EC - Jurisdiction Issues (Lesson)

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Jurisdiction Issues

Introduction

In our previous modules, we talked about legal jurisdiction. In most civil and criminal cases, depending on the circumstances of the case, it is generally easy to identify the jurisdiction – whether local, state, or federal. In situations involving ecommerce, however, jurisdiction is not that easily defined. In this microlesson we will take a brief look into the complexities of ecommerce jurisdiction.

Determining Jurisdiction in ECommerce

Let’s look back at the definition of jurisdiction – the power of a court to hear a case and the authority to render a decision, or judgement. This decision will be enforceable by authorities and other courts. In most cases brought to a local, state, or federal court; the jurisdiction is clear based upon the circumstances. When determining jurisdiction in situations involving ecommerce, defining jurisdiction is not that clear cut. Since ecommerce is across boundaries and operates from not only a national but a global perspective, it often comes down to a matter of “economic presence” versus “physical presence” in many respects. In many cases the issues comes down to whether or not the case is to be decided within the state where it is filed or in the state where the e-business is physically located. To get an idea of the complexity of jurisdiction in ecommerce issues, we will review a few of the notable jurisdiction based court cases. Look below to learn more about each of the cases.

Zippo Manufacturing v Zippo Dot Com

    • Domain name and state jurisdiction issue
    • Zippo Manufacturing brought suit against Zippo Dot Com, alleging that it had violated the Federal Trademark Act and various other Pennsylvania state intellectual property laws
    • Zippo Manufacturing holds the trademark on the name “ZIPPO”
    • Heard in US Supreme Court – court agreed & determined the Internet site (Zippo Dot Com) had sufficient contracts with Pennsylvania to warrant state jurisdiction, thus violating use of trademark. The company sold passwords to 3,000 subscribers in the state and signed seven contracts with Internet access providers to furnish services to their Pennsylvania customers.

Quill v North Dakota

    • Physical presence and online sales tax issue
    • This case dealt with the issue of establishing physical presence in the state and whether or not the corporation had to pay sales and use taxes in North Dakota.
    • US Supreme Court case that ruled that Quill, a catalog retailer, did not have to collect sales tax in North Dakota because it had no physical presence in the state. Quill’s headquarters are in Illinois.
    • Has set precedent for similar cases since its ruling

Let's Review!

Take a moment to participate in the following activity to practice your understanding of the topics in this module.  Reach out to your instructor if you have any questions.

Final Thoughts

As the complexities of ecommerce advance so will the complexities of jurisdiction when legal issues arise. Ecommerce has and will continue to work within a national and an international scope. Considering this, Internet jurisdiction will remain a significant issue for some time. Laws will have to be modified and new laws created to ensure protection of all parties as advancement of technologies and ecommerce emerge. Consumers, new business entrepreneurs, current business owners, and corporations need to stay abreast of the continued changes in the scope of law that governs Internet and ecommerce.

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