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CMU ISR 08732 - Minimum Contacts in Cyberspace

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(85)Copyright © 2002 Journal of High Technology Law. All Rights Reserved. ISSN 1536-7983Minimum Contacts in Cyberspace:The Classic Jurisdiction Analysis in a New SettingTricia Leigh GrayI. INTRODUCTIONBecause no special law yet exits to address jurisdiction issues on theInternet, courts have been forced to apply traditional analyses of jurisdiction tocases in this new environment. Our traditional notions of jurisdiction havemade a relatively smooth transition into cyberspace. Historically, jurisdictionalrequirements have centered on the locus and the activity of the parties as ameans of determining which state’s law to apply.1 With the advent of theInternet and the new frontier of cyberspace, established ideas about where andhow interactions take place must be re-considered in this unconventional, on-line environment. These sorts of issues affect a court’s jurisdiction over partiesinteracting in cyberspace.Surprisingly, our conventional notions of jurisdiction have adapted well tothis new cyber-environment. This is illustrated by the report of the AmericanBar Association, which extends support to the minimum contacts analysis todetermine jurisdiction over on-line parties.2 Cyberspace has expanded thearena for interactions of all sorts,3 and has provided another forum in whichparties can reach out to each other from different locations, and possibly createthe minimum contacts necessary for personal jurisdiction.4 Traditionalprinciples of jurisdiction are adaptable to cyberspace because they consider the1.See RICHARD D. FREER & WENDY COLLINS PERDUE, CIVIL PROCEDURE, CASES, MATERIALS ANDQUESTIONS 70-71 (2d ed. 1997). The place of litigation is significant for several reasons. Id. at 70. First,parties want to avoid inconvenience. Id. A trial that occurs away from the resident state can bring up issues ofout-of-state witnesses, documents, and attorneys. Id. Traveling to and maintaining a presence in a differentstate can be very costly and time-consuming. Id. at 71. Second, litigants might be concerned about the bias ofa judge or jury to their own party. Id. Third, and most common, is the concern with which state’s law appliesto the suit. Id. The forum state decides which state’s law will apply, and thus, the choice of forum becomes avery significant question. Id.2.See AMERICAN BAR ASS’N, ACHIEVING LEGAL AND BUSINESS ORDER IN CYBERSPACE 29-30 (2000).3. Donnie L. Kidd, Jr. & William H. Daughtrey, Jr., Adapting Contract Law to Accommodate ElectronicContracts: Overview and Suggestions, 26 RUTGERS COMPUTER & TECH L.J. 215 (2000). “The Internet providesfour principal processes by which parties may enter an agreement: (1) e-mail; (2) listserv and chat services, (3)World Wide Web interfaces, and (4) electronic data interchange (EDI).” Id.4. In Int’l Shoe v. Washington, 326 U.S. 310, 319-320 (1945), the Supreme Court held that a state mayexercise personal jurisdiction over a defendant if he has sufficient minimum contacts with the state. The test isthree-fold: (1) the defendant must have sufficient minimum contacts with the forum state; (2) the suit againstthe defendant must arise out of those contacts; and (3) the exercise of jurisdiction must be reasonable. Id. at319-320. In cases involving corporate defendants, minimum contacts have been found in continuous butlimited business relationships. In such a case, jurisdiction is proper only if the lawsuit arises out of thedefendant’s minimum contacts with the state.86 JOURNAL OF HIGH TECHNOLOGY LAW [Vol. 1 No. 1physical location of the parties and the conduct they direct at the forum state.5These factors remain crucial to our current analysis of jurisdiction incyberspace.6Individuals and corporations continue to exist in real space, and continue todo business from one state, while targeting other states. We should continue touse the physical status of the parties as a starting point for jurisdictionalanalysis. This approach makes sense, because the application of the minimumcontacts test to Internet jurisdiction simply extends the amenability to suit thatalready exists for parties. No new rules are necessary, because although theInternet is a new forum, parties, as always, exist in a physical space. Thereport of the American Bar Association and a review of current caselawsupport this proposition.II. THE MODERN CHALLENGE: PERSONAL JURISDICTION AND THE INTERNET1. The Report of the American Bar AssociationAn important, and largely on-target, reexamination of the issue ofjurisdiction in cyberspace began with a report by the American BarAssociation, published in July 2000.7 The report, titled ACHIEVING LEGAL ANDBUSINESS ORDER IN CYBERSPACE: A REPORT ON GLOBAL JURISDICTIONISSUES CREATED BY THE INTERNET, is the cumulative effort of multiplesections of the bar, working groups, and international commentators.8Cyberlaw jurisdiction is discussed in both global and domestic forums.9 Thereport tends to be more successful when considering domestic jurisdictionproblems.The goal of the ABA’s report is to promote a legal infrastructure that willprovide guidance to the new area of cyberlaw and the jurisdiction of courtsover Internet-related litigation.10 Despite its global overtones, the report’sanalysis stays squarely in the American traditional context of jurisdiction,which is rooted firmly in physicality and minimum contacts.11 The anatomy ofAmerican jurisdiction in the new Internet environment is preserved by theABA’s report.12 A less conventional approach would seem too far a departure5. It is important to the jurisdictional analysis that the defendant “purposefully avail[ed] itself of theprivilege of conducting activities within the forum state, thus invoking the protection of its laws.” Hanson v.Denckla, 357 U.S. 235, 253 (1958).6.See AMERICAN BAR ASSOCIATION [hereinafter ABA], ACHIEVING LEGAL AND BUSINESS ORDER INCYBERSPACE 9 (2000). “[W]hile technology changes how parties communicate, it does not and can not changethe fact that parties themselves exist in physical space – the key to jurisdictional analysis. Cyberspace may bea ‘place,’ but it is inhabited bits and bytes, not by people. It may change how people understand theirboundaries, and thus affect their state of mind, but in the end it is a means of communication.” Id. at 9.7.See ABA, supra note 6, at 7.8.See ABA, supra note 6, at i-iii.9.See ABA, supra note 6, at 18-22 and 35-67.10.See ABA, supra note 6, at 7. In 1998,


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CMU ISR 08732 - Minimum Contacts in Cyberspace

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