Coastal Video Communications, Corp.
v.
The Staywell Corporation

59 F.Supp.2d 562 (E.D. Va. 1999)

What's Going On?

Motion by Defendant to dismiss Plaintiff's action seeking a declaration that its publication does not infringe on copyrighted material contained in Defendant's publication, and motion by Plaintiff seeking discovery on the issue of personal jurisdiction.

Who's Who?

Plaintiff     :

Coastal Video Communications, Corp. – a Virginia corporation, publisher of an employee handbook titled “Defending Your Safety Zone: Back Protection.”

Defendant :

The Staywell Corporation, d/b/a Krames Communications – a Delaware Corporation with its principal place of business in California, publisher of “Safety Zone: Using Natural Limits to Protect Your Back.”

Facts:

Plaintiff Coastal Video Communications, Corp. is a Virginia corporation that publishes an employee handbook titled “Defending Your Safety Zone: Back Protection.” Defendant Krames Communications is a Delaware Corporation, with its principal place of business in California, that publishes an employee handbook titled “Safety Zone: Using Natural Limits to Protect Your Back.” Defendant sells its products to customers in fifty countries. Defendant has sold and distributed products in Virginia, has sent catalogs and other mailings to Virginia, and maintains a registered agent in Virginia. Defendant also maintains a Web site that advertises over 850 of its products, including the handbook at issue, and allows customers to order the products over the Internet. Customers may also direct inquiries to Defendant regarding its products and services through the Web site. There is no indication that Defendant's handbook was ever sold in Virginia. Plaintiff filed this action in federal court in Virginia seeking a declaration that its handbook did not infringe on copyrighted material contained in Defendant's handbook. Plaintiff moves for discovery on the issue of general personal jurisdiction over Defendant. Defendant moves to dismiss pursuant to FRCP  2(b)(2) for lack of personal jurisdiction.

Issue:

May a court exercise general jurisdiction over a nonresident defendant based on the defendant's Internet-based contacts with the forum state?

Decision:

Yes. Specific jurisdiction over Defendant based on Defendant's alleged but unproven sales of its handbook to Virginia would not be proper because the action does not arise from the sale of Defendant's handbook. A court may, however, assert general jurisdiction over a corporate defendant when the defendant's systematic and continuous corporate activities within a state are so substantial as to justify a suit against it on causes of action arising from dealings entirely distinct from those activities. In this case, Defendant maintains a Web site with a high degree of interactivity that goes beyond mere advertising and soliciting by allowing customers to purchase all of Defendant's products. Customers may also pose questions to Defendant through the site. Defendant has effectively created an on-line storefront that provides the same level of service offered by a traditional salesman, and is readily accessible to every Virginia resident with Internet access. Previous cases have held that a defendant's Internet-based and traditional business contacts may subject it to the general jurisdiction of a foreign forum; however, more evidence regarding the nature and extent of Defendant's traditional and Internet-based contacts with Virginia is necessary to such a determination. Therefore, Plaintiff's motion for discovery on the issue of general personal jurisdiction over Defendant is granted.

Basic Rule:

A nonresident defendant's interactive Web site may establish Internet-based contacts with a forum state that are sufficiently systematic and continuous to justify the forum state's exercise of general jurisdiction over the defendant.

Terms:

d/b/a :

Abbreviation for “doing business as.”

General jurisdiction :

Jurisdiction over a suit that arises when a defendant's contacts with the forum state are so continuous and systematic that the defendant may be subject to suit for causes of action entirely distinct from the in-state activities.

Specific jurisdiction :

Jurisdiction over a suit that arises out of the defendant's activities in the forum state.

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