American Eyewear, based in Texas, claimed in a Texan court that Minnesota-based Peepers Inc. infringed its “Peepers” trade mark by doing web sales of sunglasses from peepers.com. The Minnesota company tried to argue that the Texas court had no jurisdiction to hear the case. This argument was rejected by Judge Sidney Fitzwater, although his reasoning was somewhat controversial.
The web site at peepers.com was selling to residents of Texas on a daily basis. The US rules on web jurisdiction would normally provide that, in these circumstances, the Texas court has jurisdiction over the Minnesota company. However, the Judge Fitzwater went much further by suggesting how the peepers.com site might have avoided the jurisdiction of the Texas courts.
Among his suggestions on how to evade the jurisdiction of an out-of-state court he said the site could invite site visitors to click an agreement on the site saying that they were bound by Minnesota courts. He also suggested including a disclaimer that it would not sell products in Texas. Suggesting that a disclaimer or a click wrap agreement might be sufficient for such a web site to avoid jurisdiction in another US state is unusual.
Although ruling that the Minnesota company could not evade the Texan courts, Judge Fitzwater did not rule on the question of trade mark infringement because the parties settled out of court. The agreement subjected the domain name dispute to the discretion of the World Intellectual Property Organisation (WIPO), one of the four bodies with ICANN authority to decide dot.com disputes.
In a ruling by WIPO panellist Mark Partridge, the original owner of peepers.com was allowed to keep the name. Partridge wrote that, in his opinion, the peepers.com domain name was not registered,
"as a deliberate infringement of [American Eyewear's] rights. Rather, the selection was based on a long period of prior use of the name. At the time of [American Eyewear's] adoption of [the trade mark PEEPERS], any rights [of American Eyewear] were limited to its local area of Texas. As a good faith junior user in a remote location, [the owner of the domain name] did not violate any potential rights of [American Eyewear]."