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Internet Jurisprudence
National Law Journal - January 25, 1999

IN THE NEXT-TO-LAST YEAR of the 20th century, Internet jurisprudence is just starting to emerge. The basic building block of law--jurisdiction--is still developing. The administration of the first essential of a business--its trade name, or domain name on the Internet, which functions as both a Web address and an identifier--is in flux.

Complicating matters is that trademark rights are based on geography: A business can have the right to use a name within a specific locality, but no farther. The Czech town of Budweis has for centuries brewed a beer called "Budweiser." Its site is at www.budweiser.cz. It retains the right to use that name within the Czech Republic for its beer. Elsewhere, the rights to the name belong to the junior trademark user from St. Louis, Anheuser-Busch, which brews a slightly better-known Budweiser whose site is at www.budweiser.com.

But such concurrent uses, based on geographic borders, vanish on the Web.

Two recent lawsuits may help define Internet fundamentals. The first, Porsche Cars North America Inc. v. Porsch.com., No. 99-0006-A, was filed on Jan. 6 in Alexandria, Va., against 130 domain names, some of them for pornographic Web sites.

The domain names, such as www.porschecar.com, are confusingly similar to the elite automobile, whose Web address is www.porsche.com.

The intriguing aspect of the suit is that it is an "in rem" action, brought against the property itself--the domain names, in this case--rather than against the individuals who registered the names.

An in rem action is filed where the property is located--here, in the Eastern District of Virginia, home of the domain name registrar, Network Solutions Inc.

"The domain names exist in the domain name registry of NSI," says Porsche's North American trademark counsel Gregory D. Phillips, a partner at Salt Lake City's Johnson & Hatch. Rather than chase around the world to locate the "cybersquatters," says Mr. Phillips, "we've sued the domain names themselves, in the domain where they exist."

He notes that, to complicate legal matters, some of the infringers have set up shop in places such as Iran and Honduras. But a court order from the Eastern District of Virginia should be enforceable against the Herndon, Va.- based domain name registrar.

Many trademark and domain name litigators are watching the Porsche case, says Neil A. Smith, an intellectual property partner at San Francisco's Limbach & Limbach. The case could help establish a convenient U.S. forum for domain name issues to be resolved.

The second case is Millennium Enterprises Inc. v. Millennium Music Inc., No. 98-1058-AA, a decision handed down in early January by Judge Ann Aiken, a Portland, Ore., federal district judge. The case involved a dispute between two music companies.

The Portland company is well-known in the Northwest and lives on the Web as www.musicmillennium.com. The Millennium Music company, in Charleston, S.C., registered a federal trademark and opened its doors on the Internet 14 months ago as www.millenniummusic.com. The Oregon company sued for trademark infringement in August 1998, standing on its state and common-law rights under Oregon law.

The defendants could have gone immediately to the NSI, armed with the federal trademark registration, and gotten the plaintiff's domain suspended. This would have blocked access to the plaintiff's Web site.

"We didn't go to NSI," says Julianne Ross Davis, a litigator at Portland's Chernoff, Vilhauer, McClung & Stenzel L.L.P. who represented the defendants. "We were hopeful that an amicable resolution could come out of it short of starting World War III. We wanted to keep the door open for a deal."

But no deal was made, and the question shifted to the crux of trademark infringement: proving consumer confusion. The plaintiffs asked a Portland friend to order a CD from the defendant's Web site. "Defendants have sold no other merchandise to any Oregon resident," found the judge, adding, "The court was gratified to learn that [the friend], at least, was allowed to select the compact disc she was directed to purchase. Regardless, the court finds that the sale...was nothing more than an attempt by plaintiff to manufacture a contact with this forum sufficient to establish personal jurisdiction." There was no confusion, added the judge: The friend knew exactly whom she was ordering from, and why.

In a lengthy opinion, Judge Aiken reviewed federal case law governing personal jurisdiction on the Web, finding that it appears to be an "all or nothing" proposition. A Web site could render a company liable for suit anywhere in the world since its site is accessible from anywhere. That was the ruling in one of the first Web jurisdiction decisions, Inset Systems Inc. v. Instruction Set Inc., 937 F. Supp. 161 (D. Conn. 1996). At the other extreme, a virtual presence could shield a company from all liability, as it could claim that it "lived" on the Internet and lacked sufficient minimum contacts with any forum in the physical world where it might be sued.

In the end, Judge Aiken declined to exercise jurisdiction over the South Carolina company, as the defendants had not purposely availed themselves of, or directed their activities at, the Oregon forum. Her decision requires more than a Web site to establish jurisdiction.

"It will take more time and more cases for Internet jurisdiction to be a settled area, I think," says intellectual property attorney Carl Oppedahl, who recently won a Web jurisdiction battle in Florida for a California client. "A creative plaintiff can find ways to...trigger almost any state's long-arm statute."

To receive a free copy of the Oregon decision, e-mail a courteous request to kelly_zusman@ce9.uscourts.gov.

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Another lawsuit has been filed demanding that libraries filter the Web to shield children from porn.

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This article is reprinted with permission from the January 25, 1999 edition of The National Law Journal. © 1999 NLP IP Company. LawNewsNetwork.com.


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