Distinguishing Panavision And Bensusan

Distinguishing Panavision And Bensusan

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Distinguishing Panavision And Bensusan

The law regarding jurisdiction determination was far from crystal clear even before the internet came of age, and courts are now having a difficult time reconciling the "purposeful availment" and related "effects" tests used in traditional jurisdiction analyses with the new paradigms in information transfer made possible by the internet, and in particular by the World Wide Web (WWW). These difficulties are apparent in Panavision, Int'l. L.P. v. Toeppen, 938 F. Supp 616 (C.D. Cal. 1996), and Bensusan Restaurant Corp. v. King, 937 F. Supp. 295 (S.D.N.Y. 1996). Both cases involved trademark infringement and dilution suits stemming from the alleged use of the trademark on the WWW. Each court came down differently on the jurisdiction issue, and rightly so, but neither court's analysis was very satisfying when one attempts to distinguish the two cases.

In Toeppen, the defendant had formed a plan to find prominent registered trademarks which had not yet been registered as internet addresses, and register them as his own, with the expectation that he could sell them at a substantial profit to the owner of each mark should that owner desire to do business on the internet using that internet address. The court used a three-part test for specific jurisdiction, the first part of which was the "purposeful availment" test, which in turn became an "effects test" when the claim is in the nature of a tort. After deciding that the claim was tort-like, the court used the "effects test" and found that Toeppen's acts were 1) intentional, 2) aimed at California, and 3) caused foreseeable harm to the plaintiff. This was at the heart of the court's reasoning in exercising jurisdiction.

The facts in Bensusan start out very much like Toeppen, but diverge at a point, resulting in a decision to decline to exercise jurisdiction. In Bensusan, which proceeded Toeppen by ten days, the defendant, a Missouri jazz club, had set up a web page the contents of which contained an allegedly infringing use of the plaintiff's trademark, "The Blue Note". The plaintiff, owner of the mark for a New York jazz club, wanted the New York district court to interpret state law so that it could exercise jurisdiction over the Missouri club. It refused to do so because, under a similar "effects test" to that used in Toeppen (the court here also found the claim to be in the nature of a tort), there was no foreseeable harm to the plaintiff.

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The Bensusan court also noted an additional requirement in the New York long arm statute that the defendant derive substantial revenue from interstate or international commerce, and found that requirement lacking here.

Because the focus in each case is on different aspects of the test, it is sometimes difficult to tell that both courts are using essentially the same test. Toeppen focuses on whether to apply the "effects test" at all (whether the claim is in the nature of a tort), and then glosses over the rest of the analysis. If one applies the analysis only this far in Bensusan, the facts are the same. Both cases are infringement / dilution actions, both in the nature of a tort, and both involved intentional acts aimed at the plaintiff. The Bensusan court's arguments about "several affirmative steps" being required to access the allegedly infringing mark is no defense in this context. According to the abbreviated analysis above, jurisdiction should not depend on how easy it was for users to access the allegedly infringing page. The infringement is the same whether it is on the front cover of a book or in the middle of Chapter 8. Toeppen muddies the water further by attempting to distinguish Bensusan because it says the defendant in the instant case was not "doing business" in California. Toeppen fails to realize that the Bensusan court made essentially the same finding ("There are no allegations that King...conducted any business ...in New York.").

Except for the "claim in the nature of a tort" analysis, the Toeppen court does not go into much depth in any of its arguments for the exercise of jurisdiction. Because of the confusing elements noted above, a casual observer may base the different outcomes on the "shmuck test", characterizing the defendant in Toeppen as a greedy cybersquatter who deserved what he got, and ignoring the real differences in the facts of the cases. There are dangers with explaining away the allowing of jurisdiction in Toeppen as justified by the "shmuck" test. First of all, even shmucks have a right to avoid being sued in a jurisdiction in which he does not have adequate ties. Secondly, our categorizing Toeppen as a shmuck is based on the perception that he has done something wrong. All he did, however, was stake out a claim to an internet address with the expectation that it might have value at a later date. Without any prior caselaw that a trademark owner necessarily had a proprietary right to that internet address (indeed, there are some good arguments that the trademark owner shouldn't have such a right), Toeppen seems less like a slimy shmuck than a shrewd opportunist who thought he had found a good investment and was merely trying to exploit it. The better reasoning is to recognize that there are differences in the cases. Indeed, the dispute in Toeppen had less to do with any website that the defendant set up that it did with the fact that the defendant was arguably keeping the plaintiff from legitimately using its trademark. Bensusan is the far better case to use for analysis of jurisdiction issues where potentially infringing trademarks show up on web pages.

In the background of this discussion, and yet always relevant, is the more general Due Process Clause requirement that even if the effects test is satisfied, the exercise of jurisdiction must "comport with traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310 (1945). One of the most frustrating details about extending jurisdiction through cyberspace and into the physical space of other states is that while recognizing that the internet has been instrumental in making our world smaller, the court system itself has not followed the rest of us and made use of its advantages. Talk of advances in information technology bringing distant parties together through the magic of cyberspace seems rather empty coming from a judge in front of whom parties must still physically appear, and a court system which will not accept testimony given over the internet. In a court of law, there's still no next-best thing to being there. As the gap grows wider between public use of the internet (and accompanying susceptibility to out-of-state jurisdictions) and courts' antiquated insistence of personal physical appearance, notions of "fair play and substantial justice" in the exercising of jurisdiction in these cases gets lost along the way. If courts are to become increasingly willing to extend jurisdiction to those persons who use the internet, let them take an additional step and reduce the physical and financial burden of being haled into court. It is not unimaginable that we might someday have in all courthouses at least one "cyberspace courtroom", in which courts can arrange for distant witnesses and parties to participate in trials all over the country, decreasing the burden on the party which is forced to participate in a trial far from home or work. Admittedly, this creates all new problems for courts regarding verification of internet testimony, the Constitutional right to confront witnesses, and undoubtedly a host of others. Still, if the internet is to become a part of our everyday life, then we as officers of the court have an obligation to ensure that the machinery of justice is maintained well enough to serve its citizens and deserve their respect.

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