Defendant Trambert, a resident of California, listed a Toyota SUV for sale to the highest bidder on eBay in November of 2008. Defendant was later notified that Plaintiff MacNeil, a resident of Illinois, was the winning bidder, and the two made arrangements for payment and delivery. As part of the eBay Terms and Conditions, MacNeil was responsible for pick-up or shipping of the vehicle. In December, Plaintiff’s agent in California inspected the vehicle and accepted title and possession, and delivered Plaintiff’s cashier’s check, which was drawn on an Illinois bank. After personally inspecting the vehicle Plaintiff discovered that there was no satellite radio and no DVD screens in the headdress, as had been indicated in the eBay listing. In February of 2009, Plaintiff filed an Illinois small claims court action for $2,546 and Defendant moved to dismiss for lack of personal jurisdiction. The trial court granted defendant’s motion and the appellate court affirmed.

A plaintiff has the burden of establishing a prima facie case for jurisdiction when seeking jurisdiction over a nonresident defendant. Bolger v. Nautica International, Inc., 269 Ill. App. 3d 947, 949 (2007). Illinois has a long-arm statute that permits jurisdiction over foreign defendants that comports with the due process requirements of the Constitution. To satisfy federal due process, a defendant must have minimum contacts with the forum state such that defending a lawsuit there would not offend “ ‘ “traditional notions of fair play and substantial justice.” ‘ “ Spartan Motors, Inc. v. Lube Power, Inc., 337 Ill. App. 3d 556, 560 (2003), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 102, 66 S. Ct. 154, 158 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 85 L. Ed. 278. 283, 61 S. Ct. 339, 343 (1940). In deciding the question of jurisdiction a court will determine whether there was purposeful availment of the benefits and protections of the forum state.

Plaintiff’s complaint averred that the had only seen Defendant’s ads for the vehicle on eBay and that was insufficient to establish general jurisdiction. Plaintiff argued, however, that the court had personal jurisdiction over Defendant because, after listing the car on eBay, which is accessible worldwide, Defendant should have anticipated being brought to court in Illinois if the winning bidder was a resident of Illinois. The appellate court rejected this argument and cited the case of Foley v. Yacht Management Group, Inc., No. 08 – -C – - 7254 (N.D. Ill. July 9, 2009), which also dealt with a failed eBay sale. In Foley, the Defendant refused to accept payment from the winning bidder and the Plaintiff brought suit. In determining whether the court had jurisdiction, the court ruled that Defendant had no tied to the forum state other than the fact that the winning bidder lived there. The Foley court held the Defendant, as an eBay seller, had no control over where the buyer of its item would live and therefore there was no purposeful availment.

While Plaintiff argued that the various telephone calls and emails that occurred between the parties was enough to establish minimum contacts, the court disagreed. Plaintiff also sought to establish jurisdiction based on precedent involving the use of “interactive websites.” Not only does Defendant not run the eBay site, nothing in the record indicated that Defendant’s listings or personal eBay pages were interactive enough to trigger jurisdiction. Plaintiff’s final argument for jurisdiction, that Defendant committed tortuous conduct in the forum, was similarly rejected by the appellate court; the so-called “Effects Doctrine” applies only to intentional torts, and not to breach of contract.

Ultimately Defendant’s business contacts with Illinois were nothing more than random and attenuated and therefore the court was unable to assert jurisdiction in this case.

The First Sale Doctrine – Sales of Copyrighted Software Online

Copyright protection gives exclusive control over the sale and distribution of copyrighted works to the copyright holder. Sales by an unauthorized party are considered piracy. There is an exception to this protection, which applies to rightful purchasers of a work, called the “first sale doctrine.” Under this theory, if you buy a book, for example, while you don’t own any portion of the copyright, you are the exclusive owner of that copy, and are free to keep it or sell it as you wish. The entire “used goods” market, which is a large portion of the eBay marketplace, is dependent on the first sale doctrine.

Many “purchasers” of software are aware that when they buy software what they are actually buying is a license for its use from the seller. Software is handled that way to allow developers to have more control over the use of their products once they are transferred. In 2007 Autodesk, Inc., the developer of the AutoCAD software package, sent a takedown notice to eBay after discovering the sale of several AutoCAD packages by Timothy Verner. Mr. Verner acquired the software packages from a Seattle architecture firm (CTA), and not Autodesk, Inc.

According to Autodesk, it still owned the AutoCAD packages in Mr. Verner’s possession because it never transfered ownership to CTA and under the terms of the software license CTA was barred from transferring rights to a third party. Thus, Verner’s sales constituted copyright infringement, or at least contributory infringement, according to Autodesk. The District Court attempted to reconcile two lines of precedent regarding this issue but was ultimately unable leading it to side with the oldest precedent among the competing options. Ultimately Mr. Verner’s sale was held to be privileged by the first sale doctrine regardless of how restrictive Autodesk’s “license” was because the intent of the parties had been to transfer ownership. Autodesk never sought to reclaim ownership of any of its software packages, the packages were merely licensed to extend unenforceable control over its products in the stream of commerce.

Forum Selection Clause – Plan Your Trip to California

In Tricome v. eBay, Inc., the plaintiff argued that eBay’s forum selection clause naming California as the forum for disputes is unconscionable and should not be enforced. The plaintiff further argued that as a “form contract,” eBay’s terms of use constituted a procedurally and/or substantively unconscionable agreement.

While plaintiff contended that the user agreement containing the forum selection clause was a contract of adhesion since the plaintiff never had the opportunity to discuss or negotiate its terms, numerous courts have held that not to be the standard for deeming a contract to be one of adhesion. Additionally, even the terms of an admitted adhesion contract are enforced unless they are “so one-sided as to be oppressive.” eBay operates worldwide and it is not shocking for it to focus its legal defense in a particular forum rather than having to litigate in potentially hundreds or thousands of other jurisdictions.

So, if you’re an eBay seller, selling software in compliance with eBay’s terms is probably not going to cause you any trouble with the copyright holder but if you run afoul eBay’s rules prepare for a trip to California.