Server Insufficient For Jurisdiction

A New Jersey court has held that, where a defendant’s only connection to the State is the location of a "host server" that channels the flow of information, it is unreasonable for a defendant to have foreseen being haled into court in New Jersey. Amberson Holdings, LLC v. Westside Story Newspaper, 110 F.Supp.2d 332, 337 (D.C. N.J. 2000).

Plaintiff sued defendants, based in California, for copyright infringement. Defendants outsourced the operation of their Website, "westsidedirectory.com," to a host server owned and operated by a New Jersey corporation. Plaintiff argued that the court had jurisdiction over defendants because defendants (1) maintained a contractual relationship with a New Jersey company that provides "hosting services" for defendants’ Website on its Internet servers in New Jersey; (2) on at least two occasions represented to Network Solutions, Inc. that the data making up defendants’ Website is physically located on servers belonging to a New Jersey corporation and operated and maintained in New Jersey; (3) on those same two occasions, affirmatively instructed Network Solutions, Inc. to arrange for all Internet requests for access to defendants’ Website be directed to Internet servers physically located in New Jersey; (4) continuously communicated and interacted with visitors to their Website via Internet servers physically located in New Jersey; and (5) regularly transmitted electronic files into New Jersey for storage and operation on Internet servers located in New Jersey for the purpose of establishing and updating their Website and conducting business over the Internet using plaintiffs’ trademark.

Defendants, on the other hand, pointed out that they should not be subject to personal jurisdiction in New Jersey because they never engaged in any of the following activities in New Jersey: (1) manufacture of any product; (2) any direct sales; (3) solicitation or advertisement to sell its product; (4) any shipment of merchandise directly into or through the state, or supply of services there; (5) the maintenance of an office; (6) the ownership of any real or personal property; (7) the employment of any employees or agents; or (8) the requirement of or payment of taxes.

The court first pointed out that access to a Website reflects nothing more than a telephone call by a district resident to the defendants’ computer servers. The court then looked beyond "traditional tools utilized in a personal jurisdiction determination for Internet cases" and concluded that, "when exploring cases dealing with the Internet, ‘personal jurisdiction surely cannot be based solely on the ability of District residents to access the Defendants’ Website, for this does not by itself show any persistent course of conduct by the defendant in the district.’"

The court went on to develop new criterion to use when deciding whether personal jurisdiction over a Website is appropriate. The court stated that, when the level of interactivity of a Website is limited to receiving a browser’s name, address and an indication of interest, without an option to sign up for the service, an exercise of personal jurisdiction would be inappropriate. Further, where a site does not offer any products for sale, and defendants only source of income is obtained by a "click-through" option that links users to other sites, such a site is a passive advertisement and is not grounds for the exercise of personal jurisdiction. For interactive sites, however, which are used to conduct business over the Internet, the court noted that personal jurisdiction is always appropriate.

In this case, the Court determined that defendants’ Website was a "passive Website." The court reasoned that, because the administration, maintenance and upkeep of defendants’ Website is based out of California, that state has a greater interest in deciding how to control issues surrounding Internet use that is derived from its business community. Taking into account all of the factors discussed above, the court found that subjecting defendants to personal jurisdiction would offend traditional notions of fair play and substantial justice. The court thus dismissed plaintiff’s case for lack of jurisdiction.