ALS Scan, Inc. v. Digital Service Consultants, Inc.
2002 WL 1309000, 293 F.3d 707 (2002)
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Rule of Law:
A court may exercise specific personal jurisdiction over a non-resident defendant based on their internet activity when the defendant (1) directs electronic activity into the forum state, (2) with the manifested intent of engaging in business or other interactions within that state, and (3) this activity creates a cause of action cognizable in the state’s courts.
Facts:
- ALS Scan, Inc., a Maryland corporation, 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, operating as an Internet Service Provider (ISP).
- Digital provided bandwidth services to its Georgia-based customer, Alternative Products, Inc.
- Alternative Products allegedly appropriated hundreds of ALS Scan's copyrighted photographs and published them on websites hosted using Digital's bandwidth service.
- An employee of ALS Scan, located in Maryland, purchased an online membership to one of Alternative Products' websites and accessed the allegedly infringing photographs.
- Digital had no offices, property, contracts, or clients in Maryland, and derived no income from the state.
- Digital maintained its own passive website, which was not used to transact business and was unrelated to the copyright infringement claim.
Procedural Posture:
- ALS Scan, Inc. filed a complaint for copyright infringement against Digital Service Consultants, Inc., and others in the U.S. District Court for the District of Maryland.
- Defendant Digital filed a motion to dismiss the complaint against it for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).
- The district court granted Digital's motion, dismissing it from the case.
- ALS Scan, the plaintiff, filed an interlocutory appeal of the district court's dismissal order to the U.S. Court of Appeals for the Fourth Circuit.
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Issue:
Does a federal court in Maryland have personal jurisdiction over a Georgia-based Internet Service Provider (ISP) that provided bandwidth services to a third-party website which published copyrighted photographs owned by a Maryland corporation, where the ISP's only connection to Maryland is its customer's website being accessible there?
Opinions:
Majority - Niemeyer, Circuit Judge
No, a federal court in Maryland lacks personal jurisdiction over the Georgia-based ISP. An out-of-state ISP that passively provides bandwidth to a customer, without purposefully directing its own activities toward the forum state, does not have the sufficient minimum contacts required by the Due Process Clause. The court adopted a three-part test based on the 'Zippo' sliding scale model to determine when internet activity creates specific jurisdiction. Under this test, jurisdiction is proper only when a defendant (1) directs electronic activity into the state, (2) with the intent to engage in business there, and (3) the activity gives rise to the claim. Here, Digital's role was merely passive; it provided a service from Georgia to a Georgia customer and did not purposefully avail itself of the privilege of conducting business in Maryland. Its actions did not involve selecting the infringing photos or targeting Maryland residents. The court also found that general jurisdiction was lacking, as merely operating a passive website accessible in Maryland does not constitute the 'continuous and systematic' contacts necessary for such a finding.
Analysis:
This case established the governing standard in the Fourth Circuit for analyzing personal jurisdiction in the context of internet activities. By adopting the influential 'Zippo' sliding-scale test, the court provided a clear framework that distinguishes between passive websites (which generally do not create jurisdiction) and interactive websites where a defendant purposefully engages in commercial activity with a state's residents. This decision is significant for internet-based businesses and service providers, as it clarifies that merely providing the technical infrastructure for the internet or operating a website accessible from a state is insufficient to subject a defendant to suit there. It reinforces the constitutional requirement of purposeful availment, ensuring that defendants are not haled into court in a foreign jurisdiction based on random, fortuitous, or attenuated contacts.
