Internet Litigation Finds Home in Virginia

Internet Litigation Finds Home in Virginia

By Jonathan Cain
Contributing Writer

A business situated in a western state, or foreign country, with no facilities in Virginia, whose employees have never visited Virginia and whose only business is advertising products for sale on the Internet, probably would not expect to be hauled into a Virginia court to answer a charge of copyright or trademark infringement, defamation or other business tort.

The executives of companies located in other states or countries who advertise on the Internet may be in for an unwelcome surprise following several recent cases decided in Virginia.

The authority of a court to exercise jurisdiction over a nonresident, known as long-arm jurisdiction, is governed by two legal guidelines: the so-called long-arm statute of the state where the court is located and the due process clause of the U.S. Constitution. Both look at the nature and extent of the contacts between the defendant and the state to determine whether it is permissible for the court to require the defendant to answer a charge in the court where the action was brought.

As a practical matter, current long-arm statutes have passed constitutional muster and it is rare that an exercise of long-arm
jurisdiction that satisfies the state law would not satisfy due process. Conversely, however, not every constitutional exercise of long-arm jurisdiction meets the specific requirements of the state's long-arm statute. If the specific requirements of the statute are not met, then the defendant cannot be required to defend the action in that state's court.

Virginia's long-arm statute, like those in many other states, permits the exercise of long-arm jurisdiction if the defendant either (1) caused an injury by an act in Virginia or (2) caused an injury in Virginia by an act outside Virginia if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in Virginia.

In cases recently decided, courts in Virginia have dissected both long-arm statutes in connection with claims brought over the defendant's conduct on the World Wide Web and have required foreign defendants to answer the charges in Virginia courts.

A Virginia federal district court recently considered a case involving press releases placed on the Internet to advertise investment banking services. The court concluded that the defendants were "regularly soliciting business" under the long-arm statute because their advertising and solicitation over the Internet could be accessed by a Virginia resident 24 hours a day.

Similar results have been reached in cases in Connecticut and Missouri. In the Connecticut case, the owner of the Web site maintained a toll free number that could be used by Connecticut residents to make purchases, but the court did not rely solely on the existence of the telephone number to assert long-arm jurisdiction. Merely maintaining a Web site to advertise goods and services accessible in the state was enough. A New York court, on the other hand, held that simply posting information on a passive Web site for those who are interested in reading it, without soliciting business, will not support long-arm jurisdiction.

Virginia courts have another potential basis to assert long-arm jurisdiction based on a persistent course of conduct. Maintaining a domain name requires that the site owner register and renew the domain name with Network Solutions Inc. and pay an annual fee. NSI is located in Herndon, Va. The Virginia courts have, to date, been reluctant to assert long-arm jurisdiction solely on the basis of domain name registration. Doing so would open them to a potential flood of Web site litigation. Arguably, there is no inherent legal obstacle to asserting long-arm jurisdiction on the basis of repeated business with NSI.

The other likely basis for asserting long-arm jurisdiction in Web site cases involves committing an act in Virginia that causes an injury either in Virginia or elsewhere.

The rule used to be that the defendant had to be physically present in Virginia while causing the injury. That rule no longer applies. In 1993, the Virginia Supreme Court ruled that a defendant in New York who placed a defamatory message on a computer bulletin board in Virginia had "committed" the act in Virginia because he used the Virginia bulletin board as an essential part of the defamatory act.

At least one recent Virginia federal court decision noted that the very existence of Internet service providers and Internet users in Virginia means that defamatory material placed on the Internet will inevitably involve the use of facilities in Virginia and result in long-arm jurisdiction.

Likewise, in trademark infringement cases, the act of placing infringing material on the Internet means that any viewing of the material in Virginia will necessarily employ the use of a facility in Virginia. Therefore, a defendant can be brought into court here, even if he remained exclusively in another state or foreign country.

Jonathan T. Cain chairs the Technology Practice Group of Mays & Valentine LLP, McLean, Va. His e-mail address is jcain@maysval.com.