Internet Library of Law
and Court Decisions

Edias Software International, L.L.C. et al v. Basis International Ltd.

In this case, defendant entered into an agreement with plaintiff pursuant to which plaintiff was to distribute defendant's software products in various European locales. Dissatisfied with the relationship, defendant terminated the contract. Defendant also sent e-mail messages to various European clients as well as Basis employees (located in New Mexico) and posted information on its World Wide Web site which explained that plaintiff was being terminated as a distributor due to its refusal to commit to sell the product at a fair price, and provide appropriate technical support. Plaintiff commenced suit in Arizona, where it had offices, charging that defendant by terminating the agreement, breached the parties' contract. In addition, plaintiff alleged that defendant's e-mail and website statements gave rise to claims for libel, defamation, tortious interference with contract and prospective advantage and violations of the Lanham Act. Defendant moved to dismiss for want of personal jurisdiction. Defendant was a corporation based in New Mexico which had neither offices, employees nor bank accounts in Arizona. The court denied defendant's motion, finding that defendant had sufficient contacts with Arizona to permit the assertion of specific personal jurisdiction over it. With respect to the breach of contract claim, the court found that because defendant had phone, fax and e-mail communications with plaintiff in Arizona related to the parties' business venture, had employees visit the state, sent invoices to plaintiff in the state, sold plaintiff software which was shipped abroad, and sold approximately $50,000 in software directly to Arizona customers, defendant had sufficient contacts with Arizona to permit the assertion of jurisdiction over it with respect to the breach of contract claim. Perhaps more significantly for users, the court found that defendant's posting a statement about the reasons for termination of plaintiff on its web site, and hosting a CIS forum, both of which were available to Arizona residents, permitted suit against defendant for libel and defamation to proceed in Arizona because defendant could foresee that its activities would have an effect on the plaintiff in Arizona, where it had offices. Said the court:" Basis' ... Compuserve Web Site which reaches Arizona customers ... confers jurisdiction in Arizona under the "effects test." When intentional actions are expressly aimed at the forum state and cause foreseeable harm to the defendant, jurisdiction in the forum state exists. The e-mail, Web page and forum message were both directed at Arizona and allegedly caused foreseeable harm to Edias. "Unlike communication by mail or telephone, messages sent through computers are available to the recipient and anyone else who may be watching. Thus, while modern technology has made nationwide commercial transactions simpler and more feasible, even for small businesses, it must broaden correspondingly the permissible scope of jurisdiction exercisable by the courts." ... Basis should not be permitted to take advantage of modern technology through an Web page and forum and simultaneously escape traditional notions of jurisdiction."