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Millennium Enterprises, Inc., d/b/a Music Millennium, et al. v. Millennium Music, et al.

Plaintiff Music Millennium Enterprises, Inc. sells music products such as CDs from two retail music stores in Oregon, as well as from an Internet website and via telephone and mail order. Defendants Millennium Music LP and Millennium Music, Inc. operate retail music stores in South Carolina. Defendants also have two franchised stores operating under the "Millennium Music" name in North Carolina.

Defendants created a website at which customers can purchase music products, and obtain information about franchising opportunities. Defendants' actual sales from their website are meager. From March to September 1998, defendants sold a grand total of fifteen compact discs for $225 to nine separate customers.

Defendants' sole contacts with Oregon consist of: (1) the availability to Oregon residents of defendants' website at which music products can be purchased; (2) the sale of a single compact disc to an Oregon resident, who apparently ordered the same at the behest of plaintiffs' attorneys; and (3) defendants' purchase of approximately 1/2 of 1% of their inventory from an Oregon based company.

Plaintiffs commenced suit, charging that defendants' use of "Millennium Music" infringed plaintiffs' trademark in "Music Millennium" under Federal and state laws, and constituted dilution, unfair competition and unfair trade practices under state law.

Defendants moved to dismiss, arguing that the Oregon District Court lacked personal jurisdiction over them. The court agreed, and dismissed the suit.

The court held that the in-state sale of a single compact disc, apparently purchased at plaintiffs' behest, did not support a finding of jurisdiction. Said the court:

[T]he court finds that the sale to Ms. Lufkin was nothing more than an attempt by plaintiff to manufacture a contact with this forum sufficient to establish personal jurisdiction. Defendants cannot be said to have 'purposely' availed themselves of the protections of this forum when it was an act of someone associated with plaintiff, rather than defendants' Web site advertising, that brought defendants' product into this forum. ... "Only those contacts with the forum that were created by the defendant rather than those manufactured by the unilateral acts of the plaintiff, should be considered for due process purposes."

The court also held that defendants' purchase of a small percentage of their inventory from an Oregon company could not support the court's assertion of personal jurisdiction over the defendants, because the claims asserted by the plaintiffs did not arise out of those inventory purchases.

The last and by far most interesting question analyzed by the court was whether the availability to forum residents of an interactive website on which forum residents could but had not yet effectuated purchases was enough to permit the court to exercise specific personal jurisdiction in a lawsuit arising out of the website's operation. The court ultimately answered this question in the negative, holding that something more, such as actual sales to forum residents or a site particularly targeted toward forum residents, was required to sustain personal jurisdiction.

In analyzing this question, the court provided the Internet community with the most exhaustive and comprehensive listing to date of court decisions addressing personal jurisdiction and the Internet.

The court started its analysis with Zippo and the Ninth Circuit's decision in Cybersell. Under the Zippo sliding scale analysis, the court found that defendants' website was an interactive site. Operation of such a site, concluded the court, could only give rise to personal jurisdiction if there was some "deliberate action" engaged in or "purposefully directed" toward the forum. Said the court:

[T]he court finds that the middle interactive category as described in Zippo needs further refinement to include the fundamental requirement of personal jurisdiction: "deliberate action" within the forum state. Such action could include transactions between the defendant and forum residents through the defendant's Web site or conduct of the defendant purposefully directed at residents of the forum state through the Web site. ... The fact that someone who accesses defendants' Web site can purchase a compact disc does not render defendants' actions 'purposefully directed' at this forum. ... Until transactions with Oregon residents are consummated through defendants' Web site, defendants cannot reasonably anticipate that they will be brought before this court, simply because they advertise their products through a global medium which provides the capability of engaging in commercial transactions.

(Citations omitted).

This something more was missing from the instant case, because no sales had been made to forum residents, and because the site was not particularly targeted to Oregon residents. Accordingly, the court dismissed plaintiffs' suit for want of personal jurisdiction. In so holding, the court declined to adopt the reasoning of the courts in either Maritz or Inset.