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LUXEMBOURG--James A. Graham, #2

IP, Comments to the proposed ABA's Draft

James A. Graham

Assistant lecturer at the French-German Law Center, University of Saarland, Germany

Assistant lecturer at the Universitarian Center of Luxembourg, Luxembourg

Research Fellow at the Economical Law Laboratory, Public Research Center G. Lippmann, Luxembourg

In our first Comment I concluded that it were possible to conciliate the American and European approach to jurisdictionnal problems concerning the protection of the consumers, even if the legal basis differ.

However there is at first glance no possible conciliation concerning the resolution of jurisdiction questions of IP infringements. Indeed Europe has no "point of contact" approach as it does consider that IP infringements are part of the tort category involving the application of the forum loci delicti rule.

In fact, the last rule is very simple to handle in IP cases. If there are difficulties it is about the applicable law, question that has been carefully analyzed by Jon Bing. In so far, I will only present very shortly the European system before adding some remarks about the American case-law as presented in the draft.

However, I have first of all to precise that on the one hand the concept of IP infringement is very broad in France, Belgium and Luxembourg as it does also include domain name grabbing and unauthorized use of protected metatags. On the other hand, Germany considers only copyright litigations stricto sensu as IP infringements.

 

I.

The Brussels Convention foresees in its article 5.3 jurisdiction of a Member State if the "harmful event" occurred on its territory and the defendant is domiciled in another Member State. In such a case the plaintiff may sue either at the defendant's domicile, in accordance with art. 2 of the Convention, or in the jurisdiction of the locus deliciti. The concept of "harmful event" was read by the European Court of Justice as involving in case where both places are not identical an option between the place of the allegedly wrongful conduct and the place of the resulting injury even if both courts are not competent to the same extent. The first one is able to award damages for the full harm, the second one being limited to award compensatory damages only for the injury sustained within the national territory.

Regarding infringement of IP rights, art 5.3 operates to confer jurisdiction on the courts for the place of an allegedly infringing act, even if the defendant relies on a licence arising from a contract over which those courts otherwise lack jurisdiction.

The few IP cases related to Internet that have been pleaded in Europe didn't invoke conflict rules. But case-law in France, Germany and Luxembourg, did always consider that, regarding to internal procedure rules, the courts and tribunals of the place where the infringement has been established have jurisdiction. In so far, there is no doubt that art. 5.3 will be read as allowing the copyright owner to sue in each Member State where the infringement culminated. In other words, if the copyright owner is domiciled in the European Union he benefits ipso facto from a forum actoris and he may go forum shopping.

One ought not to forget that European law of torts is based on the principle that only the victim needs (and deserves ?) protection. In opposition, American law emphasizes the principle of fairness to the defendant.

II.

In regard to the American case-law I am surprised that the draft does emphasize the Zippo test while it does not deal very much with the Millenium case although the latter is a very interesting decision that pleads for itself :

"The existence of a Web site, whether passive or interactive, does not rise to the requisite level of conduct. Publishing a Web site requires no "deliberate" action within the forum state. Furthermore, a Web site is not automatically projected to a user's computer without invitation as are advertisements in a newspaper or on the television and radio. Rather, the user must take affirmative action to access either a passive or interactive Web Site. The user must turn on a computer, access the Internet and the Web, and browse the Web for a particular site. Thus, contrary to the scenario described in Inset, information published on Web sites is not thrust upon users indiscriminately.

Absent actual exchanges or transactions with residents of the forum or evidence that local residents were targeted, the distinctions between specific and general jurisdiction become blurred. As the courts in Inset and Maritz point out, Web sites are accessible day and night to all who possess the necessary technological know-how and equipment. Thus, if an interactive Web site can constitute "purposeful availment" of a forum simply by being continuously accessible to residents of that forum, surely that contact can be considered "continuous and systematic" for purposes of general jurisdiction. Taking this reasoning to its logical conclusion, a plaintiff could sue a foreign defendant in any forum and claim jurisdiction based on the defendant's interactive Web site, even if the cause of action is unrelated to the Web site. Such results hardly conform with notions of "fair play and substantial justice." International Shoe, 326 U.S. at 320. The grasp of personal jurisdiction was never intended to reach so far and so wide.

Moreover, the imposition of broad territorial concepts of personal jurisdiction on the commercial uses of the Internet has dramatic implications, "opening the Web user up to inconsistent regulations throughout fifty states, indeed, throughout the globe." Digital Equipment, 960 F. Supp. at 463 (internal quotation marks and citations omitted); see also Hearst, 1997 WL 97097 at *20. The possibility of such overreaching jurisdiction raises the specter of "dramatically chilling what may well be the most participatory marketplace of mass speech that this country--and indeed the world--has yet seen." Id. Businesses offering products through the Internet, particularly small businesses, might forego this efficient and accessible avenue of commerce if faced with the "litigious nightmare of being subject to suit" in every jurisdiction in this country. See Donnie L. Kidd, Jr., Casting the Net: Another Confusing Analysis of Personal Jurisdiction and Internet Contacts in Telco Communications v. An Apple a Day, 32 U. Rich. L. Rev. 505, 541 (1998).

For all of these reasons, this court will not abandon the basic principle that defendants must have taken some action to direct their activities in the forum so as to "purposely avail" themselves of the privilege of doing business within Oregon. The timeless and fundamental bedrock of personal jurisdiction assures us all that a defendant will not be "haled" into a court of a foreign jurisdiction based on nothing more than the foreseeability or potentiality of commercial activity with the forum state. World-Wide Volkswagen, 444 U.S. at 297. Until transactions with Oregon residents are consummated through defendants' Web site, defendants cannot reasonably anticipate that they will be brought before this court, simply because they advertise their products through a global medium which provides the capability of engaging in commercial transactions. It is therefore "presumptively . . . unreasonable to require [them] to submit to the burdens of litigations" in this forum. Burger King, 471 U.S. at 476.

CONCLUSION

Due process requires that personal jurisdiction be based first and foremost on fairness. If defendants do not have "fair warning" that their Internet activities would render them subject to jurisdiction in this forum, personal jurisdiction may not be had, regardless of other considerations:

Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment.

World-Wide Volkswagen Corp., 444 U.S. At 294 "

The decision rendered by Judge Aiken is very favorable to the defendant but contains in itself its limits. In fact, it does not permit a forum actoris obliging the plaintiff to travel from jurisdiction to jurisdiction in order to prevail its IP rights.

In other words, in the United States it is the plaintiff who has to travel from court to court ; in Europe is the defendant who has to travel. Who should bear the burden of litigation ? I guess that's the real question as well in the material world as in cyberspace.

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