Inset Systems, Inc. v. Instruction Set, Inc.
155 A.L.R. Fed. 745, 937 F. Supp. 161, 1996 U.S. Dist. LEXIS 7160 (1996)
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Rule of Law:
Advertising on the Internet, which is continuously accessible to residents of a forum state, constitutes repeated solicitation of business under that state's long-arm statute and establishes sufficient minimum contacts to satisfy constitutional due process for the exercise of personal jurisdiction.
Facts:
- Inset Systems, Inc. ('Inset') is a Connecticut corporation that develops and markets computer software.
- In October 1986, Inset obtained a federal trademark registration for the name 'INSET'.
- Instruction Set, Inc. ('ISI') is a Massachusetts corporation with no offices, employees, or regular business operations in Connecticut.
- After Inset registered its trademark, ISI obtained the Internet domain address 'INSET.COM' to advertise its goods and services.
- ISI's website was continuously accessible to an estimated 10,000 Internet users in Connecticut.
- ISI also used the toll-free telephone number '1-800-US-INSET' to advertise its goods and services.
- Inset did not authorize ISI's use of its 'INSET' trademark in either the domain name or the toll-free number.
Procedural Posture:
- Inset Systems, Inc. filed a complaint for damages and injunctive relief against Instruction Set, Inc. in the U.S. District Court for the District of Connecticut, alleging federal trademark infringement and state law violations.
- Instruction Set, Inc. filed a motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3), arguing a lack of personal jurisdiction and improper venue.
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Issue:
Does a federal district court in Connecticut have personal jurisdiction over a Massachusetts corporation whose only contacts with Connecticut are the operation of a commercial website accessible to Connecticut residents and a national toll-free telephone number?
Opinions:
Majority - Covello, District Judge
Yes, the court has personal jurisdiction. A defendant who continuously advertises its products on a website accessible to residents of a forum state has purposefully availed itself of the privilege of conducting business in that state, thereby satisfying both the state's long-arm statute and constitutional due process requirements. The court reasoned through a two-part analysis. First, it found that ISI's continuous Internet advertising constituted 'repeatedly so solicited business' under the Connecticut long-arm statute, C.G.S. § 33-411(c)(2), comparing it to repeated newspaper advertisements. Second, the court held that due process was satisfied because ISI had established 'minimum contacts' with Connecticut by purposefully availing itself of the privilege of doing business in the state. By directing its advertising to all states via the Internet, ISI could 'reasonably anticipate being haled into court' in Connecticut. The court also found that exercising jurisdiction would not offend 'traditional notions of fair play and substantial justice,' given the minimal burden on the Massachusetts-based defendant and Connecticut's interest in the dispute.
Analysis:
This case is a foundational decision in the field of Internet law, establishing an early and broad interpretation of personal jurisdiction based on online activities. It asserted that maintaining a passive, commercial website accessible within a state could be enough to establish the 'minimum contacts' required for jurisdiction, even without any sales or physical presence. This principle expanded the concept of purposeful availment into the digital realm, suggesting that businesses could be subject to suit in any jurisdiction where their website was accessible. Later cases, notably Zippo Mfg. Co. v. Zippo Dot Com, Inc., would refine this approach by creating a 'sliding scale' test to differentiate between passive and interactive websites, but Inset remains significant as one of the first cases to grapple with and affirm jurisdiction based solely on Internet advertising.
