Citation: 126 F.3d 25 (2d Cir. 1997)
The case of Bensusan Restaurant Corp. v. King is a seminal decision by the United States Court of Appeals for the Second Circuit that clarified the limits of personal jurisdiction in the context of the Internet, especially involving passive websites. This case addressed whether a New York court could assert personal jurisdiction over a Missouri resident who operated a website advertising a local club under a name identical to that of a New York-based jazz club, raising trademark infringement claims.
The Court of Appeals affirmed the district court’s dismissal for lack of personal jurisdiction, emphasizing the necessity to apply the forum state’s long-arm statute strictly and recognizing constitutional due process limitations on asserting jurisdiction in internet-related cases.
Facts of Bensusan Restaurant Corp. v. King
In Bensusan Restaurant Corp. v. King, the plaintiff, Bensusan Restaurant Corporation, was a New York corporation that owned “The Blue Note,” a jazz club located in Greenwich Village, New York City. Bensusan held federal trademark rights to the name “The Blue Note.” The defendant, Richard B. King, was a resident of Missouri who operated a small club in Columbia, Missouri, also named “The Blue Note,” which had been in operation since 1980.
In April 1996, King created a website hosted on a server in Missouri. This website was passive in nature; it provided general information about the Missouri club, a calendar of events, and ticketing information. The website also contained a disclaimer clearly stating that the Missouri “Blue Note” should not be confused with Bensusan’s New York jazz club.
The website was accessible nationwide, including in New York, but it did not actively transact business or sell goods online to New York residents. For example, it required patrons to call a Missouri box office phone number and pick up tickets in Missouri.
After the website’s creation, Bensusan initiated a trademark infringement lawsuit in the United States District Court for the Southern District of New York. Bensusan alleged trademark infringement, trademark dilution, and unfair competition, asserting that King’s website caused harm within New York.
King moved to dismiss the case for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(6), arguing that New York courts did not have jurisdiction over him because he was neither a resident nor had sufficient contacts with New York.
Issue
The key legal issues in Bensusan Restaurant Corp. v. King were:
- Whether New York courts had personal jurisdiction over King under New York’s long-arm statute, specifically New York Civil Practice Law and Rules (CPLR) § 302(a)(2) and § 302(a)(3)(ii), which address tortious acts committed within the state or outside the state causing injury within the state.
- Whether asserting personal jurisdiction over King would violate the Due Process Clause of the United States Constitution.
Applicable Law
Under New York CPLR § 302, a court may exercise personal jurisdiction over a non-domiciliary defendant if:
- The defendant commits a tortious act within New York (§ 302(a)(2)); or
- The defendant commits a tortious act outside New York causing injury within New York, and the defendant expects or should reasonably expect such act to have consequences in New York and derives substantial revenue from interstate commerce (§ 302(a)(3)(ii)).
Additionally, personal jurisdiction must satisfy constitutional due process requirements, requiring a non-resident defendant to have sufficient minimum contacts with the forum state such that jurisdiction does not offend traditional notions of fair play and substantial justice.
Court’s Analysis and Holding in Bensusan Restaurant Corp. v. King
In Bensusan Restaurant Corp. v. King, the District Court analyzed Bensusan’s claims under New York’s long-arm statute and the Due Process Clause. The Court of Appeals affirmed the dismissal based primarily on the lack of personal jurisdiction under the long-arm statute.
Regarding § 302(a)(2), the Court found that King’s website was created and hosted in Missouri and did not constitute a tortious act committed within New York. The website’s nature was passive; it merely provided information about the Missouri club, with no direct sales or transactions with New York residents.
The fact that the website was accessible in New York was not sufficient to establish that the tortious act occurred in New York. The requirement that goods be shipped to New York was unmet.
Under § 302(a)(3)(ii), the Court held that King did not derive substantial revenue from interstate commerce and that merely knowing about Bensusan’s New York club was insufficient to meet the statute’s threshold.
The Court noted that the injury allegedly suffered by Bensusan in New York, while relevant, did not by itself establish jurisdiction. The expectation that the website would have consequences in New York did not satisfy the statute’s requirements because King did not purposefully direct activities at New York or avail himself of its markets.
The Court also addressed the constitutional due process considerations, although it declined to rule on due process explicitly because it found no statutory jurisdiction. Nonetheless, the District Court had observed that asserting jurisdiction would likely violate due process because King did not purposefully avail himself of New York’s laws or benefits.
The creation of a passive website accessible in New York was not a deliberate act targeting New York residents. The Court contrasted this case with CompuServe, Inc. v. Patterson, where personal jurisdiction was found because the defendant actively targeted the forum state by sending software and subscribing to a network service.
Conclusion
The Court of Appeals in Bensusan Restaurant Corp. v. King affirmed the District Court’s dismissal of the trademark infringement lawsuit for lack of personal jurisdiction. The decision clarified that:
- A passive website accessible in a forum state does not constitute a tortious act within that state for purposes of personal jurisdiction.
- Personal jurisdiction requires more than mere foreseeability that a website can be accessed in the forum state.
- The long-arm statute requires that the tortious act itself occur in the forum state or that the defendant have substantial revenue from interstate commerce and expect consequences in the state.
- Due process considerations further limit the exercise of jurisdiction over defendants who have not purposefully availed themselves of the forum state.
This case remains a foundational precedent in defining the boundaries of personal jurisdiction in internet-related cases, particularly involving passive websites and trademark disputes.