Federal Court of Canada Discusses Internet Jurisdictional Issues

The Federal Court of Canada recently addressed the issue of Internet jurisdiction in Desjean v Intermix Media Inc (2006 FC 1395), a case involving an allegation that the defendant (Intermix) violated the misleading representations provisions of the Competition Act by bundling without disclosure "spyware" or "adware" with free software offered on various web sites. The Intermix head office was located in California and it had no servers, bank accounts, or employees in Canada, nor did it target Canadian consumers. The plaintiff (Desjean) failed to establish that the Court had jurisdiction to hear the matter. In addressing the jurisdiction issue, Justice Montigny noted the relatively greater body of US jurisprudence dealing with Internet jurisdictional issues, discussed the American jurisprudence and applied the "minimum contact" doctrine, which was first considered in Canada by the Ontario Court of Appeal in Muscutt v Courcelles (2002 CanLII 44957). Under the minimum contact doctrine, for a court to have jurisdiction over a matter involving an out-of-state defendant, the defendant must have certain minimum contacts with the state, contacts that support either general jurisdiction or specific jurisdiction. General jurisdiction attaches when the defendant has concrete connections to the state that are independent from the plaintiff. In this case, Intermix was based in California and had no such general jurisdiction contacts. Specific jurisdiction arises when the defendant directs activities towards the forum state. In the Internet context, specific jurisdiction will arise where the defendant operates a web site through which business is conducted with individuals in the forum state. Conversely, no such jurisdiction would attach when the defendant simply posts information on a site that can be viewed in the forum state. However, American case law has identified a middle ground, represented by interactive web sites, in which specific jurisdiction may also attach. Web sites in this latter category allow users to exchange information with the host computer. In this scenario, attachment of specific jurisdiction will depend on the level of interactivity and the commercial nature of the exchange. Since the web sites at issue in this case were neither commercial nor interactive, the Court ruled that it had no jurisdiction to hear the action. Furthermore, even if the Intermix site were interactive, specific jurisdiction would not arise because the product was downloaded for free, there was no targeting of Canada or Canadian-specific content, and Intermix did not purposely take the benefit of Canadian law. For the full text of the decision, see: http://decisions.fct-cf.gc.ca/en/2006/2006fc1395/2006fc1395.html Summary by: Michael Migus