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CompuServe, Inc. v. Patterson

Defendant Patterson was a resident of the state of Texas who owned a Texas based corporation, Flash point Development. Both defendants had entered into two separate agreements with CompuServe, a corporation based in Ohio. Under the first of these agreements, Patterson and his company agreed to become "users" of the CompuServe system. Under the second, a shareware agreement, these defendants were permitted to advertise and sell software they had designed, called 'Windows Navigator', to other CompuServe users. The software was uploaded on a CompuServe computer located in Ohio. A sale of the software was effectuated by the users' accessing and downloading the software from this Ohio computer. After the purchase was made, CompuServe billed the user for the purchase, payment was sent to CompuServe in Ohio, and an agreed percentage of the receipts forwarded on to the defendants in Texas. CompuServe sought to sell a product called 'CompuServe Navigator.' When the defendants objected, and advised CompuServe that such a product would infringe the trademark defendant held in the mark 'Windows Navigator', CompuServe commenced a declaratory judgment action against Patterson and his Texas-based company in Ohio. The Ohio District Court dismissed the case for want of personal jurisdiction. In reaching its decision, the court made clear that "if this were simply a suit brought by CompuServe to collect a small amount of user fees from a Texas resident who, while seated at his computer terminal, became a member of the ComupuServe network, the Court would have a very difficult time concluding that the exercise of jurisdiction over that customer in the State of Ohio was proper." The added presence of the Shareware Agreement and the sales effectuated pursuant thereto did not cause the court to alter its decision. 

The full text of the decision discussed above can be found on a website maintained by the John Marshall Law School.