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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...

Taxation - Internet Library of Law and Court Decisions - Updated June 18, 2007

No. M2001-00927-COA-R3-CV (Tenn. Crt. App., July 30, 2002)

Reversing the decision of the court below, the Tennessee Court of Appeals holds that issues of fact preclude it from determining if America Online Inc. ("AOL") has sufficient nexus with the State of Tennessee to make it subject to Tennessee state taxes.  While AOL does not own or lease any real property in Tennessee, and does not have any "regular employees" in the state, there were issues of fact as to whether AOL could be held to have a sufficient nexus with the state as a result, inter alia, of the presence in Tennessee of (a) equipment AOL leased, which equipment was used by an AOL subsidiary to assist AOL customers in connecting to AOL's network, (b) unpaid persons working from their homes who were trained by AOL to, and did, moderate real time conferences on AOL's network and were called by AOL "remote staff," and (c) a substantial number of discs containing software used to assist users in connecting to AOL's network.  The Court of Appeals accordingly denied AOL's motion for summary judgment, and remanded the case to the Chancery Court for further proceedings.

In dicta, the court also stated that a nexus sufficient to permit the assertion of taxing authority does not exist "where the only contact with the state is by the Internet, mail and common carriers."

Case No. A105488 (Cal. Crt. App., May 31, 2005)

Affirming decisions of both the California Board of Equalization ("Board") and the California Superior Court, the California Court of Appeals held that Borders Online LLC ("Borders Online"), an out-of-state corporation, is obligated to collect California state use tax on sales of tangible products shipped from out-of-state locations to California residents.  The Court found that Borders Online had sufficient contacts with California to permit it to impose this obligation by virtue of the fact that Borders, Inc., an affiliated but distinct entity, agreed to and did accept returns from Borders Online's customers at Borders, Inc.'s brick and mortar stores located in California.  The Court further held that the imposition of such a collection obligation on Borders Online does not run afoul of the Commerce Clause.

SC OHA 97-638364 56270 (Cal. Board of Equalization, September 26, 2001)

California Board of Equalization holds that Borders Online Inc. ("Borders Online"), an out-of-state corporation, is obligated to collect California state use tax on sales of tangible products which are shipped from out-of-state locations to California residents.  Court holds that Borders Online has sufficient contacts with California to permit it to impose this obligation by virtue of the fact that Borders, Inc., an affiliated but distinct entity, agreed to and did accept returns from Borders Online's customers at Borders, Inc.'s brick and mortar stores located in California.

Civ. Action No. 4: 05-CV-249-HLM (N.D Ga., May 8, 2006)

Court denies defendants' motion to dismiss claims brought by municipalities in Georgia, charging defendant online travel services with improperly failing to remit excise taxes collected from motel guests in connection with their purchase of hotel accommodations.  The Court also allowed plaintiffs to go forward with claims that defendants misled consumers by failing to apprise them that such collected excise taxes were not being remitted to the appropriate governmental authorities.  The Court did dismiss claims plaintiffs brought to recover sales taxes allegedly due as a result of defendants' sales of hotel accommodations.  The Court held that such claims could only be pursued by the Georgia Revenue Commissioner, who was not a party to this suit and had not yet made a determination that any such taxes had been improperly withheld by the defendants.

Va. Ruling of Comm'r PD 00-53

In a private letter ruling, the Virginia Tax Commission states that the presence of a server in Virginia on which a taxpayer's web site is hosted does not, by itself, constitute a nexus with Virginia sufficient to subject the tax- payer to Virginia sales and use taxes.

Case No. 98-1051-111 (Tenn. Ch. Crt., August 30, 2002)

Court holds that information service provider ("ISP") does not have to charge Tennessee sales tax to its Tennessee customers on fees collected for the utilization of ISP's services.  Court holds that ISP is not providing "telecommunication services," which are subject to Tennessee sales tax.  Instead, the ISP is providing information and other services, which are not.

06-103 (October 5, 2006)

In response to a request for ruling, the Virginia Tax Commissioner advises a business process software company (the "Taxpayer") that it is not obligated to collect Virginia sales tax on scanning software delivered electronically to Virginia residents.  The Tax Commissioner further advised that the Company is not obligated to collect such sales tax on scanning services it provides to Virginia residents, provided it only makes the results of such services available electronically, and not via a tangible storage medium such as a CD Rom.

Civ. Act. No. 05-5695 (E.D. La., March 22, 2007).

Court holds that the online bookseller Barnesandnoble.com was not obligated to collect local sales and use taxes on sales made to St. Tammany parish residents, a location in which Barnesandnoble.com has no physical presence.  The Court holds that neither the presence of a retail store in the parish owned by a sister corporation, Barnes and Noble Booksellers Inc.  (“Booksellers”), nor the activities Booksellers engaged in in conjunction with Barnesandnoble.com, created a nexus with the forum sufficient to permit Louisiana to impose such an obligation on Barnesandnoble.com.  Nor, held the Court, were such activities sufficient to permit Booksellers’ presence to be attributed to Barnesandnoble.com for tax purposes under the ‘attributional nexus test.’ 

The Court reached this result notwithstanding the fact that: (1) both Barnesandnoble.com and Booksellers sold their respective customers membership in a ‘customer rewards’ program that permitted the customer to use the purchased membership rewards at either retailer; (2) Booksellers sold gift cards that could be used at Barnesandnoble.com, and Barnesandnoble.com sold gift cards that could be used at Booksellers; (3) Booksellers took in-store orders for products that it did not have in stock, that were shipped by Barnesandnoble.com, for which it was paid a commission; (4) both Booksellers and Barnesandnoble.com engaged in cross-promotional activities; and (5) Booksellers accepted returns of merchandise purchased from Barnesandnoble.com on terms more favorable than those offered to customers who purchased products from other suppliers.

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