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A state law that allows the state to exercise jurisdiction over an out-of-state defendant, provided that the prospective defendant has sufficient minimum contacts with the forum state.
Jurisdiction over an out-of-state defendant is referred to as extraterritorial in personam jurisdiction. In personam jurisdiction, also known as personal jurisdiction, allows a court to exercise jurisdiction over an individual, and is the fundamental requirement necessary for a court to hear the merits of a claim. Historically, a state could exercise jurisdiction only within its territorial boundaries; therefore, a nonresident defendant could be brought into court only when service of process was effected while that defendant was within the boundaries of the state. The U.S. Supreme Court upheld this principle, and raised it to a constitutional level, when it stated that judgments entered by a court without such jurisdiction were violations of the Due Process Clause of the U.S. Constitution (Pennoyer v. Neff, 95 U.S. 714, 24 L. Ed. 565 ).
The requirement of physical presence within the state's boundaries was expanded in International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945). In International Shoe, the Supreme Court held that due process required that the defendant have "certain minimum contacts" with the forum in order for a state to assert jurisdiction, and that such jurisdiction may not offend "traditional notions of fair play and substantial justice."
Since International Shoe, the Supreme Court has set forth several criteria to be used in analyzing whether jurisdiction over a nonresident is proper. These criteria require (1) that the defendant has purposefully availed himself or herself of the benefits of the state so as to reasonably foresee being haled into court in that state; (2) that the forum state has sufficient interest in the dispute; and (3) that haling the defendant into court does not offend "notions of fair play and substantial justice."
Following the Court's lead in International Shoe, individual states began enacting long-arm statutes setting forth their requirements for personal jurisdiction over nonresidents. Illinois was the first state to do so. Its statute (Ill. Rev. Stat. chap. 110, para. 17 ) allowed service of process outside the state on nonresident individuals and corporations in actions arising out of (1) the transaction of any business in the state; (2) the commission of a tortious act within the state; (3) the ownership, use, or possession of real estate in the state; or (4) a contract to insure any person, property, or risk located in the state. The Illinois statute became a template for many state long-arm statutes.
In 1963, the Uniform Interstate and International Procedure Act was promulgated by the commissioners on uniform laws. The Uniform Act was similar to the Illinois statute, but also included a provision authorizing jurisdiction in the event that an act or omission outside the state caused injury in the state. This Uniform Act also became a model for other states in developing their long-arm statutes.
Since 1963, all states and the District of Columbia have enacted long-arm statutes. Long-arm statutes tend to fall into one of two categories. The first enumerates factual situations likely to satisfy the minimum-contacts test of International Shoe. The second type is much broader: it provides jurisdiction over an individual or corporation as long as that jurisdiction is not inconsistent with constitutional restrictions. If such a statute enumerates requirements for jurisdiction, the facts of the situation must fall within one of those requirements. The court must then determine whether the procedural due process requirements of both the state and federal constitutions have been met.
The long-arm statute has seriously been challenged with the emergence of the Internet. Since the late 1990s, lawsuits that center on Internet commercial and defamation disputes have been commonplace. A key issue has been whether plaintiffs may sue and enforce judgment in their state of residence or whether they must file suit in the state where the defendant resides or has its place of business. In Zippo Manufacturing v. Zippo Dot Com, 952 F. Supp.1119 (W.D. Pa. 1997), the court announced a standard that showed promise for analyzing this question.
Zippo Manufacturing, the maker of the well-known Zippo lighter, discovered that another company, Zippo Dot Com, had acquired the domain names "zippo.com," "zipponews.com," and "zippo.net." From these sites, Zippo Dot Com, based in California, ran a news distribution service with nearly 150,000 paying customers, including some 3,000 in Pennsylvania, Zippo Manufacturing's state of incorporation. Zippo Dot Com's contacts with Pennsylvania were almost entirely electronic, consisting of the contract filled out online by new customers and access agreements with seven Internet service providers in that state. Zippo Manufacturing sued Zippo Dot Com in the Western District of Pennsylvania for a variety of trademark offenses relating to the domain names owned by the latter. The news service filed a motion to dismiss for lack of personal jurisdiction.
The court denied Zippo Dot Com's motion and concluded that the news service does do business in Pennsylvania; therefore, jurisdiction was established. In its ruling, the court divided websites into three categories based on the presumption that the exercise of personal jurisdiction is "directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet." If a defendant enters into contracts that involve the "knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper." At the opposite end are situations where a defendant runs a "passive website" that merely contains posted information accessible to anyone. The third category involves 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 site.
Owing to the different types of long-arm statutes, as well as various court interpretations of these statutes, the relevant state laws must be examined when determining whether a prospective nonresident defendant falls under the jurisdiction of a state and may be brought into that state's court.
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Rosenthal, Robert E. 2003. "From Zippo to ALS: Jurisdiction Over IP Violations on the Internet." Journal of Internet Law (April).
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Wildasin, Mark H., and Richard A. Jones. 2001. "Internet Jurisdiction." Journal of Internet Law (December).