User:Dchin2/Zippo Manufacturing Co. v. Zippo Dot Com, Inc.

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

Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (1997), was a decision by the United States District Court for the Western District of Pennsylvania in which the Court found personal jurisdiction over a defendant providing Internet services. The case is a landmark opinion regarding Internet jurisdiction, and it is one of the most frequently cited Cyberlaw opinions.

Factual and Procedural Background
Plaintiff Zippo Manufacturing Company (“Manufacturing”), a Pennsylvania corporation, makes the well-known “Zippo” tobacco lighters. Zippo Dot Com (“Dot Com”), a California corporation, operated an internet web site that offered access to USENET newsgroups. Dot Com registered the domain names “zippo.com,” “zippo.net” and “zipponews.com.”

Dot Com’s contacts with Pennsylvania occurred exclusively over the Internet. Dot Com’s offices, employees and internet servers were located in California. Dot Com did not maintain any offices, employees or agents in Pennsylvania. Dot Com’s advertising for its service to Pennsylvania residents involved posting information about its service on its webpage, which was accessible to Pennsylvania residents as well as everyone else. Dot Com had approximately 140,000 paying subscribers worldwide, and approximately two percent (3,000) of those were Pennsylvania residents. The subscribers contracted to receive Dot Com’s service by visiting its website and filling out the application. Dot Com also entered into agreements with seven internet access providers in Pennsylvania to permit their subscribers to access Dot Com’s USENET database, including two providers in the Western District of Pennsylvania.

Manufacturing filed a five count complaint against Dot Com alleging trademark dilution, infringement, and false designation under the Lanham Act and state law trademark dilution claims. Manufacturing’s basis of the trademark claims was Dot Com’s use of the word “Zippo” in the domain names in numerous locations in its website and in the heading of internet newsgroup messages that were posted by Dot Com subscribers. Dot Com moved to dismiss for lack of personal jurisdiction.

The Court’s “Sliding Scale” Test for Internet Jurisdiction
The Court established a three-prong test for determining whether a court has jurisdiction over a website. Under the test, “the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of the commercial activity that an entity conducts over the internet.”

“At one end of the spectrum are situations where a defendant clearly does business over the internet.” “If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the internet, then personal jurisdiction is proper.” “At the opposite end are situations where a defendant has simply posted information on an internet website which is accessible to users in foreign jurisdictions.” “A passive website that does little more than make information available to those who are interested init is not grounds for the exercise of personal jurisdiction.” “The middle ground is occupied by interactive websites 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 website.”.

Result
The Court stated that “Dot Com had contracted with approximately 3,000 individuals and seven internet access providers in Pennsylvania.” “The intended object of the transactions had been the downloading of electronic messages that formed the basis of suit in Pennsylvania.” These contacts constituted purposeful availment under the three-prong test as Dot Com freely chose to sell its services to residents of Pennsylvania. Therefore, the Court denied Dot Com’s motion to dismiss for lack of jurisdiction.

Dot Com dissolved several months before the parties settled the case on December 11, 1998 on confidential terms. The zippo.com domain name now resolves to the Manufacturing company’s website.

The Case’s Legacy
The Zippo “Sliding Scale” has played an important role in internet jurisdiction. Federal appellate courts have expressly adopted the Zippo test. The Third, Fourth , Fifth , Ninth and Tenth Circuits have followed the holding under Zippo.

However, courts have implicitly rejected the Zippo test criticizing the level of interactivity and commercialism sufficient to justify purposeful availment.