United States: California Court Retains Jurisdiction Over Out-Of-State Resident Based On Internet Postings

In the latest battle over personal jurisdiction in Internet cases, California's Sixth District Court of Appeal ruled yesterday that an out-of-state resident who posted computer code that circumvents encryption measures can be sued in California under California law.

Michael Pavlovich developed and posted a computer program designed to defeat the DVD Copy Control Association, Inc.'s ("DVD CCA") encryption-based copy protection system known as the Content Scramble System, or CSS, which encrypts and protects the copyrighted motion pictures contained on DVDs. Pavlovich developed the computer program through reverse engineering and posted the information on a Web site that he owned and operated. The DVD CCA sued Pavlovich in California, alleging that Pavlovich repeatedly published DVD CCA's trade secrets and copyrighted material throughout the Internet.

At the time DVD CCA filed suit, Pavlovich was a student at Purdue University in Indiana, and now resides in Texas. Pavlovich filed a motion to quash, alleging that the California court lacked personal jurisdiction over him. The court framed the issue in the case as "whether California's long-arm statute reaches owners, publishers, and operators of those Web sites when, in violation of California law, they make available for copying or distribution trade secrets or copyrighted material of California companies."

The court held that it does, reasoning that Pavlovich, a computer engineering student, a technician in the computer and telecommunications industry, and the founder and president of a start-up technology company, knew that California is commonly known as the center of the motion picture industry, and that the computer industry holds a commanding presence in the state. Further, the court noted that "[i]nstant access provided by the Internet is the functional equivalent of personal presence of the person posting the material on the Web at the place from which the posted material is accessed and appropriated. It is as if the poster is instantaneously present in different places at the same time, and simultaneously delivering his material at those different places." The court ruled Pavlovich, "knew, or should have known, that the DVD republishing and distribution activities he was illegally doing and allowing to be done through the use of this Web site, while benefiting him, were injuriously affecting the motion picture and computer industries in California."

This case seems to turn on the fact the Pavlovich knew that what he was doing was illegal. Nevertheless, according to John Patton, an attorney in Hughes & Luce's Outsourcing and Technology group, the case "sets a potentially dangerous precedent for cases involving jurisdiction where the Internet is involved." "Following the court's logic," said Patton, "a person who posts information on the Internet could be haled into any court anywhere, which isn't consistent with other courts' rulings involving personal jurisdiction in Internet cases." Pavlovich's attorneys have indicated their intent to appeal the decision.