DR.

RAM MANOHAR LOHIYA NATIONAL LAW

UNIVERSITY, LUCKNOW

2022 – 2023

CYBER LAW

PROJECT

TITLE – ANALYSIS OF APPROPRIATE FORUM IN CYBER

JURISDICTION

SUBMITTED TO: SUBMITTED BY:

Dr. Amandeep Singh Shobhit Kumar Shukla

Assistant Professor (Law) Enrollment No. - 190101138
Dr. Ram Manohar Lohiya National Law University, B.A. LL.B. (Hons.)
Lucknow 4th Year (Semester - VII)

1
 ACKNOWLEDGEMENT

I would like to take this opportunity to extend a word of gratitude to my esteemed ‘Cyber
Law’ faculty Dr. Amandeeep Singh, who had been a constant source of inspiration for me in
the pursuance of this project. Sir has been gracious enough toguide me on the right path which
has enabled me to strengthen my efforts.

I may also take this opportunity to wish the reader of my project a knowledgeable experience.
The project has been made with utmost care and with utmost finesse to see that the
information mentioned is to the best of accuracy and correctness. Sir’s constantguidance and
suggestions regarding the format and subject matter regarding the project has been very
helpful.

I would also like to express my sincere gratitude to our Honourable Vice Chancellor Prof.
Subir K. Bhatnagar sir for his guidance and supervision. I would like to thank theUniversity
staff for providing extensive database resources in the library and through internet. Lastly I
thank my dear parents, family and friends for their constant encouragement and without them
this work would not have been possible.

Shobhit Kumar Shukla

Semester - VII

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 TABLE OF CONTENTS

INTRODUCTION .............................................................................................................. 4

ASCERTAINMENT OF THE CORRECT FORUM ......................................................... 5

FIVE CATEGORIES OF JURISDICTIONAL CONTROL ...........................................5

CATEGORY 1: MERE ACCESSIBILITY… .............................................................. 6

CATEGORY 2: POTENTIAL CONTACTS BEYOND ACCESSIBILITY… ........... 9

CATEGORY 3: ACTUAL CONTACTS WITH FORUM STATE ........................... 13

CATEGORY 4: ACTUAL ONLINE SALES OR TARGETTING ........................... 16

CATEGORY 5: TARGETTING VICTIM IN THE SPECIFIC FORUM STATE .... 19

ANALYSIS OF ALL THE STANDARDS… .................................................................. 21

CONCLUSION ................................................................................................................ 23

BIBLIOGRAPHY ............................................................................................................ 24

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 INTRODUCTION
With the advent of the Internet, thousands of traditional brick and mortar stores are
gravitating to cyberspace. This prolific growth is fueled by the relative ease of transmitting
information worldwide instantaneously. At the same time, concerns over the legal risks of
selling products and providing services online are emerging. The unique challenge
presented by the Internet is that in order to limit businesses’ exposure to legal risks, it would
not suffice for them to simply comply with municipal laws. As web sites can be assessed
world wide, the prospect that a web site owner may be dragged into a foreign courtroom
thousands of miles away is more than just fanciful conjecture. For electronic commerce to
evolve profitably and efficiently, businesses and consumers should be aware of the regimes
that regulate their virtual interaction. As the Internet resides in a virtual world, its operation
pays no heed to geographical boundaries. The consequence is such that in the event of legal
disputes, parties to an Internet transaction are faced with overlapping and often
contradictory claims that different national laws are applicable and different courts have
jurisdiction over their activities. Internet jurisdiction can be examined on three bases:
jurisdiction to prescribe, jurisdiction to adjudicate and jurisdiction to enforce. Jurisdiction
to prescribe refers to a State’s authority to make substantive law applicable to different
persons and circumstances. Jurisdiction to adjudicate is defined as the court’s entitlement
to subject persons or things to the judicial process. Jurisdiction to enforce deals with a
State’s authority to compel compliance with its laws, whether through judicial or
administrative means. This paper would seek to examine in particular the principles that
have emerged from case law relating to court’s jurisdiction to adjudicate over disputes
arising from activities in cyberspace. A comparative study of the judicial approaches in the
Commonwealth will be attempted although extensive reference will be made to various
American judgments since the United States is at the forefront of Internet technology and
its courts have on numerous occasions dealt with jurisdictional issues in cyberspace. These
precedents have and will continue to influence Canadian courts when they are seized with
similar issues. Before launching into a discussion on judicial jurisdictional approaches over
cyber- activities, it would be pertinent to review the traditional bases on which courts have
generally assertedtheir competence over the persons.

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 ASCERTAINMENT OF THE CORRECT FORUM

FIVE CATEGORIES OF JURISDICTIONAL CONTROL

Judicial approaches of asserting jurisdictional control in cyberspace have not been
homogenous and cases lie on a continuum of varying nexus between the forum state and
the cyber- act in question. I would argue that the cases could be categorized into five
different groups. Cases falling in Category 1 illustrate that the ‘mere accessibility’ of the
website in the forum state would suffice to confer jurisdictional rights on the court.
Examples that would be discussed include the Australian decision of Gutnick v Dow Jones1
and the American case of Inset.2 In Category 2 cases, courts seek some sort of ‘potential
contacts’ between the cyber- actor and the forum state, beyond the mere accessibility of
the web site in the jurisdiction. The Zippo3 decision was pivotal to this new development
and the court propounded the ‘sliding interactivity’ test which has beenadopted by our
Canadian court in Braintech.4. As for cases in Category 3, the cyber-actor has to make
‘actual contacts’ with the forum state. Actual contacts would include cyber- acts with
effects on the requisite jurisdiction as exemplified in the American decision of Panavision5
or actual online sales with forum state as illustrated in the Canadian case of Easthaven6.
Falling in Category 4 are the United States case of Millennium Music7and the United
Kingdom decision of 1-800 Flowers8 which permit judicial jurisdictional assertions on the
bases enumerated in either Category 3 or Category 5. Finally, the only case to date in
Category 5 is the American decision of Callaway9 in which the cyber- actor has to target
the victim specifically in the forum state.

1 [2001] VSC 305, Lexis BC200104980 online: Lexis (Australia) [hereinafter Gutnick].
2
Inset Systems, Inc. v Instruction Set, Inc, 937 F.Supp. 161 (1996) [hereinafter Inset].
3
Zippo Manufacturing Co v. Zippo Dot Com, Inc, 952 F.Supp. 1119 (1997) [hereinafter Zippo].
4
Braintech v Kostiuk, (1999) 9 W.W.R. 133 [hereinafter Braintech].
5
Panavision International, L.P. v. Toeppen, 141 F.3d 1316 [hereinafter Panavision].
6
Easthaven Ltd. v. Nutrisystem.com Inc., (2001) 55 O.R. (3d) 334 [hereinafter Easthaven].
7
Millennium Enters., Inc. v. Millennium Music, 33 F.Supp. 2d 907 (1999) [hereinafter Millennium Music].
8
1-800 Flowers Incorporated v Phonenames Limited, Lexis [2001] EWCA Civ 721 online: Lexis (United
Kingdom) [hereinafter 1-800 Flowers].

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CATEGORY 1: MERE ACCESSIBILITY
Gutnick v Dow Jones
In Gutnick10, the defendant Dow Jones & Co Inc was the publisher of Barrons, American
magazine while the plaintiff, Gutnick was an Australian entrepreneur. The plaintiff alleged
that defamatory remarks about him were published in the magazine and the articlewas also
made available on the defendant's website which was hosted in New Jersey. The web site
was subscription based with several hundred subscribers from Victoria, Australia. The
jurisdictional issue turned on whether the defamatory article being available on the Internet
could be considered published in Victoria, Australia. The Supreme Court of Victoria
concluded that there was publication in Victoria. Since Dow Jones controlled access to its
web materials by the imposition of charges and passwords,it “intended that only those
subscribers in various states of Australia who met their requirements”11 to have access to
those materials. Admittedly, the same outcome would have been reached if the ‘actual
online sales’ test borne out by those cases in Category 3 were used. By accepting
subscriptions from Victoria, Australia and providing residents in that state with the
necessary online passwords, the defendant was effectively concluding actual online sales
with the forum state. What is however, significant is that the court decided the case “on the
basis that publication takes place on downloading.”12 As reasoned by the court, “the point
simply is that if you do publish a libel justiciable in another country with its own laws…
then you may be liable to pay damages for indulgingthat freedom.”13 While this reasoning
is clearly obiter, taken to its extreme conclusion would mean that every publication on the
Internet that could be accessed in Victoria, Australia, would confer jurisdictional rights on
the state court, regardless of whether the parties had any connections whatsoever with the
forum state in dispute.
Inset Systems, Inc. v Instruction Set, Inc Deciding along the same lines was the American
decision of Inset14. The plaintiff, Inset Systems, was a software company based in
Connecticut while the defendant, Instruction Set was a technology firm based in

9
Callaway Golf Corp. v. Royal Canadian Golf Ass'n, 125 F. Supp. 2d 1194; 2000 U.S. Dist. Lexis 19032
online: Lexis (United States) [hereinafter Callaway].
10
Supra note 5.
11
Ibid .
12
Ibid.
13
Ibid.

6
Massachusetts. The suit ensured after Inset attempted to register its federal trademark
INSET as a domain name and learned that Instruction had already obtained inset.com as a
domain name. Inset hence brought an action against Instruction in the Connecticut District
Court for trademark infringement on the basis that Instruction advertised in Connecticut
over the Internet using the domain name inset.com. Instruction however asked the court to
decline jurisdiction on the grounds that it does not conduct any business or have any
employees in Connecticut. The Court reasoned that “minimum contacts” with the forum
state were satisfied as Instruction had purposefully availed itself of the privilege of
conducting activities within Connecticut by establishing a website on the Internet. The
court perceived the website as akin to an advertisement that is “available continuously to
any Internet user”.15 As an advertisement on the Internet can reach as many as 10,000
Internet users within Connecticut alone, the court concluded that Instruction had
“purposefully directed” its advertising activities towards Connecticut ona continuing basis
and “could reasonably anticipate the possibility of being hauled into court there. ”16The
Court however did acknowledge that the concept of “fair play and substantial justice” may
defeat the reasonableness of jurisdiction even if the defendant has the requisite minimum
contacts with the forum. However on the facts, the court held that this was satisfied as the
distance between Connecticut and Massachusetts was minimal. The reasoning of the Court
is problematic and should give pause to any web siteoperator. By analogizing a website to
a continuous advertisement, the Court has effectively handcuffed any defendant who
advertises via the Internet to the jurisdiction in every forum from which Internet access is
available. Furthermore, the Court did not examine Instruction’s actual activity in
cyberspace. While admittedly, the website could reach up to the 10,000 users in
Connecticut, there were no evidence to show how many Connecticut residents did in fact
accessed the website. No evidence was also offered to prove that there were active
solicitation of customers on the Internet or that sale of goods and services were being
concluded through its website. The mere uploading of a website onto the Internet was
sufficient for the court to justify jurisdiction. While the Court entered a caveat of “fair
play” to mitigate the scope of “minimum contacts”, this

14
Supra note 6.
15
Supra note 6 at 165.

7
legitimate safeguard was deemed satisfied by the minimal distance between the two
disputed jurisdictions. The concern with distance between the forum state and the
defendant’s location would be of little assistance to insulate bordering states in an
international context. In particular, Canada would still be subjected to a multitude of
jurisdictions within the United States. With this Inset precedent established, several
subsequent cases soon followed its approach in enlarging judicial jurisdictional control in
cyberspace. A prime example would be the case of Maritz, Inc v. CyberGold17.
Maritz, Inc v. Cybergold
CyberGold, a corporation located in California operated an Internet site that allowed users
to sign onto an e-mailing list to receive web advertisements. Before the e-mail service
became operational, Maritz, a Missouri firm which provided an e-mail service under its
trademark Goldmail, filed suit in Missouri claiming trademark infringement. Following the
legal reasoning in Inset, the Court here articulated that through its website, CyberGold has
“consciously decided to transmit advertising information to all Internet users, knowing that
such information will be transmitted globally.”18 The court also found that since CyberGold
transmitted information into Missouri via its website approximately 131 times, the
defendant had purposefully availed itself to the privileges of conducting activities in
Missouri.19In part, the Inset decision was taken a step further as proximity between the
forum state and the defendant’s location was no longer required. It would appear that by
posting information on its website per se, CyberGold had the requisite “intent is to reach
all Internet users, regardless of geographic location.”20 The rationale here appears to be
that commercial web- pages by its very nature solicit business all over the world, including
the disputed forum, and hence justifies the finding of proper personal jurisdiction. While
Inset gave birth to a line of cases endorsing a broader judicial jurisdictional reach over the
Internet, concurrently, there grew a volume of cases which bucked this trend. The genesis
of this countervailing force would probably be Bensusan.21

16
Ibid.
17
947 F.Supp 1328 (1996).
18
Supra note 17 at 1333.
19
Ibid.
20
Ibid.
21
Bensusan Restaurant Corporation v. King, 937 F.Supp. 295 (1996) [hereinafter Bensusan].

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CATEGORY 2: POTENTIAL CONTACTS BEYOND ACCESSIBLITY
Bensusan Restaurant Corporation v. King
Bensusan, a New York Corporation, was the owner of the “The Blue Note” jazz club in
New York City and owned the federal trademark in its name. King, a Missouri resident, set
up a web site called “The Blue Note” to advertise his Missouri jazz club. Bensusan later
brought suit against King for trademark infringement. Unlike Inset, the court here held that
“the mere fact that a person can gain information on the allegedly infringing product is not
the equivalent of a person advertising, or otherwise making an effort to target its product
in New York”.22 As analyzed by the court, to obtain tickets to the club,a person would
have to call the Missouri number listed on the website and pick up the tickets in Missouri.
The court analogized the operation of a website to the placement of a product into the
“stream of commerce” which may be felt worldwide, “but without more, it is not an act
purposefully directed toward the forum state.”23 The court in Bensusan in sharp contrast
with Inset emphasized that King’s website while capable of being assessed worldwide,
including New York, did not constitute sufficient presence in that state. As reasoned by the
court, “mere foresee-ability of an in-state consequence and a failure to avert that
consequence is not sufficient to establish personal jurisdiction.” 24
Apparently, the court
foresaw the international implications of a contrary decision and wanted to pre- empt global
jurisdiction over overseas website operators in every dispute involving New York
residents. The Bensusan decision did not endeavor to reconcile the Inset chain of cases, but
instead laid the foundation for a series of cases that propounds a different legal theory on
judicial jurisdiction in cyberspace. Many subsequent courts while agreeing withInset that
“additional activity” is needed to find personal jurisdiction, had nonetheless been vague on
what this encompassed. An attempt was eventually made by the Pennsylvania District court
in Zippo25 to synthesize the early cases, and its analytical framework henceforth became
the next best thing in cyber-jurisdiction.

22
Supra note 23 at 301.
23
Ibid.
24
Ibid.

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Zippo Manufacturing Co v. Zippo Dot Com, Inc
The plaintiff, Zippo Manufacturing was the manufacturer of the Zippo lighters in
Pennsylvania and held a trademark in its name. The defendant, based in California,
operated an Internet news service and used zippo.com as the domain name. Although the
defendant had no physical presence in Pennsylvania, it had about 3000 subscribers who
were Pennsylvania residents and also had agreements with multiple Internet service
providers in Pennsylvania. The plaintiff commenced proceedings in Pennsylvania claiming
trademark infringement while the defendant moved for dismissal, arguing that the state of
Pennsylvania lacked personal jurisdiction over the defendant. The Pennsylvania court
developed a ‘sliding scale’ of personal jurisdiction based on the online interactivity of the
websites. Under this sliding continuum test, “the likelihood thatpersonal jurisdiction can
be constitutionally exercised is directly proportionate to the nature and quality of
commercial activity that an entity conducts over the Internet.”26“At one end of the spectrum
are situations where a defendant clearly does business over the Internet. If the defendant
enters into contracts with residents of a foreign jurisdiction that involve the knowing and
repeated transmission of computer files over the Internet, personal jurisdiction is proper.
At the opposite end are situations where a defendant has simply posted information on an
Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site
that does little more than make information available to those who are interested in it is not
grounds for the exercise of personal jurisdiction. The middle ground is occupied by
interactive Web sites where a user can exchange information with the host computer. In
these cases, the exercise of jurisdiction is determined by examining the level of interactivity
and commercial nature of the exchange of information that occurs on the Web site. ”27 By
looking at the level of commercial activities undertaken by the website in cyberspace, it
would appear that whilemere advertisements posted on the Internet would no longer suffice
to legitimize judicial jurisdiction over the person, an engagement in electronic commerce
would. As long as the web site has the capacity to conduct online sales, it would appear
that under Zippo it is immaterial whether there are actual online sales concluded with
the forum state in

25
Supra note 7.
26
Ibid at 1124.

10
question. The construction of a jurisdictional framework on the basis of website
interactivity as propounded by the Zippo court soon found favor with subsequent courts.
This paradigm shift could be attributed to the growing judicial awareness that due to the
vast and complex nature of cyberspace, it would be unreasonable and unrealistic to make
webmasters amenable to the jurisdiction of any forum state where their websites could be
assessed, regardless of the nature of their contents. With the widespread adoption of the
Zippo test within the United States, it is not surprising that the Canadian courts soon jumped
on the bandwagon and integrated the ‘sliding scale’ test within our constitutional folds.
Braintech v Kostiuk 28 was the first of the Internet jurisdictional cases that confronted our
courts.
Braintech v Kostiuk
The defendant, Kostiuk had allegedly used the Internet to transmit and publish defamatory
messages about Braintech, the plaintiff, a British Columbia based company. Braintech
subsequently sued and won in a Texas court and sought to enforce the judgment it in
British Columbia. The British Columbia Court of Appeal in analyzing the “real and
substantial connection” between the forum state Texas and the alleged injury adopted the
Zippo approach of categorizing the website on a sliding scale of Internet interactivity. The
court concluded that the postings were passive in nature and that the “mere possibility that
someone in that jurisdiction might have reached out to cyberspace to bring the defamatory
material to a screen in Texas”29 would not satisfy the constitutional test laid down in
Morguard. Braintech is a landmark decision as the court not only embraced the Zippo
approach within the Canadian context the judiciary had also implicitly equated the
American “minimum contacts” doctrine with our Morguard “real and substantial
connection” test. As articulated by Goldie J.A., “the mere transitory, passive presence in
cyberspace of the alleged defamatory material … does not constitutea real and substantial
presence. On the American authorities this is an insufficient basis for the exercise of an in
personam jurisdiction over a non-resident. ”30 This approach should be lauded as
regardless of whether the jurisdictional test is couched in terms of “

27
Ibid.
28
Supra note 8.
29
Ibid. at149.
30
Ibid.

11
minimum contacts ” or “ real and substantial connection ”, the fundamental principle of
jurisdictional reasonableness remains unchanged. A connection made between the two tests
would facilitate the import and application of American Internet case law in Canada. This
is of much practical value to Canada as the United States being at the forefront of Internet
technology, have already confronted several jurisdictional issues that would come
Canada’s way and their judicial analytical frameworks would equip our courts with the
tools to traverse the cyber-jurisdictional quagmires.

Rising Problems with the Zippo Test

While the Zippo test was formulated to provide a level of legal certainty in Internet
jurisdiction, majority of the websites on cyberspace straddle the “middle group” in terms
of user interactivity and cannot be classified as either passive or active. For these websites
falling in the gray zone, they are back at square one. Moreover, the Zippo approach is a
dampener on the development of electronic commerce as it discourages the adoption of
interactive websites. With its sliding continuum test of aggregating the assertion of
personal jurisdiction to the “nature and quality of commercial activity that an entity
conducts over the Internet”,31 prospective website operators would logically limit their
home pages to passive sites for fear of being haled into a far flung court to face suit. This
constraint runs contrary to the global movement towards the embrace of e- commerce. This
dissatisfaction with the Zippo framework led courts to seek actual contacts between with
the cyber-actor and the forum states before asserting jurisdictional control. While some
courts moved toward an effect- based analysis, others refined the Zippo ‘sliding scale’
framework and searched for actual online sales between the requisite forum and the cyber-
actor.

31
Supra note 26.

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CATEGORY 3: ACTUAL CONTACTS WITH FORUM STATE

a. Effects- Based Analysis

Calder v. Jones

The Supreme Court of America first established the “effects test” in Calder v Jones.32 This
doctrine states that personal jurisdiction may be predicated upon “(1) intentional actions
(2) expressly aimed at the forum state (3) causing harm, the brunt of which is suffered, and
which the defendant knows is likely to be suffered, in the forum state.” The effects test was
applied within an Internet setting in the American decision of Panavision.33

Panavision International, L.P. v. Toeppen

The defendant, Toeppen, engaged in scheme to register Panavision’s trademarks as a
domain name for the purpose of extorting money for its release. Panavision sued Toeppen
in California, but the latter moved for dismissal, alleging that the forum state did not have
proper personal jurisdiction over his person. The Californian court in deciding whether
“minimum contacts” was available incorporated the effects doctrine within the first prong
requirement of purposeful availment.34 It was held that the “application of the purposeful
availment prong differs depending on whether the underlying claim is a tort or contract
claim.”35 The court found that the defendant had intentionally directed his conduct towards
California, knowing that the effects of registering the plaintiff’s trademarks would be felt
in that state as that was its principal place of business. Minimum contacts were thus
satisfied on this basis. The effects test in Panavison was quoted with favor in the Ontario
Superior Court case of Itravel2000.com.ca.36

32
465 U.S. 783 (1984) at 789.
33
Supra note 9.
34
Ibid. at 1321.
35
Ibid.
36
Itravel2000.com Inc. (c.o.b. Itravel) v. Fagan, 2001 O.J. No.943 online: QL (CJ). Cited from Peter P.
Swire, Of Elephants, Mice, and Privacy: International Choice of Law and the Internet, 32 INT’L LAW.
991 (1998).

13
Itravel2000.com Inc. (c.o.b. Itravel) v. Fagan
In an application for an interlocutory injunction, the Ontario Superior Court referred to the
American decision of Panavision and its application of the effects test in determining
proper personal jurisdiction. Jurisdictional issues are wholly uninvolved here, as both
parties are residents of Ontario. This judicial reference is certainly noteworthy as it would
appear that the Ontario court was implicitly endorsing the use of the effects test in
determining a court’s jurisdiction to adjudicate and was paving the way for its adoption
should future opportunities arise.

b. ‘Actual Online Sales’ Test

Pro-C Ltd. v. Computer City Inc

In Pro-C Ltd. v. Computer City Inc37, the Ontario Court of Appeal had an opportunity to
address the scope of judicial jurisdiction in cyberspace. Pro- C, the Ontario plaintiff was
the owner of a software trademark, Wingen, in Canada and the United States. The
defendant, Computer City sold an in-house line of computers that was also called Wingen.
From the outset, Computer City was aware of the registrations of the trade-markWingen
owned by Pro-C. The computers were offered for sale in all the United States outlets but
not in Canada. The only connection Computer City had with Canada was its website
"www.computercity.com” which it used to advertise and provide product information. The
plaintiff brought an action in trademark infringement in Ontario under the Trademark
Act.38The appeal turned on whether under the Trademark Act, Computer City has “used”
the trademark Wingen “in association with wares”. The court ruled that Computer City's
“passive website could not constitute a use in association with wares because no transfer
of ownership was possible through that medium.”39 As observed by the Court, “Computer
City's site did not have interaction with customers -- it used the siteonly to post information.
A phone number was included for receiving orders but no sales were made directly to
Canada or in Canada. ”40 Admittedly, while the Court of Appeal

37
[2001] O.J. No. 3600 online: QL (CJ).[hereinafter Computer City] cited from Peter P. Swire, Of
Elephants, Mice, and Privacy: International Choice of Law and the Internet, 32 INT’L LAW. 991 (1998).
38
R.S.C. 1985 c. T-13.
39
Supra note 37 at para. 14.
40
Supra note 37 at para. 5.

14
made no mention of Zippo, in its examination of whether actual sales were made with
Canada via the website, it would appear the court was seeking a stricter nexus between the
forum state and cyber- actor than what the original Zippo framework would provide.

Easthaven Ltd. v. Nutrisystem.com Inc.

Following Computer City, Ontario courts had the opportunity to re-visit the issue of
jurisdiction on the Internet in Easthaven41, and this time round, the court analyzed Zippo
more closely. The plaintiff corporation, Easthaven, was the owner of the domain name
“sweetsuccess.com ". The defendant, Nutrisystem.com Inc., was an American corporation
engaged in the marketing, sales and distribution of weight loss programs on and offline.
Nutrisystem.com Inc also owned certain "Sweet Success" trademarks which it had used in
connection with the weight loss products. Easthaven had sought a judicial declaration in
Ontario that the domain name of “sweetsuccess.com” belonged to Easthaven and not
Nutrisystem.com Inc. The Ontario Superior Court explicitly approved of the application of
the three prong “minimum contacts” test to determine whether there was a “real and
substantial connection” between the parties and the subject matter of the suit.42 What is
even more noteworthy in this case is that the Court held that for the defendant to avail itself
of the privileges of doing business in the forum state, ( the first prong of the minimum
contacts test ), the defendant’s operation of a fully interactive website would not in itself
suffice. As held by the court, Nutrisystem.com conducted online sales but it had “not done
any act nor consummated any transaction within Ontario.”43It would appear that the
Ontario Court here, while explicitly applying the Zippo test, it has in reality refined its
legal framework. While under the Zippo approach, adefendant’s use of a fully interactive
website with the capability of conducting electronic commerce would on itself justify
proper personal jurisdiction, the Easthaven court lookednot to potential but actual online
sales with the forum state. This, as respectfully submitted by this writer, would appear to
be a clearer indication that the defendant had purposefully (albeit electronically) directed
his activity in a substantial way to the forum state.

41
Supra note 10.
42
Ibid. at 343.

15
CATEGORY 4: ACTUAL ONLINE SALES OR TARGETTING
Millennium Enters., Inc. v. Millennium Music
This next step forward was undertaken by the Oregon Court in Millennium Music44 which
adopted a dual approach to the determination of judicial jurisdictional control. This dual
approach springs from the refinement of both the effects test in Panavision and the ‘sliding
scale’ test in Zippo. The plaintiff, Music Millennium, operated music retail business in
Oregon while the defendants, Millennium Music ran a music retail business in North and
South Carolina. The defendants also operated an interactive web site where it sold compact
discs online. The plaintiff had subsequently sued the defendants in the state of Oregon for
trademark infringement and the defendants sought a dismissal of the suit on the basis that
the state of Oregon did not have personal jurisdiction. In deciding whether Oregon had
personal jurisdiction, the court proposed to apply both the effectstest and the ‘sliding
scale’ rule. When applying the effects test, the court held that there were no evidence that
defendant intentionally directed its activities at Oregon, knowing that plaintiff would be
harmed in that forum.45 It would appear that for a plaintiff to succeed under the effects test,
the defendants must know that the plaintiff would suffer harm not just in any state, but in
the forum state where the action would be pursued. This is a new development from
Panavision as in that case, while the plaintiff had clearly sought to extort money from the
plaintiff, it does not logically follow that his actions contemplated an eventual injury to the
plaintiff in California. The defendant’s actions could not be specifically directed towards
California any more than they could be directed towards any state. It would appear that in
Panavision, the court simply assumed that the defendant knew the plaintiff would likely
suffer harm in the forum state because that was its principal place of business. The court in
Millennium Music, however demanded a stricter nexus between the forum state and the
course of action. Despite the fact that Oregon was the plaintiff’s principal place of business,
the court held that even if the defendants knew of the plaintiff's existence in Oregon,
evidence must be adduced thatthe defendants directed their conduct at that forum. Given
this new development, it wouldappear that the court was shifting its focus from an effects-
based analysis to a targeting-

43
Ibid.
44
Supra note 11.

16
centered framework. It is not enough for the effects of the injury to have been sustainedin
that forum state, the tort-feasor has to target the victim in that requisite jurisdiction.. Not
content to just apply the targeting test, the court analyzed the Zippo rule along side, and
modified the test in its application. The court found that “ the middle interactive category
of Internet contacts as described in Zippo needs further refinement to include the
fundamental requirement of personal jurisdiction: deliberate action within the forum state
in the form of transactions between the defendant and residents of the forum or conduct
of the defendant purposefully directed at residents of the forum state. ”46 Remarkably, this
court had subsumed the effects test within the folds of the Zippo approach. Expanding
upon Zippo, the court further held that while the defendant operated an interactive website,
“the fact that someone who accesses defendants' Web site can purchase a compact disc
does not render defendants' actions ‘purposefully directed ’ at this forum. ”47 Previously in
Zippo, an engagement in electronic commerce per se would justify proper jurisdiction.
Now, the court has progressed from looking at the defendant’s capacity to do business
over the Internet to actually identifying actual sales with the forum state. As rightly
concluded by the court, “it is the conduct of the defendants, rather than the medium utilized
by them, to which the parameters of specific jurisdiction apply.”48It would appear that in
Millennium Music, the Court was propounding theconcurrent use of both the ‘targeting ’
and the ‘actual online sales’ tests; the satisfaction of either test under this dual approach
would permit proper judicial jurisdictional assertions.
1-800 Flowers Incorporated v Phonenames Limited
Across the ocean, in the United Kingdom, the British courts were first confronted with a
Internet jurisdictional issue in 1- 800 Flowers49.1-800 Flowers was a company
incorporated in the United States, which carried on an international floral telemarketing
business via their web site and a toll free phone number system. In the United States, the
toll free number that accessed Flower’s marketing system was 1-800-356-9377. Expressed
in "alpha-numeric" terms, the toll free number was the equivalent of 1-800-

45
Ibid. at 922.
46
Supra note 11 at 921.
47
Ibid.
48
Ibid.

17
FLOWERS. Flowers also maintained an interactive website with the address
www.1800flowers.com. Phonenames was a British company responsible for promoting
and marketing the alpha-numeric concept in the United Kingdom. Flowers had
subsequently applied under s 17(1) of the United Kingdom Trade Marks Act 1938 to
register the trade mark 800-FLOWERS but their registration was opposed byPhonenames.
The jurisdictional issue turned on whether Flowers for the purposes of section 17 of the
Trade Marks Act, had established “ use ”of the trademark in the United Kingdom. In the
UK Court of Appeal, Parker LJ had held that the access of the Applicant’s website from
the United Kingdom was not enough to establish use of the trademark in Britain. Buxton
LJ elaborated upon this, stating that even though orders had been placed by the website by
persons whose credit card addresses were in the United Kingdom, it did not follow that
these clients actually were in Britain. There was no evidence to support the picture “of a
pattern of trade by customers in the United Kingdom.”50 This search for an online “pattern
of trade” between two countries is similar to the ‘actual online sales’ test propounded in
Easthaven and Millennium Music. In dismissing the Applicant’s claims, Buxton LJ held in
addition, that “there is something inherently unrealistic in saying that A uses his mark in
the United Kingdom when all he does is to place the mark on the Internet, from a location
outside of the United Kingdom. ”51 There has to be “some active step” undertaken by the
user “that goes beyond providing facilities that enable others to bring the mark into the
area.”52 This “active step” test seems akin to the targeting test as elucidated upon in
Millennium Music.It would appear that the British courts have independently developed a
jurisdictional framework that bears much semblance to the dual- approach undertaken in
Millennium Music. This brings much promise to the global move toward greater certainty
for Internet jurisdictions.

49
Supra note 12.
50
Supra note 12 at para. 131.
51
Supra note 12 at para. 137.

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CATEGORY 5: TARGETING VICTIM IN THE SPECIFIC FORUM STATE
Callaway Golf Corp. v. Royal Canadian Golf Ass'n
The latest development pertaining to jurisdictional issues in cyberspace surfaced in the
American decision of Callaway53. The Californian court, while endorsing Millennium
Music, effectively strips away the ‘actual online sales’ test from its folds. The plaintiff,
Callaway, a Delaware corporation headquartered in California, was a manufacturer of golf
clubs. The defendant, Royal Canadian Golf Association was a non-profit Canadian
company chartered by the Canadian government as the governing body of Canadian men's
amateur golf. The RCGA had made public its decision to preclude use of named golf clubs
in its regulation golf tournaments and one of Callaway's brand of golf clubs was mentioned
in the Canadian association's announcement. The plaintiff thereafter filed suit against
defendant in California alleging claims for trade libel and defamation. The defendant
sought a dismissal on the basis that the forum state did not have personal jurisdiction over
the Association. Following Millennium Music, the court applied the targeting test to
determine the presence of “minimum contacts”. The Californian court held that the plaintiff
did not “adduce facts sufficient to establish that defendant knew or should have known
plaintiff was a resident of California, had its principal place of business in California, or
otherwise would feel the brunt of the effects of defendant's actions in California.”54 As
decided by the court, “merely knowing a corporate defendant might be located in California
does not fulfill the effects test.”55 It is instructive that the court declined jurisdiction even
where the forum state in dispute was also the location of the defendant’s principal place of
business. The defendant had to target the forum state inparticular, and injuries sustained by
the plaintiff in its principal place of business would not in itself, suffice to justify proper
personal jurisdiction. Similar to Millennium Music, the court here concurrently applied the
modified Zippo ‘actual online sales’ rule in the examination of the defendant’s web site.
The court found that the defendant did conclude online sales with one person in the forum
state California via the web site. Here in Callaway, the court was left to handle a vital
question left unanswered by the Millennium

52
Supra note 12 at para. 138.
53
Supra note 13.
54
Supra note 13 at 13.
55
Ibid.

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Music. When there were actual sales conducted with the forum state via the operation of
the defendant’s interactive web site, but the sales were unrelated to the lawsuit in question,
would minimum contacts be satisfied? The court in Millennium Music skirted this issue
because on the facts, the defendants' web site did not constitute purposeful availment of
this forum state as no online sales were concluded with it. The Callaway court held that for
a court to exercise specific personal jurisdiction, “ the contacts constituting purposeful
availment must be the ones that give rise to the current suit. ”56 While the RCGA may have
purposely availed itself of California as a forum by engaging in commercial activity
through its Web site, the court concluded that minimum contacts were not satisfied as the
dispute did not arise from these online contacts with California.It is uncertain whether the
court in Callaway had understood the implications of its decision, but effectively it had
dismantled the entire ‘sliding interactivity’ framework along with the ‘actual online sales’
rule. By looking for actual online sales with the forumstate and the need for the dispute to
arise from those sales in question, effectively what the court is determining is whether the
defendant via its web site had targeted the plaintiffspecifically in the forum state. After all,
the only way a defendant can conclude sales online with the forum state and have the
dispute arising from this same online contact is for the defendant to have targeted the
plaintiff in the forum state all along. It would seem that what now remains of the Zippo
rule is no different from the targeting test laid downin Millennium Music.

56
Supra note 13 at 25.

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 ANALYSIS OF ALL THE STANDARDS
With a gradation of varying nexus between the forum state and the cyber act, the
determinative question is which standard or test would best serve the purposes of asserting
judicial control in cyberspace. Ultimately, the answer rests on policy choices.As elucidated
upon above, the Category 1 ‘mere accessibility’ approach is far too intrusive, as it permits
a draconian reach into cyberspace, regardless of whether the parties had any connections
whatsoever with the forum state in dispute. The subjugation of every website to global
jurisdiction would undermine Internet growth as many webmasters would forego the
technology for fear of its secondary repercussions. The Zippo approach in Category 2 may
be less draconian in its scope, but nonetheless, by aggregating the assertion of personal
jurisdiction to the “nature and quality of commercialactivity that an entity conducts over
the Internet”,57 it dilutes the incentives of a web operator in uploading an interactive
website with the capacity to conduct electronic commerce. While public policy seeks to
increase cyber interactivity, enhance consumer choices and widen business frontiers, the
Zippo test stands as an obstacle to this progression. The actual contacts analysis underlying
the Category 3 cases does provide a tenable framework to determining jurisdictional
control. But the two branches of the test
i.e. the effects based and the actual online sales analysis should be applied concurrently
instead of being juxtaposed as alternatives to each other. In Panavision, the court had held
that the “application of the purposeful availment prong differs depending on whetherthe
underlying claim is a tort or contract claim.”58 This suggests that where an action arises in
tort, courts should apply only the effects based test. This legal rule is problematic on two
accounts. Firstly, this segregation is not borne out by case law. After all, the classic Zippo
test arose from a tortious claim in trademark infringement. Secondly, it unduly narrows
the scope of jurisdictional control as tort feasors often do notintentionally aim their actions
at a particular forum state. Some torts like trademark infringement are independent of the
tort feasor’s mens rea while others torts like defamation are directed at the person and not
the forum. Hence, to apply the effects test exclusively to determine jurisdiction would
exculpate too many cyber- tort feasors from

57
Supra note 32.
58
Supra note 40.

21
liability in cyberspace. By the abovementioned reasoning, the exclusive use of the specific
forum- targeting test as laid down in Callaway (Category 5 case) would face the same
objection as being too narrow in scope. Maintaining such a strict nexus between the forum
state and the cyber act would handicap our court’s effort to regulate cyber activities that
have a real and substantial connection with Canada. The actual online test permits courts
in finding proper jurisdiction, to take into account the electronic commercial transactions
conducted by web operator with the forum state, even if the transactions are wholly
unrelated to the underlying dispute in question. This should be permissible, given that a
foreign corporation has benefited from its commerce with Canada, it should simultaneously
be subjected to the burdens of such an association. Callaway’s exclusive targeting analysis,
without the application of the ‘actual online sales’ test, would hence provide tort feasors
with unwarranted refuge and protection in cyberspace. The dualistic approach of applying
both the targeting-centered framework and the actual online sales test as exemplified in the
category 4 cases strikes the right balance in asserting jurisdictional control in cyberspace.
While courts should guard against subjecting online businesses to the possibility of facing
suit in every jurisdiction in the world, they should also avoid turning the Internet into a
haven for cyber torts. While the actual online test ensures that corporations bears the burden
of any benefits gleaned from Internet transactions with the forum state, the concurrent
application of the targeting framework ensures that the individuals are not exculpated for
their cyber intentional torts. Our Canadian decisions are mostly grouped within Category
3. Millennium Music has yet found its way into our Canadian jurisprudence, but with time
there would be an alignment, given the positive adoption of American jurisprudence, as
observed in Easthaven. While there is a need for a conducive legal environment to spur the
growth of online businesses and harness the full potential of the information technology
revolution, wisdom dictates that courts should not go overboard and follow the likes of
Callaway. The Callaway court had set such a Herculean threshold for a complainant to
surmount, that cyber tort feasors may easily slip through the legal cracks. To date,
Millennium Music provides the best jurisprudential framework yet to delineate legal
borders in cyberspace. Online businesses should incorporate this juridical test in their legal
risk assessment of the Internet.

22
 CONCLUSION
Jurisdiction hinges on a state’s dominance over a geographic area. In contrast, the Internet
is an expression of the ability of technology to facilitate communication and transactions
independent of geographical boundaries. The mechanics of jurisdiction thus sits uneasily
with the amorphous structure of cyberspace. The development of the Millennium Music
test hence brings greater promise to the delineation of legal borders in cyberspace. The
flexibility of the common law in adapting to this new medium is integral to this evolution.
This juridical test supplies online businesses with a valuable aid to assessing their legal
liabilities in cyberspace, and enhances certainty in the efforts to order their affairs in
compliance with the law. To avoid legal ramifications in undesired jurisdictions, web
operators are also well advised to include forum selection clauses in online agreements and
harness the use of geographic identification technology to locate user addresses. The full
potentials of a world- wide market in cyberspace is alluring but its fruits has to be
cultivated prudently. A fine balance needs to be struck between regulation and revolution.

23
 BIBLIOGRAPHY

BOOKS

1. B. Sookman, Computer, Internet and Electronic Commerce Law, (Toronto:

Carswell, 2000).
2. G. Takach, Computer Law, (Toronto: Irwin Law, 1998).
3. M Geist, Internet Law in Canada, (Toronto, Captus Press, 2000).

ARTICLES

1. American Bar Association, Achieving Legal and Business Order in Cyberspace: A

Report on Global Jurisdiction Issues Created by the Internet (As visited on
10/02/07).
2. Bernadette Jew, Cyber-jurisdiction – Emerging Issues and Conflicts of Law when
Overseas Courts Challenge your Web <http://www.camla.asn.au> (As visited on
10/02/07).
3. Bradley A. Slutsky, Jurisdiction over Commerce on the Internet
<http://www.kslaw.com/library/articles.asp?123> (As visited on 10/02/07).
4. David R. Johnson and David G. Post, Law and Borders--The Rise of Law in
Cyberspace, 48 Stanford Law Review 1367 (1996)

WEB LINKS

1. https://cyber.harvard.edu/property99/domain/Betsy.html
2. https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?referer=&httpsredir=
1&article=1364&context=jil
3. https://www.legalserviceindia.com/legal/article-3329-analysis-of-cyber-
jurisdiction-in-india.html
4. http://docs.manupatra.in/newsline/articles/Upload/07D8E605-DE8C-435E-
A7D5-16508E156554.pdf

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