"Middle-of-the-Road" Web Sites
It's more
difficult to determine whether a court will assert jurisdiction
over your business when your activities fall somewhere between
transactional and passive. These "middle-of-the-road" Web sites
often involve some level of interactivity that invites consumers
to engage with the business by providing a business e-mail
address and by exchanging information with customers online.
Whether a court will assert jurisdiction in such cases usually
depends on the amount of online interactivity between the
business and consumers and whether the exchange of information
is commercial in nature.
The difficulty of
determining whether courts will entertain lawsuits against
out-of-state defendants in such cases is demonstrated by two
trademark and/or unfair competition cases. In each case, there
was no evidence the company had done any business in the state —
the only contact was made through the company's Web site.
In one case, a federal
court in Connecticut allowed a lawsuit against the out-of-state
company. It held that by offering a Web site and a toll-free
telephone number available 24 hours a day to everyone, including
Connecticut residents, the company had purposefully directed its
advertising activities toward Connecticut and could "reasonably
anticipate the possibility of being hailed into court" there.
In the other case, a
federal court in Arizona refused to assert jurisdiction over the
out-of-state company, finding that having a Web site that
included an e-mail link alone wasn't enough to show that the
company availed itself of the "privilege" of doing business in
Arizona.
Most
courts that have addressed the issue have followed the reasoning
of the Arizona court, looking for some type of activity, however
minimal, that shows the defendant intended to do business in the
state.
What Can You Do?
If your company
transacts business online, whether by selling products or using
a Web site to create business relationships, you may risk being
sued in those states where your customers are located. If you
use the Internet to merely exchange information with potential
customers or clients, your risk may be lower, but it still
exists.
There are steps you can
take to reduce the risk of being sued in another state. Among
other things, you should:
Create and adhere
to
fair returns and other
customer-friendly policies that will
reduce or eliminate the chances that a customer or other party
will sue you.
Include "choice of
law" clauses in your online agreements that specify
which state's laws govern the relationship between your business
and your customers, as well as "forum selection" clauses that
specify where a dispute will be resolved. These should be
reviewed by an experienced lawyer and should be in bold letters,
so they can be readily seen.
Make sure that you
don't violate trademarks or patents of other parties.
Businesses that think you are infringing on their intellectual
property rights are prime candidates to sue you in another
state.
Notice:
The foregoing information is provided for informational purposes
only and is not meant to constitute legal advice; your specific
legal issue may vary from the one described in this article and
you should seek the advice of a qualified lawyer regarding your
own situation.
The views of our authors don' t necessarily
reflect the views and policies of this company or its
advertisers.
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