Part I - Everybody Wants to Rule
the Web (published in the Globe
and Mail, January 18, 2001)
Part II - Additional responses
Everybody Wants to Rule the Web
Few
cyberlaw cases have sparked as large an outcry as the recent Yahoo France
case, in which a French judge ordered the company to block access to Nazi
memorabilia offered in its auctions within France.
Free speech advocates reacted with
alarm, arguing that the case is a setback for free speech on the Internet that
sets a dangerous precedent for countries seeking to impose restrictions on
speech outside their borders.
That concern was heightened two
weeks ago when Yahoo shifted its strategy and suspended Nazi memorabilia
auctions not only in France, but for all its users, a move clearly designed to
appease the French court. The company is still pursuing legal action in a U.S.
court to nullify the application of the French court's decision.
Before launching into claims of
free-speech chill and an unfair assertion of jurisdiction, however, critics
would do well to consider how widespread the extraterritorial application of
law is on the Internet.
In the United States both Congress
and the courts have been willing to extend U.S. law outside that country's
borders. For example, the Children's On-line Privacy Protection Act, which
establishes stringent privacy requirements for Web sites that target children,
applies not only to U.S. sites but to any Web site anywhere in the world that
is perceived to be targeting U.S. children.
Similarly, last year's iCraveTV
case, in which a U.S. court dismissed Canadian copyright law as irrelevant in
ordering iCraveTV to cease broadcasting on the Web, illustrates that the
courts have also been willing to extend U.S. law in an extraterritorial
fashion. In fact, from on-line gambling cases to domain name disputes, U.S.
courts have repeatedly applied U.S. law to foreign operations with little
regard for the governing law of the other jurisdiction.
The United States, however, is not
alone in this regard. The European Union's Data Privacy Directive has spurred
the enactment of privacy laws in Canada and around the world by including a
provision that prohibits the transfer of personal data to non-EU countries
that do not employ adequate privacy protections. Australia's on-line content
regulation, enacted last year, includes provisions that mandate blocking
obscene content that originates from foreign Web sites.
Canada has also gotten into the
act. Last year the Alberta Securities Commission prosecuted the local
promoters behind the World Stock Exchange, a Web site based in Antigua with
Cayman Islands ownership. The securities regulators argued that the effects of
the site were felt to such a degree in Alberta that asserting jurisdiction was
proper.
Despite the dire claims of critics,
these actions do not spell the end of either Internet free speech or global
e-commerce. Rather, they merely reflect the desire of local authorities to
protect their citizens from harm. The complicating factor is that many
countries have different views of what is harmful.
There are a handful of issues,
such as child pornography and fraud, where there is widespread agreement on
the need to for government involvement. That is why efforts by the U.S.
Federal Trade Commission and other consumer protection agencies targeting
Internet fraud, regardless of its origin, meet with little global criticism.
Conversely, prosecution of hate
speech in countries such as Canada and Germany raises the ire of free speech
advocates in the United States, where such speech is constitutionally
protected.
While there are no simple
solutions to the Internet jurisdiction issue, the Yahoo France case provides
some important guidance.
First, foreign law matters. Once a
company has assets or customers in a foreign country, it can ill-afford to
ignore the local legal system.
Moreover, those same companies
often enjoy the benefits of foreign law. Yahoo, for example, has relied on
local trademark law in countries from India to Israel to contest local
cybersquatting. If companies are to benefit from local law, they must also
bear its burdens.
Second, work on developing
international Internet jurisdiction standards is still needed. The passive
versus active test, adopted by courts in the United States and Canada to
determine when assertion of jurisdiction is appropriate, should at best be a
starting point for analysis.
Web site targeting (identifying
the intended jurisdiction of a site), the use of technology to identify
location, reliance on contract, and the actual or implied knowledge of the Web
site owner should also be factored into the equation.
Third, the resilience of free
speech should not be underestimated. Shutting down Nazi memorabilia auctions
on Yahoo will not eradicate Nazi materials from the Internet. The Internet is
a vast space and if there is demand, Web sites will meet that demand no matter
how objectionable the content.
Fourth, it is dangerous to speak
in absolutes when it comes to Internet law. All parties, from companies to
countries, have issues they view as critical.
Since those views are occasionally
bound to conflict, it is unwise to expend significant political capital
criticizing the actions of others on jurisdictional grounds. There is always
some issue for which everyone wants to rule the cyberworld.
Michael Geist is a law
professor at the University of Ottawa Law School and director of e-commerce
law at the law firm Goodmans LLP.
Globe and Mail, January
18, 2001
http://www.globetechnology.com/archive/gam/E-Business/20010118/TWGEIS.html
Additional
responses
Although
my recent column in the Globe and Mail addresses many of the questions raised in this case interview, it is
appropriate to add several additional comments.
While the
column argues that the Yahoo! case should be viewed in the context of a global
jurisdictional power grab on the Internet, it should not be taken to suggest
that I think the French judge’s decision is a good one.
Based on my knowledge of the facts, "Yahoo.com", the site at the centre
of the case, is clearly not targeted toward France. In fact, Yahoo! maintains a site specific for France which is compliant
with French law. Accordingly,
under the “passive vs. active” test for determining Internet jurisdiction,
this site should be viewed as passive from a French perspective.
More
interesting than whether the decision is “good or bad,” however, is how
the case fits within the growing body of Internet jurisdiction jurisprudence.
On that count, the willingness of the French court to assert
jurisdiction despite the passive nature of the site from a French perspective
is not an isolated event. In fact,
I would suggest that we are beginning to see courts finding the passive vs.
active test too constraining and thus moving toward an “effects based”
analysis for Internet jurisdiction. For
example, in People Solutions, Inc. v. People Solutions, Inc., a July 2000 U.S.
District Court decision, the court refused to assert jurisdiction over a
trademark infringement case despite a clearly "active" Web site The case involved a
dispute between California and Texas companies employing the same name, with
the Texas company launching an action in its home state. The California company's Web site provided detailed descriptions and
interactive pages regarding the products and services it offered. The site
also contained interactive pages that allowed customers to test the company's
products, download product demos, obtain product brochures and information,
and order products online.
The court
cited Zippo and its progeny, including Mink v. AAAA Development,
LLC a 5th Circuit Court of Appeal decision that adopts the Zippo
passive vs. active test, with approval. Notwithstanding
the "active indicia" of the Web site in question, however, the court
refused to assert jurisdiction, noting that:
"Although
Defendant appears to have the potential to interact with, sell products to,
and contract with Texas residents on its Web site, the evidence does not
support a finding that this level of activity has taken place. Personal
jurisdiction should not be premised on the mere possibility, with nothing
more, that Defendant may be able to do business with Texans over its Web site;
rather, Plaintiff must show that Defendant has "purposefully availed
itself" of the benefits of the forum state and its laws."
While
this case suggests that U.S. courts may actually be moving in the opposite
direction from the French court by refusing to assert jurisdiction over an
active site, I would instead argue that both courts are moving toward an
effects based analysis whereby jurisdiction will be asserted where the court
believes that the Web site has had an effect within the jurisdiction. In the People Solutions case the court sought evidence that there was
actual activity – essentially commercial effects – within the jurisdiction. Without such evidence, it refused to assert
jurisdiction. That same approach can be found in this case as the French judge
reached a determination that the "Yahoo.com" site, despite being passive from a
French perspective, still had an effect within France and was thus subject to
French jurisdiction.
The
movement toward an effects based analysis marks an important shift in the
understanding of Internet jurisdiction since it may breed increased
uncertainty for Web site operators. While
a Web site operator may be aware of its effect locally, it is unrealistic to
expect the site operator to identify the effects in every jurisdiction
worldwide.
A second
trend is also quietly emerging that is equally troubling, particularly when
combined with an effects based approach for Internet jurisdiction. This trend is the lack of deference toward other courts and legal norms
such as forum non conveniens and international comity.
For
example, in Heathmount A.E. Corp v.
Technodome.com, a case released in early January 2001, the federal court for the
Eastern District of Virginia considered the
application of the U.S. anticybersquatting act to two Canadian litigants
fighting over two domains: "technodome.com"
and "destinationtechnodome.com". The plaintiff brought an action under the in rem jurisdiction
provisions in the ACPA. The owner
of the domain argued that the case should have been heard in the Canadian
courts, citing as support forum non conveniens and international comity.
The court
ruled against the motion to dismiss. Interestingly,
it stated that:
"A
Canadian court would be less familiar with the provisions of the ACPA than
is this Court. Even if it
prevailed, Plaintiff might face difficulties enforcing the Canadian
court’s judgment in the United States, which would arguably undercut its
U.S. trademark rights in its ‘technodome’ mark.
A trademark holder seeking to enforce its U.S. registered marks
against infringing domain name registrants should not be penalized in the
exercise of those rights merely because the parties involved are not United
States citizens. On a more basic level, Plaintiff may not be able to assert
the same rights in Canada, which lacks a body of law equivalent to the ACPA
and whose enforcement of its trademark laws cannot extend into the United
States."
The
decision is troubling since it effectively exports the ACPA to the world given
that no other country will provide the same rights as does the U.S. statute (unless
they adopt an ACPA). Moreover,
much like the Yahoo! case, the decision illustrates that courts worldwide are
reluctant to surrender jurisdiction, particularly if doing so means that the
local law will either be applied by a foreign court or not at all.
Professor Michael
Geist statements as collected by Lionel Thoumyre
Case No. CA-00-00714-A (E.D. Va., 2000).
