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An Internet company asked a skeptical U.S. Court of Appeals for the 9th Circuit on June 22 for the right to sue an East Coast business rival in Northern California, even though the rival has no physical presence there. The en banc arguments were lively, with nine of the 11 judges questioning lawyers about the benefits — and dangers — of allowing Gator.com to sue L.L. Bean Inc. over pop-up advertising that the latter says infringed on its intellectual property. Gator, now known as the Claria Corp., filed a pre-emptive suit against L.L. Bean after the Maine-based clothing company mailed a cease-and-desist letter to Gator, which distributed a piece of software causing pop-up advertising for clothing competitors to appear when people who had the software installed visited L.L. Bean’s Web site. Gator, which is based in Redwood City, Calif., got lucky with the panel’s selection, which includes two judges who have already ruled in the company’s favor: Senior Judge Warren Ferguson, author of the unanimous three-judge panel decision under review, and Judge A. Wallace Tashima. But Judge Jay Bybee was the most active questioner, clearly leaning toward protecting L.L. Bean from suits in California. Gator lawyer Michael Traynor, of Cooley Godward, told the judges that L.L. Bean was subject to jurisdiction in California under two theories — because it has had so many contacts in the state through its Web site and mail-order catalogs, and because of the specific incident with the cease-and-desist letter. AN ATTENTION-GETTER When Traynor argued that the more contacts a company has, the easier it is to establish general jurisdiction, Bybee sat up. “The more contacts . . . the less connection to an incident there has to be?” Bybee asked. “Does that mean there’s a continuum between general and specific jurisdiction?” Traynor said more commercial contacts justifies jurisdiction. He said establishing jurisdiction required a “holistic approach” that took into account various factors, including that Gator is a small company with most of its business in California. And, Traynor added, L.L. Bean started the whole mess by sending the cease-and-desist letter. Bybee was reluctant to buy that. “But there was nothing unique about the pop-up ad that tied the business to California. Why should L.L. Bean be subject to California jurisdiction because it sent a letter?” Bybee said. Ferguson didn’t seem entirely happy the case was taken en banc. While questioning Traynor, Ferguson seemed irritated that the court was even dealing with the case when the parties have another suit moving through Oregon federal court. But when L.L. Bean attorney Peter Brann took the podium, Ferguson switched back to the tack he took in his ruling, wanting to know what would happen to plaintiffs cases if the court granted the Maine company freedom from the Northern District. “If a person causes harm in California, isn’t there jurisdiction?” Ferguson said. If the letter caused harm, Ferguson continued, then how else is Gator supposed to protect itself other than by suing? L.L. Bean countered that forcing it to answer Gator’s complaint would set up a dangerous precedent that will result in California becoming the venue of choice for Internet disputes from all over the world. The clothing provider was joined in its case by the U.S. Chamber of Commerce, which filed a last-minute amicus brief warning of a “tsunami” of new cases against Internet defendants in the Northern District. Responding to the brief, Gator lawyers dismissed the chamber’s “parade of horribles” and said the court needs to take “modern economic realities” into account in its decision. L.L. Bean had prevailed in U.S. district court when U.S. Magistrate Judge Maria-Elena James said California federal court did not have jurisdiction over the dispute. But in September, the three-judge circuit panel overturned James. In that opinion, Ferguson said courts must adapt to e-commerce. “Our conceptions of jurisdiction must be flexible enough to respond to the realities of the modern marketplace,” he wrote. Elizabeth Rader, an attorney and fellow at the Center for Internet and Society at Stanford Law School, attended the arguments. She said the court appears ready to allow Internet companies in different states to sue each other, but the court may not go as far as some would like. “They think there’s definitely one kind of jurisdiction,” Rader said. “They’re trying to figure out how to explain what they’re trying to do.” In addition to Bybee, Ferguson, and Tashima, the June 22 panel included Chief Judge Mary Schroeder and Judges Diarmuid O’Scannlain, Richard Paez, William Fletcher, Susan Graber, Pamela Ann Rymer, M. Margaret McKeown, and Ronald Gould. The case is Gator.com v. L.L. Bean, No. 02-15035. Jeff Chorney is a reporter at The Recorder, an American Lawyer Media newspaper published in San Francisco, where this article first appeared.

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