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CompuServe, Inc. v. Patterson, 89 F.3d 1257, 39 U.S.P.Q.2d (BNA) 1502 (6th Cir. 1996) (full-text).
Factual Background Edit
Patterson, a Texas resident, entered into a contract to distribute shareware through CompuServe's Internet server located in Ohio.From Texas, Patterson electronically uploaded thirty-two master software files to CompuServe's server in Ohio via the Internet. One of Patterson's software products was designed to help people navigate the Internet. Subscribers who downloaded the software and paid the "shareware" fee send their money to CompuServe, which then deducted a percentage and sent the rest to Patterson.
The standard electronic distribution agreement "was first manifested at [Patterson's] own computer in Texas, then transmitted to the CompuServe computer system in Ohio." The contract and the terms of service to which the agreement referred both stated that they were entered into in Ohio, and the terms of service stated that it was to be governed by Ohio law. When CompuServe later began to market a product that Patterson believed to be similar to his own, he threatened to sue. CompuServe brought an action in the Southern District of Ohio, seeking a declaratory judgment.
Trial Court Proceedings Edit
The trial court held that the electronic “link” between the defendant in Texas and CompuServe in Ohio were “too tenuous to support the exercise of personal jurisdiction” in a lawsuit by CompuServe against a Texas subscriber.
Appellate Court Proceedings Edit
The appellate court stated that “merely entering into a contract with CompuServe would not, without more, establish that Patterson had minimum contacts with Ohio. By the same token, Patterson's injection of his software product into the stream of commerce, without more, would be at best a dubious ground for jurisdiction.
The Ohio long-arm statute allows an Ohio court to exercise jurisdiction over a non-resident "transacting business" in the state to the full extent allowed by the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution. In finding it had jurisdiction under Ohio law, the court looked to see whether the following tests were met:
|“||First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum to make the exercise of jurisdiction over the defendant reasonable.||”|
The appellate court held that Patterson had purposefully directed his business activities toward Ohio by knowingly entering into a contract with an Ohio resident and then “deliberately and repeatedly” transmitted files to Ohio.
|“||Because Patterson deliberately did both of those things . . . we believe that ample contacts exist to support the assertion of jurisdiction in this case. . . .||”|