entirely within its control. ... When a defendant makes a conscious choices to conduct business with the residents of a forum state 'it has clear notice that it is subject to suit there. ... If Dot Com had not wanted to be amenable to jurisdiction in Pennsylvania, the solution would have been simple - it could have chosen not to sell its services to Pennsylvania residents.

This last sentence indicates that the court might have found that mere advertising on the , without more, would not be sufficient to permit the exercise of jurisdiction over the advertiser. This is indicated by the following statement of the court:

[O]ur review of the available cases and materials reveals that the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the . This sliding scale is consistent with well developed personal jurisdiction principles. At one end of the spectrum are situation where a defendant clearly does business over the . If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the , personal jurisdiction is proper. (Compuserve v. Patterson) At the opposite end are situations where a defendant has simply posted information on an Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jurisdiction. (Bensusan) The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web Site. (Maritz v. Cybergold).