Zippo Manufacturing Co v Zippo Dot Com Inc

Facts

• Zippo Manufacturing Co. made lighters in Bradford, Pennsylvania and held the "Zippo" trademark
• Zippo Dot Com Inc., a California corporation, operated an internet news service at zippo.com and zippo.net
• Zippo Dot Com had approximately 3,000 paying subscribers in Pennsylvania who signed up online
• It had also contracted with seven internet service providers in Pennsylvania for access
• There was no physical office, employee, or property in Pennsylvania
• Zippo Manufacturing sued for trademark dilution and infringement in the Western District of Pennsylvania

Issues

1. Whether operating a commercial website accessible from Pennsylvania, with subscribers there, establishes personal jurisdiction under the Due Process Clause
2. What test should courts apply to determine when internet contacts suffice for jurisdiction

Held

• The court has jurisdiction because Zippo Dot Com conducted continuous, deliberate commercial activity directed at Pennsylvania residents (3,000 contracts with PA subscribers, 7 ISP contracts)
• A sliding scale applies: (1) active sites conducting business = jurisdiction; (2) passive sites displaying information = no jurisdiction; (3) interactive sites = analyse level and commercial nature of exchange
• This case falls at the "active" end: repeated, knowing commercial contacts with forum residents
• Motion to dismiss denied

Ratio Decidendi

The constitutionality of exercising jurisdiction over an out-of-state defendant based on internet contacts depends on the nature and quality of commercial activity conducted over the internet. A spectrum exists from passive information display (no jurisdiction) through interactive exchange (fact-specific inquiry) to repeated knowing commercial transactions with forum residents (jurisdiction proper). Physical presence is not required; purposeful availment through digital commerce suffices.