Is There a There There: Towards Greater Certainty for Internet Jurisdiction

Abstract

The unique challenge presented by the Internet is that compliance with local laws is rarely sufficient to assure a business that it has limited its exposure to legal risk. The paper identifies why the challenge of adequately accounting for the legal risk arising from Internet jurisdiction has been aggravated in recent years by the adoption of the Zippo legal framework, commonly referred to as the passive versus active test. The test provides parties with only limited guidance and often results in detrimental judicial decisions from a policy perspective. Given the inadequacies of the Zippo passive versus active test, the paper argues that it is now fitting to identify a more effective standard for determining when it is appropriate to assert jurisdiction in cases involving predominantly Internet-based contacts. The solution submitted in the paper is to move toward a targeting-based analysis. Unlike the Zippo approach, a targeting analysis would seek to identify the intentions of the parties and to assess the steps taken to either enter or avoid a particular jurisdiction. Targeting would also lessen the reliance on effects-based analysis, the source of considerable uncertainty since Internet-based activity can ordinarily be said to create some effects in most jurisdictions. To identify the appropriate criteria for a targeting test, the paper recommends returning to the core jurisdictional principle -- foreseeability. Foreseeability in the targeting context depends on three factors -- contracts, technology, and actual or implied knowledge.