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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Mark Andrew Austin v. Crystaltech Web Hosting, et al.

1 CA-CV 04-0823, 125 P.3d 389 (Arz. Crt. App., 2006)

Communications Decency Act Immunizes Web Hoster From Liability In Defamation Action For Content Of Third Party Web Site

Court holds that the Communications Decency Act, 47 U.S.C. § 230 ("CDA") immunizes web hosting company from liability arising out of its hosting of a third party's website that allegedly contained defamatory statements about plaintiff.  Following the Fourth Circuit's decision in Zeran v. AOL, the Court holds that such immunity exists notwithstanding any notice the web hosting company received concerning the defamatory nature of the content it was hosting.  The Court also dismisses plaintiff's defamation claims against the originator of the content at issue, holding it lacks personal jurisdiction over him.  The Court reached this result notwithstanding the fact that this defendant had contracted with an Arizona web hosting company to host the website which contained the defamatory statements at issue.  The Court held the exercise of jurisdiction over the defendant would be unreasonable given the fact he was a non-resident, the parties each operated Bali-related travel services, and the dispute was governed by Bali law.

Web Hoster Given Notice Of Allegedly Defamatory Nature Of Content On Hosted Third Party Site

Plaintiff Mark Austin and Defendant John Daniels each operate travel related businesses in Bali.  Daniels' company, PT Bali Discovery Tours, operates a website hosted by defendant Crystaltech Web Hosting, an Arizona company.  Daniels posted an article on his website "alleging that Bali officials were going to file criminal charges against Austin."  Austin, claiming this statement was defamatory, sought to have it removed from the website.  When defendants refused, plaintiff commenced this suit for defamation.

Crystaltech Web Hosting sought to dismiss the complaint, asserting it was immunized from liability by operation of the CDA.  Daniels moved to dismiss on the grounds that the Court lacked personal jurisdiction over him.  The trial court granted both motions and dismissed the complaint.  This decision was affirmed on appeal by the Arizona Court of Appeals.

Web Hoster Protected By Communications Decency Act 

Section 230 of the CDA provides: 

No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.

The Court held that the CDA immunized Crystaltech Web Hosting from defamation claims because, as a web hosting company, it was an operator of an "interactive computer service" within the meaning of the CDA, and because the conduct in question was originated by a third party - defendant Daniels.

In reaching this result, the Court rejected plaintiff's claim that Crystaltech Web Hosting could be held liable for continuing to publish the statements at issue after receipt of notice of their allegedly defamatory nature.  Plaintiff argued that imposing such liability on an interactive service provider is akin to the liability imposed on a distributor, and hence is permitted under the CDA.  According to plaintiff, the CDA only immunized an interactive service provider from liability when it acts as a publisher, and not as a distributor.  Following the Fourth Circuit's decision in Zeran v. AOL, 129 F.3d 327 (4th Cir. 1997), the Court held that the immunity granted providers of interactive computer services under the CDA extended both to liability as a publisher and distributor of allegedly defamatory statements.  A web hoster's receipt of notice of the allegedly defamatory nature of a statement contained on a website it was hosting thus did not trigger potential liability as a distributor of that statement.

No Personal Jurisdiction 

The Court of Appeals also affirmed the trial court's dismissal of the defamation claims plaintiff asserted against Daniels arising out of the publication of the statements at issue.  According to the Court, to assert specific personal jurisdiction over a non-resident defendant, three requirements must be met:

(1) the defendant performed some act or consummated some transaction within Arizona by which he purposefully availed himself of the privilege of conducting activities in Arizona; (2) the claim arises out of or results from the defendant's Arizona-related activities; (3) the exercise of jurisdiction would be reasonable.

Notwithstanding the fact that Daniels engaged an Arizona company to host his website, and sent it to Arizona for publication, the Court held the exercise of specific personal jurisdiction in a lawsuit arising out of those contacts would be unreasonable.  Said the Court:

…we find that it would be unreasonable for Arizona to exercise jurisdiction over this internet defamation case.  First, neither Daniels nor Austin are Arizona residents, and neither lives here.  Second, Arizona has no real interest in resolving a dispute between two Bali travel-related competitors.  Third, Austin does not dispute Daniels' claim that Bali law governs the dispute; and Arizona has no interest in the substantive law of Indonesia.  Consequently, because Arizona has no specific interest in the alleged wrongful conduct or the alleged harm to a British citizen that would compel an Arizona court to protect Austin's interests, personal jurisdiction over Daniels would be unreasonable.

The Court accordingly affirmed the dismissal of plaintiff's claims against Daniels for want of personal jurisdiction.

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