Legal final


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Legal final

  1. 1. Legal Issues Kelly Logue Kathryn Sutton Topics in E-Commerce
  2. 2. Legal Issues Jurisdiction  Encryption Linking, Framing,  Privacy Metatags  Domain Names Copyright  Electronic Libel Agreements Trademarks  Digital Signature
  3. 3. Jurisdiction Issue: Which court has power to render a verdict? In order for a verdict to be enforceable, the court must have authority over the subject matter and the person involved  Subject matter - the nature of the case  Personal involved needs to be either physically present or the offense need to have occurred within the boundaries of the court Ragothaman, Davies, Dykstra 2000
  4. 4. Jurisdiction Case CompuServe vs. Patterson Patterson, software developer, and CompuServe entered into an agreement where CompuServe would distribute his shareware Patterson brought suit against CompuServe for trademark infringement CompuServe sought no infringement in a Federal District Court in Ohio Satterlee Stephens Burke & Burke LLP, 1998
  5. 5. Jurisdiction Case Court dismissed the case claiming the court did not have jurisdiction over the case  The argument did not come from Patterson’s agreement with CompuServe  Patterson did not have adequate contact with Ohio• Court of Appeals for the 6th Circuit reversed the courts decision to dismiss Satterlee Stephens Burke & Burke LLP, 1998
  6. 6. Jurisdiction Case Court of Appeals found that Ohio had jurisdiction because:  Patterson agree to the contract terms with CompuServe in Ohio  Patterson’s sharewares where put into Ohio’s position• Satterlee Stephens Burke & Burke LLP, 1998
  7. 7. Linking, Framing, Metatags Issue with Linking: A third party links to another site creating a false impression in the mind of the viewer that the two sites are related. Safeguard against Linking: preemptive action Issue with Framing: can cause audience confusion Issues with Metatags: Arguments over a third party using the trademark of another as a metatag Violation: Unfair competition, copyright, and trademark infringement Ragothaman, Davies, Dykstra 2000 and Springer, Randel 2000
  8. 8. Linking, Framing, Metatags Case Ticketmaster Corp. vs. Microsoft Corp. Microsoft created a city guide web site for Seattle City guide web site used Ticketmaster’s name and services without Ticketmaster’s consent “Cyberspace” 2002
  9. 9. Linking, Framing, Metatags Case Ticketmaster claims damages to its name and business opportunities Court Ruled:  Microsoft had damaged Ticketmaster’s name and web site• “Cyberspace” 2002
  10. 10. Copyright Issue: The unauthorized reproduction or posting of protected material through the Internet Material: Text, Pictures, or Sound Ragothaman, Davies, Dykstra 2000
  11. 11. Copyright Case A&M Records, Inc vs. Napster Napster allowed Internet users to download, duplicate, and distribute copyrighted music without consent A&M Records Complaint: Contributory & vicarious copyright infringement and unfair competition Court ruled in favor of A&M Records Isenberg, Douglas M. 2000
  12. 12. Libel Issue: By using the web to post false information about a person that causes harm to the person’s reputation Cyber-smearing: Communication of false information about a company that harms the value of it Safeguard against cyber-smearing: implement corporate policies and damage control procedures Ragothaman, Davies, Dykstra 2000
  13. 13. Libel Case Cubby Inc. vs. CompuServe CompuServe entered into an agreement with a third party to perform a special interest forum, called “Rumorville” for CompuServe Defamatory material regarding Cubby Inc. was displayed by the third party and CompuServe Godwin, Mike 1993
  14. 14. Libel Case Court did not find CompuServe liable Issues: 1. First issue  Difference between the “publisher” and the “bookstore owner”  “publisher” – third party  “bookstore owner” – CompuServe  First Amendment calls attention to the “publisher” as being liable for defamation, but the “bookstore owner” should not be held accountable Godwin, Mike 1993
  15. 15. Libel Case 1. Second issue  CompuServe had an agreement with the third party; therefore limiting its liability• Godwin, Mike 1993
  16. 16. Trademarks There are 3 types of Trademark Legal Issues:  Trademark Infringement: the unauthorized use of a trademark as a domain name  Trademark Dilution: when a third party harms the reputation of a trademark  Trademark Dress Infringement: the illegal replication of a certain look a company owns (via the look of a product or website) Springer, Randel 2000
  17. 17. Trademark Case Saturn Corp. vs. Saturn Service Inc. Saturn Service Inc. has no agreement with Saturn Corp. to use its trademark for business opportunities Saturn Corp. is suing Saturn Service Inc. for “trademark infringement, dilution, false designation of origin, false advertising, and cybersquatting”  Cypersquatting – refers to bad faith registration of someone else’s trademark or trade name as a domain name. Finnegan, Henderson, Farabow, Garrett & Dunner 2001
  18. 18. Trademark Case Court ruled Saturn Service Inc. was in violation of:  Trademark Infringement – allowing consumers to assume the shop was associated with Saturn Corp.  Intent to confuse consumers by using the same script and copying Saturn’s mark  Unauthorized use of the Saturn mark in the defendant’s web site “”  The defendant’s use of the name Saturn, diluted the value of the business• Finnegan, Henderson, Farabow, Garrett & Dunner 2001
  19. 19. Encryption Regulation Description of the issue: The encryption regulation debate involves disputes between the needs of business for integrity and privacy, the First Amendment’s right to free speech, and the need of law enforcement to track criminal behavior, such as espionage, terrorism, money laundering, and other crimes. Ragothaman, Davies, Dykstra 2000
  20. 20. Encryption RegulationHow to Safeguard: President Clinton issued Direction 63 calling for a detailed plan to protect Americans against cyber disruptions. He stated “each sector must decide for itself what practices, procedures, and standards are necessary for it to protect its key systems”. The critical sectors to which President Clinton referred were the economy, national security, public health and safety. Ragothaman, Davies, Dykstra 2000
  21. 21. Encryption RegulationIn the Law or in Business: December 5th, 2001 - Secretary of Commerce Donald Evans officially finalized the federal governments approval of the Advanced Encryption Standard (AES), a data encryption technique that will be used to protect sensitive information and which is widely expected to be adopted by the private sector as well. Olavsrud 2001
  22. 22. Privacy Rights Description of the issue: Privacy Issues relate to obtaining , using, and distributing personal data such as names, addresses, phone numbers, income, medical conditions, and characteristics of race, sex, age, ethnicity and political affiliation. Ragothaman, Davies, Dykstra 2000
  23. 23. 10 RULES OF PRIVACY POLICY1. Make sure you have an explicit and formal company privacy policy in place, highlight it in all customer interactions, and make it easy to understand.2. Don’t ask for more private information than you need.3. Make customers feel safe in their relationship with your company, regardless of formal and often contradictory – legal requirements.4. Handle the security basics well: SET and SSL are your best friends. They don’t guarantee privacy by themselves, but they sure show that your firm is responsible in its e-commerce.
  24. 24. 10 RULES OF PRIVACY POLICY5. Associate your site with an organization, such as TrustE, BBBOnLine (Better Business Bureau) or CPA Web Trust, that certifies Web sites and the business and audit processes behind them.6. Let customers easily opt out of allowing you to share information with other parties, but inform them that they’ll probably lose convenience, service, and personalization if they do so..7. Don’t be tempted by easy technology tricks that deceive your customers.
  25. 25. 10 RULES OF PRIVACY POLICY8. Invite the person in you firm’s audit department who handles financial control of online services out to lunch. Most breaches of privacy happen far, far away from your Web site. Access control audit logs, and formal rules of information use are the process essentials that support or undermine what you build into Web site.9. Don’t put all your faith in firewalls.10.Look on the bright side. Privacy is generally discussed in negative terms: Everyone’s for it, and violating it is A Bad Thing. But in practice, it’s very much a matter of common sense and ensuring informed consent Keen, Peter 2000
  26. 26. Privacy Rights Two primary areas of concerns arise under the privacy concept. 1. Privacy of Internal Workplace data 2. Privacy of External Workplace data Company to company or company to customer data – internal memos and e-mail generated from the company’s computers are owned by the company. Employees also need to be aware that companies can monitor employee use of e-mail and the Internet. (This includes personal messages sent via e-mail) Ragothaman, Davies, Dykstra 2000
  27. 27. Privacy Rights In the Law or in Business:  e-Bay Takes Some Heat on Privacy Policy  Unfair or deceptive trade practices  Conflict of Terms  Changes to its privacy policy and user agreement Cox, Beth 2002
  28. 28. Domain Name Disputes Description of the issue: Disputes arise over ownership of domain names and because of similarities between similar domain names. This practice of adopting similar or identical domain names is often referred to as “cybersquatting”. Ragothaman, Davies, Dykstra 2000
  29. 29. Domain Name DisputesHow to Safeguard: Internet Corporation for Assigned Names and Numbers (ICANN) new rules and procedures for resolving domain names disputes provide for an exclusionary process which allow an owner of a domain name to exclude others from obtaining registration of a domain name identical or confusingly similar to theirs. Ragothaman, Davies, Dykstra 2000
  30. 30. Domain Name DisputesHow to Safeguard: A related domain name issue that e- business must consider revolves around ownership. Businesses need to carefully review their contracts to be sure they, and not the service providers or developer, own their registered domain name. Ragothaman, Davies, Dykstra 2000
  31. 31. Domain Name DisputesIn the Law or in Business: New Jersey teenager sues Black Entertainment Television over a URL   Alleged Trademark Violations: Teenager is seeking $10 million in damages  Big companies are challenging domain names that they believe encroach on their trademarks. Federal spending bill imposes up to $100,000 in penalties for “cybersquatters” Quittner 2000
  32. 32. Electronic Agreements Description of the issue: Ensuring enforceability of electronic agreements in the courts critical to increasing their usefulness. A major issue with electronic agreements is whether they meet writing requirement of the Statue of Frauds. Most Statue of Frauds issues have and will continue to involve the acceptability of a digital signature as sufficient to meet signature requirements. Ragothaman, Davies, Dykstra 2000
  33. 33. Electronic AgreementsHow to Safeguard: Safeguards for ensuring enforceability of electronic commercial agreements arising through the Internet include:  ensuring that all terms and conditions are stated in clear, simple and straightforward language;  stating that the online display is the sole, exclusive and final agreement;  establishment of a storage system for agreements;  offering the opportunity for telephone discussion and clarification of terms;  inclusion of a statement that the person accepting the contract has the authority to do so;  requiring a ‘signature’ either handwritten or facsimile, where needed. Ragothaman, Davies, Dykstra 2000
  34. 34. Electronic AgreementsIn the Law or in Business: Electronic Filing of Complex Legal Cases Mandated in D.C.  Beginning May 1st,2001 will no longer accept paper filings, except for initial complaints, in its most complex and lengthy civil cases.  D.C. Superior Court will become one of the first courts in the Northeast to mandate electronic filing of documents.  Pilot Project with CourtLink Corporation - all parties in over 600 cases will be required to file electronically with the Superior Court using the CourtLink eFile service. Estock 2001
  35. 35. Digital Signature Description of the issue: The major problem associated with digital signatures are whether the recipient has the specific number code added by the computer and whether the signatures meet the Statue of Frauds requirement that contracts be ‘signed’ by the party to be charged. Ragothaman, Davies, Dykstra 2000
  36. 36. Digital SignatureHow to Safeguard: The Uniform Commercial Code (UCC) does not specifically recognize digital signatures, but the UCC does define ‘signed’ as any symbol executed or adopted by a third party with the present intention to authenticate a writing. Ragothaman, Davies, Dykstra 2000
  37. 37. Digital Signature Grotta 2000
  38. 38. Digital SignatureIn the Law or in Business: President Bill Clinton signed the Electronic Signature Act, E-Sign Law, which officially granting e-mail the same status as paper in court.  The new law is part of Capitol Hill’s “eContract 2000,” a program aimed at modernizing the nation’s laws to be in-step with advancing technologies. Mutual Fund Example Financial Institutions, insurance companies, brokerages, and utility companies will experience dramatic cost-cutting reductions because of the E- SIGN law. Fusco 2000
  39. 39. Legal Issues Summary While both business-to-business e-commerce and business-to-consumer e-commerce are expanding at a brisk pace, laws dealing with e-commerce are lagging behind. We have provided an overview of several legal issues that have emerged in the arena of e-commerce.
  40. 40. References• Cox, Beth (2002). “eBay Takes Some Heat on Privacy Policy,” Internet News, February 2002.• Estock, Debra A. (2001). “Electronic Filing of Complex Legal Cases Mandated in D.C.,” Application Planet, May 1st, 2001.• Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P (2001). “Saturn Corp. v. Saturn Service, Inc.”• Fusco, Patricia (2000). “President Gives Nod to Digital Signature,” Internet World, June 30, 2000.• Godwin, Mike (1993). “Internet Libel: Is the Provider Responsible,” Internet World, Nov./Dec.• Grotta, Sally (2000). “Cyber-Sign,” PC Magazine, May 2001.• Keen, Peter (2000). “Designing Privacy for Your E-business,” PC Magazine, June 6, 2000.• Isenberg, Douglas M. (2000). “A&M Records, Inc. v. Napster, Inc. U.S. District Court, Northern District of California." Legal Information for Internet Professional, May 12, 2000.
  41. 41. References• Olavsrud, Thor (2001). “Infrastructure News,” Internet News, December 15, 2001.• Quittner, Jeremy (2000). “The Lemonade Stand Circa 2000: A Boy, a Site, a $10 Million Lawsuit,” Business Week Online.• Ragotarnan, Srinivasan, Davies, Thomas, and Dykstra, DeVee (2000). “Legal Aspects of Electronic Commerce and Their Implications for the Accounting Profession,” Human System Management.• Springer, Randel (2000). “,” Business and Law• “Cyberspace Law,” John Marshall Law School, 2002• “Cases Finding Jurisdiction on the Basis of Internet Contracts,” Satterlee Stephens Burke & Burke LLP, 1998