29
Cal. 4th 262; 58 P.3d 2; 127 Cal. Rptr. 2d 329; 2002 Cal. LEXIS 7959; Copy. L. Rep.
(CCH) P28,543; 65 U.S.P.Q.2D (BNA) 1422; 2002 Cal. Daily Op. Service 11383;
2002 Daily Journal DAR 13223
November 25, 2002, Decided
November 25, 2002, Filed
PRIOR HISTORY: Superior Court of Santa Clara County, No.
CV786804. William J. Elfving Judge.
Pavlovich v. Superior Court, 91 Cal. App. 4th 409, 109 Cal. Rptr. 2d 909,
2001 Cal. App. LEXIS 623 (6th Dist. 2001).
COUNSEL:
Ornah Levy; Huber Samuelson; HS Law Group; Hopkins & Carley, Arthur V.
Plank and Allonn E. Levy for Petitioner.
Richard S. Wiebe for the Computer & Communications Industry Association
and the Student Press Law Center as Amici Curiae on behalf of Petitioner.
Ann Brick and Stephen McG. Bundy for the American Civil Liberties Union of
Northern California as Amicus Curiae on behalf of Petitioner.
Weil, Gotshal & Manges, Jared Ben Bobrow, Christopher J. Cox, Robert G.
Sugarman, Jeffrey L. Kessler, Geoffrey D. Berman and Gregory S. Coleman for
Real Party in Interest.
JUDGES: (Opinion by Brown, J., with Kennard, Werdegar, and Moreno,
JJ., concurring. Dissenting opinion by Baxter, J., with George, C. J., and
Chin, J., concurring (see p. 279).)
OPINIONBY: BROWN
OPINION:
BROWN, J.
"The Internet is an international network of interconnected
computers" which "enable[s] tens of millions of people to communicate
with one another and to access vast amounts of information from around the
world." ( Reno v. ACLU (1997) 521 U.S. 844, 849-850 [138 L. Ed. 2d
874, 117 S. Ct. 2329].) "The best known category of communication over the
Internet is the World Wide Web, which allows users to search for and
retrieve information stored in remote computers, as well as, in some cases, to
communicate back to designated sites. In concrete terms, the Web consists of a
vast number of documents stored in different computers all over the
world." ( Id. 521 U.S. at p. 852 [117 S. Ct. at p. 2335].) On the
Web, "documents, commonly known as Web 'pages,' are . . . prevalent."
(Ibid.) These pages are located at Web sites and have addresses marking
their location on the Web. (See ibid.) If a Web page is freely
accessible, then anyone with access to a computer connected to the Internet
may view that page. With its explosive growth over the past two decades, the Internet
has become " 'a unique and wholly new medium of worldwide human
communication.' " ( Id. 521 U.S. at p. 850 [117 S. Ct. at p.
2334].)
Not surprisingly, the so-called Internet revolution has spawned a
host of new legal issues as courts have struggled to apply traditional legal
frameworks to this new communication medium. Today, we join this struggle and
consider the impact of the Internet on the determination of personal
jurisdiction. In this case, a California court exercised personal jurisdiction
over a defendant based on a posting on an Internet Web site. Under the
particular facts of this case, we conclude the court's exercise of jurisdiction
was improper.
I
Digital versatile discs (DVD's) "provide high quality images, such as
motion pictures, digitally formatted on a convenient 5-inch disc . . . ."
Before the commercial release of DVD's containing motion pictures, the Content
Scrambling System (CSS), a system used to encrypt and protect copyrighted
motion pictures on DVD's, was developed. The CSS technology prevents the
playing or copying of copyrighted motion pictures on DVD's without the
algorithms and keys necessary to decrypt the data stored on the disc.
Real party in interest DVD Copy Control Association, Inc. (DVD CCA) is a
nonprofit trade association organized under the laws of the State of Delaware
with its principal place of business in California. The DVD industry created
DVD CCA in December 1998 to control and administer licensing of the CSS
technology. In September 1999, DVD CCA hired its staff, and, in December 1999,
it began administering the licenses. Soon thereafter, DVD CCA acquired the
licensing rights to the CSS technology and became the sole licensing entity for
this technology in the DVD video format.
Petitioner Matthew Pavlovich is currently a resident of Texas and the president
of Media Driver, LLC, a technology consulting company in Texas. During the four
years before he moved to Texas, he studied computer engineering at Purdue
University in Indiana, where he worked as a systems and network administrator.
Pavlovich does not reside or work in California. He has never had a place of
business, telephone listing, or bank account in California and has never owned
property in California. Neither Pavlovich nor his company has solicited any
business in California or has any business contacts in California.
At Purdue, Pavlovich was the founder and project leader of the LiVid video
project (LiVid), which operated a Web site located at
"livid.on.openprojects.net." The site consisted of a single page with
text and links to other Web sites. The site only provided information; it did
not solicit or transact any business and permitted no interactive exchange of
information between its operators and visitors.
According to Pavlovich, the goal of LiVid was "to improve video and
DVD support for Linux and to . . . combine the resources and the efforts of the
various individuals that were working on related things . . . ." To reach
this goal, the project sought to defeat the CSS technology and enable the
decryption and copying of DVD's containing motion pictures. Consistent with
these efforts, LiVid posted the source code of a program named DeCSS on its Web
site as early as October 1999. DeCSS allows users to circumvent the CSS
technology by decrypting data contained on DVD's and enabling the placement of
this decrypted data onto computer hard drives or other storage media.
At the time LiVid posted DeCSS, Pavlovich knew that DeCSS "was derived
from CSS algorithms" and that reverse engineering these algorithms was
probably illegal. He had also "heard" that "there was an
organization which you had to file for or apply for a license" to the CSS
technology. He did not, however, learn that the organization was DVD CCA or
that DVD CCA had its principal place of business in California until after DVD
CCA filed this action.
In its complaint, DVD CCA alleged that Pavlovich misappropriated its trade
secrets by posting the DeCSS program on the LiVid Web site because the
"DeCSS program . . . embodies, uses, and/or is a substantial derivation of
confidential proprietary information which DVD CCA licenses . . . ." The
complaint sought injunctive relief but did not seek monetary damages. In
response, Pavlovich filed a motion to quash service of process, contending that
California lacked jurisdiction over his person. DVD CCA opposed, contending
that jurisdiction was proper because Pavlovich "misappropriated DVD CCA's
trade secrets knowing that such actions would adversely impact an array of
substantial California business enterprises--including the motion picture
industry, the consumer electronics industry, and the computer industry."
In a brief order, the trial court denied Pavlovich's motion, citing Calder
v. Jones (1984) 465 U.S. 783 [79 L. Ed. 2d 804, 104 S. Ct. 1482] (Calder),
and Panavision Intern., L.P. v. Toeppen (9th Cir. 1998) 141 F.3d 1316 (Panavision).
Pavlovich petitioned the Court of Appeal for a writ of mandate. After the
Court of Appeal summarily denied the petition, we granted review and
transferred the matter back to the Court of Appeal with directions to vacate
its denial order and issue an order to show cause. The Court of Appeal then
issued a published opinion denying the petition. Because Pavlovich knew that
posting DeCSS on the LiVid Web site would harm the movie and computer industries
in California and because "the reach of the Internet is also the
reach of the extension of the poster's presence," the court found that he
purposefully availed himself of forum benefits under the Calder effects
test. The court also concluded that the exercise of jurisdiction over Pavlovich
was reasonable.
We granted review to determine whether the trial court properly exercised
jurisdiction over Pavlovich's person based solely on the posting of the DeCSS
source code on the LiVid Web site. We conclude it did not.
II
(1) California courts may exercise personal jurisdiction on any
basis consistent with the Constitutions of California and the United States. (
Code Civ. Proc., § 410.10.) The exercise of jurisdiction over a nonresident
defendant comports with these Constitutions "if the defendant has such
minimum contacts with the state that the assertion of jurisdiction does not
violate ' "traditional notions of fair play and substantial justice."
' " ( Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th
434, 444 [58 Cal. Rptr. 2d 899, 926 P.2d 1085] (Vons), quoting Internat.
Shoe Co. v. Washington (1945) 326 U.S. 310, 316 [90 L. Ed. 95, 66 S. Ct.
154] (Internat. Shoe).)
Under the minimum contacts test, "an essential criterion in all cases
is whether the 'quality and nature' of the defendant's activity is such that it
is 'reasonable' and 'fair' to require him to conduct his defense in that
State." ( Kulko v. California Superior Court (1978) 436 U.S. 84, 92
[56 L. Ed. 2d 132, 98 S. Ct. 1690], quoting Internat. Shoe, supra,
326 U.S. at pp. 316-317, 319 [66 S. Ct. at pp. 158, 159-160].) "[T]he
'minimum contacts' test . . . is not susceptible of mechanical application;
rather, the facts of each case must be weighed to determine whether the
requisite 'affiliating circumstances' are present." ( Kulko, 436
U.S. at p. 92, quoting Hanson v. Denckla (1958) 357 U.S. 235, 246, 2 L.
Ed. 2d 1283, 78 S. Ct. 1228 (Hanson).) "[T]his determination is one
in which few answers will be written 'in black and white. The greys are
dominant and even among them the shades are innumerable.' " ( Kulko,
436 U.S. at p. 92 [98 S. Ct. 1697], quoting Estin v. Estin (1948) 334
U.S. 541, 545 [92 L. Ed. 1561, 68 S. Ct. 1213].))
(2) In making this determination, courts have identified two ways to
establish personal jurisdiction. "Personal jurisdiction may be either
general or specific." (Vons, supra, 14 Cal. 4th at p. 445.)
In this case, DVD CCA does not contend that general jurisdiction exists. We
therefore need only consider whether specific jurisdiction exists.
When determining whether specific jurisdiction exists, courts consider the
" 'relationship among the defendant, the forum, and the litigation.'
" (Helicopteros Nacionales de Colombia v. Hall (1984) 466 U.S. 408,
414 [80 L. Ed. 2d 404, 104 S. Ct. 1868], quoting Shaffer v. Heitner
(1977) 433 U.S. 186, 204 [53 L. Ed. 2d 683, 97 S. Ct. 2569].) A court may
exercise specific jurisdiction over a nonresident defendant only if: (1)
"the defendant has purposefully availed himself or herself of forum
benefits" (Vons, supra, 14 Cal. 4th at p. 446); (2)
"the 'controversy is related to or "arises out of" [the]
defendant's contacts with the forum' " ( ibid., quoting Helicopteros,
supra, 466 U.S. at p. 414 [104 S. Ct. at p. 1872]); and (3) " 'the
assertion of personal jurisdiction would comport with "fair play and
substantial justice" ' " (Vons, supra, 14 Cal. 4th at
p. 447, quoting Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462,
472-473 [85 L. Ed. 2d 528, 105 S. Ct. 2174] (Burger King)).
"The purposeful availment inquiry . . . focuses on the defendant's
intentionality. [Citation.] This prong is only satisfied when the defendant
purposefully and voluntarily directs his activities toward the forum so that he
should expect, by virtue of the benefit he receives, to be subject to the
court's jurisdiction based on" his contacts with the forum. ( U.S. v.
Swiss American Bank, Ltd. (1st Cir. 2001) 274 F.3d 610, 623 (Swiss
American Bank).) Thus, the " 'purposeful availment' requirement
ensures that a defendant will not be haled into a jurisdiction solely as a
result of 'random,' 'fortuitous,' or 'attenuated' contacts [citations], or of
the 'unilateral activity of another party or a third person.'
[Citations.]" (Burger King, supra, 471 U.S. at p. 475 [105
S. Ct. at p. 2183].) "When a [defendant] 'purposefully avails itself of
the privilege of conducting activities within the forum State,' [citation], it
has clear notice that it is subject to suit there, and can act to alleviate the
risk of burdensome litigation by procuring insurance, passing the expected
costs on to customers, or, if the risks are too great, severing its connection
with the State." ( World-Wide Volkswagen Corp. v. Woodson (1980)
444 U.S. 286, 297 [62 L. Ed. 2d 490, 100 S. Ct. 559] (World-Wide Volkswagen).)
In the defamation context, the United States Supreme Court has described an
"effects test" for determining purposeful availment. ( Noonan v.
Winston Co. (1st Cir. 1998) 135 F.3d 85, 90 (Noonan).) In Calder,
a reporter in Florida wrote an article for the National Enquirer about Shirley
Jones, a well-known actress who lived and worked in California. The president
and editor of the National Enquirer reviewed and approved the article, and the
National Enquirer published the article. Jones sued, among others, the reporter
and editor (individual defendants) for libel in California. The individual
defendants moved to quash service of process, contending they lacked minimum
contacts with California. (Calder, supra, 465 U.S. at pp. 785-786
[104 S. Ct. at pp. 1484-1485].)
The United States Supreme Court disagreed and held that California could
exercise jurisdiction over the individual defendants "based on the
'effects' of their Florida conduct in California." (Calder, supra,
465 U.S. at p. 789 [104 S. Ct. at p. 1487].) The court found jurisdiction
proper because "California [was] the focal point both of the story and of
the harm suffered." (Ibid.) "The allegedly libelous story
concerned the California activities of a California resident. It impugned the
professionalism of an entertainer whose television career was centered in
California . . . and the brunt of the harm, in terms both of [Jones's]
emotional distress and the injury to her professional reputation, was suffered
in California." ( Id. 465 U.S. at pp. 788-789 [104 S. Ct. at p.
1496), fn. omitted.) The court also noted that the individual defendants wrote
or edited "an article that they knew would have a potentially devastating
impact upon [Jones]. And they knew that the brunt of that injury would be felt
by [Jones] in the State in which she lives and works and in which the National
Enquirer has its largest circulation." ( Id. 465 U.S. at pp.
789-790 [104 S. Ct. at p. 1487].)
Although Calder involved a libel claim, courts have applied the
effects test to other intentional torts, including business torts. (See IMO
Industries, Inc. v. Kiekert AG (3d Cir. 1998) 155 F.3d 254, 259-260, 261 (IMO)
[courts must consider Calder in intentional tort cases]; Far West
Capital, Inc. v. Towne (10th Cir. 1995) 46 F.3d 1071, 1077 (Far West)
["Courts have also applied Calder to business torts"].)
Application of the test has, however, been less than uniform. (See Swiss
American Bank, supra, 274 F.3d at p. 624, fn. 7 ["we note that
several circuits do not appear to agree as to how to read Calder"];
IMO, supra, 155 F.3d at p. 261 [courts applying Calder to
nondefamation cases have adopted "a mixture of broad and narrow
interpretations"].) Indeed, courts have "struggled somewhat with Calder's
import, recognizing that the case cannot stand for the broad proposition that a
foreign act with foreseeable effects in the forum state always gives rise to
specific jurisdiction." ( Bancroft & Masters, Inc. v. Augusta Nat.
Inc. (9th Cir. 2000) 223 F.3d 1082, 1087 (Bancroft).)
Despite this struggle, most courts agree that merely asserting that a
defendant knew or should have known that his intentional acts would cause harm
in the forum state is not enough to establish jurisdiction under the effects
test. (See IMO, supra, 155 F.3d at p. 265 ["we . . . agree
with the conclusion reached by the First, Fourth, Fifth, Eighth, Ninth and
Tenth Circuits that jurisdiction under Calder requires more than a
finding that the harm caused by the defendant's intentional tort is primarily
felt within the forum"]; Griffis v. Luban (Minn. 2002) 646 N.W.2d
527, 534 [the United States Supreme Court "did make it clear that
foreseeability of effects in the forum is not itself enough to justify long-arm
jurisdiction"].) Instead, the plaintiff must also "point to contacts
which demonstrate that the defendant expressly aimed its tortious
conduct at the forum . . . ." (IMO, supra, 155 F.3d at p.
265.) For example, the Third Circuit Court of Appeals has held that, to meet
the effects test, "the plaintiff must show that the defendant knew that
the plaintiff would suffer the brunt of the harm caused by the tortious conduct
in the forum, and point to specific activity indicating that the defendant
expressly aimed its tortious conduct at the forum." (IMO, supra,
155 F.3d at p. 266.) Similarly, in the Ninth Circuit Court of Appeals, the
plaintiff must show not only that the defendant "caused harm, the brunt of
which is suffered and which the defendant knows is likely to be suffered in the
forum state," but also that the defendant "committed an intentional
act . . . expressly aimed at the forum state." (Bancroft, supra,
223 F.3d at p. 1087.) Indeed, virtually every jurisdiction has held that the Calder
effects test requires intentional conduct expressly aimed at or targeting
the forum state in addition to the defendant's knowledge that his intentional
conduct would cause harm in the forum. n1
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 (See, e.g., Wien Air Alaska, Inc. v. Brandt (5th Cir. 1999) 195
F.3d 208, 212 ["Foreseeable injury alone is not sufficient to confer
specific jurisdiction, absent the direction of specific acts toward the
forum"]; Noonan, supra, 135 F.3d at p. 91 [holding that the
defendants' knowledge that the plaintiff would suffer injury in the forum was
insufficient to establish jurisdiction under the effects test because the
defendants "did not direct their actions toward" the forum state]; id.
135 F.3d at pp. 90-91; ESAB Group, Inc. v. Centricut, Inc. (4th Cir.
1997) 126 F.3d 617, 625 (ESAB) [holding that the defendants' knowledge
that their actions would, if successful, "result in less sales" for
the plaintiff, "which was headquartered in" the forum state, was
insufficient to establish jurisdiction under the effects test, because the
defendants did not "manifest behavior intentionally targeted at and
focused on" the forum]; Far West, supra, 46 F.3d at p. 1080
[holding that the defendants' knowledge that their acts would interfere with
the contractual rights of a forum resident is not enough to establish
jurisdiction under the effects test because their acts had no
"connection" to the forum state "beyond [the] plaintiff's
corporate domicile"]; id. 46 F.3d at pp. 1079-1080; Hicklin
Engineering, Inc. v. Aidco, Inc. (8th Cir. 1992) 959 F.2d 738, 739 [holding
that the defendant's knowledge that its tortious acts "may have an effect
on a competitor, absent additional contacts," is insufficient to establish
jurisdiction]; Drayton Enterprises, L.L.C. v. Dunker (D.N.D. 2001) 142
F. Supp. 2d 1177, 1184 [holding that the defendants' "revealing and
procuring [of] a trade secret" "while knowing that the primary
consequence would be felt in" the forum state was not enough to establish
jurisdiction]; id. at pp. 1184-1185; Cognigen Networks, Inc. v.
Cognigen Corp. (W.D.Wash. 2001) 174 F. Supp. 2d 1134, 1141 ["A
defendant's knowledge of a resident plaintiff's use of a mark in an
intellectual property tort claim is not enough to satisfy the effects test for
personal jurisdiction"]; Barrett v. Catacombs Press (E.D.Pa. 1999)
44 F. Supp. 2d 717, 731 ["Unless [the forum state] is deliberately or
knowingly targeted by the tortfeasor, the fact that harm is felt in [the forum
state] from conduct occurring outside [that state] is never sufficient to
satisfy due process"]; Conseco, Inc. v. Hickerson (Ind.Ct.App.
1998) 698 N.E.2d 816, 819 [holding that the defendant's knowing posting of a
forum resident's trademark on a Web site was insufficient to confer
jurisdiction because there was no "purposefully directed activity"]; Griffis
v. Luban, supra, 646 N.W.2d at pp. 535-537 [holding that the knowing
posting of defamatory material about a forum resident on the Internet is
insufficient to establish express aiming]; Laykin v. McFall (Tex.App.
1992) 830 S.W.2d 266, 271 [holding that a court may not exercise jurisdiction
even though the "intentional tortfeasor knowingly cause[d] injury" in
the forum state because "he did not purposefully direct his activities
into" the forum].)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
At least one exception does, however, exist. In Janmark, Inc. v. Reidy
(7th Cir. 1997) 132 F.3d 1200, the plaintiff, an Illinois corporation, and the
defendants, California residents, were competitors who sold minishopping carts
worldwide. The defendants claimed that they owned a copyright in their cart
design and threatened the plaintiff's New Jersey customer with contributory
copyright infringement. Because of the threat, the customer stopped buying
shopping carts from the plaintiff. Based on this incident, the plaintiff sued
the defendants for tortious interference with prospective economic advantage. (
Id. at p. 1201.) Although the defendants had no other contacts with
Illinois, the Seventh Circuit Court of Appeals found that Illinois could
exercise jurisdiction over the defendants solely because "the
injury and thus the tort occurred in Illinois." ( Id. at p. 1202.)
In doing so, the Seventh Circuit apparently concluded that the state where the
injury occurred--in this case, the plaintiff's residence--could always exercise
jurisdiction over a nonresident defendant in the intentional tort context.
Like most of our sister courts, we do not find Janmark persuasive.
By making the location of the harm dispositive, Janmark ignores
"the defendant's knowledge and intent in committing the tortious
activity"--the very focus of the purposeful availment requirement. (IMO,
supra, 155 F.3d at p. 264.) Even if Janmark merely stands for the
proposition that a defendant's knowledge that its tortious acts would cause the
plaintiff injury in the forum state satisfies the effects test (see IMO,
supra, 155 F.3d at p. 264, fn. 6), it is still problematic. (3) "[F]oreseeability
of causing injury in another State . . . is not a 'sufficient benchmark'
for exercising personal jurisdiction." (Burger King, supra,
471 U.S. at p. 474 [105 S. Ct. at p. 2183].) Rather, "the foreseeability
that is critical to due process analysis . . . is that the defendant's conduct
and connection with the forum State are such that he should reasonably
anticipate being haled into court there." (World-Wide Volkswagen, supra,
444 U.S. at p. 297 [100 S. Ct. at p. 567].) The knowledge that harm will likely
be suffered in the forum state, "when unaccompanied by other contacts,"
is therefore "too unfocused to justify personal jurisdiction." (ESAB,
supra, 126 F.3d at p. 625.) Thus, we decline to follow Janmark
and its progeny n2 and join with those jurisdictions that require additional
evidence of express aiming or intentional targeting. In doing so, we are in
accord with those California decisions applying the effects test. n3
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n2 (See, e.g., Bunn-O-Matic Corp. v. Bunn Coffee Service Inc. (C.D.
Ill. 2000) 88 F. Supp. 2d 914; Clearclad Coatings, Inc. v. Xontal Ltd.
(N.D.Ill. Aug. 20, 1999, No. 98 C 7199) 1999 WL 652030; McMaster-Carr Supply
Co. v. Supply Depot, Inc. (N.D.Ill. June 16, 1999, No. 98 C 1903) 1999 WL
417352; Bunn-O-Matic Corp. v. Bunn Coffee Service Inc. (C.D.Ill. 1998)
1998 U.S. Dist. LEXIS 7819, 46 U.S.P.Q.2d 1375 (Bunn-O-Matic I).)
n3 (See, e.g., Sibley v. Superior Court (1976) 16 Cal.3d 442, 446
[128 Cal. Rptr. 34, 546 P.2d 322] ["The mere causing of an 'effect' in
California . . . is not necessarily sufficient to afford a constitutional basis
for jurisdiction"]; Mansour v. Superior Court (1995) 38 Cal.App.4th
1750, 1762 [46 Cal. Rptr. 2d 191] [refusing to exercise jurisdiction under the
effects test because there was "no evidence [the defendants] purposefully
directed their activities toward[] California"]; Edmunds v. Superior
Court (1994) 24 Cal.App.4th 221, 236 [29 Cal. Rptr. 2d 281] [refusing to
exercise jurisdiction under the effects test because the defendant's acts were
directed at Hawaii and not California]; Wolfe v. City of Alexandria
(1990) 217 Cal. App. 3d 541, 548-549 [265 Cal. Rptr. 881] (Wolfe)
[refusing to exercise jurisdiction under the effects test because the
defendant's acts, even if wrongful and fraudulent, were not expressly aimed at
California]; Taylor-Rush v. Multitech Corp. (1990) 217 Cal. App. 3d 103,
114 [265 Cal. Rptr. 672] [exercising jurisdiction under the effects test
because the defendant's contacts with California showed intentional targeting];
Farris v. Capt. J. B. Fronapfel Co. (1986) 182 Cal. App. 3d 982, 990
[227 Cal. Rptr. 619] [finding that the "effects in California" of the
defendant's tortious acts were "too remote in time and causal connection
to fairly and justly require" the defendant "to come to California to
defend himself"]; Quattrone v. Superior Court (1975) 44 Cal. App.
3d 296, 304 [118 Cal. Rptr. 548] [exercising jurisdiction based on the effects
of the defendant's tortious acts plus his other contacts with California]. )
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
(4a) We now consider whether Pavlovich's contacts with California
meet the effects test. (5) "[T]he plaintiff has the initial burden
of demonstrating facts justifying the exercise of jurisdiction." (Vons,
supra, 14 Cal. 4th at p. 449.) If the plaintiff meets this initial
burden, then the defendant has the burden of demonstrating "that the
exercise of jurisdiction would be unreasonable." (Ibid.) In
reviewing a trial court's determination of jurisdiction, we will not disturb
the court's factual determinations "if supported by substantial
evidence." (Ibid.) "When no conflict in the evidence exists,
however, the question of jurisdiction is purely one of law and the reviewing
court engages in an independent review of the record." (Ibid.) (4b)
Applying these standards, we conclude that the evidence in the record fails
to show that Pavlovich expressly aimed his tortious conduct at or intentionally
targeted California.
In this case, Pavlovich's sole contact with California is LiVid's posting
of the DeCSS source code containing DVD CCA's proprietary information on an Internet
Web site accessible to any person with Internet access. Pavlovich never
worked in California. He owned no property in California, maintained no bank
accounts in California, and had no telephone listings in California. Neither
Pavlovich nor his company solicited or transacted any business in California.
The record also contains no evidence of any LiVid contacts with California.
Although we have never considered the scope of personal jurisdiction based
solely on Internet use, other courts have considered this issue, and
most have adopted a sliding scale analysis. "At one end of the spectrum
are situations where a defendant clearly does business over the Internet.
If the defendant enters into contracts with residents of a foreign jurisdiction
that involve the knowing and repeated transmission of computer files over the Internet,
personal jurisdiction is proper. [Citation.] At the opposite end are situations
where a defendant has simply posted information on an Internet Web site
which is accessible to users in foreign jurisdictions. A passive Web site that
does little more than make information available to those who are interested in
it is not grounds for the exercise [of] personal jurisdiction. [Citation.] The
middle ground is occupied by interactive Web sites where a user can exchange
information with the host computer. In these cases, the exercise of
jurisdiction is determined by examining the level of interactivity and
commercial nature of the exchange of information that occurs on the Web
site." ( Zippo Manufacturing Co. v. Zippo Dot Com, Inc. (W.D.Pa.
1997) 952 F. Supp. 1119, 1124.)
Here, LiVid's Web site merely posts information and has no interactive
features. There is no evidence in the record suggesting that the site targeted
California. Indeed, there is no evidence that any California resident ever
visited, much less downloaded the DeCSS source code from, the LiVid Web site.
Thus, Pavlovich's alleged "conduct in . . . posting [a] passive Web site[]
on the Internet is not," by itself, "sufficient to
subject" him "to jurisdiction in California." ( Jewish
Defense Organization, Inc. v. Superior Court (1999) 72 Cal.App.4th 1045,
1060 [85 Cal. Rptr. 2d 611], fn. omitted [refusing to exercise jurisdiction
under the effects test even though the defendant had "passive Web sites on
the Internet"]; Cybersell, Inc. v. Cybersell, Inc. (9th Cir.
1997) 130 F.3d 414, 419-420 [refusing to exercise jurisdiction under the
effects test even though the defendant posted infringing material on its Web
site]; but see Bunn-O-Matic I, supra, 46 U.S.P.Q.2d at p. 1377
[suggesting that the operation of a Web site, by itself, is sufficient to
establish express aiming at the forum state].) " 'Creating a site, like
placing a product into the stream of commerce, may be felt nationwide--or even
worldwide--but, without more, it is not an act purposefully directed toward the
forum state.' " ( Cybersell, 130 F.3d at p. 418, quoting Bensusan
Restaurant Corp. v. King (S.D.N.Y. 1996) 937 F. Supp. 295, 301, affd. (2d
Cir. 1997) 126 F.3d 25.) Otherwise, "personal jurisdiction in Internet-related
cases would almost always be found in any forum in the country." ( GTE
New Media Services Inc. v. BellSouth Corp. (D.C. Cir. 2000) 339 U.S. App.
D.C. 332, 199 F.3d 1343, 1350.) Such a result would "vitiate long-held and
inviolate principles of" personal jurisdiction. (Ibid.)
Nonetheless, DVD CCA contends posting the misappropriated source code on an
Internet Web site is sufficient to establish purposeful availment in
this case because Pavlovich knew the posting would harm not only a licensing
entity but also the motion picture, computer and consumer electronics
industries centered in California. According to DVD CCA, this knowledge
establishes that Pavlovich intentionally targeted California and is sufficient
to confer jurisdiction under the Calder effects test. Although the question
is close, we disagree.
As an initial matter, DVD CCA's reliance on Pavlovich's awareness that an
entity owned the licensing rights to the CSS technology is misplaced. Although
Pavlovich knew about this entity, he did not know that DVD CCA was that entity
or that DVD CCA's primary place of business was California until after
the filing of this lawsuit. More importantly, Pavlovich could not have known
this information when he allegedly posted the misappropriated code in October
1999, because DVD CCA only began administering licenses to the CSS technology
in December 1999--approximately two months later. Thus, even assuming
Pavlovich should have determined who the licensor was and where that licensor
resided before he posted the misappropriated code, he would not have discovered
that DVD CCA was that licensor. n4 Because Pavlovich could not have known that
his tortious conduct would harm DVD CCA in California when the misappropriated
code was first posted, his knowledge of the existence of a licensing entity
cannot establish express aiming at California. n5
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n4 At oral argument, DVD CCA claimed that Pavlovich had received a
cease-and-desist letter from the Motion Picture Association (MPA), and
contended his receipt of this letter established purposeful availment. Although
the complaint alleged that MPA sent such a letter to various Web sites and Internet
service providers, the record contains no copy of this letter. Moreover,
nothing in the record indicates that such a letter was sent to Pavlovich or
that he received or even knew about the letter. Accordingly, DVD CCA's
unsubstantiated allusion to a cease-and-desist letter cannot support a finding
of jurisdiction. In any event, DVD CCA made no mention of this letter to the
trial court and Court of Appeal or in its briefs to this court. Thus, it has
waived the issue.
n5 (See, e.g., JDO, supra, 72 Cal. App. 4th at p. 1059
[refusing to exercise jurisdiction under the effects test because the defendant
did not know that the plaintiff would suffer harm in the forum state]; Chaiken
v. W Publishing Corp. (2d Cir. 1997) 119 F.3d 1018, 1029 [refusing to
exercise jurisdiction under the effects test because the defendant had no
reason to believe that the plaintiffs would suffer harm in the forum state]; Search
Force, Inc. v. Dataforce Intern., Inc. (S.D.Ind. 2000) 112 F. Supp. 2d 771,
780 [refusing to exercise jurisdiction under the effects test because the
defendant was not aware of the plaintiff's use of the trademark before the
defendant created its infringing Web site]; Tech Heads, Inc. v. Desktop
Service Center, Inc. (D.Or. 2000) 105 F. Supp. 2d 1142, 1148 [refusing to
exercise jurisdiction under the effects test because the defendant did not know
about the plaintiff or its presence in the forum state]; Perry v.
RightOn.com (D.Or. 2000) 90 F. Supp. 2d 1138, 1141 [refusing to exercise
jurisdiction under the effects test because the defendant did not know about
the plaintiff or his residence when the defendant acquired the infringing
domain name]; Rannoch, Inc. v. Rannoch Corp. (E.D.Va. 1999) 52 F. Supp.
2d 681, 685 [refusing to exercise jurisdiction under the effects test because
the defendant did not know about the plaintiff or its trademarks].)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Thus, the only question in this case is whether Pavlovich's knowledge that
his tortious conduct may harm certain industries centered in California--i.e.,
the motion picture, computer, and consumer electronics industries--is
sufficient to establish express aiming at California. As explained below, we
conclude that this knowledge, by itself, cannot establish purposeful availment
under the effects test.
First, Pavlovich's knowledge that DeCSS could be used to illegally pirate
copyrighted motion pictures on DVD's and that such pirating would harm the
motion picture industry in California does not satisfy the express aiming
requirement. As an initial matter, we question whether these effects are even
relevant to our analysis, because DVD CCA does not assert a cause of action
premised on the illegal pirating of copyrighted motion pictures. (See Cornelison
v. Chaney (1976) 16 Cal.3d 143, 148 [127 Cal. Rptr. 352, 545 P.2d 264]
[specific jurisdiction "depends upon the quality and nature of [the
defendant's] activity in the forum in relation to the particular cause of
action" (italics added)].) In any event, "the mere 'unilateral
activity of those who claim some relationship with a nonresident defendant
cannot satisfy the requirement of contact with the forum State.' " (World-Wide
Volkswagen, supra, 444 U.S. at p. 298 [100 S. Ct. at p. 567],
quoting Hanson, supra, 357 U.S. at p. 253 [78 S. Ct. at pp.
1239-1240].) "[T]he fact that a defendant's actions in some way set into
motion events which ultimately injured a California resident" cannot, by
itself, confer jurisdiction over that defendant. (Wolfe, supra,
217 Cal. App. 3d at p. 547.) Thus, the foreseeability that third parties may
use DeCSS to harm the motion picture industry cannot, by itself, satisfy the
express aiming requirement. Because nothing in the record suggests that
Pavlovich encouraged Web site visitors to use DeCSS to illegally pirate
copyrighted motion pictures, his mere "awareness" they might do so
does not show purposeful availment. (See Asahi Metal Industry Co. v.
Superior Court (1987) 480 U.S. 102, 112 [94 L. Ed. 2d 92, 107 S. Ct. 1026]
(plur. opn. of O'Connor, J.) [the mere awareness that third parties will sweep
the defendant's product into the forum state does not convert its act of
selling the product to third parties "into an act purposefully directed
toward the forum State"].)
Second, Pavlovich's knowledge of the effects of his tortious conduct on the
consumer electronics and computer industries centered in California is an even
more attenuated basis for jurisdiction. According to DVD CCA, Pavlovich knew
that posting DeCSS would harm the consumer electronics and computer industries
in California, because many licensees of the CSS technology resided in
California. The record, however, indicates that Pavlovich did not know that any
of DVD CCA's licensees resided in California. At most, the record establishes
that Pavlovich should have guessed that these licensees resided in California
because there are many consumer electronic and computer companies in
California. DVD CCA's argument therefore boils down to the following syllogism:
jurisdiction exists solely because Pavlovich's tortious conduct had a
foreseeable effect in California. But mere foreseeability is not enough for
jurisdiction. (See Bancroft, supra, 223 F.3d at p. 1087.)
Otherwise, the commission of any intentional tort affecting industries in
California would subject a defendant to jurisdiction in California. We decline
to adopt such an expansive interpretation of the effects test. (See Callaway
Golf Corp. v. Royal Canadian Golf Ass'n (C.D.Cal. 2000) 125 F. Supp. 2d
1194, 1200 ["Merely knowing a corporate [plaintiff] might be
located in California does not fulfill the effects test" (italics
added)].)
Cases citing a defendant's knowledge of the effects of its tortious conduct
on an industry centered in the forum state to support a finding of jurisdiction
under the effects test are inapposite. In exercising jurisdiction, those courts
concluded that the defendant's knowledge of industry-wide effects in the forum
state in conjunction with other evidence of express aiming at the forum
state established purposeful availment under the effects test. n6 Thus, those
cases merely hold that such knowledge is relevant to any determination of
personal jurisdiction. They do not establish that such knowledge, by itself,
establishes express aiming. Indeed, DVD CCA does not cite, and we have not
found, any case where a court exercised jurisdiction under the effects test
based solely on the defendant's knowledge of industry-wide effects in the forum
state.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n6 (See Panavision, supra, 141 F.3d at p. 1322 [the defendant
"engaged in a scheme to register [a forum resident's] trademarks as his
domain names for the purpose of extorting money from" that resident]; CNN,
L.P. v. GoSMS.com, Inc. (S.D.N.Y. 2000) 56 U.S.P.Q.2d 1959, 1963 [2000 WL
1678039, *4] [the defendant "transmitted infringing content to" forum
residents]; 3 DO Co. v. Poptop Software, Inc. (N.D.Cal. 1998) 49
U.S.P.Q.2d 1469, 1472 [1998 U.S. Dist. LEXIS 21281] [the defendants
"encourage[d] and facilitate[d] users" in the forum state "to download
allegedly infringing copies" from its Web site and used a server in the
forum state to operate the site].)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
This dearth of supporting case law is understandable when we consider the
ramifications of a contrary holding. According to DVD CCA, California should
exercise jurisdiction over Pavlovich because he should have known that
third parties may use the misappropriated code to illegally copy movies
on DVD's and that licensees of the misappropriated technology resided in
California. In other words, DVD CCA is asking this court to exercise
jurisdiction over a defendant because he should have known that his
conduct may harm--not a California plaintiff--but industries associated
with that plaintiff. As a practical matter, such a ruling makes foreseeability
of harm the sole basis for jurisdiction in contravention of controlling United
States Supreme Court precedent. (See Burger King, supra, 471 U.S.
at p. 474.)
Indeed, such a broad interpretation of the effects test would effectively
eliminate the purposeful availment requirement in the intentional tort context
for select plaintiffs. In most, if not all, intentional tort cases, the
defendant is or should be aware of the industries that may be affected by his
tortious conduct. Consequently, any plaintiff connected to industries centered
in California--i.e., the motion picture, computer, and consumer electronics
industries--could sue an out-of-state defendant in California for intentional
torts that may harm those industries. For example, any creator or
purveyor of technology that enables copying of movies or computer
software--including a student in Australia who develops a program for creating
backup copies of software and distributes it to some of his classmates or a
store owner in Africa who sells a device that makes digital copies of movies on
videotape--would be subject to suit in California because they should have
known their conduct may harm the motion picture or computer industries in
California. n7 Indeed, DVD CCA's interpretation would subject any defendant who
commits an intentional tort affecting the motion picture, computer, or consumer
electronics industries to jurisdiction in California even if the plaintiff was
not a California resident. Under this logic, plaintiffs connected to the auto
industry could sue any defendant in Michigan, plaintiffs connected to the
financial industry could sue any defendant in New York, and plaintiffs
connected to the potato industry could sue any defendant in Idaho. Because finding
jurisdiction under the facts in this case would effectively subject all
intentional tortfeasors whose conduct may harm industries in California to
jurisdiction in California, we decline to do so. n8
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n7 Pavlovich claims--and DVD CCA does not dispute--that DeCSS may be used
for legitimate, and not just illegal, purposes. Thus, Pavlovich is no different
from the student or store owner in the hypothetical.
n8 We disapprove of Nam Tai Electronics, Inc. v. Titzer (2001) 93
Cal.App.4th 1301 [113 Cal. Rptr. 2d 769], to the extent it is contrary to our
decision today.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
We, however, emphasize the narrowness of our decision. A defendant's
knowledge that his tortious conduct may harm industries centered in California
is undoubtedly relevant to any determination of personal jurisdiction and may
support a finding of jurisdiction. We merely hold that this knowledge alone
is insufficient to establish express aiming at the forum state as required by
the effects test. Because the only evidence in the record even suggesting
express aiming is Pavlovich's knowledge that his conduct may harm industries
centered in California, due process requires us to decline jurisdiction over
his person.
In addition, we are not confronted with a situation where the plaintiff has
no other forum to pursue its claims and therefore do not address that
situation. DVD CCA has the ability and resources to pursue Pavlovich in another
forum such as Indiana or Texas. Our decision today does not foreclose it from
doing so. Pavlovich may still face the music--just not in California.
III
Accordingly, we reverse the judgment of the Court of Appeal and remand for further
proceedings consistent with this opinion.
Kennard, J., Werdegar, J., and Moreno, J., concurred.
DISSENTBY: BAXTER
DISSENT: BAXTER, J.
I respectfully dissent. That this case involves a powerful new medium of
electronic communication, usable for good or ill, should not blind us to the
essential facts and principles. The record indicates that, by intentionally
posting an unlicensed decryption code for the Content Scrambling System (CSS)
on their Internet Web sites, defendant and his network of "open
source" associates sought to undermine and defeat the very purposes of the
licensed CSS encryption technology, i.e., copyright protection for
movies recorded on digital versatile discs (DVD's) and limitation of
playback to operating systems licensed to unscramble the encryption code.
The intended targets of this effort were not individual persons or businesses,
but entire industries. Defendant knew at least two of the intended targets--the
movie industry and the computer industry involved in producing the licensed
playback systems--either were centered in California or maintained a
particularly substantial presence here. Thus, the record amply supports the
trial court's conclusion, for purposes of specific personal jurisdiction, that
defendant's intentional act, even if committed outside California, was
"expressly aimed" at California. (See Calder v. Jones (1984)
465 U.S. 783, 788-790 [79 L. Ed. 2d 804, 104 S. Ct. 1482] (Calder).)
In the particular circumstances, it cannot matter that defendant may not
have known or cared about the exact identities or precise locations
of each individual target, or that he happened to employ a so-called passive Internet
Web site, or whether any California resident visited the site. By acting with
the broad intent to harm industries he knew were centered or substantially
present in this state, defendant forged sufficient "minimum
contacts" with California "that he should reasonably
anticipate being haled into court [here]" ( World-Wide
Volkswagen Corp. v. Woodson (1980) 444 U.S. 286, 297 [62 L. Ed. 2d 490, 100
S. Ct. 559] (World-Wide Volkswagen)) for litigation " 'aris[ing]
out of' " his forum-related conduct ( Vons Companies, Inc. v. Seabest
Foods, Inc. (1996) 14 Cal.4th 434, 451 [58 Cal. Rptr. 2d 899, 926 P.2d 1085]
(Vons)).
Moreover, defendant has made no "compelling case" ( Burger
King Corp. v. Rudzewicz (1985) 471 U.S. 462, 477 [85 L. Ed. 2d 528, 105 S.
Ct. 2174] (Burger King)) that California's assertion of personal
jurisdiction for this purpose otherwise fails to "comport with 'fair play
and substantial justice.' " (Burger King, supra, at p. 476
[105 S. Ct. at p. 2184], quoting Internat. Shoe Co. v. Washington (1945)
326 U.S. 310, 320 [90 L. Ed. 95, 66 S. Ct. 154] (Internat. Shoe Co.).)
Quite the contrary. Defendant identifies no unconscionable burden of defending
the suit here, nor does he suggest California litigation would infringe any
significant sovereignty interests of other jurisdictions.
But California has a substantial interest in the subject matter, and
California appears a fair, convenient, and effective forum for
California-centered industries to obtain relief. Moreover, this action seeks
injunctions against a large number of persons, geographically dispersed, who
are alleged to have participated with defendant in an organized effort to
infringe and defeat DVD encryption. Thus, so long as the defendants' due
process rights are not compromised, the interests of both the plaintiff and the
interstate judicial system "in obtaining the most efficient resolution of
controversies" (World-Wide Volkswagen, supra, 444 U.S. 286,
292 [100 S. Ct. 559, 564]) strongly favor suit against all in a single forum,
rather than a multiplicity of suits in the defendants' individual domiciles.
Accordingly, I conclude the Court of Appeal's judgment should be affirmed.
FACTS
As the majority opinion indicates, DVD's are a means of storing digitally
formatted information, including video information, on convenient 5-inch discs.
One major use of DVD's, probably the best known to the consuming public, is as
a medium for storing and viewing copyrighted motion pictures. Before the
commercial release of movies on DVD's, the motion picture and DVD industries
developed CSS. This encryption technology was designed to protect DVD movies
against unauthorized copying and to allow playback of CSS-encrypted DVD's only
on operating systems with CSS decryption capability. To protect the trade
secret represented by CSS, the technology and its descrambling codes were
disclosed only subject to licensing agreements.
Plaintiff DVD Copy Control Association, Inc. (DVD CCA) is a nonprofit trade
association organized under Delaware law, but with its principal place of
business in Morgan Hill, California. DVD CCA was created by the motion picture
and DVD industries to administer the licensing of CSS. No later than December
1999, DVD CCA took over administration of the licenses.
DVD CCA immediately filed suit in California superior court against
defendant Matthew Pavlovich, 20 other named individuals, and 500 Does for
misappropriation of trade secrets. The complaint alleges the following: As
early as October 25, 1999, Jon Johansen, a resident of Norway, posted on the Internet
a computer program, dubbed DeCSS, that defeats CSS encryption. DeCSS was
derived by "willfully 'hacking' and/or improperly reverse engineering
software created by" a CSS licensee. Around the time Johansen posted the
DeCSS program, the same information appeared on a Web site "operated
by" Pavlovich. Thereafter, many other Web sites "in at least 11
states and 11 countries" either posted the code directly or provided links
to the sites where it appeared directly. The defendants who posted or provided
Web site links to this information knew or should have known DeCSS was derived
from the misappropriation of proprietary information, because DeCSS was
specifically designed to defeat CSS and was aimed at infringing movie
copyrights by permitting the "pirating" of movies on DVD's. The
motion picture industry--centered in California--and the computer and
electronics businesses involved in DVD development and production--including 73
companies in California--have been harmed because the wholesale copying and
distribution of DVD's destroys both the movies' copyrights and the market for
DVD-based products. The breach of CSS has also delayed the introduction of DVD
audio--a new technology in which these industries have invested
substantially--while a new copyright protection system is developed.
The complaint further asserts: The Motion Picture Association sent
cease-and-desist notices to some 66 Web sites and Internet service
providers, including Pavlovich and all but one of the other named defendants.
Some who received notices had voluntarily removed the DeCSS information, but
Pavlovich and all the other named defendants who were notified had refused.
The complaint asks for a declaratory judgment that defendants have
willfully misappropriated the CSS trade secret. It seeks to enjoin the
defendants, singly or in combination, from distributing, via the Internet
or otherwise, any proprietary information or trade secrets relating to the CSS
technology, and from copying, marketing, licensing, publishing, selling,
leasing, or renting the DeCSS program and any other product substantially
derived from CSS proprietary property or trade secrets.
Pavlovich moved to quash summons, alleging that California courts lacked
personal jurisdiction over him. The motion, and DVD CCA's opposition, attached
considerable documentary evidence, including excerpts from Pavlovich's
depositions. Much is fiercely disputed between the parties, but the record
discloses the following facts that are either uncontroverted, or are fairly
inferable in support of the trial court's jurisdiction order:
Pavlovich is the president of a startup technology consulting company. He
currently lives and works in Texas, and he has no direct business or personal
ties with California. While a computer engineering student in Indiana, he was
the founder and project leader of the LiVid video project. The project operated
a Web site at livid.on.openprojects.net, which posted the DeCSS source code. n1
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 Pavlovich vigorously disputes whether DVD CCA has shown, for purposes of
personal jurisdiction over him, that the DeCSS source code actually was
posted on the LiVid Web site, and if so, whether Pavlovich himself had any
responsibility for the posting. In his declaration attached to the motion to
quash, Pavlovich carefully avoided either admitting or denying that DeCSS was
posted on the site, or that he was personally involved, though he acknowledged
he had "input" into the site. In excerpts from his deposition, as
presented to the trial court, Pavlovich several times described himself as the
"founder and leader" of the LiVid project, but these deposition
excerpts shed no further light on whether, or by whom, the DeCSS source code
was posted. In his brief on the merits, Pavlovich urges affirmatively that his
"sole connection" to the case is as "one of many
contributors" to a Web site which "allegedly" posted information
in derogation of the CSS trade secret. At oral argument in this court,
Pavlovich's counsel insisted it is not clear by whom, or even whether, the
DeCSS source code was posted on the LiVid Web site; counsel represented that no
such material was found among the contents of Pavlovich's computer hard drive,
as provided during discovery on the motion to quash. But in light of
Pavlovich's claim of his predominant role in LiVid, his admission that he had
input into the project's Web site, and his artful failure to deny the Web site
posting or his involvement therein, I conclude the trial court was entitled,
based on the evidence before it, to draw the inferences necessary for
personal jurisdiction.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
According to Pavlovich, LiVid was "an organization of software
developers and computer programmers from around the world that were interested
in . . . developing . . . video and DVD-related applications" for the
Linux computer operating system. The project's goal, according to Pavlovich,
was to "improve video and DVD support" for Linux and, in particular,
"to develop an open source DVD player for Linux" so "we could
play . . . DVDs . . . on the systems that we had bought that had DVD drives . .
. ." In other DeCSS-related litigation, Pavlovich himself has testified as
an expert witness "relating to computers, primarily Linux DVD
technology," specifically including "various projects in Linux
including the Linux video and DVD project."
By the time the LiVid Web site posted the DeCSS source code, Pavlovich had
heard there was an entity that licensed CSS technology. As Pavlovich explained,
"[i]n the course of the development of the . . . Linux video and DVD
project, there was a lot of discussion regarding the decryption piece of the
full length of decoding of DVD," and people on the LiVid mailing list were
advising that "you've got to apply for a license." A CSS licensee
posted on the site a friendly warning that CSS was a licensed trade secret
which licensees were forbidden to disclose, that its purpose was to prevent the
pirating of movies from DVD's, that Hollywood was "paranoid" about
pirating, and that if CSS were "cracked," there was a "good
chance" no new movie titles would be released on DVD. Nonetheless, the
project declined to seek a license because, as Pavlovich indicated, "more
than likely a license would not allow us to release the source code and things
like that that didn't follow the same development path as open source
followed."
Pavlovich also understood that DeCSS had been "reverse engineered from
another [CSS-equipped] DVD player like a Windows player." In an e-mail
dated October 1, 1999, he advised that "[r]everse engineering is illegal
in most (if not all) of the countries that developers in this project live
in." Nonetheless, Pavlovich's e-mail predicted that although "[t]his
is a very nasty thing and a lot is on the line for those involved," "DVD
(everything non-free) will be hacked before the end of time."
In his deposition, Pavlovich insisted the LiVid project was not directly
concerned with the unauthorized reproduction and distribution of copyrighted
materials contained on DVD's. However, Pavlovich admitted he was aware that
DeCSS could facilitate the process of transferring the information stored on
the discs to computer hard drives, whence it could be copied into new playback
mediums. n2 Indeed, Pavlovich insisted that one who buys a DVD with copyrighted
material should have the freedom to duplicate it, at least for personal use,
and to transfer its information to any other playback format he or she wishes.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n2 There is some controversy among those familiar with DVD technology, and
with the CSS system in particular, whether CSS encryption itself prevents the
copying of materials contained on CSS-encoded DVD's. However, in a recent
federal case involving the federal Digital Millennium Copyright Act (17
U.S.C.A. § 1201 et seq.), the court of appeals upheld district court findings
that DeCSS "sidesteps" whatever anticopying protections are contained
on standard DVD's and is the "superior" means of acquiring easily copyable
movies. ( Universal City Studios, Inc. v. Corley (2d Cir. 2001) 273 F.3d
429, 438, fn. 5.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Pavlovich insists he did not know the identity or location of the CSS
licensing entity until this lawsuit was filed. However, he did know that the
movie industry was centered in California and that computer companies of the
kind involved in producing components for DVD players had a substantial
presence here. Specifically, Pavlovich admitted, "the general common idea
is that Hollywood is the area" where the movie industry is centered, that
several major movie studios are located or have substantial presences in
Hollywood, that Silicon Valley is one of the "top three technology hot
spots in the United States," that computer hardware manufacturers are
involved in the production of DVD player components such as "video
boards" or "DVD boards," and that "a lot" of hardware
manufacturers are located in California.
In a brief order, the trial court denied the motion, citing Calder,
supra, 465 U.S. 783, and a Ninth Circuit Court of Appeals case applying Calder,
Panavision Intern., L.P. v. Toeppen (9th Cir. 1998) 141 F.3d 1316 (Panavision).
Pavlovich petitioned the Court of Appeal for a writ of mandate. The petition
was summarily denied. On review, we retransferred the matter to the Court of
Appeal with directions to vacate its denial order and issue an order to show
cause. After briefing and argument, the Court of Appeal wrote an opinion
denying the writ.
The Court of Appeal reasoned that (1) Pavlovich knew or should have known
his Internet activities were having injurious effects on the California
movie and computer industries, (2) he also necessarily knew the misappropriated
material posted on his Web site was instantly accessible to a wide range of Internet
users and consumers, including those in California, (3) his use of the Internet,
rather than older mass communications media, as the means of inflicting harm
was irrelevant, and (4) the instant access afforded by an Internet Web
site is the equivalent of the site operator's personal presence wherever the
site's material is accessed and appropriated. Hence, the Court of Appeal
concluded, though physically absent from California, Pavlovich had established
minimum jurisdictional contacts with this state under a theory of
"purposeful availment" of its benefits and privileges, because, by
his intentional conduct, he had caused harmful effects in the state.
The Court of Appeal further concluded that personal jurisdiction over Pavlovich
was reasonable under all the circumstances. It stressed that (1) the degree of
Pavlovich's personal interjection was substantial, because his knowing activity
posed substantial harm for industries centered in California; (2) the burden of
defending the suit in California was substantial, but not so great as to deny
Pavlovich due process; (3) Pavlovich identified no conflict with the
sovereignty of his home state; (4) California had a substantial interest in the
subject matter; (5) California offered a logical forum for convenient,
efficient, and effective resolution of the dispute; and (6) no other forum
could claim a greater interest.
DISCUSSION
The majority correctly state the broad principles. California may assert
personal jurisdiction over a foreign defendant on any basis consistent with the
state and federal Constitutions. ( Code Civ. Proc., § 410.10.) Such
jurisdiction is constitutionally permissible only "if the defendant has
such minimum contacts with the state that the assertion of jurisdiction does
not violate ' "traditional notions of fair play and substantial
justice." ' " (Vons, supra, 14 Cal. 4th 434, 444,
quoting Internat. Shoe Co., supra, 326 U.S. 310, 316 [66 S. Ct.
154, 158]; see Burger King, supra, 471 U.S. 462, 471-478 [105 S.
Ct. 2174, 2181-2185].)
The "minimum contacts" rule protects both the defendant's
"liberty interest in not being subject to the judgments of a forum with
which he or she has established no meaningful 'contacts, ties, or relations'
" (Vons, supra, 14 Cal. 4th 434, 445; Burger King, supra,
471 U.S. 462, 471-472 [105 S. Ct. 2174, 2181]) and the mutual territorial
limits of coequal sovereigns in a federal system (Vons, supra, at
p. 445; see World-Wide Volkswagen, supra, 444 U.S. 286, 292 [100
S. Ct. 559, 564-565]). The rule also " 'gives a degree of predictability
to the legal system that allows potential defendants to structure their primary
conduct with some minimum assurance as to where that conduct will and will not
render them liable to suit.' " (Burger King, supra, at p.
472 [105 S. Ct. at p. 2182], quoting World-Wide Volkswagen, supra,
at p. 297 [100 S. Ct. at p. 567].)
But the test of minimum contacts is necessarily flexible, and, as the
majority concede, subtle shades of grays predominate. (Maj. opn., ante,
at p. 268; see Kulko v. California Superior Court (1978) 436 U.S. 84, 92
[56 L. Ed. 2d 132, 98 S. Ct. 1690] (Kulko).) "[T]he question of
jurisdiction cannot be answered by the application of precise formulas or
mechanical rules. Each case must be decided on its own facts." ( Integral
Development Corp. v. Weissenbach (2002) 99 Cal.App.4th 576, 583 [122 Cal.
Rptr. 2d 24] (Integral Development Corp.); see Cornelison v. Chaney
(1976) 16 Cal.3d 143, 150 [127 Cal. Rptr. 352, 545 P.2d 264] (Cornelison).)
For particular litigation, the "fair warning" standard that
underlies the minimum contacts rule "is satisfied if the defendant has
'purposefully directed' his activities at residents of the forum [citation],
and the litigation results from alleged injuries that 'arise out of or relate
to' those activities [citation]." (Burger King, supra, 471
U.S. 462, 472 [105 S. Ct. 2174, 2182]; see also Helicopteros Nacionales de
Colombia v. Hall (1984) 466 U.S. 408, 414 [80 L. Ed. 2d 404, 104 S. Ct.
1868]; Vons, supra, 14 Cal. 4th 434, 446.) As Burger King
explained, there are several reasons why personal jurisdiction is appropriate
in such cases. A state generally has a manifest interest in providing its
residents a forum for redressing injuries inflicted by out-of-state actors.
When such persons "purposefully derive benefit" from their interstate
activities (Kulko, supra, 436 U.S. 84, 96 [98 S. Ct. 1690,
1699]), it may well be unfair to allow them to raise a territorial shield
against efforts to hold them to account where injury proximately resulted.
Also, modern transportation and communications have made it much less
burdensome, and thus less unfair, to require one to litigate in another forum
for disputes relating to such activity. (Burger King, supra, at
pp. 473-474 [105 S. Ct. at pp. 2182-2183]; see also Keeton v. Hustler
Magazine, Inc. (1984) 465 U.S. 770, 776 [79 L. Ed. 2d 790, 104 S. Ct. 1473]
(Keeton); McGee v. International Life Ins. Co. (1957) 355 U.S.
220, 223 [2 L. Ed. 2d 223, 78 S. Ct. 199]; Vons, supra, at p.
447.)
The necessary purposeful direction toward the forum has sometimes been
described as requiring "some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the forum
[s]tate, thus invoking the benefits and protections of its laws." (
Hanson v. Denckla (1958) 357 U.S. 235, 253 [2 L. Ed. 2d 1283, 78
S. Ct. 1228], italics added.) But purposeful availment in this literal sense is
not the only form of purposeful direction that will permit the exercise of
personal jurisdiction over a foreign defendant.
Thus, in Calder, supra, 465 U.S. 783, the court concluded
that California actress Shirley Jones could bring a California suit against
Florida residents who wrote and edited an allegedly defamatory article about
her which appeared in a nationally circulated tabloid newspaper. The court
concluded that, despite their lack of any direct personal or business ties to
California, the individual defendants had "expressly aimed" their
intentional conduct at this state. (Calder, supra, at p. 789 [104
S. Ct. at p. 1487].) Calder stressed that the defendants' newspaper had
prominent circulation in California, and that California was the focal point of
the story, because the defendants consulted California sources and knew the
brunt of the harm, both emotional and reputational, would be felt in this
state, where Jones lived and pursued her professional career. ( Id. at
pp. 788-790 [104 S. Ct. at pp. 1486-1487].)
California has similarly assumed that, because of this state's "
'natural interest in the effects of an act within its territory, even though
the act itself was done elsewhere' " (Judicial Council of Cal., com.,
reprinted at 14 West's Ann. Code Civ. Proc. (1973 ed.) foll. § 410.10, p. 472,
quoting Rest.2d Conf. of Laws (Proposed Off. Draft (1967) pt. I) § 37, com. a,
p. 197), one whose out-of-state act was intended to cause effects here
may be sued in this state for the act just as if it had occurred here (Judicial
Council of Cal., com., reprinted at 14 West's Ann. Code Civ. Proc., supra,
foll. § 410.10, p. 473; cf. Sibley v. Superior Court (1976) 16 Cal.3d
442, 446 [128 Cal. Rptr. 34, 546 P.2d 322] (Sibley) [state may exercise
jurisdiction over foreign defendant who causes effects here unless nature of
effects, and of defendant's relationship to this state, make exercise of
jurisdiction unreasonable]).
One cannot be sued in a foreign jurisdiction "solely as a result of
'random,' 'fortuitous,' or 'attenuated' contacts [citations]." (Burger
King, supra, 471 U.S. 462, 475 [105 S. Ct. 2174, 2183]; Keeton,
supra, 465 U.S. 770, 774 [104 S. Ct. 1473, 1478].) But the minimum
contacts necessary to personal jurisdiction are always present where the
defendant has so purposefully directed injurious conduct toward the
forum, with the intent of affecting its residents, " 'that he
should reasonably anticipate being haled into court there' " for
related litigation. (Burger King, supra, at p. 474 [105 S. Ct. at
p. 2183], quoting World-Wide Volkswagen, supra, 444 U.S. 286, 297
[100 S. Ct. 559, 567], italics added.)
In Calder, the court unanimously found that the Florida-based author
and editor of an allegedly defamatory tabloid article about a California
actress "must 'reasonably anticipate being haled into court [in
California]' to answer for the truth of the statements made in their article.
[Citations.]" (Calder, supra, 465 U.S. 783, 790 [104 S. Ct.
1482, 1487].) As the court observed, the defendants were "primary
participants in an alleged wrongdoing intentionally directed at a California
resident, and jurisdiction over them is proper on that basis." (Ibid.,
italics added.) "An individual injured in California," the court
said, "need not go to Florida to seek redress from persons who, though
remaining in Florida, knowingly cause the injury in California." (Ibid.,
italics added.)
As the majority indicate, the Calder test of minimum contacts based
upon conduct expressly aimed at the forum is not limited to defamation actions.
It applies to intentional torts generally. (See, e.g., Bancroft &
Masters, Inc. v. Augusta Nat. Inc. (9th Cir. 2000) 223 F.3d 1082, 1087-1088
(Bancroft & Masters); Panavision, supra, 141 F.3d
1316, 1321-1322; see also, e.g., IMO Industries, Inc. v. Kiekert AG (3d
Cir. 1998) 155 F.3d 254, 260 (IMO); Far West Capital, Inc. v. Towne
(10th Cir. 1995) 46 F.3d 1071, 1077.)
"When a defendant moves to quash service of process on jurisdictional
grounds, the plaintiff has the initial burden of demonstrating facts justifying
the exercise of jurisdiction. [Citation.] Once facts showing minimum contacts
with the forum state are established, however, it becomes the defendant's
burden to demonstrate that the exercise of jurisdiction is unreasonable.
[Citation.] Where there is conflicting evidence, the trial court's factual
determinations are not disturbed on appeal if supported by substantial
evidence. [Citation.] When no conflict in the evidence exists, however, the
question of jurisdiction is purely one of law and the reviewing court engages
in an independent review of the record. [Citation.]" (Vons, supra,
14 Cal. 4th 434, 449; cf. Floveyor Internat., Ltd. v. Superior Court
(1997) 59 Cal.App.4th 789, 793-794 [69 Cal. Rptr. 2d 457].)
When, as here, no findings of fact were requested or made, the trial
court's implicit findings of disputed fact are entitled to the same appellate
deference as explicit findings. (See City and County of San Francisco v.
Sainez (2000) 77 Cal.App.4th 1302, 1313 [92 Cal. Rptr. 2d 418]
[constitutionality, as applied, of cumulative housing code penalties].) Thus,
we must accept all undisputed facts, indulge all other reasonable factual
inferences that support the trial court's order, and independently apply the
law to those facts. (Integral Development Corp., supra, 99 Cal.
App. 4th 576, 584-585; cf. Gleaves v. Waters (1985) 175 Cal. App. 3d
413, 417 [220 Cal. Rptr. 621] [preliminary injunction].)
Application of these principles compels a conclusion that the unique
circumstances of this case satisfy the fundamental requirements of Calder.
For purposes of minimum contacts analysis, the following facts are either
undisputed or fairly inferable from the record: The DeCSS source code was
posted on defendant Pavlovich's LiVid Web site as part of a widespread effort
to defeat the CSS encryption system jointly developed by the movie and DVD
industries for their mutual protection and benefit. DeCSS was posted on the
LiVid Web site despite Pavlovich's assumption that DeCSS illegally infringed
the licensed trade secret represented by CSS. n3 Pavlovich, a technical expert
in this area, knew CSS was intended to protect copyrighted materials on DVD's
from unauthorized duplication, and also to limit DVD playback to systems with
CSS technology. Indeed LiVid's goal in defeating CSS was to develop an alternative,
and presumably competitive, "open source" DVD playback system. Thus,
the intended injurious effects of posting DeCSS were aimed directly at the
computer hardware industry involved in producing CSS-encrypted DVD players--an
industry Pavlovich knew was heavily concentrated in California.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n3 As indicated above, this assumption is evidenced by Pavlovich's
admission that he understood DeCSS had been derived by reverse engineering a DVD
player equipped with CSS technology, and by his e-mail, dated October 1, 1999,
warning that "[r]everse engineering is illegal in most (if not all) of the
countries that developers in this project live in." Pavlovich now urges
that under the Uniform Trade Secrets Act as applicable in California ( Civ.
Code, § 3426 et seq.), "[r]everse engineering . . . alone shall not be
considered improper means" of acquiring a trade secret. (Id., §
3426.1, subd. (a).) But the merits of DVD CCA's lawsuit are not before us
at this preliminary stage. What counts for jurisdictional purposes is that
Pavlovich engaged in intentional conduct, targeted against California
interests, with the understanding that it would produce potentially
actionable effects in this state, thus making it reasonable to anticipate that
he would be haled into court here.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Moreover, Pavlovich knew the purpose of CSS was to protect copyrighted
movies from pirating, and that the widespread availability of DeCSS undermined
that interest. Thus, even if he did not personally pirate copyrighted material
for commercial gain, Pavlovich, by publishing material he understood as an
infringement of the CSS trade secret, took an action calculated to harm the
movie industry, which Pavlovich knew was centered in California.
Accordingly, the necessary minimum contacts required by Calder, supra,
465 U.S. 783, are present. Pavlovich engaged in " '(1) intentional actions
(2) expressly aimed at the forum state (3) causing harm, the brunt of which is
suffered--and which the defendant knows is likely to be suffered--in the forum
state.' " (Panavision, supra, 141 F.3d 1316, 1321, quoting Core-Vent
Corp. v. Nobel Industries AB (9th Cir. 1993) 11 F.3d 1482, 1486 (Core-Vent).)
Accordingly, he should reasonably anticipate he would be haled into California's
courts to account for his conduct.
The majority ascribe undue significance to the fact that Pavlovich acted
through a new and rapidly burgeoning medium of interstate and international
communication--the Internet. They assert that the mere posting of
information on a passive Internet Web site, which is accessible from
anywhere but is directed at no particular audience, cannot be an action
targeted at a particular forum. Otherwise, they worry, mere use of the Internet
would subject the user to personal jurisdiction in any forum where the site was
accessible.
I agree that mere operation of an Internet Web site cannot expose
the operator to suit in any jurisdiction where the site's contents might be
read, or where resulting injury might occur. (See, e.g., Mink v. AAAA
Development LLC (5th Cir. 1999) 190 F.3d 333, 336-337 (Mink); Oasis
Corp. v. Judd (S.D.Ohio 2001) 132 F. Supp. 2d 612, 623; Nicosia v. De
Rooy (N.D.Cal. 1999) 72 F. Supp. 2d 1093, 1098; but see Inset Systems,
Inc. v. Instruction Set, Inc. (D.Conn. 1996) 937 F. Supp. 161, 164-165 (Inset
Systems, Inc.).) Communication by a universally accessible Internet
Web site cannot be equated with "express aiming" at the entire world.
However, defendants who aim conduct at particular jurisdictions, expecting
and intending that injurious effects will be felt in those specific places,
cannot shield themselves from suit there simply by using the Internet,
or some other generalized medium of communication, as the means of inflicting
the harm. (See, e.g., Calder, supra, 465 U.S. 783, 789-790 [104
S. Ct. 1482, 1486-1487] [significant California circulation of nationwide
newspaper supports California defamation suit by California resident against
Florida residents who wrote and edited defamatory article]; Keeton, supra,
465 U.S. 770, 773-780 [104 S. Ct. 1473, 1477-1481] [significant regular
circulation of nationwide magazine in New Hampshire supports New Hampshire
defamation suit against magazine by well-known New York resident]; Panavision,
supra, 141 F.3d 1316, 1319-1322 [California suit proper where Illinois
defendant registered and used California plaintiff's trademarks as domain names
for defendant's Internet Web sites, then solicited payoff to relinquish
domain names]; Indianapolis Colts, Inc. v. Metro. Baltimore Football (7th
Cir. 1994) 34 F.3d 410, 411-412 (Indianapolis Colts, Inc.) [in Indiana
trademark infringement suit by former Baltimore (now Indianapolis) Colts of
National Football League against Baltimore CFL Colts of Canadian Football
League, defendant established minimum contacts with Indiana, among other ways,
through nationwide cable telecasts of football games]; cf., e.g., CompuServe,
Inc. v. Patterson (6th Cir. 1996) 89 F.3d 1257, 1262-1267 [Ohio declaratory
relief action by Ohio-based Internet service provider is proper where
Texas defendant transmitted "trademarked" software over the Internet
to plaintiff, used plaintiff's Internet service to share and market
software, then e-mailed plaintiff in Ohio, claiming names and marks of
plaintiff's similar software infringed his trademarks]; Bancroft &
Masters, supra, 223 F.3d 1082, 1084-1088 [California declaratory
relief action is proper where defendant, based in Georgia, sent letters both to
plaintiff, a California merchant, and to a Virginia-based Internet Web
site domain name registrar, claiming plaintiff's registered domain name
infringed defendant's trademark, thus forcing plaintiff to sue to retain
control of domain name].) n4
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n4 The majority imply that the maintenance of a passive Internet Web
site cannot be considered "express aiming" at any jurisdiction
because such a site is just a way of allowing interested persons to search for
and retrieve information stored in remote computers. (Maj. opn., ante,
at p. 265, citing, for such a description of the World Wide Web, Reno v.
American Civil Liberties Union (1997) 521 U.S. 844, 849-852 [117 S. Ct.
2329, 2334-2335, 138 L. Ed. 2d 874].) But the maintenance of a Web site that
includes content intended and expected to harm particular individuals,
entities, or interests in specific places is no more "passive" in
this regard than television broadcasts which all or none may watch as they
choose (see Indianapolis Colts, Inc., supra, 34 F.3d 410,
411-412), or a recorded toll-free telephone message which all or none may hear
as they choose (cf. Inset Systems, Inc., supra, 937 F. Supp. 161,
165).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
In such circumstances, the defendant is not exposed to universal and
unpredictable jurisdiction. He faces suit only in a particular forum where he directed
his injurious conduct, and where he must reasonably anticipate being called to
account.
The cases cited by the majority for the proposition that operation or use
of a passive Internet Web site cannot create personal jurisdiction in a
state foreign to the operator's location are inapposite. Those decisions hold
that personal jurisdiction cannot be based on mere accessibility
to a Web site by residents of the forum state or otherwise conclude, on their
individual facts, that particular uses of the Internet did not
establish the geographic specificity, knowledge, and intent necessary for
"express aiming." n5
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n5 (E.g., Jewish Defense Organization, Inc. v. Superior Court (1999)
72 Cal.App.4th 1045 [85 Cal. Rptr. 2d 611] [assertion by plaintiff, who lives
in New York and travels frequently, that he "spends 'considerable
professional time' in California" is insufficient to show California was
targeted when plaintiff was allegedly defamed by an individual and
organization, both located in New York, using Internet services provided
by companies with offices in California]; Cybersell, Inc. v. Cybersell, Inc.
(9th Cir. 1997) 130 F.3d 414 (Cybersell) [Floridians' mere use of an
allegedly infringing mark on a passive Web site home page promoting their
business did not subject users to personal jurisdiction in Arizona, where
mark's owners were located; there was no evidence defendants sought Arizona
business or otherwise targeted Arizona with knowledge that harm would be
suffered there]; GTE New Media Services, Inc. v. BellSouth Corp. (D.C.
Cir. 2000) 339 U.S. App. D.C. 332, 199 F.3d 1343 [mere evidence that foreign
defendants sought to maximize use, within District of Columbia as elsewhere, of
their Internet "yellow pages" service did not create District
of Columbia jurisdiction for suit by competing Internet "yellow
pages" service provider]; Bensusan Restaurant Corp. v. King
(S.D.N.Y. 1996) 937 F. Supp. 295, affd. (2d Cir. 1997) 126 F.3d 25 (Bensusan
Restaurant Corp.) [use of allegedly infringing logotype on Web site
promoting independent Blue Note jazz club, which was located in Missouri, did
not create New York personal jurisdiction in trademark infringement suit by
owner-operator of Blue Note jazz clubs in New York and elsewhere]; see also,
e.g., Nam Tai Electronics, Inc. v. Titzer (2001) 93 Cal.App.4th 1301
[113 Cal. Rptr. 2d 769] [defendant Colorado resident, who posted alleged
commercial libels against plaintiff Hong Kong company on an Internet
bulletin board provided by Yahoo!, a California corporation, was not subject to
California jurisdiction at plaintiff's behest simply because Yahoo!'s Web site
was "maintained" in California and defendant's service agreement with
Yahoo! stated that California jurisdiction would apply to disputes between
Yahoo! and defendant].)
For purposes of this case, which does not involve direct commercial
use of the Internet, I find little utility in those federal decisions
that look to " 'the nature and quality of commercial activity that an
entity conducts over the Internet' " to determine personal
jurisdiction. (Mink, supra, 190 F.3d 333, 336, quoting Zippo
Mfg. Co. v. Zippo Dot Com, Inc. (W.D.Pa. 1997) 952 F. Supp. 1119, 1124.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Next, the majority accept Pavlovich's argument that he cannot have
expressly aimed his conduct at California because he knew neither the specific
identity nor the location of the CSS licensing agency (now California-based
plaintiff DVD CCA) at the time DeCSS was posted on the LiViD Web site. But
knowledge of this exact kind is unnecessary to establish personal jurisdiction.
When a foreign defendant, by intentional conduct directed toward the forum,
establishes the necessary minimum contacts with that jurisdiction, he or she
may be exposed to litigation there for any " 'controversy [that] is related
to or "arises out of" [those] contacts . . . .'
[Citations.]" (Vons, supra, 14 Cal. 4th 434, 446, italics
added.) The plaintiff need not be the exact person or entity toward whom
the defendant's conduct was directed.
The facts of Vons, supra, 14 Cal.4th 434, are illustrative. There,
customers of several Jack-in-the-Box restaurants were injured or killed by
eating tainted hamburger. Other Jack-in-the-Box franchisees brought a
California suit against Jack-in-the-Box's California parent company, Foodmaker,
seeking damages for business losses caused by the adverse publicity. Foodmaker
cross-complained against various parties, including California-based Vons,
which shipped hamburger to Foodmaker for use in Jack-in-the-Box restaurants.
Vons, in turn, cross-complained against Foodmaker and the franchises where food
poisoning had occurred, including two Washington state restaurants. Vons
alleged the injuries could have been avoided by proper cooking procedures.
We held that for purposes of the particular litigation, jurisdiction over
the Washington cross-defendants was proper, though they had no general ties
with California, nor any direct contacts with Vons. As we explained, "the
nexus required to establish specific jurisdiction is between the defendant, the
forum, and the litigation [citations]--not between the plaintiff and the
defendant." (Vons, supra, 14 Cal. 4th 434, 458.) " 'The
crucial inquiry concerns the character of [the] defendant's activity in the
forum [and] whether the cause of action arises out of or has a substantial
connection with that activity . . . .' " ( Id., at p. 452,
quoting Cornelison, supra, 16 Cal. 3d 143, 148, italics added by Vons.)
In Vons, this substantial connection between the Washington
cross-defendants and Vons's California cross-complaint arose from the
cross-defendants' California-centered contractual franchise relationship with Foodmaker.
The cross-defendants bought all their hamburger from Foodmaker, and the
standard franchise agreement, which provided that contractual disputes between
Foodmaker and its franchisees would be litigated in California, set exacting
standards for sanitary food preparation in Jack-in-the-Box restaurants. Hence,
on the basis of their California contacts, the cross-defendants could
reasonably anticipate a California lawsuit with respect to that subject. (Vons,
supra, 14 Cal. 4th 434, 456-460.)
Similarly here, defendant Pavlovich's connection with California arises
from his participation in a concerted effort to defeat the CSS encryption
system he knew was developed to protect interests of the movie and DVD-related
computer industries. Those industries, as he also knew, were centered or
substantially concentrated in this state. He knew CSS was a trade secret,
available only by a license his LiVid project had specifically declined to
obtain. He also assumed the DeCSS source code posted on the LiVid Web site had
been derived by illegal means, and was an infringement of the proprietary
information represented by CSS. DVD CCA's lawsuit, alleging that the Web site
posting was an infringement of the CSS trade secret, thus " 'arises out of
or has a substantial connection with' " his conduct aimed at this state. (Vons,
supra, 14 Cal. 4th 434, 452.) Because he targeted the trade secrets of
industries he knew were centered in California, he must reasonably anticipate
California litigation calling him to account for that conduct. That he did not
know the exact identity or location of the entity authorized to prosecute such
an action is immaterial.
The majority also accept Pavlovich's claim that his contacts with the
California movie, computer, and consumer electronics industries are too random,
remote, and attenuated to satisfy Calder's express aiming test. ( Calder,
supra, 465 U.S. 783.) As to the motion picture industry, the
majority insist it is insufficient that Pavlovich knew the DeCSS source code
could be used to harm that industry through the pirating of copyrighted motion
pictures. The majority note that DVD CCA's lawsuit does not allege Pavlovich
pirated movies, and they say express aiming at the movie industry cannot be
found from the mere foreseeability that other persons might use the code
to do so. As to the computer and electronics industries, the majority
observe there is no evidence Pavlovich actually knew that California members of
these industries were among the CSS licensees allegedly harmed by DeCSS.
Finally, the majority suggest that a defendant's knowledge of industry-wide
effects cannot form the sole basis for personal jurisdiction in any event.
It is true that one cannot be sued in another forum simply because his or
her conduct has foreseeable effects there. n6 A number of lower court
decisions suggest further that, absent other indicia of activity purposefully
directed at the forum, even the defendant's intent to injure a forum resident,
standing alone, is not sufficient to satisfy the test of Calder, supra,
465 U.S. 783. n7 And several cases have held that alleged trademark
infringement on an Internet Web site cannot alone, under Calder,
establish minimum contacts with the forum in which the trademark's owner
resides. n8
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n6 E.g., Asahi Metal Industry Co. v. Superior Court (1987) 480 U.S.
102, 112 [94 L. Ed. 2d 92, 107 S. Ct. 1026] (Asahi Metal Industry Co.)
(placing product into stream of commerce does not create minimum contact with
every state to which product may foreseeably travel); World-Wide Volkswagen,
supra, 444 U.S. 286, 298 [100 S. Ct. 559, 567-568] (mere foreseeability
that vehicle sold by wholesale and retail dealers serving New York City
metropolitan area would be taken to another state, such as Oklahoma, did not
create dealers' minimum contacts with Oklahoma for products liability suit
arising from Oklahoma accident); Noonan v. Winston Co. (1st Cir. 1998)
135 F.3d 85, 90-92 (French publisher's knowledge that copies of its magazine,
containing offensive photo of Massachusetts resident, might reach that state is
insufficient to satisfy Calder); see also Sibley, supra,
16 Cal. 3d 442, 445-446.
n7 See, e.g., IMO, supra, 155 F.3d 254, 260-268 (the
defendant German corporation's activities, outside New Jersey, which allegedly
interfered with New Jersey-based company's efforts to sell its Italian
subsidiary did not create minimum contacts between the defendant and New Jersey
despite the defendant's knowledge that the plaintiff was headquartered there); ESAB
Group, Inc. v. Centricut, Inc. (4th Cir. 1997) 126 F.3d 617, 625-626
(scheme, carried out in New Hampshire and Florida, at behest of defendant New
Hampshire manufacturer, to procure, disclose, and use trade secrets and
customer lists of the plaintiff, a South Carolina competitor, did not create
minimum contacts with South Carolina despite the defendant's presumed intent to
affect the plaintiff's business); Hicklin Engineering, Inc. v. Aidco, Inc.
(8th Cir. 1992) 959 F.2d 738, 739 (actions by Michigan manufacturer, taken
outside Iowa, to injure general business of Iowa competitor, did not create
minimum contacts with Iowa).
n8 E.g., Cybersell, supra, 130 F.3d 414, 418-420; Bensusan
Restaurant Corp., supra, 937 F. Supp. 295, 299-300; but see Inset
Systems, Inc., supra, 937 F. Supp. 161, 164-165 (Massachusetts
defendant directed its activities toward all states, including Connecticut, by
advertising via Internet and toll-free telephone number; hence,
Connecticut jurisdiction was proper for suit by Connecticut firm alleging that
the defendant's Web site domain name infringed the plaintiff's trademark).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
Nonetheless, I believe that the unusual and unprecedented facts of this
case demonstrate purposeful activity directed toward this forum
sufficient to establish minimum contacts under the Calder test. As a
result of his actions, defendant Pavlovich should reasonably have anticipated
being haled into court in this state, and recognition of California's
jurisdiction thus meets constitutional standards of fairness.
The posting of the DeCSS source code on Pavlovich's LiVid Web site was done
with the specific goal of negating, by illegal means, the
licensed CSS technology Pavlovich knew had been jointly developed by the movie
and DVD industries for their mutual protection. Pavlovich's immediate aim, he
acknowledged, was to promote development of alternative DVD playback systems
not dependent on CSS licensure. However, he also knew CSS was intended to
afford crucial copyright protection to DVD movies. He has denied any personal
desire to pirate movies, or to encourage others to do so. But by deciding to
display the DeCSS source code without restriction on the universally accessible
Web site, Pavlovich offered visitors to the site the patent opportunity to
exploit this information as they chose.
By taking this calculated action, Pavlovich thus not only foresaw, but must
have intended, the natural and probable consequences he knew would
befall the affected industries. These consequences included both the
competitive injury Pavlovich admitted he intended to inflict upon the DVD
industry, which is substantially present in California, and the loss of
copyright protection to the movie industry he knew is primarily associated with
this state.
This lawsuit, brought by the agent of these affected industries, seeks to
forestall just such damage by enjoining Pavlovich, and other members of his
network, from continuing to display the DeCSS source code on their Web sites. (
Civ. Code, § 3426.2, subd. (a).) For purposes of such an action, it is
irrelevant whether Pavlovich himself exploited DeCSS for commercial benefit.
The instant suit is predicated on the inherent harm to California-centered
industries caused by Pavlovich's intentional, knowing, and allegedly improper
"[d]isclosure" of their trade secret. (Id., § 3426.1, subd.
(b)(2).) Pavlovich knew he was targeting those industries when he acted. He
proceeded despite his assumption that DeCSS was likely "illegal." He
thus had every reason to expect--indeed, he effectively invited--responsive
litigation.
For purposes of this particular action, therefore, he established sufficient
connection with this state that he must "reasonably anticipate" being
haled into a California court to account for his conduct. (World-Wide
Volkswagen, supra, 444 U.S. 286, 297 [100 S. Ct. 559, 567-568]; see Burger
King, supra, 471 U.S. 462, 474 [105 S. Ct. 2174, 2183].) Because of
the minimum contacts he forged by his intentional conduct directed toward this
state, maintenance of a related suit against him in this forum does not offend
traditional notions of fair play and substantial justice. (Calder, supra,
465 U.S. 783, 787-788 [104 S. Ct. 1482, 1486]; see Internat. Shoe Co., supra,
326 U.S. 310, 316, 320 [66 S. Ct. 154, 160; see also Integral Development
Corp., supra, 99 Cal. App. 4th 576, 587 [suggesting that, even
absent prior employer-employee relationship, California suit by California
corporation against resident of Germany for misappropriation of trade secrets
would be proper under Calder on basis that defendant directed his
intentional tortious conduct toward a known forum resident].) n9
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n9 The majority reject Janmark, Inc. v. Reidy (7th Cir. 1997) 132
F.3d 1200, deeming it the only federal decision that would support jurisdiction
over Pavlovich, because, they conclude, it stands for the unpersuasive notion
that jurisdiction over an intentional tort is always proper where the injury,
or at least foreseeable injury, occurred. In Janmark, a California
manufacturer of minishopping carts was sued in Illinois by an Illinois competitor.
The plaintiff alleged that when it refused to participate in the defendant's
cartel scheme, the defendant retaliated by inducing a New Jersey customer to
cancel an order for the plaintiff's carts. The court of appeals found
jurisdiction proper on grounds that the alleged tort was not complete until the
customer cancelled the order; accordingly, the court ruled, "the injury
and thus the tort occurred in Illinois" for purposes of that state's
long-arm statute. ( Id. at p. 1202.) Whatever the merits of this
reasoning, the court additionally noted, without extended discussion, that
Illinois jurisdiction also satisfied the Calder test. I pass no final
judgment on Janmark, but I do not believe it stands for so broad or
unsupportable a proposition as the majority contend. The plaintiff in Janmark
posited a scenario in which the defendant, who knew the plaintiff's identity
and Illinois location, attempted to obtain the plaintiff's cooperation in a
monopolistic scheme, and, when that effort failed, took revenge by acting for
the express purpose of causing commercial injury to the plaintiff. I do not
find this fact pattern lacking in Calder's requirement of particularized
" 'knowledge and intent in committing the tortious activity' " (maj.
opn., ante, at p. 272, quoting IMO, supra, 155 F.3d 254,
264), nor do I construe Janmark as permitting jurisdiction based solely
on mere " '[f]oreseeability of causing injury in another State'
" (maj. opn., ante, at p. 272, quoting Burger King, supra,
471 U.S. 462, 474 [105 S. Ct. 2174, 2183], original italics omitted).
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I see no reason why the result should differ simply because Pavlovich targeted
entire industries within the forum, rather than a single individual or
business. The majority suggest there is no case "where a court exercised
jurisdiction under the effects test based solely on the defendant's knowledge
of industry-wide effects in the forum state." (Maj. opn., ante, at
p. 277.) By the same token, however, no decision has held that the defendant's
efforts to target an entire industry cannot form a basis for specific
personal jurisdiction. Jurisdiction is appropriate under Calder whenever
a foreign defendant expressly aimed injurious actions toward the forum,
with the intent and understanding that the brunt of the harm would be felt
there. (Calder, supra, 465 U.S. 783, 788-790 [104 S. Ct. 1482,
1486-1487].) While targeting of an individual forum resident certainly meets
that test, the aiming is no less specific, and jurisdiction no less proper,
when the effort is directed, with equal purpose and precision, at one or more
entire industries located there.
Pavlovich insists he did not aim at California in particular, because movie
and computer companies exist throughout the nation and world. Moreover, he
asserts, we may not assume large companies, with widely dispersed interests and
operations, suffer the "brunt of the harm" in California simply
because they are headquartered here.
Some cases have suggested that "a corporation 'does not [necessarily]
suffer harm in a particular geographic location in the same sense that an
individual does.' " (Cybersell, supra, 130 F.3d 414, 420,
quoting Core-Vent, supra, 11 F.3d 1482, 1486; see also IMO,
supra, 155 F.3d 254, 262-263, and cases cited.) But other decisions have
implicitly rejected the argument that, for purposes of Calder, acts
intended to harm a corporation cannot be said to be directed at any particular
place. (Core-Vent, supra, at p. 1487.)
Calder "does not preclude a determination that a corporation
suffers the brunt of harm in its principal place of business." (Panavision,
supra, 141 F.3d 1316, 1322, fn. 2; see Core-Vent, supra,
11 F.3d 1482, 1487.) It seems reasonable that, for purposes of litigation
arising from tortious conduct purposefully directed against the general
commercial interests of particular business enterprises, those businesses may
be deemed to have suffered the "brunt of the harm," and the actor may
reasonably anticipate suit, in the state where he or she knew they maintained
their principal places of business. (Panavision, supra, at p.
1322, fn. 2.) n10
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n10 In any event, where minimum contacts are otherwise present, it may not
be necessary that the "brunt of the harm" was suffered in the
forum. In Keeton, supra, 465 U.S. 770, the high court allowed a
New Hampshire defamation action against a national magazine with circulation in
that state, even though the plaintiff was a resident of New York, and it was
"undoubtedly true that the bulk of the harm done to [the plaintiff]
occurred outside [the forum]." ( Id. at p. 780.)
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Nor, in my view, is it fatal that individual members of the industries
Pavlovich targeted are not based exclusively within California. When, as
here, one purposefully directs injurious conduct against entire industries,
with actual knowledge that they are primarily or substantially
present in a particular forum, his contacts with that state are no more
attenuated, random, or fortuitous, than if, by unusual happenstance, they were
solely concentrated there. The actor must reasonably anticipate that litigation
generated by his intentional conduct will originate in a forum where, as he
knows, the industry or industries he sought to injure are primarily or
substantially located. Otherwise, one who acted from a remote location against
an entire multistate or multinational industry, as opposed to a single
enterprise, could rest secure that he was immune from suit in every
jurisdiction where members of that industry were located.
Indeed, that is the unfortunate result, and the glaring flaw, of the
majority's holding. Under the majority's rule, the California-centered
industries directly targeted by Pavlovich and his numerous Internet
colleagues have no recourse for their alleged injury but to pursue a
multiplicity of individual suits against each defendant in his or her separate
domicile. Nothing in the basic principles of long-arm jurisdiction compels such
an illogical and unfair outcome. I therefore conclude that Pavlovich
purposefully established minimum contacts with California sufficient to permit
litigation related to those contacts to proceed against him here.
Of course, "[o]nce it has been decided that a defendant purposefully
established minimum contacts within the forum State, these contacts [must] be
considered in light of other factors to determine whether the assertion of
personal jurisdiction would comport with 'fair play and substantial justice.'
[Citations.] Thus courts in 'appropriate case[s]' may evaluate 'the burden on
the defendant,' 'the forum [s]tate's interest in adjudicating the dispute,'
'the plaintiff's interest in obtaining convenient and effective relief,' 'the
interstate judicial system's interest in obtaining the most efficient
resolution of controversies,' and the 'shared interests of the several [s]tates
in furthering fundamental substantive social policies.' [Citations.]" (Burger
King, supra, 471 U.S. 462, 476-477 [105 S. Ct. 2174, 2184]; see also
Asahi Metal Industry Co., supra, 480 U.S. 102, 113 [107 S. Ct.
1026, 1032-1033]; World-Wide Volkswagen, supra, 444 U.S. 286, 292
[100 S. Ct. 559, 564].)
"These considerations sometimes serve to establish the reasonableness
of jurisdiction upon a lesser showing of minimum contacts than would
otherwise be required. [Citations.]" (Burger King, supra,
471 U.S. 462, 477 [105 S. Ct. 2174, 2184], italics added.) Moreover,
"where a defendant who purposefully has directed his activities at forum
residents seeks to defeat jurisdiction, he must present a compelling case
that the presence of some other considerations would render jurisdiction
unreasonable." (Ibid., italics added.)
Though Pavlovich argues otherwise, he has failed to make such a compelling
case here. On the contrary, as the Court of Appeal concluded, the factors
bearing on the overall reasonableness of California jurisdiction weigh strongly
on the side of such jurisdiction.
The first of these factors, the burden on the defendant, favors Pavlovich
the most, since he would presumably be required to travel from his current home
in Texas to defend the suit. We cannot discount the significant time, expense,
and inconvenience this may entail.
But such concerns are present whenever jurisdiction away from the
defendant's residence is at issue. Here, the travel required is domestic, not
international, and Pavlovich is not disadvantaged by the alien judicial system
of a foreign nation. (Compare, e.g., Asahi Metal Industry Co., supra,
480 U.S. 102, 114 [107 S. Ct. 1026, 1033]; Core-Vent, supra, 11
F.3d 1482, 1489.) The distance between Texas and California is not extreme
under modern conditions. Pavlovich cites his youth and represents in his brief
that his current income is relatively low, but he does not otherwise suggest
any unusual hardship.
Moreover, as indicated above, Pavlovich assumed the DeCSS source code was
an illegal infringement of the licensed CSS technology, yet a decision was made
to post it on the LiVid Web site anyway. Pavlovich thus had reason to
anticipate a responsive lawsuit from somewhere. According to his deposition, he
has already voluntarily appeared outside his home state as an expert witness in
related litigation. Thus, the burden is not constitutionally unreasonable in
this case.
On the other hand, the interests of the plaintiff, the forum, and the
interstate judicial system all strongly favor jurisdiction in this state. For
several reasons, California is a logical forum for convenient, efficient, and
effective relief. The industries affected by Pavlovich's conduct are centered
or substantially present here. Their licensing agent DVD CCA, the plaintiff in
this suit, has its headquarters here. As indicated above, California has a
natural interest, reflected by the reach of its long-arm statute, in redressing
the effects of an act within its territory, even though the act was done
elsewhere. (See ante, p. 286.) California has also evidenced a more
specific interest in the type of injury at issue here. California's adoption of
the Uniform Trade Secrets Act ( Civ. Code, § 3426 et seq.) reflects both its
common concern with regulating trade secret infringements and its special
interest in providing effective remedies for such infringements committed
against its own residents.
Finally, and importantly, both DVD CCA and the interstate judicial system
have a strong interest in efficient resolution of DVD CCA's dispute, involving
common issues of fact and law, with all of the many defendants named in
its complaint. That interest is not served by requiring DVD CCA to pursue
individual defendants in separate fora, if a single suit in one fair and
logical forum is possible. For the reasons already stated, California is such a
forum in this case. In fact, I submit, California's specific interests,
reinforced by the interest in efficient dispute resolution, are so strong here
that "the reasonableness of [California] jurisdiction [may be established]
upon a lesser showing of minimum contacts than would otherwise be
required." (Burger King, supra, 471 U.S. 462, 477 [105 S.
Ct. 2174, 2184].) For these reasons, I am amply persuaded that California's
assertion of personal jurisdiction over Pavlovich, for purposes of this
specific litigation, is constitutionally fair and reasonable. n11
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n11 To the extent it is relevant to consider whether California
jurisdiction would conflict with the competing sovereign interest of another
forum, particularly the defendant's state of residence (see, e.g., Core-Vent,
supra, 11 F.3d 1482, 1487), Pavlovich identifies no specific interest of
Texas in this litigation that might create such a conflict, and I am aware of
none. Pavlovich concedes that this factor has little if any weight in his
favor.
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Though the majority imply otherwise, the result I propose does not signal a
broad new rule that California jurisdiction is proper over any foreign
defendant who causes foreseeable effects in this state. On the contrary, I base
my conclusions on the specific facts of this case. These facts indicate that
defendant Pavlovich engaged in intentional conduct purposefully targeted at
interests he knew were centered or substantially present in California, with
knowledge they would suffer harm here, such that he must reasonably have
anticipated being called to account in this state. Pavlovich thus forged
minimum contacts with California, and it is otherwise fair and reasonable to
assert personal jurisdiction over him here for purposes of related litigation.
For these reasons, and these reasons alone, I conclude that his motion to quash
was properly denied.
I would affirm the judgment of the Court of Appeal.
George, C. J., and Chin, J., concurred.