Older Uniform Acts

Jurisdiction and the Internet Are the Traditional Rules Enough 1998


Footnote: 1 This paper is a synthesis of research and analysis by the Ogilvy Renault Internet group, in particular by Frédéric Bachand, Christian Beaudry, Gregory Bordan, Andrew Foti, Sally Gomery and Claudine Roy.
(c) Ogilvy Renault, 1998

Footnote: 2 See for example United States of America v. Thomas, 74 F.3d 701 (1996) (although this case could be distinguished because it involved a bulletin board service rather than a website).

Footnote: 3 Trademark and copyright infringement, tortious interference with contracts and competition issues have so far been the most fruitful source of cases arising from internet use. American decisions include Bensusan Restaurant Corp. v. King, 40 U.S.P.Q. (2d) 1519 (S.D.N.Y.), conf'd by the U.S. Court of Appeals (2d cir.) on Sept. 10, 1997; Cybersell Inc. v. Cybersell Inc. (U.S.C.A., 9th Cir. 1997); Hearst Corp. v. Goldberger, 1997 WL 97097 (S.D. N.Y. 1997); Heroes Inc. v. Heroes Foundation, 958 F.Supp. 1 (D.D.C. 1996); IDS Life Insurance Co. v. Sun America Inc., 958 F. Supp. 1258 (N.D. Ill. 1997); Inset Systems Inc. v. Instruction Set Inc., 937 F.Supp. 161 (D. Conn. 1996); Maritz Inc. v. Cybergold Inc., 947 F. Supp. 1328 (E.D. Mo. 1996); McDonough v. Fallon McElligott Inc., 40 U.S.P.Q. (2d) 1826 (S.D. Cal. 1996); Panavision International, L.P. v. Toeppen, 938 F. Supp. 616 (C.D. Cal. 1996); Playboy Enterprises Inc. v. Chuckleberry Publishing Inc., 39 U.S.P.Q. (2d) 1746 and 1846 (S.D.N.Y. 1996); Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997).

Footnote: 4 Cases which have considered jurisdiction in cases of alleged slander and defamation over the internet include California Software Inc. v. Reliability Research Inc., 631 F. Supp. 1356 (C.D. Cal. 1986); Naxos Resources (U.S.A.) Ltd. v. Southam Inc., 1996 WL 662451 (C.D. Cal. 1996); It's in the Cards v. Fuschetto, 1995 Wisc. App. LEXIS 489 (C.A. Wis. 1995).

Footnote: 5 The leading case on deceptive trade practices on the internet is Minnesota (State of) v. Granite Gate Resorts, Inc., 568 N.W. 2d 715 (Minn. C.A. 1997).

Footnote: 6 Decisions which have discussed the proper forum for contractual disputes arising from internet use include Beverage Management Solutions Inc. v. Yankee Spirits Inc., 460 SE 2d 564 (GA C.A 1995); Cody v. Ward, 954 F.Supp. 43 (D. Conn. 1997); Compuserve Inc. v. Patterson, 89 F. 3d 1257 (6th Cir. 1996); Digital Equipment Corp. v. Altavista Technology Inc., 960 F. Supp. 456 (D. Mass. 1997); Edias Software International v. Basis International Ltd., 947 F.Supp. 413 (D. Ariz. 1996); Hall v. LaRonde, 66 Cal. Rptr. 2d 399(Ca. C.A., 1997); Pres-Kap Inc. v. System One Direct Access Inc., 636 So 2d 1351 (Fla. App. 3 Dist. 1994); Resuscitation Technologies Inc. v. Continental Health Care Corp., 1997 WL 148567 (S.D. Ind. 1997).

Footnote: 7 This may become particularly problematic in the context of internet dispute, but the broad topic of choice of law goes beyond the scope of this paper. There are certain well- recognized situations where substantive foreign law will be held to apply: for example, where the parties have included a choice of law provision in a contract; where under the forum's own laws, status is determined under the laws of the place of birth or marriage; in tort, where lex loci delicti applies; and in the enforcement of foreign judgments (assuming that the application of foreign law does not offend public order).

Footnote: 8 See discussion of Inset Systems Inc. v. Instruction Set Inc., 937 F. Supp. 961 (D. Conn. 1996), infra.

Footnote: 9 Admittedly it is less probable that courts will be too reticent to take competence over disputes simply because they involve the use of the internet. As a judge of the Federal Court recently remarked in allowing an injunction against a website operator apparently in violation of trademark: "It may perhaps be said that the case before me is already one in which, notwithstanding the peregrinations of the Internet in terms of seamless borders and its obtrusive presence across whole continents, the basic principles of property ownership require continuing protection." See Tele-Direct (Publications) Inc. v. Canadian Business Online Inc., [1997] F.C.J. No. 1387 (unreported decision of Joyal J. on September 17, 1997, court file no. T-1340-97).

Footnote: 10 Courts in other jurisdictions in Europe and elsewhere have also dealt with courts' jurisdiction over internet disputes, but due to space considerations this caselaw will not be discussed.

Footnote: 11 Reno v. American Civil Liberties Union, 000 U.S. 96-511 (1997), http://supct.law.cornell.edu/supct/hmtl/96-511.ZS.html .

Footnote: 12 See, generally, P. HOGG, Constitutional Law of Canada, (Carswell, Toronto, 1992), at pp. 565 et seq..

Footnote: 13 Westcoast Energy Inc. v. Canada (National Energy Board), S.C.C., n °25259, March 18, 1998, at p. 30.

Footnote: 14 Id., at p. 30.

Footnote: 15 E.g. Capital Cities Communications Inc. v. Canadian Radio-Television Commission, [1978] 2 S.C.R. 141 (television); Toronto v. Bell Telephone Co., [1905] A.C. 52, Alberta Government Telephones v. Canadian Radio-Television Commission, [1989] 2 S.C.R. 225 and Téléphone Guévremont Inc. v. Québec (Régie des télécommunications), [1994] 1 S.C.R. 878 (telephone).

Footnote: 16 Re Regulation and Control of Radio Communications in Canada, [1932] A.C. 304 (P.C.); Capital Cities Communications Inc. v. Canadian Radio-Television Commission, [1978] 2 S.C.R. 141, at p. 161.

Footnote: 17 See, for example, D. MULAN and R. BEAMAN, "The Constitutional Implications of the Regulation of Telecommunications", (1973) 4 Queens L.J. 67, at p. 71. The Ontario Court of Appeal concluded likewise in Re C.F.R.B. and Attorney-General for Canada, [1973] 3 O.R. 819, at p. 823.

Footnote: 18 R.A. BRAITT, "The Constitutional Jurisdiction to Regulate the Provision of Telephone Services in Canada", (1981) 13 Ott. L.R. 53, at pp. 79 et seq.

Footnote: 19 For an informative survey of the case law, see P. HOGG, Constitutional Law of Canada (Carswell, Toronto, 1992), at pp. 565 et seq.

Footnote: 20 Bell Canada v. Quebec (Commission de la santé et de la sécurité du travail), [1988] 1 S.C.R. 749, at p. 762.

Footnote: 21 Capital Cities Communications Inc. v. Canadian Radio-Television Commission, [1978] 2 S.C.R. 141, at p. 162.

Footnote: 22 In Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927, the Supreme Court found that a statute regulating advertising addressed to minors, including adverstising broadcast on television, was intra vires Quebec's National Assembly because the provincial statute specifically targeted advertisers, not broadcasters. See also Attorney General of Quebec v. Kellogg's Co. of Canada, [1978] 2 S.C.R. 211 and Air Canada v. Ontario (Liquor Control Board), [1997] 2 S.C.R. 581, at p. 609.

Footnote: 23 For example, art. 3134 of the Civil Code of Quebec states that: "In the absence of any special provision, the Quebec authorities have jurisdiction when the defendant is

domiciled in Quebec." In Ontario, the assumption of jurisdiction over defendants residing within the province is implicit in rule 17 of the Rules of Civil Procedure, which establishes the circumstances in which a defendant not in Ontario may be served with an originating process without leave of the court. In personam jurisdiction is preserved in secart. 3(d) of the Uniform Law Conference of Canada'sLCC's draft Uniform Court Jurisdiction and Proceedings Transfer Act (hereinafter the "Draft Uniform Jurisdiction Act") which states that "A court has territorial competence in a proceeding that is brought against a person only if . that person is ordinarily resident in" the enacting province's territory "at the time of the commencement of the proceeding". The Uniform Act is at http://www.law.ualberta.ca/alri/ulc/acts/ejurisd.htm .

Footnote: 24 This principle was adopted by the Supreme Court of Canada in Morguard Investments Ltd. v. De Savoye , [1990] 3 S.C.R. 1077 and upheld subsequently in Hunt v. T & N plc, [1993] 4 S.C.R. 289. In the latter decision, the Supreme Court of Canada wrote that the "real and substantial connection" test is grounded in constitutional values. See also J.-G. Castel, Canadian Conflict of Laws 4th ed. (Butterworths, Toronto, 1997) at pp. 52 et seq.

Footnote: 25 Art. 3148, al. 2 C.C.Q. and secart. 10(h) of the Draft Uniform Jurisdiction Act. Rule 17.02(p) of the Ontario Rules of Civil Procedure simply provides that extraterritorial service may be effected without leave on any person "carrying on business in Ontario".

Footnote: 26 Art. 3148, al. 3 C.C.Q., rule 17.02(g) of the Ontario Rules of Civil Procedure and secart. 10(g) of the Draft Uniform Jurisdiction Act.

Footnote: 27 Art. 3148, al. 3 C.C.Q. and rule 17.02(h) of the Ontario Rules of Civil Procedure.

Footnote: 28 Art. 3148, al. 3 C.C.Q. and secart. 10(e) of the Draft Uniform Jurisdiction Act. Rule 17.02(f)(iv) of the Ontario Rules of Civil Procedure similarly provides that an out-of- Province defendant may be served without leave in an action arising from a "breach of contract . committed in Ontario", which presumably implies that contractual obligations were to be performed there.

Footnote: 29 Art. 3148, al. 4 C.C.Q.; rule 17.02(f)(iii) of the Ontario Rules of Civil Procedure; and secart. 3(c) of the Draft Uniform Jurisdiction Act.

Footnote: 30 Rule 17.02(f)(ii) of the Ontario Rules and secart. 10(e)(ii) of the Draft Uniform Jurisdiction Act. This is not a ground for competence explicitly recognized in the Quebec Civil Code, although a choice of law provision mandating the application of Quebec law

would certainly be relevant to the issue of jurisdiction.

Footnote: 31 Arts. 3141 et seq. C.C.Q.; Divorce Act, R.S.C. 1985, ch. 3 (2d supp.), ss. 3-7; rule 17.02(j), (k) and (l) of the Ontario Rules of Civil Procedure. Rules governing competence over family law matters are not included in the Draft Uniform Jurisdiction Act.

Footnote: 32 Arts. 3152 and 3154 C.C.Q.; rules 17.02(a), (b), (c), (d) and (e) of the Ontario Rules of Civil Procedure and sarts. 10 (a), (b), (c) or (d) of the Draft Uniform Jurisdiction Act.

Footnote: 33 Art. 3136 C.C.Q. (which actually refers to "sufficient connection") and secart. 3(e) of the Draft Uniform Jurisdiction Act. Common law provinces such as Ontario generally provide that where a plaintiff asserts a "real and substantial connection" not explicitly provided for in the rules, leave of the court must be obtained before the non-resident defendant may be served; see rule 17.03(1) of the Ontario Rules of Civil Procedure.

Footnote: 34 Hunt v. T & N plc, [1993] 4 S.C.R. 289and Tolofsen v. Jensen, [1994] S.C.R. 1022.

Footnote: 35 For a more complete discussion of the rules governing forum in the U.S. and their impact on dispute related to the internet, see Barry Sookman, "Personal Jurisdiction and the Internet: If you put material in Cyberspace, Where can you be sued?", a paper presented at the Computer and Cyberspace Law Convention at the University of Dayton School of Law in July 1997.

Footnote: 36 Helicopteros Nationales de Columbia, S.A. v. Hall, 466 U.S. 408; Data Disc Inc. v. Systems Technology Associations Inc., 557 F. 2d 1280 (9th Cir. 1977).

Footnote: 37 International Shoe Co. v. Washington, 326 U.S. 310.

Footnote: 38 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286.

Footnote: 39 This test is used by both the Ninth Circuit Court of Appeals and the Sixth Circuit Court of Appeals. For an example of how it has been applied in a lawsuit involving internet issues, see CompuServe Inc. v. Patterson, supra at note 6.

Footnote: 40 Burger King Corp. v. Rudzewicz, 471 U.S. 462; CompuServe Inc. v. Patterson, supra at note 6; California Software Inc. v. Reliability Research, Inc, supra at note 4.

Footnote: 41 Burger King Corp. v. Rudzewicz, ibid.; World-Wide Volkswagen Corp. v. Woodson, supra at note 38.

Footnote: 42 Rule 17.06(2) of the Ontario Rules of Civil Procedure says that a court may stay a proceedings or set aside service of a non-resident defendant if it is satisfied that Ontario is not "a convenient forum" for the hearing of the proceeding. SecArt. 14 of the Draft Uniform Jurisdiction Act says that a case may be transferred to the court of another jurisdiction if the receiving court has subject matter competence in the proceedings and it is a "more appropriate forum"

Footnote: 43 Amchem Products Inc. v. British Columbia, [1993] 1 S.C.R. 897.

Footnote: 44 For good examples of the application of such principles, see Frymer v. Brettschneider (1994), 28 C.P.C. (3d) 84 (Ont. C.A.) and MacDonald v. Lasnier (1994), 21 O.R. (3d) 177 (Ont. Gen. Div.).

Footnote: 45 In Dennis v. Salvation Army Grace General Hospital (1997), 14 C.P.C. (4th) 207 (N.S.C.A.), a medical malpractice suit, the defendant physicians and hospital moved to stay the proceedings in Nova Scotia on the grounds that all of the alleged tortious conduct had taken place in Newfoundland, all of the defendants resided in Newfoundland, and all of the hospital and medical records relating to the alleged malpractice were also there. These factors seemed to argue strongly for a transfer of the case to the courts of Newfoundland. The Nova Scotia Court of Appeal nevertheless reversed the motions court judgment allowing the stay, on the basis that the plaintiffs would face great financial and psychological hardship in returning to Newfoundland for discoveries and the trial, and that damages had occurred in both Newfoundland and Nova Scotia, where the plaintiffs had moved shortly after the alleged malpractice took place. See in the same vein Oakley v. Barry (N.S.C.A. no. 137568, judgment rendered March 27, 1998) and Dunlop v. Connecticut College (1996), 50 C.P.C. (3d) 109 (Ont. Gen. Div.).

Footnote: 46 Frymer v. Brettschneider and MacDonald v. Lasnier, supra at note 32.

Footnote: 47 A very recent decision by the Ontario Court (General Division) touched on the issue peripherally. In Kitakufe v. Oloya, [1998] O.J. No. 2537 (unreported decision of Himel J. dated June 18, 1998 in Court file no. 97-CV-133151), an Ontario resident sued for damages arising from statements about him in a Ugandan newspaper, extracts of which were reproduced on the internet. The defendant brought a forum non conveniens motion to stay the suit in Ontario, alleging that Uganda was the more convenient forum. Madamr . Justice Himel dismissed the motion. ShHe did not discuss the effect of the internet posting on the jurisdictional issue, but did state that the plaintiff's alleged damages would have been suffered in Ontario. Beyond this, the Court's analysis is made on the basis of traditional forum non conveniens factors, such as the residence of the defendant, the location of expert witnesses, and potential hardship and expense associated with being forced to sue in Uganda.

Footnote: 48 Remarkably, the decision of the U.S. District Court in California in California Software Inc. v. Reliability Research Inc. dates from 1986, almost 10 years before any other reported case. It is no coincidence that this case involved parties involved in computer software programming and distribution. See supra at note 4.

Footnote: 49 Supra at note 3.

Footnote: 50 Supra at note 3.

Footnote: 51 Supra at note 3.

Footnote: 52 Supra at note 5.

Footnote: 53 See the Office de la langue française's brochure entitled "Information Technologies in French. It's Your Right . It's Your Duty"; see the Commission de l'accès à l'information's website at www.cai.gouv.qc.ca/auto.html ("L'accès à l'information et la confidentialité des renseignements personnels sur l'autoroute de l'information").

Footnote: 54 In a similar vein see Naxos Resources (U.S.A.) Ltd. v. Southam Inc., 1996 W.L. 662451 (C.D.Calif. 1996).

July 1998

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