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How the "Effects Test" Drove the Courts to Opposite Rulings on Personal Jurisdiction

Web sites can be accessed virtually everywhere. A frequent worry of website operators is that a court in some distant state will find that it has personal jurisdiction over them and force them to defend a suit far from home. While it often seems that courts are biased towards assuming jurisdiction over defendants, two recent cases dealing with personal jurisdiction over alleged typo-squatters show that there are true limits: 1060134_red_arrows.jpgIn Ubid, Inc. v. The GoDaddy Group, Inc., N.D. Ill., No. 1:09-cv-02123, an Illinois District Court found that it lacked personal jurisdiction over an Arizona corporation for alleged typosquatting which affected a Chicago business. On the other hand, in Weather Underground, Inc. v. Navigation Catalyst Systems, Inc., E.D. Mich., No. 2:09-cv-10756, a Michigan District Court found that it had personal jurisdiction over a defendant for alleged typosquatting that affected a Michigan resident, even though the defendant was a Delaware corporation. What led to these different results? Whether a court may assume personal jurisdiction over a non-resident defendant depends on the amount of contact the defendant has with the state. If a defendant has “continuous and systematic contacts” with the state, a court may assume “general jurisdiction” over it, regardless of its contacts with the state for the transaction at issue in the case. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984). Even where such systematic contacts are lacking, a court may assume “specific jurisdiction” over the defendant for the transaction at issue in the suit, if the suit arises out of the defendant’s intentional contacts with the state. Id. In both Ubid and Weather Underground, the courts found that the defendants lacked sufficient contacts with the “forum state” — the state where the court was located — for general jurisdiction. The Weather Underground case wasn’t close, since defendant Navigation’s sole contacts with Michigan had been the sale of eight domain names to Michigan residents over a period of 3 years. The Ubid case was harder: GoDaddy derived 3% of its revenues from Illinois, regularly conducted business with Illinois customers, placed advertisements in Illinois as part of national ad campaigns and sponsored race drivers at Illinois venues. Nevertheless, because all of these activities lacked an “Illinois-specific focus,” the court found that they would not support a finding of general jurisdiction. However, the courts reached opposite conclusions on specific jurisdiction.

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