Last week, in Chicago Architecture Foundation v. Domain Magic, LLC, 2007 WL 3046124 (N.D. Ill. 2007), the United States District Court for the Northern District of Illinois denied a Motion to Dismiss for lack of personal jurisdiction, holding that pay per click advertisements found on the Defendants’ website made the site sufficiently interactive for the court to exercise personal jurisdiction over Defendants.
The plaintiff, Chicago Architecture Foundation (CAP) was founded in 1966 and is in the business of providing architectural tours, education, and book services pertaining to architecture in Chicago. It advertises its services on the Internet at www.architecture.org.
Defendant Domain Magic, LLC is a Florida limited liability company with offices in Hillsborough County, Florida. In February 2006, Domain Magic registered the domain name www.chicagoarchitecturefoundation.org on which it provided links to various businesses that offered bike, bus, and boat tours of Chicago, in direct competition with CAP. Though the website was primarily informational, the Court found that Domain Magic received payments based upon the number of clicks on each link. (This finding was not based upon any admission by the defendants but was a sanction imposed by the Court under Federal Rule of Procedure 37 for the defendants’ failure to properly respond to discovery requests propounded by CAP.)
Applying the now familiar standard first set forth in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997), the Court found that the Defendants’ website was not purely passive (that is, a website that "merely makes available information about the company and its products"). The Court stated
Domain Magic earns revenue each time a user clicks on the links attached to the offending webpage. While users can look up services and tours on the offending website, it is Domain Magic who profits from the numerous "hits" it receives each day by unsuspecting users looking for information about CAF.
Moreover, the Court held that there was "no question" that Domain Magic’s actions satisfied the Illinois Long-Arm statute "as it has profited from individuals clicking on the hyperlinks that were posted on the offending website" and Domain magic "knew, or should have known that CAF would suffer injury in Illinois, as that is its state of incorporation, and principle [sic] place of business. Most telling, Domain Magic only listed businesses that provided services in the Chicago area on its offending website, thereby targeting individuals located in Illinois."
Given the ubiquity of pay per click advertisements, widespread adoption of the Court’s analysis in Chicago Architecture Foundation would be a big step toward granting courts "universal jurisdiction" over online businesses, where website operators must anticipate being haled into any court in the United States to defend actions based upon their website content.