1. Global Cyber-Laws
and E-Commerce &
Strategic Implication for E-Commerce

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Law, Regulation, and Policy
 What do we mean by the “rule of law”?
 Who makes laws? How are they made?
 What is the relationship between laws and
regulations or policy?
 Which of these are most applicable to the
different areas of Cyberlaw? Why?

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What is CyberLaw?
 Intellectual Property Laws
 Internet Laws and Regulations
 Telecommunications Laws and Regulations
 Software Laws (including encryption)
 Copyright Law
 Patent Law
 Trademark Law
 International Trade Laws and Treaties

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Much of “Cyberlaw” is US Based
 Domain names under US laws jurisdiction
 Many websites for ecommerce hosted in US
 Even for businesses not owned by US companies
 Most of litigation in cyberspace over
intellectual property rights has taken place
within the USA over the past 20 years
 Easier defenses for firms infringing others rights
 Less formal government controls on internet under
US law than under laws of many other countries

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CyberLaw is a MYTH!
 There is no CyberLaw.
 There are many CyberLaws.
 Noone can make laws in Cyberspace.
 Everyone makes laws in Cyberspace.
 Cyberspace is unregulated.
 Cyberspace is excessively regulated by every
jurisdiction applying conflicting laws.

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Internet Governance
 Internet Law and Telecom Law
 No laws, many laws, both at once!
 Evolving slowly for Telecom Law
 Developing slowly for Internet Law
 Role of ITU in Telecom and Internet
 Role of USA in Telecom and Internet Law
 Law, Regulation, and Policy
 Why do we need an Internet law at all?
 Network Solutions, Inc. as Cyberspace Landlord

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Copyright, Software, and the
Applications to the Internet
 Any copying in print or electronic form of any
expression without author’s consent is violation of
copyright protections, even if only for an instant
 Copyright always exists immediately upon publication
 Rights can be waived, but need not be asserted to be valid
 Any copying of expression is violation, unless exception
 Fair use doctrine not adequate defense for Internet
 Limited to copying small percentage only for non-profit use
 Internet copies the entire site many, many times
 Special exceptions to copyright laws created for ISPs
 Be careful about copying others’ website code!

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Jurisdiction and Choice of Law
 Most businesses have the right to choose the laws
they will operate under and be subject to
 Cyberspace firms may be held liable for violations of
laws in ANY JURSIDICTION from which citizens of
that nation can view their websites!
 France and eBay auctions for USA – strict liability.
 German and Compuserve pro-Nazi sites in USA.
 Italian site subject to US law in New York.
 State laws in USA – community standards applied
 Firms responsible for preventing local law violation
 No automatic membership, check address, age, etc.
 Alternatively, be small and hard to sue! (e.g., porn sites)

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Contract Laws Differ by Country
 When is an offer not an offer?
 Requirements for offer differ by country
 When is there acceptance?
 Strict requirement for complete acceptance (UK
and common law) versus judge created contracts
 Battle of the Forms – different outcomes possible
in different legal jurisdictions!
 What constitutes breach of contract?
 What damages may be applied or allowed?

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E-Commerce and Jurisdiction
 Where is the contract enforceable?
 Contract is only a right to sue for legal
enforcement in civil action

Police will not make sure the contract is honored

Threat of legal action encourages compliance
 Contract also is a way to clarify agreement

Honor and relationship may be all that is needed

EDI and contracts – no cases ever get to court. Why?

Relationship and the basis for long-term contracts
 Dispute resolution outside court under contracts

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Contract Law and the Internet
 Terms of use important for eCommerce
 Make choice of law and venue clear in contract
 Require action to affirm customer has read terms
 Inconsistent or unclear terms favor customers
 Warrantees trump disclaimers
 Be careful about express or implied warantees
 Make terms clear of any intended guarantees
 Make disclaimers clear and consistent everywhere
 Puffing allowed, but be careful about bounds

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E-commerce and Contract Law
 Offer, acceptance, and consideration
 Does website make an offer, or invitation for offers?
 Advertisement, or commitment?
 When we have a contract?
 Is electronic acceptance valid? (It depends …)
 Meeting of minds requirement of acceptance?
 Confirmation of receipt of order not acceptance
 Void and voidable contracts – big difference
 You could be locked in but partner not!
 Look to contract terms and details

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Contract created by Offer,
Acceptance, and Consideration?
 Offer – when is an offer not legally an offer?
 Advertisements?
 Website?
 B2B E-Commerce and EDI?
 Revocation of offers?
 Unilateral offers and contracts
 Bilateral offers
 Acceptance
 What is required for acceptance?
 What if acceptance is partial?
 Can acceptance be by actions instead?
 Can acceptance be revoked?

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Battle of the Forms
 Purchase order states some terms
 E.g., warrantee for 5 years against all defects
 Confirmation of order states other terms
 E.g., sold as-is, where-is, with no warrantee
 Goods shipped by producer and accepted
 What terms are in the contract?
 Is there a contract at all? (Meeting of minds?)
 Payment made on invoice and accepted
 Invoice reiterates no warrantee condition
 Payment reiterates requirement for warrantee

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License Agreements and Related
Contract Law Rights and Issues
 Many things can be included in a license agreement,
including many restrictions
 Not the same as sale, so some fair use exceptions or FIRST
SALE DOCTRINE rights need not apply

Right to modify code is First Sale Doctrine right, so may not be
included in rights of licensee, but always available with sale
 Some terms MIGHT be excluded and the contract
“reformed” by the court as matter of public policy
 Contracts may not include terms which are illegal,
impossible, unconscionable, or against public policy
 Unless reformed, license contract sets the terms

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Global E-commerce and International
Applicability of IP Legal Protections
 Trademark usage may or may not be found
based on Internet usage when there is no
specific intention to target citizens of nation
 UK law and US law in conflict on this point
 Different judicial presumptions about intention
 State laws and even US laws also not consistent

Partially depends on product and context
 US Law strongly dominants domain name
and trademark law issues in e-Commerce

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Intellectual Property Ideals
 Why create monopolies in some products or
processes to increase profits for some firms
in society?
 Social cost of IP laws?
 Social benefits of IP laws?
 Does theory of cost and benefits match with
reality of incentives and actions?
 Music incentives and behavior?
 I-Pod benefits versus costs of copying?

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Practical Issues and Problems
 Can a firm violate IP laws and profit?
 Can a firm be harmed or forced out of
business without violating IP laws?
 Do the IP Laws today really protect
innovations and innovators?
 If not, who do they protect and why?
 What might create pressures to change?
 How are disputes between countries resolved
when they disagree on rights?

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Elephants and Mice
 Small firms and people without assets are
effectively like mice.
 You can squash and kill some of them
 However, it is hard to find and kill them all
 When some are killed, more pop up
 Large firms are like Elephants
 Easy to find, and easy to punish if cheating
 Powerful defenses against direct attacks
 Easy to constrain by simple laws

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CyberLaw: Mice and Elephants
 There are many laws that apply to
Cyberspace, but these laws can be difficult to
enforce against small, entrepreneurial firms.
 Large firms are like elephants, they are easy
to see and find and they will crush anything in
their way, but they can’t hide for long.
 Small firms, like mice, might be crushed or
killed, but 3 more will rise when one is killed;
governments can not effectively stop them.

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Privatization of Information
 Information which was previously not able to
be copy protected might be able to be
protected via encryption under DMCA rights
 Provide limited access to data via screen only
 Encrypt database to prevent easy access to data
 Increase cost of replication of data which would
otherwise not be copy protected
 Underlying data not visible or displayed may
be protected via encryption using DMCA

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Restrictions on Global Commerce
 Provides protections under US law never
anticipated in original copyright or patent law
 Global businesses have offices in USA, so subject
to application of US laws for their firms actions
 Restricts competition more than copyright or
patent, and US laws being effectively exported
 Extends USA laws into other countries by
making foreign citizens subject to USA laws
while on USA soil or for subsidiary US firms