ALS Scan, Inc. v. Digital Service Consultants, Inc.
2002 WL 1309000, 293 F.3d 707 (2002)
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Rule of Law:
A state may exercise personal jurisdiction over an out-of-state person based on Internet activity only when that person (1) directs electronic activity into the state, (2) with the manifested intent of engaging in business or other interactions within the state, and (3) that activity creates a potential cause of action in a person within the state.
Facts:
- ALS Scan, Inc. is a Maryland corporation that creates and markets adult photographs for distribution over the Internet.
- Digital Service Consultants, Inc. ('Digital') is a Georgia corporation with its only place of business in Atlanta, Georgia.
- Digital, acting as an Internet Service Provider (ISP), provided bandwidth service to its customer, Alternative Products, Inc.
- Alternative Products copied and published hundreds of ALS Scan’s copyrighted photographs on its websites, which were accessible to users in Maryland and elsewhere.
- An employee of ALS Scan, located in Maryland, purchased an online membership to one of Alternative Products' websites and accessed the infringing photographs.
- Digital did not select the photographs for publication, had no knowledge they were posted, and received no income from Alternative Products' subscribers.
- Apart from its website's accessibility, Digital has no offices, contracts, clients, property, or advertising in Maryland.
Procedural Posture:
- ALS Scan, Inc. filed a copyright infringement lawsuit against Digital Service Consultants, Inc. and others in the U.S. District Court for the District of Maryland.
- Digital filed a motion to dismiss the complaint against it under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction.
- The district court granted Digital's motion, finding it lacked both specific and general jurisdiction over the company.
- ALS Scan, as the appellant, filed an interlocutory appeal of the dismissal to the U.S. Court of Appeals for the Fourth Circuit.
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Issue:
Does a Georgia-based Internet Service Provider (ISP) subject itself to personal jurisdiction in Maryland by providing bandwidth to a customer whose website infringes on a Maryland corporation's copyrights, when the ISP's only contact with Maryland is the accessibility of its and its customer's websites there?
Opinions:
Majority - Niemeyer
No. A Georgia-based ISP does not subject itself to personal jurisdiction in Maryland merely by providing bandwidth to a customer whose website is accessible in Maryland and causes injury there. The court held that exercising personal jurisdiction over Digital would violate due process because Digital's actions did not constitute sufficient minimum contacts with Maryland. Adopting the 'sliding scale' framework from Zippo v. Zippo Dot Com, the court established a three-part test for internet-based specific jurisdiction, requiring that an out-of-state defendant must (1) direct electronic activity into the state, (2) with an intent to engage in business or other interactions there, and (3) this activity must give rise to the cause of action. The court found Digital's role as an ISP to be passive, as it did not purposefully direct any activity toward Maryland or intend to engage in business there; it merely provided a service to a customer in Georgia. Furthermore, the court rejected general jurisdiction because Digital's own passive website, accessible in Maryland, did not rise to the level of 'continuous and systematic' contacts required for such jurisdiction.
Analysis:
This case was one of first impression in the Fourth Circuit, establishing a clear framework for analyzing personal jurisdiction in the context of internet activities. By adopting the influential Zippo 'sliding scale' test, the court provided a predictable standard that distinguishes between passive website operators and those who actively conduct business in a forum state. The decision is significant for protecting passive Internet Service Providers from being haled into court in any jurisdiction where their customers' content is viewed, thus preventing a situation where providing internet infrastructure would create universal jurisdiction. This precedent clarifies that merely enabling online activity is not the same as purposefully availing oneself of a state's laws and benefits, reinforcing traditional due process limits in the digital age.
