The Software IP Report

When Does Internet Use Create Personal Jurisdiction?

By Charles Bieneman

Categories: Patent Civil Procedure, The Software IP Report, Trade Secrets

A defendant’s use of computers in Canada to access servers in Connecticut was sufficient to give rise to personal jurisdiction in Connecticut, the Second Circuit Court of Appeals has held. MacDermid, Inc. v. Deiter, No. 11-5388-cv (2nd Cir. Dec. 26, 2012). A district court had held that the defendant’s conduct was not covered under Connecticut’s long arm statute. The Second Circuit reversed.

MacDermid, the plaintiff, was headquartered in Connecticut. MacDermid employed the defendant, Deiter, as an account representative in Canada. Deiter learned that MacDermid was about to terminate her employment. In advance of her termination, she downloaded and forwarded to her personal e-mail account certain data files that MacDermid alleged were confidential and proprietary. MacDermid then sued Dieter, “alleging unauthorized access and misuse of a computer system and misappropriation of trade secrets.” Dieter brought a Rule 12(b)(2) motion to dismiss, alleging lack of personal jurisdiction.

Connecticut’s long arm statute, Conn. Gen. Stat. § 52-59b(a), allows Connecticut courts to exercise personal jurisdiction over anyone who “uses a computer . . . located within the state.” The District Court had reasoned that Deiter had not used a Connecticut computer, but rather had simply sent e-mails from one computer in Canada to another computer in Canada. The Second Circuit disagreed with this conclusion, noting that Deiter had to have accessed information from a computer in Connecticut, where MacDermid’s servers were located. It was immaterial that Deiter was outside Connecticut when she accessed the servers.

Further, subjecting Deiter to jurisdiction in Connecticut was in accord with due process. Applying Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), the Second Circuit concluded that “Deiter purposefully availed herself of the privilege of conducting activities within Connecticut because she was aware ‘of the centralization and housing of the companies’ e-mail system and the storage of confidential, proprietary information and trade secrets’ in Waterbury, Connecticut, and she used that email system and its Connecticut servers in retrieving and emailing confidential files.” Unlike most Internet users, therefore, Deiter knew the location of the servers she accessed, and by that access she committed a tort (according to MacDermid’s Complaint). Further, she directed her contacts toward MacDermid, a Connecticut corporation.

Because the minimum contacts test was satisfied, the Court turned to whether exercise of personal jurisdiction was reasonable under the due process clause. Personal jurisdiction could be reasonably exercised here, even given the burden on Deiter to travel to Connecticut to defend the case. Both Connecticut and MacDermid had significant interests in resolving the case in Connecticut. Most witnesses and evidence were located there. Also, “efficiency and social policies against computer-based theft are generally best served by adjudication in the state from which computer files have been misappropriated.”