9th Circuit Holds that Operation of Passive Website Is Insufficient to Create Personal Jurisdiction in Trademark Case

July 12, 2006. The U.S. Court of Appeals (9thCir) issued its opinion [16 pages in PDF] in Peable Beach v. Caddy, holding that the U.S. District Court lacks personal jurisdiction over a citizen and resident of the United Kingdom (UK) who operates a web site that a U.S. plaintiff alleges infringes and dilutes its trademark rights.

Pebble Beach Company (PBC) operates a posh golf course resort in northern California. It is located on a bluff above the Pacific Ocean. The beach below is comprised of pebbles. It asserts that "Pebble Beach" is a trade name, and that this trade name has acquired secondary meaning in the US and UK. PBC also operates a web site with the URL of www.pebblebeach.com.

Michael Caddy, who once lived in nearby Carmel, California, has dual US and UK citizenship. He lives in southern England, where he operates a hotel, restaurant and bar. It is located on a bluff overlooking a beach comprised of pebbles. He too uses the name "Pebble Beach" for his business. Caddy operates a web site with the URL of www.pebblebeach-uk.com.

Caddy's business is located at Barton on Sea, in Hampshire. The Court of Appeals opinion notes that Caddy has no golf course. However, a quick Google search reveals that there is a Barton on Sea Golf Club.

PBC filed a complaint in U.S. District Court (NDCal) against Caddy alleging violation of the Lanham Act and the California Business and Professions Code for intentional infringement and dilution of its Pebble Beach mark.

The District Court dismissed the complaint for lack of personal jurisdiction over Caddy.

PBC appealed. The Court of Appeals affirmed.

It concluded that "Caddy did not expressly aim his conduct at California or the United States and therefore is not subject to the personal jurisdiction of the district court. A passive website and domain name alone do not satisfy the Calder effects test and there is no other action expressly aimed at California or the United States that would justify personal jurisdiction." See, Calder v. Jones, 456 U.S. 783 (1984).

The Court of Appeals began by noting the "The general rule is that personal jurisdiction over a defendant is proper if it is permitted by a long-arm statute and if the exercise of that jurisdiction does not violate federal due process." It added, citing International Shoe v. Washington, 326 U.S. 310 (1945), that "For due process to be satisfied, a defendant, if not present in the forum, must have ``minimum contacts´´ with the forum state such that the assertion of jurisdiction ``does not offend traditional notions of fair play and substantial justice.´´"

The Court of Appeals applied the following three part "minimum contacts" test : "(1) the defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) the claim arises out of or results from the defendant’s forum-related activities, and (3) the exercise of jurisdiction is reasonable." (Citing Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).)

It elaborated that, under the first part of the test, "Pebble Beach must establish either that Caddy (1) purposefully availed himself of the privilege of conducting activities in California, or the United States as a whole, or (2) that he purposefully directed its activities toward one of those two forums." However, in applying the facts of this case to these principles, it concluded that Caddy had neither purposely availed himself of an privilege, or aimed his conduct at California.

The Court of Appeals, in analyzing purposeful direction, distinguished the present case from Panavision Int'l L.P. v. Toeppen, 141, F.3d 1316 (9th Cir. 1998), another dispute involving domain names in which the Court found personal jurisdiction. The Court wrote that the defendant (Toeppen) schemed to obtain money from the plaintiff (Panavision), but that in the present case "Caddy has hatched no such plan directed at Pebble Beach. He is not a cybersquatter trying to obtain money from Pebble Beach. His operation is legitimate and his website relates directly to that end."

The Court of Appeals also wrote that there are "two salient points. First, there can be no doubt that we still require ``something more´´ than just a foreseeable effect to conclude that personal jurisdiction is proper. ... Second, an internet domain name and passive website alone are not ``something more,´´ and, therefore, alone are not enough to subject a party to jurisdiction."

It similarly concluded that Caddy did not purposefully aim his actions at California.

This case is Pebble Beach Company v. Michael Caddy, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. No. 04-15577, an appeal from the U.S. District Court for the Northern District of California, D.C. No. CV-03-04550-PJH, Judge Phyllis Hamilton presiding. Judge Stephen Trott wrote the opinion of the Court of Appeals, in which Judges Mary Schroeder and Andrew Kleinfeld joined.

Other Cases. Internet based personal jurisdiction is an evolving area of law. The Supreme Court has denied certiorari in several cases, but not yet decided an internet related personal jurisdiction case.

There have been numerous state court, U.S. District Court, U.S. Court of Appeals, and foreign court opinions. What follows identifies some of these recent cases.

On June 14, 2002, the U.S. Court of Appeals (4thCir) issued its opinion in ALS Scan v. Digital Service Consultants, a case holding that the District Court lacks personal jurisdiction over an out of state internet service provider that provides web hosting services to an alleged copyright infringer in a copyright infringement suit. See also, stories titled "Internet Shoes: Two Appeals Courts Address Internet Based Personal Jurisdiction", "Fourth Circuit Holds No Personal Jurisdiction Over Out of State Web Host", and "DC Circuit Suggests Personal Jurisdiction Over Out of State Online Brokerage" in TLJ Daily E-Mail Alert No. 452, June 17, 2002. The Supreme Court denied certiorari in ALS Scan. See, story titled "Supreme Court Denies Certiorari in Personal Jurisdiction Case" in TLJ Daily E-Mail Alert No. 582, January 14, 2003.

On October 7, 2002, the U.S. Court of Appeals (9thCir) issued its "not for publication" opinion in Northwest Healthcare Alliance v. HealthGrades.com holding that the District Court has personal jurisdiction over an out of state defendant in defamation case, based solely upon its publication of the allegedly defamatory statements in its "passive" internet web site. See also, story titled "Supreme Court Denies Certiorari in Internet Jurisdiction Case" in TLJ Daily E-Mail Alert No. 652, April 30, 2003.

On December 10, 2002, the High Court of Australia issued its opinion in Dow Jones v. Gutnick, a tort action brought in Australia for an allegedly defamatory news story published on the Internet by Dow Jones, a U.S. publisher. The Court held that because of publication on the Internet, the Australian courts have jurisdiction, that Australian law applies, and that the case should proceed in the trial court in the Australian state of Victoria. See also, story titled "High Court Rules Australia Has Jurisdiction Over Dow Jones Based on Web Publication" in TLJ Daily E-Mail Alert No. 564, December 10, 2002.

On December 13, 2002, the U.S. Court of Appeals (4thCir) issued its opinion [12 pages in PDF] in Young v. New Haven Advocate, holding that a court in Virginia does not have jurisdiction over two small newspapers, and their editors and reporters, located in Connecticut, who wrote allegedly defamatory stories about a Virginia prison warden and published them on the Internet. The Court held that the web publication did not establish minimum contacts because the newspapers are not directed at a Virginia audience. See also, story titled "4th Circuit Rules in Internet Jurisdiction Case" in TLJ Daily E-Mail Alert No. 568, December 16, 2002. See also, story titled "Supreme Court Denies Cert in Case Involving Personal Jurisdiction in Internet Defamation Suit" in TLJ Daily E-Mail Alert No. 665, May 20, 2003.

On January 9, 2003, the U.S. District Court (CDCal) held in MGM v. Grokster that personal jurisdiction may be based upon making software available for download to residents of the forum state. See also, story titled "District Court Squeezes Sharman on Internet Based Personal Jurisdiction" in TLJ Daily E-Mail Alert No. 581, January 13, 2003.

On July 2, 2003, the U.S. Court of Appeals (4thCir) issued its opinion [PDF] in Carefirst Maryland v. CPC, a case involving whether the operation of a website by a local non profit group can serve as the basis for personal jurisdiction over it by an out of state court in a trademark infringement case. The District Court dismissed for lack of personal jurisdiction. The Appeals Court affirmed. See also, story titled "Court Rules Operation of Website Does Not Create Personal Jurisdiction Over Out of State Defendant" in TLJ Daily E-Mail Alert No. 693, July 8, 2003.

On September 2, 2003, the U.S. Court of Appeals (9thCir) issued its opinion [16 pages in PDF] in Gator.com v. L.L.Bean, holding that personal jurisdiction over an out of state defendant may be based upon its operation of a web site that engages in electronic commerce. See also, story titled "9th Circuit Rules on Personal Jurisdiction Over Internet Retailers" in TLJ Daily E-Mail Alert No. 731, September 3, 2003.

On January 25, 2006, the U.S. Court of Appeals (5thCir) issued its opinion [10 pages in PDF] in Luv N' Care v. Insta Mix, holding that personal jurisdiction over an out of state defendant in copyright, trademark and Lanham Act unfair competition suits may be based upon the stream of commerce theory. See also, story titled "5th Circuit Addresses Personal Jurisdiction in IPR Cases" in TLJ Daily E-Mail Alert No. 1,313, February 20, 2006.

On February 10, 2006, the Supreme Court of the State of Utah issued its opinion [15 pages in PDF] in Fenn v. Mleads, holding that the courts of Utah cannot exercise personal jurisdiction over an out of state defendant who sends one email message to a state resident without knowledge of the residence of the recipient or the location at which the recipient will retrieve the message. See also, story titled "Utah Supreme Court Addresses Personal Jurisdiction Based upon Sending E-Mail" in TLJ Daily E-Mail Alert No. 1,313, February 20, 2006.