Zippo Mfg. Co. v. Zippo Dot Com

Brief Fact Summary.

Plaintiff sued Defendant in Pennsylvania for trademark dilution and violations of the Federal Trademark Act because Defendant owned a website that provided information about Zippo lighters, Plaintiff’s products, advertisements, and subscriptions to a news service about the Plaintiff ’s products. Defendant moved to dismiss for lack of personal jurisdiction.

Synopsis of Rule of Law.

In order to assert personal jurisdiction over a non-resident defendant, the court must apply a three prong test to be sure that the defendant has minimum contacts with the forum state, the claim asserted arises out of those contacts, and the exercise of jurisdiction is reasonable.

Facts.

Zippo Dot Com (Defendant) was a California corporation which operated a website and provided an internet news service relating to Zippo lighter products. The website provided information about the company, advertisements, and subscriptions to a news service about the company’s products. Defendant owned the right to use the domain names “zippo.com,” “zippo.net,” and “zipponews.com.” Defendant had approximately 140,000 subscribers worldwide, roughly 3,000 of whom were Pennsylvania residents, accounting for approximately two percent (2%) of Defendant’s total subscribers. Zippo Manufacturing Corporation (Plaintiff), a Pennsylvania corporation, sued Defendant in Pennsylvania, alleging trademark dilution and violations of the Federal Trademark Act. Defendant filed a motion to dismiss, alleging lack of personal jurisdiction.

Issue.

Whether a non-resident company may be subject to personal jurisdiction in a state where the company’s only contact with the state is made through the internet.

Held.

Yes. Defendant’s motion to dismiss is denied. In order to assert personal jurisdiction over a non-resident defendant, the court must apply a three prong test to be sure that the defendant has minimum contacts with the forum state, the claim asserted arises out of those contacts, and the exercise of jurisdiction is reasonable.

Discussion.

A defendant doing business over the internet with residents of the forum state has sufficient contact with that state to satisfy the minimum contacts requirement, and the forum state’s court may exercise personal jurisdiction. In deciding whether the exercise of personal jurisdiction over a non-resident defendant is appropriate, the court must apply a three prong test: (1) the defendant must have minimum contacts with the forum state; (2) the claim asserted must arise out of those contacts; and (3) the exercise of jurisdiction must be reasonable. In order to establish that the defendant has minimum contacts with the forum state, the inquiry is whether the defendant purposefully availed himself to the state; a key aspect of this examination is whether the defendant’s contact with the state is such that it is foreseeable that he may be brought to court there. This test is intended to prevent defendants from being unfairly brought into foreign jurisdictions based on attenuated contacts. A defendant does not have to physically enter a state to have minimum contacts there, however, as businesses may provide services over the internet which may establish the requisite minimum contacts within the forum state. While a passive website, which merely provides information to visitors and does not provide a service, will not provide grounds for personal jurisdiction, a website which actively reaches out to visitors and maintains relationships with them will likely satisfy the minimum contacts requirement.  Here, Defendant actively exchanged information with Pennsylvania residents with the intent of deriving commercial gain. Its contacts with these residents are more than merely fortuitous; Defendant consciously chose to process the applications of Pennsylvania residents and issue passwords to them. If Defendant did not want to subject itself to personal jurisdiction in Pennsylvania, it was free to reject the application of Pennsylvania residents. The number of Pennsylvania subscribers is significant enough to satisfy the minimum contacts requirement, because the nature and quality of the contacts is the important point of inquiry, not the number of contacts itself. Because Defendant’s contacts with Pennsylvania satisfy the three-prong minimum contacts test, this court may exercise personal jurisdiction over Defendant.