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TAMBURO v. DWORKIN: 601 F.3d 693 (7th Cir. 2010)
FACTS
The plaintiff was an Illinois resident and the owner of a dog pedigree program that, after
rightfully taking information from other dog pedigree websites, was the subject of
retaliation against him by postings on the other company’s websites to boycott plaintiff’s
program, as well as blast emails to the plaintiff. The defendants were several owners of
dog pedigree websites, some from the United States, one from Canada, and one from
Australia. None had any ties with Illinois. Plaintiff contended that these actions by the
defendant companies were defamatory and tortiously interfered with his business.
The United States District Court for the Northern District of Illinois found that the court
lacked personal jurisdiction over the defendants and dismissed the case. The plaintiff
appealed.
JUDICIAL OPINION
The Court of Appeals for the Seventh Circuit was asked to determine whether the
transmission of blast emails and boycotting messages about another Internet company
can subject the defendant to personal jurisdiction in the plaintiff’s state of residence.
The court used the Calder v. Jones test and held that in this case, the defendants
“defame[d] and tortiously generate[d] a consumer boycott against [plaintiff] knowing
that he lived and operated his software business in Illinois and would be injured there.”
On this basis, the court held that the federal district court could exercise personal
jurisdiction over the defendants in Illinois.
CASE QUESTIONS
1.
What test was used in this case to determine that there was jurisdiction over the
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defendants in Illinois?
2.
In the new technological age, there is much litigation on whether one is subject to
personal jurisdiction even though he or she had never stepped foot in the
jurisdiction where the court was located or, for that matter, even heard of it. What is
your opinion on how cases such as this should be decided?
3.
Ethical Consideration: The court held in this case that the district court in Illinois
had personal jurisdiction over the defendant. Could this result be justified solely on
the idea that we want to discourage people from defaming individuals and
companies?
The Calder and Tamburo cases demonstrate that a court’s jurisdiction can extend as far
as the tortfeasor’s injury, even if that injury was caused by using electronic media.
Another way that personal jurisdiction might attach is by operation of a website. In the
last decade, the courts have considered various uses of websites and to what extent a
website operator’s actions or the content of the website can form the basis for the court’s
personal jurisdiction over the defendant.
The seminal case in this area is widely considered to be Yahoo!, Inc. v. La Ligue Contre Le
Racisme Et l’Antisemitisme.
YAHOO!, INC. v. LA LIGUE CONTRE LE RACISME ET
l’ANTISEMITISME: 433 F.3d 1199 (9th Cir. 2006)
While there has been debate over the general topic of Internet jurisdiction ever since the
Internet came into existence, concern over facing civil or criminal liability in foreign
jurisdictions because of the content of one’s website is a relatively new issue, fostered in
large part by the experiences of Yahoo! in France.18
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FACTS
France had enacted a law making it illegal and punishable with both civil and criminal
penalties to display or sell Nazi artifacts. Nazi material was being made available
through Internet Service Provider Yahoo!’s online auction service hosted out of the
United States (although Yahoo! France complied with the French law). In April 2000, La
Ligue Contre Le Racisme et L’Antisémitisme (“LICRA”) and L‘Union des Etudiants Juifs de
France (“UEJF”)19 filed suit in a French court, claiming that Yahoo! violated the French
Penal Code, which prohibits exhibition or sale of racist materials. The French court
found it had jurisdiction and found Yahoo! liable. It ordered Yahoo! to use all means
necessary to prevent French users from accessing its auction site. It further order Yahoo!
“to remove from ‘all browser directories accessible in the territory of the French
Republic’” the “negationists” heading, as well as all links “‘bringing together, equating, or
presenting directly or indirectly as equivalent’ sites about the Holocaust and sites by
Holocaust deniers.”20
Yahoo! then brought suit in a federal district court in California claiming, and seeking a
declaration, that the French court’s order was unenforceable. The court found that it had
jurisdiction over the two French organizations.21 It also decided that there was an actual
controversy, which was causing a real and immediate threat to Yahoo!, and that
enforcement of the French order in the United States would violate the First Amendment
of the U.S. Constitution. This decision was overturned by the Court of Appeals for the
Ninth Circuit, which concluded that the district court erred in finding that it had
personal jurisdiction over the French organizations.22 Jurisdiction in a U.S. court could
only be obtained, and Yahoo!’s First Amendment claim heard, if the French parties
sought enforcement of the French judgment in the United States—and that had not yet
happened.
JUDICIAL OPINIONS
In the first Ninth Circuit Court of Appeals decision, the three-member court panel stated
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the familiar test for determining whether jurisdiction existed:
Exercise of jurisdiction is consistent with these requirements of “minimum contacts”
and “fair play and substantial justice” where (1) the non-resident defendant has
purposefully directed his activities or consummated some transaction with the forum or
a resident thereof, or performed some act by which he purposefully availed himself of
the privileges of conducting activities in the forum, thereby invoking the benefits and
protections of its laws; (2) the claim arises out of or relates to the defendant’s forumrelated activities; and (3) the exercise of jurisdiction is reasonable.23
After applying the test, the court concluded:
LICRA and UEJF took action to enforce their legal rights under French law. Yahoo! makes
no allegation that could lead a court to conclude that there was anything wrongful in the
organizations’ conduct. As a result, the District Court did not properly exercise personal
jurisdiction over LICRA and UEJF.24
Yahoo! sought and was granted a rehearing en banc, that is, by the entire 11-member
Ninth Circuit Court of Appeals. Eight judges—a majority—decided that California did
have jurisdiction over the French organizations based on its actions in California, but
that the case should be dismissed for other reasons. There were several opinions issued
in the appeal.
The Majority (Judge W.A. Fletcher, joined by Chief Judge Schroeder and
Judges Hawkins, Fisher, Gould, Paez, Clifton, and Bea)
A majority of eight judges concluded that the U.S. district court had properly exercised
personal jurisdiction over the defendants. They reasoned that personal jurisdiction
could be exercised over the defendants because the French court order required Yahoo!
to take actions in California (where Yahoo! was headquartered) and the order was under
threat of substantial penalty.
In a specific jurisdiction inquiry, we consider the extent of the defendant’s contacts with
the forum and the degree to which the plaintiff’s suit is related
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to those contacts. A strong showing on one axis will permit a lesser showing on the
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other.… The case before us is the classic polar case for specific jurisdiction described in
International Shoe, in which there are very few contacts but in which those few contacts
are directly related to the suit.25
The court reviewed the French organizations’ actions under the applicable International
Shoe test, holding that a court in California could exercise personal jurisdiction over
LICRA based on its sending a cease-and-desist letter to Yahoo! in California, serving
process on Yahoo!, and obtaining and serving a French court order. Together, these
contacts were enough to confer jurisdiction under Calder v. Jones.
LICRA and UEJF have obtained two interim orders from the French court directing
Yahoo! to take actions in California, on threat of a substantial penalty. We agree with
LICRA and UEJF that the French court’s orders are appropriately analyzed under the
Calder effects test.
The first two requirements are that LICRA and UEJF “have ‘(1) committed an intentional
act, [which was] (2) expressly aimed at the forum state[.]’” It is obvious that both
requirements are satisfied. LICRA intentionally filed suit in the French court.… Further,
LICRA and UEJF’s suit was expressly aimed at California. The suit sought, and the French
court granted, orders directing Yahoo! to perform significant acts in California. It is of
course true that the effect desired by the French court would be felt in France, but that
does not change the fact that significant acts were to be performed in California. The
servers that support yahoo.com are located in California, and compliance with the
French court’s orders necessarily would require Yahoo! to make some changes to those
servers. Further, to the extent that any financial penalty might be imposed pursuant to
the French court’s orders, the impact of that penalty would be felt by Yahoo! at its
corporate headquarters in California.26
The majority concluded that the California federal court had jurisdiction over the French
organizations.
[C]onsidering the direct relationship between LICRA and UEJF’s contacts with the forum
and the substance of the suit brought by Yahoo!, as well as the impact and potential
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impact of the French court’s orders on Yahoo!, we hold that there is personal
jurisdiction.27
Despite the majority’s conclusion that jurisdiction existed, the action was dismissed by a
majority of six—only three of whom found jurisdiction. Three judges (Chief Judge
Schroeder and Judges W.A. Fletcher and Gould) concluded “that the suit is unripe,” that
is, not ready for litigation. When their votes were combined with “those of three
dissenting judges who conclude that there is no personal jurisdiction over LICRA and
UEJF, there are six votes to dismiss Yahoo!’s suit.”28
The Concurrence (Judges Ferguson, O’scannlain, and Tashima)
Judge Ferguson authored a concurring opinion in which he asserted that dismissal was
appropriate because personal jurisdiction was not present. LICRA did not expressly aim
its French litigation activities at California as required to find jurisdiction under Calder.
LICRA and UEJF’s suit was not “expressly aimed” at California under the “effects” test of
[Calder v. Jones], which, I agree with Judge Fletcher, governs this case and may be
appropriately applied to the French court orders.
An intentional act aimed exclusively at a location other than the forum state, which
results in harm to a plaintiff in the forum state, does not satisfy the “express aiming”
requirement under Calder.29 …
LICRA and UEJF’s suit sought French court orders directing Yahoo! to perform significant
acts locally in France, not in California.…
To comply with French law, Yahoo! would need “to prevent surfers calling from France
from viewing these [anti-Semitic] services on their computer screen”; “to identify the
geographical origin of a visiting site from the caller’s IP address, which should enable it
to prevent surfers calling from France … from accessing services and sites which[,] when
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243
displayed on a screen installed in France[,]… is liable to be deemed an offence in France
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and/or to constitute a manifestly unlawful trouble [under French law]”; and “to take all
measures to dissuade and make impossible any access by a surfer calling from France to
disputed sites and services of which the title and/or content constitutes a threat to
internal public order.” (emphases added).
There is no evidence whatsoever that LICRA and UEJF had any intention to expressly
aim their suit at California.30
Judge O’scannlain’s Separate Concurrence (Joined by Judges Ferguson and
Tashima)
In a separate concurrence, Judge O’scannlain took issue with the majority’s
determination that under Calder the relevant forum contacts need not be wrongful. He
asserted that under Calder, the rule of jurisdiction applies to intentional tortious actions
directed at the forum state.
Neither [LICRA nor UEJF] has ever carried on business or any other activity through
which they have availed themselves of the benefits and protections of California’s laws,
nor should either party have reasonably anticipated that it would be haled into court in
California to answer for the legitimate exercise of its rights in France.31
He also believed the majority went too far.
The personal jurisdiction requirement is not merely a rule of civil procedure; it is a
constitutional constraint on the powers of a State, as exercised by its courts, in favor of
the due process rights of the individual….
The Supreme Court has never approved such a radical extension of personal jurisdiction
as would sanction the majority’s holding that, by litigating a bona fide claim in a foreign
court and receiving a favorable judgment, a foreign party automatically assents to being
haled into court in the other litigant’s home forum.32
Judge Tashima’s Separate Concurrence (Joined by Judges O’scannlain and
Ferguson)
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Finally, Judge Tashima also wrote a separate concurrence and was joined by the other
two dissenting judges. He criticized the majority’s application of Calder:
[No prior case] based a finding of specific jurisdiction on conduct expressly aimed at the
forum state which conduct was not also a contact with the forum state. Here, for the first
time, the majority completely divorces the expressly-aimed conduct from the
requirement that that conduct also be a contact with the forum state. Thus, I submit that
the finding of personal jurisdiction on the basis of Calder’s “effects” test in the
circumstances of this case is a radical extension of that doctrine.33 …
Whatever other conduct Calder’s “effects” test was intended to encompass, it surely was
not intended to include attribution of the effects of an intervening court’s order when a
citizen does no more [than] petition a court in his own country for relief under domestic
law, particularly in a case, such as this, in which defendants have had no contact that
would “provide a sufficient basis for jurisdiction.”34
CASE QUESTIONS
1.
Does a U.S. court have jurisdiction over a foreign organization that obtains a
judgment against a U.S. defendant in a foreign court?
2.
Ethical Consideration: Yahoo!’s French subsidiary, and eventually Yahoo! itself,
took all Nazi parapher nalia from the site, complying with French law—what does
this say about the foreign court’s actual power? Was Yahoo! wise to do so, or should
it have defied the French court’s order?
3.
The litigation took approximately six years and in volved multiple appeals and some
related criminal proceedings—what does this tell us about the actual costs of
complex cyber-litigation?
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The following case highlights the problems associated with this joint development of
technology and technology transfer.
UNIVERSITY OF PITTSBURGH v. TOWNSEND: 2007 U.S. Dist.
LEXIS 56860 (E.D. Tenn. 2007)
FACTS
Dr. David Townsend, along with other scientists, worked on Positron Emission
Tomograph (PET) imaging at the University of Geneva. (PET imaging is a process by
which diagnostic images are created based on the detection of radioactive isotopes
injected into patients prior to the scan.) During this time, in 1991 Dr. Townsend
conceived the idea of combining a PET scanner with a CT scanner. (CTs use special x-ray
equipment to obtain image data from different angles, and then through computer
processing, reassembles the data to show a cross-section of body tissues and organs.) In
1992, Dr. Townsend signed a consulting agreement with another of the Defendants: CTI
Molecular Imaging, Inc., a manufacturer of PET scanners. In this agreement, Dr.
Townsend assigned all of his intellectual property rights to CTI. The technology was not
built out yet though.
The University of Pittsburgh then recruited Dr. Townsend to join its faculty as an
Associate Professor of Radiology and he was provided with an engagement letter along
with a Faculty Handbook. The Handbook contains a section entitled “University Policy
on Patents” in which it claims ownership and control of the worldwide patent rights that
result from activities of its faculty. Inventors are to receive 30%, and the University is to
receive 70% of the net financial returns from the sale, licensing or other transfer of such
rights. Dr. Townsend also filled out conflict of interest forms in which he disclosed that
he is a paid consultant with CTI, and that a patent application on the PET/CT scanner was
filed by CTI.
Dr. Townsend commenced work at the University; he applied for and was awarded a
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grant from the National Institutes of Health (NIH). The funds were to be used to research
and build a prototype. Federal grant money is paid directly to the universities and
disbursed from there. The prototype was completed in 1998. CTI tested it, and later CTI
personnel installed and maintained it at the University. Dr. Townsend testified that there
was no NIH funding for the clinical validation of the PET/CT scanner, and that NIH had
specifically declined to fund the clinical portion of the process. At the end of the term of
this NIH Grant in 1999, Dr. Townsend executed a Final Invention Statement and
Certification, along with a report for them, certifying that the invention was “conceived
and/or first actually reduced to practice during the course of work under the Grant.”
Later on at the suggestion of the University’s Office of Technology Management (OTM),
Dr. Townsend submitted an “Invention Disclosure Statement” for the invention, listing
him and Dr Ronald Nutt of CTI as co-inventors and CTI as a potential licensee; that it was
conceived in Geneva, and first operational in the U.S. in 1998, and that an NIH grant
provided support. The form was incomplete; it was unsigned and did not include any
statement assigning an interest to the University. [It is not uncommon in technology
transfer offices to be provided with assignments at a later date, when the invention is
closer to the licensing stages.]
In 1999 the University’s Technology Transfer Committee approved the filing of a patent
application on the invention described in Dr. Townsend’s Invention Disclosure
Statement. The University’s attorneys then filed a provisional patent application for the
combined PET/CT scanner listing Townsend and Nutt as co-inventors. On the third page
of the application is a form entitled “Statement Claiming Small Entity Status—
Independent Inventor,” and there, Dr. Townsend represented that he assigned, granted,
conveyed, or licensed rights to CTI.
The University evidently did not read this, and proceded under its abiding assumption
that it owned the technology. The University elected title to the invention pursuant to the
provisions of the Bayh-Dole Act. CTI began the commercial development of the scanner
in March 2000. In 2001, University officials asked Dr. Townsend to sever his relationship
with CTI and instead work with CTI’s competitor General Electric. Dr. Townsend refused
and left the University faculty. Before leaving, Dr. Townsend entered into a Royalty
Agreement with CTI, that in consideration of his assignment of patent rights he would
receive a royalty rate of $1,500.00 per unit sold.
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The University claims ownership of this technology asserting that is was assigned to the
school. The
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273
University alleges that Defendants subverted and misappropriated its rights and
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interests in valuable technology that was developed collaboratively at its campus; that
the wrongful actions include breaches of and interference with the University’s
contractual right to joint ownership in the technology, as well as tortious
misrepresentations and misappropriation. The Plaintiffs assert that Defendants
remained silent in response to the University’s repeatedly stated view that it had an
ownership interest in the scanner and associated intellectual property. At no time during
discussion the University argues, did any of the Defendants deny that the University had
an ownership interest, nor did any of the Defendants indicate that Dr. Townsend would
not be executing an assignment in favor of the University. The Defendants filed a motion
for summary judgment.
JUDICIAL OPINION: JUDGE SHIRLEY
In the present case, the facts … are not in dispute. Further, the fact that Dr. Townsend did
not assign his interest in the PET/CT scanner invention and the fact that the University
was provided with a copy of the provisional patent application are also … not in dispute.
The only question that remains is whether the University acted with reasonable
diligence upon learning these facts. The issue of the reasonableness of the University’s
actions is a question of law for the Court. In the present case, the University concedes
that it was aware of the lack of assignment of Dr. Townsend’s intellectual property
rights, but contends that the lack of assignment did not raise any “red flags” due to the
“continuing affirmations” by the Defendants recognizing the University’s ownership
interest. The University’s claim appears to the Court to be more in the nature of a claim
of fraudulent concealment. The Defendants’ actions need not rise to fraud or
concealment in the strictest sense, that is, with an intent to deceive; unintentional fraud
or concealment is sufficient. Mere mistake, misunderstanding or lack of knowledge is
not sufficient to invoke the doctrine of fraudulent concealment. The burden is on the
Plaintiff to show by clear and convincing evidence that such fraud or concealment
occurred.
The Court finds that the University cannot carry its burden of demonstrating that the
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Defendants engaged in acts of fraudulent concealment as there was never an affirmative
independent act of concealment upon which the Plaintiff justifiably relied. While the
University points to instances where the Defendants remained silent in response to the
University’s stated view of its ownership interest, the University cannot show any
affirmative act or statement prior to the filing of the patent application where the
Defendants made any affirmative statement or conduct re-affirming the University’s
position on ownership.
Upon careful consideration of the entire record, and viewing facts in the light most
favorable to the Plaintiff, the Court concludes that the University reasonably should have
known about the Defendants’ failure to acknowledge any ownership interest on behalf
of the University as of 1999. Later too, the University received a copy of the provisional
patent application, which contained the Small Entity Status—Independent Inventor form
listing CTI as the assignee of the technology. This information was available, and the
University could have discovered it, through the exercise of reasonable diligence.
Motions for Summary Judgment GRANTED. The action is DISMISSED WITH PREJUDICE.
Defendants may recover their costs of this action.
CASE QUESTIONS
1.
Say you were brought in to advise the university—that all of this happened, but they
did not want to file a lawsuit. What other strategies do you recommend for them to
pursue?
2.
How would you rewrite the university’s policies to encompass situations such as
this?
3.
With regard to the legal claims in this case, Defendants were not liable; do you
consider that any ethical obligations were breached?
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