Topic: Banyan Tree Holding (P) Limited vs A. Murali Krishna Reddy
Banyan Tree Holding (P) Limited vs A. Murali Krishna Reddy & Anr.
CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE DR. JUSTICE S. MURALIDHAR - HIGH COURT OF DELHI AT NEW DELHI - CS (OS) No.894/2008 - Date of decision: 23rd November 2009
1. Whether reporters of the local papers be allowed to see the judgment? - - Yes
2. To be referred to the Reporter or not? - - Yes
3. Whether the judgment should be reported in the Digest? - - Yes
23.11.2009 S. Muralidhar,J.
1. The learned single Judge has by an order dated 11.8.2008 referred for the decision of the Division Bench of this Court questions concerning the jurisdiction of this Court to entertain the present suit.
2. The factual background in which the questions arise requires to be briefly recapitulated. A peculiar feature of the present suit which is an action for passing of is that neither the plaintiff nor the Defendants is located within the territorial jurisdiction of this Court. The Plaintiff is a company having its registered office at Singapore whereas the Defendants 1 and 2 are at Hyderabad. Defendant no. 1 is the promoter of the Defendant no. 2 company. The Case of the Plaintiff
3. The Plaintiff claims that it is part of a group of companies involved in the hospitality business. Since 1994 it adopted and used the word mark „Banyan Tree‟ and also the banyan tree device. It is claimed that on the account of the extensive and continuous use by the Plaintiff of the said mark and device in relation to its business, they have acquired secondary meaning, have become highly distinctive and have come to be associated with the Plaintiff and its sister concerns. The Plaintiff maintains the websites www.banyantree.com and www.banayantreespa.com since 1996. The said websites are accessible in India.
4. It is not in dispute that the Plaintiff does not hold a registration for the said mark and device in India. Its application for registration is stated to be pending. Since the year 2002, the Plaintiff has, in collaboration with the Oberoi Group, been operating 15 spas across India. In October 2007, the Plaintiff learnt that the Defendants had initiated work on a project under the name „Banyan Tree Retreat‟. The Plaintiff has averred that the word mark and the device adopted by the Defendants in relation to their retreat is deceptively similar to that of the Plaintiff. The Plaintiff states that the Defendants have advertised their project on their website www.makprojects.com/banyantree. The Plaintiff alleges that the use of the said mark and device by the Defendants was dishonest and was an attempt to encash on the reputation and goodwill of the Plaintiff and was calculated to cause confusion and deception among the public by passing off the services of the Defendants as that of the Plaintiff. Accordingly, the present suit was filed by the Plaintiff for an injunction to restrain the Defendants from the use of the said mark and device.
5. The learned single Judge has, in the referral order dated 11.8.2008, noticed that the plaintiff has in para 30 of the plaint claimed that this Court has the territorial jurisdiction under Section 20 of the Code of Civil Procedure, 1908 (CPC) to entertain the suit. According to the Plaintiff the Defendants solicit business through use of the impugned mark "BANYAN TREE RETREAT" and the Banyan device in Delhi. It is stated that "the Defendants have presence in Delhi through their website http://www.makprojects.com/banyantree.htm which is accessible in Delhi." It is further contended that "the said website is not a passive website. It not only provides contact information but also seeks feedback and inputs from its customers through an interactive web-page." Further, the Plaintiff submits that the services of the Defendants are being offered to the customers in Delhi "also because of the ubiquity, universality and utility of the features of the Internet and the World Wide Web and hence the cause of action has arisen within the jurisdiction of this Court." The referral order
6. In the referral order, the learned single Judge has examined the above claim of the Plaintiff as to the territorial jurisdiction of this Court on account of the Defendants hosting a website which is accessible in Delhi and through which not only information can be obtained by a viewer sitting in Delhi but also a feedback and input can be sent to the Defendants through the said web-page. After noticing the developments in the law in India, Canada, USA and England, the learned single Judge has formulated the following questions for consideration by the Division Bench:
"1. Whether this court can entertain the present suit, having regard to the averments and documents, in the context of special provisions in to the Trademark and Copyrights Act, which do not provide for exercise of jurisdiction based on internet or web-presence of such alleged infringers, even while making explicit departure from the general law as to territorial jurisdiction;
2. Whether the court can entertain the present suit, in the absence of a long arm statute, having regard to the existing state of law, particularly Section 20, CPC, and the impact, if, any of the Information Technology Act, 2009 on it;
3. Applicable standards for entertaining a suit, based on use of a trademark by a Defendant, on its website, or infringement or passing off of the plaintiff‟s trademark, in such website and the relevant criteria to entertain such suits;
4. Applicable standards and criteria where the plaintiff relies exclusively on "trap orders" or transactions, in relation to passing off, or trademark infringement cases, as constituting "use" or cause of action, as the case may be."
The questions as reframed
7. Having considered the submissions of Mr. Praveen Anand, learned counsel for the Plaintiff, we consider it appropriate to reframe the questions referred to us for our opinion as under:
(i) For the purposes of a passing off action, or an infringement action where the Plaintiff is not carrying on business within the jurisdiction of a court, in what circumstances can it be said that the hosting of a universally accessible website by the Defendants lends jurisdiction to such Court where such suit is filed ("the forum court")?
(ii) In a passing off or infringement action, where the defendant is sought to be sued on the basis that its website is accessible in the forum state, what is the extent of the burden on the Plaintiff to prima facie establish that the forum court has jurisdiction to entertain the suit?
(iii) Is it permissible for the Plaintiff to establish such prima facie case through "trap orders" or "trap transactions"?
8. At the outset it needs to be noted that the present suit is not one for infringement by the Defendants of the Plaintiff‟s trademark and the Plaintiff carries on business within the jurisdiction of the court. If it were, then in terms of Section 134 (2) of the Trademarks Act 1999 (TM Act) this court would have jurisdiction to entertain the suit although the defendants do not reside or carry on business within its jurisdiction. Section 134 (2) of the TM Act (like and Section 62 (2) of the Copyright Act 1957) is therefore a „long arm‟ provision in a limited sense, confined to infringement actions by Plaintiffs carrying on business within the jurisdiction of the forum court. The present suit is an action for passing off in which neither the Plaintiff nor any of the Defendants voluntarily resides or carries on business within the local limits of Delhi.
Consequently, neither Section 20 (a) nor Section 20(b) CPC applies. The Plaintiff seeks to find the territorial jurisdiction of this Court in terms of Section 20(c) CPC. In other words, according to the Plaintiff the cause of action, wholly or in part, arises within the jurisdiction of this Court. This, according to the Plaintiff is on account of two factors. One, that the website of the Defendants is accessible in Delhi; it is not a passive website but used for soliciting business in Delhi. Second, that there was at least one instance of the Defendants‟ brochure being sent to a Delhi resident for the purposes of sale of property. Submissions of counsel
9. As regards the accessibility of the Defendants‟ website in Delhi, the learned counsel for the Plaintiff emphasized that (a) the nature of the website, (b) the intention of the website‟s host to market its products in Delhi and (c) the effect of such action by the Defendants in Delhi, are the three factors that have to be accounted for in determining whether this court has territorial jurisdiction. As regards the nature of the website, counsel for the Plaintiff submits that it could be passive, interactive or active. The case of the Plaintiff is that a mere advertisement on the website, without any move by the Defendants to block access to Delhi viewers through a device of "purposeful avoidance" would be a case of "passive plus." It is contended that all the viewers outside Andhra Pradesh where the Defendants are located are, in the absence of such blocking of access, targeted by the Defendants. According to the Plaintiff where the website is passive, in the absence of any intention to market, which absence of intention is express, the forum court would have no jurisdiction. If the intention to market its product is not discernible on account of non-application of mind by the website owner, the forum court might still have jurisdiction where there is an effect on the market in the forum state.
10. As regards an interactive website, it is submitted that for jurisdiction of the forum court to get attracted, there should be an intention on the part of the website owner to target potential customers in the forum state. This intention can be presumed unless the website owner demonstrates "purposeful avoidance" by placing filters or blocking off the website to viewers outside the state within whose territory he is located. Where the owner has not applied his mind to target a specific city, region or state, but if some „effect‟ is nevertheless felt in the forum state, the forum court would have jurisdiction. It is submitted that when there is no intention to target a specific city or a customer and there is no effect on the market, the forum court would have no jurisdiction. Learned counsel for the Plaintiff has relied on a large number of judicial precedents, including those of foreign courts, in support of his plea that this court has jurisdiction to entertain the suit. These will be discussed presently. The questions that arise are examined with reference to the development of the law in common law jurisdictions particularly the U.S.A., the U.K., Canada, Australia and India.
Question (i): Jurisdiction of a forum court in suits involving internet related disputes The law in the U.S.A.
Purposeful availment as a test
11. Among the early decisions, is one of the U.S. Supreme Court in International Shoe Co. v. Washington 326 U.S. 340 (1945) where a two-part test for determining jurisdiction of the forum court over a defendant not residing or carrying on business within its jurisdiction was evolved. It was held that in such instance the Plaintiff had to show that the defendant has sufficient "minimum contacts" in the forum state. In other words, the defendant must have purposefully directed its activities towards the forum state or otherwise "purposefully availed" of the privilege of conducting activities in the forum state. Further, the forum court had to be satisfied that exercising jurisdiction would comport with the traditional notions of fair play and substantial justice. This law was further developed in later cases.
12. In Burger King Corp v. Rudzewicz 471 U.S. 462 (1985) the Appellant Burger King Corp. had its principal offices in Miami. It entered into a franchise agreement with the defendant who opened a restaurant pursuant thereto in Michigan. The defendant defaulted in making the monthly payments. The Plaintiff terminated the franchise agreement and ordered the defendant to vacate the premises. When the defendant refused, the Plaintiff sued him in Miami. Florida had a long arm statute that extended jurisdiction to any person, whether or not a resident of that state, who committed a breach of a contract in the state by failing to perform acts that the contract required to be performed there. The District Court held that the defendant franchisee was subject to the personal jurisdiction of the court in Miami. The Court of appeals reversed and the Plaintiff appealed to the Supreme Court. Reversing the Court of Appeals and restoring the judgment of the District Court, the Supreme Court held that the defendant did not have to be physically present within the jurisdiction of the forum court and that the forum court may exercise jurisdiction over a non-resident "where an alleged injury arises out of or relates to actions by the Defendant himself that are "purposefully directed towards residents of the forum State. It was held that "purposeful availment" would not result from "random" or "fortuitous‟ contacts by the defendant in the forum state requires the plaintiff to show that such contracts resulted from the "actions by the defendant himself that created a substantial connection with the forum State." He must have engaged in "significant activities" within the forum state or have created "continuing obligations" between himself and residents of the forum state. It was held on facts that the 20 year relationship that the defendant had with the Plaintiff "reinforced his deliberate affiliation with the forum state and the reasonable foreseeability of litigation there."
13. In Asahi Metal Industries v. Superior Court 480 U.S. 102 (1987) a Japanese company sold assemblies manufactured by it to a company in Taiwan which in turn incorporated them into the finished tyres and sold them worldwide including the US where 20 per cent of its sales took place in California. A product liability suit was brought in the Superior Court in California against the Taiwanese company arising from a motorcycle accident caused as a result of a defect in the tyre. The Taiwanese company in turn filed a counter claim against the Japanese company. The order of the Superior Court declining to quash the summons issued to the Japanese company was reversed by the State Court of Appeal. However, the Supreme Court of California in an appeal by the Taiwanese company reversed and restored the order of the Superior Court. The U.S. Supreme Court reversed the State Supreme Court and held that exercise of personal jurisdiction over the Japanese company would be "unreasonable and unfair, in violation of the Due Process Clause." Further it was held that "the mere placement of a product into the stream of commerce" was not an act "purposefully directed towards the forum State" and would not result in a "substantial connection" between the defendant and the forum state necessary for a finding of minimum contacts.
14. As regards cases involving torts committed in relation to the internet, the early decisions on the point handed down by the District courts in the U.S.A. appeared to permit a forum state to exercise jurisdiction even where the website was a passive one. In Inset Systems Inc. v. Instruction Set Inc. 937 F.Supp. 161 (D.Conn.1996), the Defendant had displayed on its website used for advertising its goods and services, a toll-free telephone number "1-800-US-INSET." The Plaintiff, a company in Connecticut brought an infringement action against the Defendant in a court in Connecticut, which in any event had a long arm statute. The District court held that the Defendant had "purposefully availed itself of doing business in Connecticut because it directed its advertising activities via the Internet sites and toll-free number toward the State of Connecticut (and all states); Internet sites and toll-free numbers are designed to communicate with people and their businesses in every state; an Internet advertisement could reach as many as 10,000 Internet users within Connecticut alone; and once posted on the Internet, an advertisement is continuously available to any Internet user".
15. However, the approach in Bensusan Restaurant Corp. v. King, 937 F. Supp.295 (S.D.N.Y. 1996) was different although New York too had a long arm statute. The Defendant there had a small jazz club known as "The Blue Note" in Columbia, Missouri and created a general access web-page giving information about the said club as well as a calendar of events and ticketing information. In order to buy tickets, web browsers had to use the names and addresses of ticket outlets in Columbia. Bensusan (the Plaintiff therein) was a New York corporation that owned "The Blue Note," a popular jazz club in the heart of Greenwich Village in New York. It owned the rights to the "The Blue Note" mark. It accordingly sued the Defendant for trademark infringement in New York. It was noticed that New York had a long arm statute. The New York court held that the Defendant had not done anything „to purposefully avail himself of the benefits of New York. Like numerous others, the Defendant had "simply created a web site and permitted anyone who could find it to access it. Creating a site, like placing a product into the stream of commerce, may be felt nationwide or even worldwide but, without more, it is not an act purposefully directed towards the forum state". (emphasis supplied)
16. In Ballard v. Savage 65 F.3d 1495 (1995) it was explained that the expression "purposefully availed" meant that "the Defendant has taken deliberate action within the forum state or if he has created continuing obligations to forum residents". It was further explained that "it was not required that a Defendant be physically present within, or have physical contacts with, the forum, provided that his efforts „are purposefully directed‟ toward forum residents". In CompuServe, Inc. v. Patterson, 89 F.3d 1257(6th Cir. 1996) it was found that the Defendant had chosen to transmit its products from Texas to CompuServe‟s system, and that system provided access to his software to others to whom he advertised and sold his product. It was held that Patterson had "purposefully availed himself of the privilege of doing business". In Maritz, Inc. v. CyberGold, Inc., 947 F.Supp. 1328 (E.D.Mo.) (1996) where browsers who came on to its website were encouraged by the Defendant CyberGold to add their address to a mailing list that basically subscribed the user to the service, it was held that the Defendant had obtained the website "for the purpose of and in anticipation that, internet users, searching the internet for websites, will access CyberGold‟s website and eventually sign up on CyberGold‟s mailing list." Therefore, although CyberGold claimed that its website was a passive one, it was held that through its website, "CyberGold has consciously decided to transmit advertising information to all internet users, knowing that such information will be transmitted globally."
17. In Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 890 (6th Cir. 2002) the Court of Appeals held that the purposeful availment requirement is satisfied "if the web site is interactive to a degree that reveals specifically intended interaction with residents of the state". In that case, the Plaintiff (Neogen), a Michigan Corporation, was in the business of developing and marketing a range of health care, food, and animal-related products and services, including certain diagnostic test kits. It filed a suit in the Michigan District Courts alleging, inter alia, trademark infringement against the Defendant (Neo Gen Screening), a Pennsylvania Corporation performing diagnostic testing of blood samples from newborn infants. The District Court dismissed the suit for lack of personal jurisdiction. The Court of Appeals held that the maintenance of the Defendant‟s website, in and of itself, does not constitute purposeful availment of the privilege of acting in Michigan. It observed that "the level of contact with a state that occurs simply from the fact of a website‟s availability on the Internet is therefore an attenuated contact that falls short of purposeful availment." However, the Court in that case did not decide the question that whether the Defendant‟s website alone would be sufficient to sustain personal jurisdiction in the forum State as it held that "the website must be considered alongside NGS's [Neo Gen Screening‟s] other interactions with Michigan residents. Most significantly, when potential customers from Michigan have contacted NGS to purchase its services, NGS has welcomed their individual business on a regular basis". The Court further observed that "although customers from Michigan contacted NGS, and not the other way around, NGS could not mail test results to and accept payment from customers with Michigan addresses without intentionally choosing to conduct business in Michigan." It was in this context that the Court of Appeals reversed the finding of the District Court and remanded the matter.
The „Zippo‟ sliding scale test
18. The "sliding scale" test for determining the level of interactivity of the website, for the purposes of ascertaining jurisdiction of the forum state, was laid down in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa.1997). The Plaintiff Zippo Manufacturing was a Pennsylvania corporation making cigarette lighters. The Defendant was a California corporation operating an internet website and an internet news service. It had its offices only in California. Viewers who were resident of other states had to go on the website to subscribe for the Defendant‟s news service by filling out an on-line application. Payment was made by credit card over the internet or telephone. Around 3,000 of the Defendant‟s subscribers were residents of Pennsylvania who had contracted to receive the Defendant‟s service by visiting its website and filling out the on-line application. Additionally the Defendant entered into agreements with seven internet access providers in Pennsylvania to permit their subscribers to access the Defendant‟s news service. The Defendant was sued in a Pennsylvania court for trademark dilution, infringement and false designation. After discussing the development of the law till then, the District Court first observed:
"The Constitutional limitations on the exercise of personal jurisdiction differ depending upon whether a court seeks to exercise general or specific jurisdiction over a non-resident defendant. Mellon, 960 F.2d at 1221. General jurisdiction permits a court to exercise personal jurisdiction over a non- resident defendant for non-forum related activities when the defendant has engage3d in "systematic and continuous" activities in the forum state Helicopteos Nacionales de Colombia, S.A. v. Hall, 466 US 408. In the absence of general jurisdiction, specific jurisdiction permits a court to exercise personal jurisdiction over a non-resident defendant for forum-related activities where the "relationship between the defendant and the forum falls within the „minimum contacts‟ framework" of International Shoe Co. v. Washington, 326 US 310 and its progeny Mellon, 960 F.2d at 1221" (emphasis supplied)
19. The Zippo court then noted that "a three pronged test has emerged for determining whether the exercise of specific personal jurisdiction over a non-resident defendant is appropriate: (1) the defendant must have sufficient "minimum contacts" with the forum state, (2) the claim asserted against the defendant must arise out of those contacts, and (3) the exercise of jurisdiction must be reasonable." The court in Zippo classified websites as (i) passive, (ii) interactive and (iii) integral to the defendant‟s business. On facts it was found that the Defendant‟s website was an interactive one. Accordingly it was held that the court had jurisdiction to try the suit. The Zippo court‟s observation that "the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the internet" has been compared by that court to a "sliding scale".
20. In Cybersell, Inc. v. Cybersell. Inc. 130 F.3d 414 (1997), the facts were that an Arizona Corporation that advertised for commercial services over the internet under service mark "Cybersell", brought an infringement action against Florida Corporation which offered web-page construction services over the Internet. As part of its marketing effort, the forum Cybersell Inc in Florida created a web-page at http://www.cybsell.com/cybsell/index.htm. The same page had a logo at the top with "CyberSell" over a depiction of the planet earth, with the caption underneath "Professional Services for the World Wide Web" with a local phone number and hypertext link allowing the browser to introduce herself. That link invited a company not on the web but interested in getting on the web-to "Email us to find out how!." A hypertext link allowed a user to move directly from one web location to another by using the mouse to click twice on the colored link. Arizona had a long arm statute that permitted a court to exercise personal jurisdiction over parties whether found within or outside the state to the maximum extent permitted by the court in United States. A reference was made to the decision of the Arizona Supreme Court in Uberti v. Leonardo, 181 Ariz. 565 in which it was held that "Arizona will exert personal jurisdiction over a non resident litigant to the maximum extent allowed by the federal constitution". The Arizona Court of Appeals adopted a three part test to determine whether the district court could exercise specific jurisdiction over the non-resident Defendant: (1) the non-resident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections; (2) the claim must be one which arises out of the results from the defendant‟s forum-related activities; and (3) exercise of jurisdiction must be reasonable. It was held by the Court of Appeals that all that Cybersell FL (the Florida Corporation) "did was post an essentially passive home page on the web, using the name "CyberSell," which Cybersell AZ (the Arizona Corporation) was in the process of registering as a federal service mark. While there is no question that anyone, anywhere could access that home page and thereby learn about the services offered, we cannot see how from that fact alone it can be inferred that Cybersell FL deliberately directed its merchandising efforts toward Arizona residents". It was further noticed that "the interactivity of its web page is limited to receiving the browser‟s name and address and an indication of interest-signing up for the service is not an option, nor did anyone from Arizona do so. No money changed hands on the Internet from (or through) Arizona". It was held that "Cybersell FL‟s contacts are insufficient to establish "purposeful availment".
21. There have been difficulties experienced in the application of the Zippo sliding scale test in terms of which the assertion of a court‟s jurisdiction depended upon the "level of interactivity and commercial nature of the exchange of information" as a result of the use of the website. The courts have been finding it problematic in determining the degree of interactivity that should suffice for jurisdiction to be attracted. Mere ability to exchange files with users through the internet has been held not to be sufficiently „interactive‟ for the forum court to assume jurisdiction (Desktop Technologies v. Colourworks Reproduction & Designs Inc 1999 WL 98572 (E.D.Pa. 1999). In People Solutions v. People Solutions 2000 WL 1030619 (N.D.Tex., 2000), although it was possible for customers visiting the Defendant‟s website to download information, obtain product brochures and order products on-line, the court refused to assert jurisdiction since the Plaintiff failed to show that Defendant had sold its products or contracted for services with any person in the forum state through the website. Again in Mink v. AAAA Development 190 F.3d 333 (5th Cir. 1999) although the Defendant‟s website offered printable mail-in order forms that could be downloaded, provided a toll-free number, a mailing and an e-mail address, the forum court declined to exercise jurisdiction since in fact no orders were placed using the website. The levels of interactivity now demanded are of a much higher order. In Winfield Collection v. McCauley 105 F.Supp.2d 746 (E.D.Mich,2000) the website provided an interactive mechanism of doing on-line business and the Plaintiff showed that auction sales were conducted over the net with bidders in Michigan. Nevertheless jurisdiction was declined because the Defendant was not shown as having "actively and intentionally doing business with customers in Michigan." It was held that the form of on-line sale made it impossible for the Defendant‟s website to target the users of any particular state and therefore other than the court of the state where the principal place of the business of the Defendant was located, other state courts could not exercise jurisdiction. Since over the years, most websites are interactive to some degree, there has been a shift from examining whether the website is per se passive or active to examining the nature of the activity performed using the interactive website. The „Effects‟ test
22. The difficulty experienced with the application of the Zippo sliding scale test, has paved way for the application of the „effects‟ test. The courts have thus moved from a „subjective territoriality‟ test (that a court will regulate an activity only if it is shown having originated in its territory - exemplified by the decision in Louis Feraud Int'l SARL v. Viewfinder Inc 406 F Supp 2d 274 (SDNY 2005)] to an „objective territoriality‟ or „effects‟ test in which the forum court will exercise jurisdiction if it is shown that effects of the Defendant‟s website are felt in the forum state. In other words it must have resulted in some harm or injury to the Plaintiff within the territory of the forum state. Since some effect of a website is bound to be felt in several jurisdictions given the nature of the internet, courts have adopted a „tighter‟ version of the „effects‟ test, which is intentional targeting. Thomas Schultz in his illuminative piece "Carving up the Internet: Jurisdiction, Legal Orders, and the Private/Public International Law Interface" EJIL 2008 19 (779) points out that the dynamics of jurisdiction is reasonableness and fairness. Schultz concludes that both the subjective territoriality and objective territoriality or the „effects‟ test, if construed too broadly, are bound to be unfair and unreasonable. According to Schultz, a middle path had to be chosen between the too narrow („subjective territoriality‟) and too broad („effects‟) jurisdictional bases for better managing trans-border externalities. This middle path was „targeting‟. Schultz defines targeting to mean "in essence that the activity must be intended to have effects within the territory of the state asserting jurisdiction." According to another scholar, Professor Michael Geist ("Is There a There There? Towards Greater Certainty for Internet Jurisdiction" 16 Berkeley Tech LJ (2001) 1345 at 1357) the principle of targeting is to "identify the intentions of the parties and to assess the steps taken to either enter or avoid a particular jurisdiction." Targeting is described as "something more than effects, but less than physical presence." We now examine the decisions in which the above tests were evolved.
23. The "effects" test was first evolved in Calder v. Jones, 465 U.S. 783 (1984). The Plaintiff there was a resident of California who commenced a libel action in a California court against the National Enquirer based on an article that it printed and circulated in California. Apart from the Enquirer and its local distribution company, its editor and the author of the article were all in Florida. Affirming the assertion by the California court of personal jurisdiction over the defendants, the Supreme Court held:
"The allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. The article was drawn from California sources, and the brunt of the harm, in terms both of respondent's emotional distress and the injury to her professional reputation, was suffered in California. In sum, California is the focal point both of the story and of the harm suffered. Jurisdiction over petitioners is therefore proper in California based on the "effects" of their Florida conduct in California."
On facts it was held that the author and editor "expressly aimed" their tortuous actions at California and that "they knew" that the article would have a devastating impact on the respondent and that they should have reasonably anticipated that the brunt of that injury would be reasonably felt by the defendant in the State in which she lived and worked.
24. The "effects" test propounded in Calder has been applied with mixed results. One of the most discussed decisions of a French court where the „effects‟ doctrine was applied is the Yahoo! Case (UJEF et LICRA v. Yahoo! Inc. et Yahoo France, Tribunal de Grande Instance de Paris, No RG:00/0538, May 22, 2000 and November 22, 2000). A French Jew while surfing on the net came across Nazi memorabilia being offered for sale on a web page hosted by Yahoo!. Offering Nazi memorabilia for sale was an offence under the French Penal law. Although the website of Yahoo! France did not host a similar web page, it could be viewed on Yahoo! Website hosted from the U.S. by anyone in France. LICRA, an organization fighting racism and anti- Semitism, and the Union of Jewish students in France (UJEF) sued Yahoo! And Yahoo! France in the court in France. The French court ordered the US Internet portal to block access to its US website from France, in order to prevent internet users in France from accessing the objectionable items offered for auction sale on that site. It found that this was technologically feasible through a series of devices for which it examined experts. It thus rejected Yahoo!‟s argument that the French court‟s order was not capable of being implemented beyond the borders of France. The French court essentially applied the „effects‟ test to assert jurisdiction. It held that by "permitting visualization in France of nazi objects and eventual participation of a surfer established in France in the exposition/sale of such objects" Yahoo! had committed a wrong within the territory of France. Although the website was capable of being viewed from anywhere in the world, the French court concluded that it had caused harm to the two claimants located in France. The mere downloadability of the objectionable information/material did not alone determine the question of jurisdiction. The French court also considered the effect it would have on the public at large in France who could access Yahoo!‟s website and who were targeted. This the Court concluded from the fact that Yahoo! Inc. U.S.A displayed advertisements in French to visitors at the US based server and Yahoo! France provided a link to the U.S. based Yahoo! Server that Yahoo! Inc. did intend its services to reach persons in France and intended to profit for the visitors from France to its U.S. based website. (There was a second phase of this litigation in the courts in California where Yahoo! sued LICRA and UJEF on the ground that the order of the French court was unenforceable in the U.S.A. However, that is not being discussed as not being relevant to the questions that arise for consideration in the instant case).
25. While courts have more readily applied the „effects‟ test in defamation cases [see Remick v. Manfredy, 238 F.3d 248 (2001); Noonan v. Winston Comp., 135 F.3d 85, 91 (1998)]; Revell v. Lidov, 317 F.3d 467 (5th Cir. 2002) there have been problems in its application to trademark infringement cases. For instance, the Court of Appeals in Cybersell held that the "effects" test did not apply with the same force to Cybersell AZ as it would to an individual, because a corporation "does not suffer harm in a particular geographic location in the same sense that an individual does." Cybersell FL‟s web page simply was not aimed intentionally at Arizona knowing that harm was likely to be caused there to Cybersell AZ". In Digital Equipment Corp. v. Alta Vista Technology 969 F.Supp 456 (Mass., 1997) the Plaintiff, a Massachusetts company sued the Defendant which was its licensee alleging infringement of its mark. Although the Defendant argued that it had structured its affairs to avoid the forum state, the court found that the Defendant‟s use of its website to infringe the Plaintiff‟s mark did have effects in the forum state and its purpose may be said to targeting the forum state and its citizens. In Nissan Motor Co. v. Nissan Computer Corp.89 F. Supp. 2d 1154 (C.D. Cal.,2000) although the Defendant did not sell goods to its consumers on its websites (which were registered under the domain names nissan.com and nissan.net) it had intentionally changed the content of its web site to exploit the goodwill of the Plaintiff (a leading car manufacturer) by profiting from confusion among the consumers. It was therefore held to have "deliberately and substantially directed its activity toward the forum state."