Michigan Federal Court Addresses Personal Jurisdiction Based On Online Sales Through Hyperlinked Third-Party Website

Internet Commerce

On April 15, the U.S. District Court for the Western District of Michigan exercised personal jurisdiction in a trademark infringement suit after determining that an out-of-state company’s website was sufficiently interactive such that the exercise of personal jurisdiction comports with Due Process. Mor-Dall Enters. v. Dark Horse Distillery, LLC, No. 1:13-cv-915, (W.D. Mich. Apr. 15, 2014). In assessing personal jurisdiction, the court relied on the sliding scale framework established in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997) to assess whether a website has minimum contacts with a forum state. The court determined that the company’s website, which does not allow customers to make purchases directly but rather links customers to a third-party vendor to complete a sale, is interactive and demonstrates that the company “clearly does business over the internet.” Because the website solicits customers from across the country, including Michigan, the company purposefully availed itself of the privilege of acting in Michigan, the court explained. In so holding, the court declined to follow a Northern District of Iowa decision that a company’s website’s use of a hyperlink to a third-party vendor does not give rise to personal jurisdiction over that company. Instead, the court relied on a Sixth Circuit copyright infringement case which held that a record label whose website directed customers to Amazon.com to make purchases availed itself of the privilege of acting in the forum state. The court further held that the cause of action arises in Michigan, and that the exercise of personal jurisdiction is reasonable given the quality and quantity of contacts. The court denied the defendant’s motion to dismiss.