Jurisdiction Concept: Dow Jones & Company Inc v. Gutnick

Introduction of jurisdiction concept

Jurisdiction is one of the concepts that falls under judicial civil litigation system. Basically, jurisdiction is concerned with the court authority to hear a case relating to certain persons and activities (Engelen, 2008). From a broader perspective, it entails answering questions such as; which law to apply? Is the court in question appropriate to handle a particular case? It also addresses the criteria applied to pass judgment. The idea of jurisdiction gives concrete bases for satisfactorily managing litigations which traditionally were based on particular territory (Weill and Azarov, 2009). In today’s world, which has been transformed to a global village by internet connectivity, the concept of jurisdiction has gained more sensible meaning. This concept argues that a tortuous case is subject to territorial jurisdiction rule. It goes further to state that a lawsuit filed in regard to tortious act falls under the jurisdiction of the court at the place where the tort has occurred, or else the domicile of the defendant. However, it has also been viewed that the place of occurrence also comprises the place where the tort has been committed and also where the results of infringement takes place (Borneman, 2004). This paper tries to examine how the Australian High Court’s conclusion in Dow Jones & Company Inc v Gutnick reconciles with decisions arrive in other international jurisdictions.

Case Law: Dow Jones & Company Inc v Gutnick

In this case, Dow Jones & Co. Inc was the appellant and its core business was publishing and printing the Wall Street Journal (WSJ) newspaper and Barron magazine. Dow Jones had operated WSJ.com since 1996, publishing on the World wide web (www).WSJ newspaper and Barron Magazine had two types of subscribers; those who paid annual fee for print edition of Barron magazines or wall street journal and those who made the payment to obtain a password after registration for logging- in to gain access to Barron’s online and WSJ.com; where they could access pictures and texts of the current print editions produced.

However, the edition dated 28th October 2002 of Barron’s online contained an article titled “Unholy Gains” which had a number of references to the plaintiff Mr. joseph Gutnick. According to Mr. Gutnick, the section of the article defamed him, forcing him to file an action in the supreme court of victoria against Dow Jones & Co Incl, claiming compensation for damages suffered. In addition, Mr. Gutnick had his businesses even outside Australia including USA with the headquarters in Victoria Australia which also served as his place of residence. Nonetheless, the bigger part of his business and social life was centered in Victoria.

The written order serviced to Dow Jones relied upon two main provisions set out in Supreme Court that outlined provision of service in foreign countries. Such similar rules are well reflected in Agar v Hyde, which allows the plaintiff to serve defendant with the legal service even before the court give a leave. This case follows paragraphs of 7.01(1) which allows making a claim of such kind. The main issue was whether the material was published in Victoria or New Jersey. The response to this question aided in determining if the proceedings in the Supreme Court were to be dropped based on the argument that the court could not be the appropriate forum through which such an action could be determined.

Court proceedings

Through Judge Hedigan J, of the Supreme Court, the defendant applied for setting aside the written order serviced by the plaintiff asking for dropping of the proceedings. In establishing the place where the information was published, evidence was tabled before the primary judge which revealed more about what the evidence indicated. Following the evidence tabled before the primary judges, his honor concluded that, the statements which were of major concern to Mr. Gutnick and which was seeking compensation for damages was in deed published and uploaded in state of Victoria, Australia. The same information were accessed and downloaded by Dow Jones subscribers who proved to meet Dow Jones subscription conditions for accessing information in the internet in New Jersey, USA. The defendant objected Dow Jones claims that the publication of this material containing the defaming statements to Mr. Gutnick occurred at New Jersey, USA.

While giving a verdict regarding the point of origin of the publication, Judge Hedigan, J concluded that Victoria, Australia was indeed the appropriate place for the trial to take place and at the same time rejected the defendant’s argument by explaining that:

In defamation, the same considerations that require rejection of locating the tort by reference only to the publisher’s conduct, lead to the conclusion that, ordinarily, defamation is to be located at the place where the damage to reputation occurs. Ordinarily that will be where the material which is alleged to be defamatory is available incomprehensible form assuming, of course, that the person defamed has in that place a reputation which is thereby damaged. It is only when the material is in comprehensible form that the damage to reputation is done and it is damage to reputation which is the principal focus of defamation, not any quality of the defendant’s conduct. In the case of material on the World Wide Web, it is not available in comprehensible form until downloaded on to the computer of a person who has used a web browser to pull the material from the web server. It is where that person downloads the material that the damage to reputation maybe done. Ordinarily then, that will be the place where the tort of defamation is committed.

However, Dow jones never got satisfied with the decision of the lower court and therefore appealed in the court of appeal before Judge Buchanan JA and O’Bryan AJA, who after consideration of the issue declined leave to appeal, holding that the decision of the primary court was indeed correct.

Undisputed principles

It was established that the Australian court would decline the appeal to exercise jurisdiction invoked by the plaintiff on the grounds of forum non-conviniens regardless of whether the written notice was served by personal means or under jurisdiction provisions of the court other than when it is clearly shown that the forum invoked by the plaintiff was inappropriate.

More so, it was found that, choice of law to be applied must be governed by law of place of commission of tort following such a case where the action of tort had connection with a jurisdiction outside Australia. In Distillers Co (Biochemicals) Ltd v Thompson and Voth v Manildra Flour Mills Pty Ltd, it was observed that locating the place of commission of tort is of course a daunting task.

The criteria applied have always been unsatisfactory since the rules do not give sufficient regard to various kinds of tortious claims put forward.

Choice of law: the law of place of wrong

In situations whereby cases at hand extend beyond the territories of one nation, there arises a problem of application of conflicting laws and the court needs to guide on which laws to apply (Engelen, 2007). Further, litigations in which foreign elements are involved; international laws can be applied under set conditions.

Choice of forum

Despite the court identifying jurisdiction in certain litigation and also after finding out which particular laws to apply, it may still decline to exercise jurisdiction based on the fact that it may be inappropriate for it to exercise jurisdiction (Kramer, 2008). However, the parties involved in a certain case may choose, through written agreement a location that is convenient with their disputes mainly based on the case special requirements. For instance, The Hague Convention adopted in 2005 handles judgments following choice made by convention members.

Enforcement of Judgments

For any litigation filed, the involved parties have a right to apply to any local court for the enforcement of judgment passed by a court in a foreign country provided the local court has no jurisdiction (Engelen 2010). In addition, a local court upon request by a foreign court may enforce foreign judgments.

Need for laws governing jurisdiction concept

As a result of the problems faced because of lack of laws to solve internet related issues, Justice Kirby stated;

To wait for legislatures or multilateral international agreement to provide solutions to the legal problems presented by the Internet would abandon those problems to “agonizingly slow” processes of lawmaking. Accordingly, courts throughout the world are urged to address the immediate need to piece together gradually a coherent transnational law appropriate to the “digital millennium”. The alternative, in practice, could be an institutional failure to provide effective laws in harmony, as the Internet itself is, with contemporary civil society – national and international. The new laws would need to respect the entitlement of each legal regime not to enforce foreign legal rules contrary to binding local law or important elements of local public policy. But within such constraints, the common law would adapt itself to the central features of the Internet, namely its global, ubiquitous and reactive characteristics. In the face of such characteristics, simply to apply old rules, created on the assumptions of geographical boundaries, would encourage an inappropriate and usually ineffective grab for extra-territorial jurisdiction.

There exists a difference between choices of law and the jurisdiction, which is mostly made by the court of law. Though the court may have jurisdiction, it may be barred by the existing private international law to have control of its jurisdiction by allowing room for foreign jurisdictions laws (Symeonides, 2008). However, the fact of applicability of foreign law does not necessarily give a convenient forum for the issue at hand.

In Bray v F Hoffman-La Roche Ltd, Judge Merkel J examined the conduct of foreign corporations outside Australia under sec 5(1). This case examined the conduct of foreign corporations that engaged in international price fixing in respect of Vitamin products sold by their subsidiaries some of which were in Australia. The applicant argued that the defendant had assumed an agreement that bars fair competition in Australian market therefore contravening Sec 45. Justice Merkel, J. rejected the application on the ground that, based on the evidence put forward for this jurisdiction case, the foreign corporations carried out their business through their subsidiaries. Merkel, J. challenged the applicant by stating that the situation could only be different if the foreign companies carried out business in their own right. However, the judge went further to state that, any action filed under s 82 seeking compensation for damages should fall under tort rule. For this case, private international rule of law should be adopted. The only exception to this rule is where the Australian public policy requires the court to object enforcement of obligations falling under foreign law.

Other Jurisdiction case laws

Besides jurisdiction case laws in Australia, there have been other cases involving World Wide Web in other parts of the world. For instance in the US, courts have found litigations involving jurisdiction where jurisdiction in relation to the defendant is clearly evident. Cases where defendants readily avail themselves for the purposes of engaging in business within certain jurisdiction and finally instances where jurisdiction litigations exercised resulted to fair and reasonable settlement are other examples.

In Zippo Manufacturing Co. v Zippo Dot Com Inc., the court found that jurisdiction depended on the nature of the website.¹⁴ Interactive website comprised an element of jurisdiction whereas passive jurisdiction was for advertising purposes only. In determination of jurisdiction, it was found that either sliding scale test or Calder effects test could be used. Sliding scale test was found to be applicable where the website touched the territory in question while the Calder effects test applied where an act was intentionally carried out; affecting the forum state hence directed to the state within the jurisdiction. This approach was applied in MGM Studios, Inc v Grokster, Ltd. In this case, a California court assessed jurisdiction for a case involving copyright infringement. One of those accused in this case distributed software through the website which shared digital entertainment such as film and music. The court held that, ‘…jurisdiction was established on the basis that the software had an impact in California as it was the movie capital of the world and that software had been targeted at California.’

In Ruide (Group) Inc v Yibin Cuiping District Oriental Information Service, one of the first cases involving jurisdiction in Peoples Republic of China (PRC), the plaintiff found the defendant’s website was similar to plaintiffs. The plaintiff went ahead and filed a lawsuit in Beijing court due to the defendants infringing copyright laws. The defendant went ahead and filed a challenge that Beijing is not his domicile place nor was it the place the infringement act occurred. However, the court dismissed this challenge on the ground that, ‘… the plaintiff’s webpages were stored in and published through a server which was located at the plaintiff’s residence at Haidian district China. To access the webpages the defendant had to utilize the server. Therefore, it was held that where the injured party’s server was located was the place of commission of infringement.’

In Andrew Meldrum’s case, who was an American journalist prosecuted in Zimbabwe on abuse of journalist privileges by publishing a false article. The prosecutor observed that, Zimbabwe had jurisdiction over any content published on the internet if the content could be accessed in Zimbabwe. Mr. Meldrum was acquitted and immediately served with deportation papers. Further, citing Worldwide Volkswagen Corp v Woodson, the court held that, ‘…the standard for jurisdiction is that the defendant conduct and connection with the forum state are such that he should reasonably anticipate being charged in court there.’

In millennium case, GTE New media Services Inc v BellSouth Corp, the plaintiff sued for violations of antitrust laws and sought to establish jurisdiction over the defendants in the District of Columbia based upon district residents’ ability to access the defendant’s website. The court rejected this argument by stating that, ‘…such an approach would vitiate long-held and inviolate principles of federal court jurisdiction.’ In Voth v Manildra Flour Mills Pty Ltd, the court held that, ‘…under the conflicting laws, the court ascertains the place of tort by considering the series of events and considering where in substance did the cause of action arise.’ In Lipohar v the Queen, the defendants had organized a fraudulent scam to swindle a South Australian company which was controlled in South Australia. The scam was to make a huge payment to a sham tenant in Victoria. The scam was carried out in Queensland outside South Australia. In its verdict, the high court rejected the argument by the defendants that since the scam was made outside South Australia they could not be charged in South Australia. Justice Gaudron, Gummow and Heyne JJ held that, ‘… the object of the scam was to deprive the south Australian company of a particular receipt, but in overall the determining factor was the intended victim of the scam which was in this case the south Australian company.

Conclusion

In summary, jurisdiction will only be found where a degree of contact with the jurisdiction exists. It is quite difficult to establish how this can be defined. However, the courts have a huge role to play in determination of the benchmark for defining jurisdiction. Dow Jones v Gutnick case is a good example as other courts tend to use it as a precedent case when making their rulings regarding international jurisdiction cases. In regard to these jurisdiction cases, the courts are putting in place measures that allow free flow of information, though taking care not to impact negatively on business reputation and economic interests. As it can be observed, the IP rights owners are also attempting to understand jurisdiction in more detail with intent of protecting their assets against potential damages, just the same way as the defamation case involving Gutnick. However, uncertainty exists regarding jurisdiction as the key players strive to protect their interests. As Justice Kirby points out, there is an urgent need for countries such as US, China an Australia to work together and come up with more robust and clearer laws that pertains this issue of jurisdiction.

References

Books

Borneman, J., 2004. The Case of Ariel Sharon and the Fate of Universal Jurisdiction. Princeton: Princeton University.

Engelen, V., 2007. Intellectuele eigendom en international privaatrecht, Den Haag: Boom Juridische uitgevers.

Journals

Engelen, V., 2008. Rome II and intellectual property rights; Choice of law brought to a standstill. NIPR, 15 (2), pp. 440-448.

Engelen, V., 2010. Jurisdiction and Applicable Law in Matters of Intellectual Property. NIPR 14 (3), pp. 143-149.

Kramer, X. E., 2008. The Rome II Regulation on the Law Applicable to Non-Contractual Obligations: The European private international law tradition continued. NIPR, 16 (2), pp. 414- 424.

Symeonides, S.C., 2008. Rome II and Tort Conflicts: A Missed Opportunity. American Journal of Comparative Law, 7 (3), pp. 9-16.

Symeonides, S.C., 2008. The American Revolution and the European Evolution in Choice of Law: Reciprocal Lessons. Tulane Law Review, 15 (2), pp. 1741-1800.

Weill, S. and Azarov, V., 2009. Universal Jurisdiction once again under threat. Intifada, 5 (3), pp. 17-32.

Cases

Agar v Hyde (2002) HCA 41 ;( 2002) 74 ALJR 1219 3

Bray v F Hoffman-La Roche Ltd (2002) II8 FCR 1; 190 ALR 1.

Distillers Co (Biochemicals) Ltd v Thompson and Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 567-568; 65 ALJR 83

Dow Jones & Company Inc v Gutnick (2002) 210 CLR 575

GTE New media Services Inc v BellSouth Corp, 199 F.3d 1343, 1 347- 1 350 (D.C. Cir. 2000)

Lipohar v The Queen (1999) 200 CLR 485; 74 ALJR 282

MGM Studios, Inc v Grokster Ltd et al, 243 F Supp 2d 1073, 1090 (CDCA, 2003)

Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491

Ruide (Group) Inc v Yibin Cuiping District Oriental Information Service Inc (1999) Hai Zhi Chu No 21

Supreme court (General civil procedure) Rules 1996(Vic)(“the Victorian Rules”)(rr 7.01(1) (i) and 7.01(1)(j)

The Ha Worldwide Volkswagen Corp v Woodson, 444 U.S. 286 (1980)

Zippo Manufacturing Co. v Zippo Dot Com Inc. 952 F. Supp. 1119 (W.D. Pa. 1997)