Legal Issues: Other Areas of Concern

 
Legal Issues: Other Areas of Concern
In this section, we explore defamation, sexually explicit speech, copyrights, patents, trademarks,
unsolicited e-mails and online auctions, and we examine these issues in the context
of Internet and the First Amendment.
The First Amendment is designed to protect freedom of expression:
Congress shall make no law respecting an establishment of religion, or prohibiting the free
exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people
peaceably to assemble and to petition the Government for a redress of grievances.
The discussion of legal issues pertains to both wireless and wireline communications.
For example, pornography is readily available to wireless users, and defamatory statements
can be posted and exchanged using both wireless and wireline connections. Cybercrime,
auctions and user agreements are also issues that spread across all means of communication.
7.4.1 Defamation
Defamation is the act of injuring another’s reputation, honor or good name through false
written or oral communication. [***Webster’s New World College Dictionary (USA:
McMillan, 1999).***] It is often difficult to win a defamation suit because the First
Amendment strongly protects the freedom of anonymous speech (speech by an unknown
person or whose identity has been withheld).
Defamation consists of two parts, slander and libel. Slander is spoken defamation,
whereas libelous statements are written or spoken in a context in which they have longevity
and pervasiveness that exceed slander. For example, broadcasting is considered libelous
even though it is spoken.
To prove defamation, a plaintiff’s (the person bringing the argument to court) case
must meet five requirements: (1) The statement must have been published, spoken or
broadcast; (2) There must be identification of the individual(s) through name or reasonable
association; (3) The statement must, in fact, be defamatory; (4) There must be fault (for
public persons, the statement must have been made in actual malice, or with the intention
of causing harm; for private persons, the statement needs only to have been negligent, or
published, spoken or broadcast when known to be false); and (5) There must be evidence
of injury or actual loss. [***<www.abbotlaw.com>***]
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The responsibility of defamatory statements is addressed in the cases Cubby v. CompuServe
and Stratton Oakmont v. Prodigy (Feature: Cubby v. CompuServe and Stratton
Oakmont v. Prodigy).
Congress passed the Good Samaritan provision, Section 230 of the Telecommunications
Act. This legislation protects ISPs from defamation lawsuits in the ISPs’ attempts
to control potentially damaging postings, including those that are “obscene, lewd, lascivious,
filthy, excessively violent, harassing or otherwise objectionable.” The Telecommunications
Act further protects ISPs by excusing them from publisher status even after
they have been informed of defamatory material posted on their site. This premise
relieves ISPs of the time-consuming activity of exploring all defamation claims, and it
protects freedom of expression by allowing unpopular opinions to appear. The added protection
deters ISPs, concerned about being charged with defamation, from removing all
questionable material.
A plaintiff in a defamation suit cannot seek reward from the ISP, they must instead
seek out the author of the content. Most often, the speakers are anonymous and can
remain so through false e-mail accounts and anonymity indexes (e.g., PrivacyX.com
and www.anonymizer.com), through which the users can hide their identities. When
Cubby v. CompuServe and Stratton Oakmont v. Prodigy
In the case Cubby v. CompuServe, an anonymous individual used a news service hosted
by CompuServe to post an allegedly defamatory statement. As the provider of the bulletin
board, Compuserve claimed that it could not be held liable for the defamatory
statements because Compuserve was not the publisher of the statement.
The deciding factor in this case rested on the distinction between distributor and
publisher. In the court’s opinion, a distributor cannot be held liable for a defamatory
statement unless the distributor has knowledge of the content.
As a result, CompuServe and other providers cannot be held responsible for their
users’ statements. However, as we will discover when addressing the case Stratton
Oakmont v. Prodigy, there was a fine line between claiming responsibility as a publisher
of users’ content and maintaining the “distance” of a distributor.
Prodigy differed from CompuServe in that it, as an Internet Service Provider (ISP),
claimed responsibility to remove potentially defamatory or otherwise questionable
material when the material had been brought to its attention. Prodigy further claimed
that it had an automatic scanning device that screened bulletin-board postings before
they were posted.
As a result, Prodigy assumed the role of a publisher by claiming control over statements
made by its users. As a publisher, Prodigy was held liable for the posted statements.
This decision later spurred Congress to pass Section 230 of the Telecommunications Act,
which protects ISPs actively seeking to control the content of their sites (see Section
7.4.1). [***Cubby vs. Compuserve, 776 F. Supp. 135 at _ (1991) And Stratton Oakmont
vs. Prodigy, 23 Media L. Rep 1794 at_ (1995).***]
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plaintiffs pursue such cases, they create what is called a John Doe suit. [***M. France
and D. Carney, “Free speech on the Web? Not Quite.” Business Week 28 February
2000: 93-94.***] In an attempt to resolve the situation, the ISP will receive a request
to provide the user’s information. In the meantime, John Doe, whoever he or she might
be, is being sued for what may or may not be a defamation case. To bring the case to
court, John Doe’s identity must be revealed. This is arguably a violation of John Doe’s
First Amendment right to anonymous free speech. [***R. Kerber, “Free Speech or
Cyber-slander?” The Boston Globe 29 February 2000.***]
7.4.2 Sexually Explicit Speech
As determined in Miller v. California (1973), the Miller Test identifies the criteria used to
distinguish between obscenity and pornography. Pornography is protected by the First
Amendment. To be determined obscene by the Miller Test, material has to (1) Appeal to
the prurient interest, according to contemporary community standards, and (2) When taken
as a whole, lack serious literary, artistic, political or scientific value. [***Miller vs. California,
413 U.S. 15 at 24-25 (1973).***]
The Internet, with its lack of geographic boundaries, challenges the Miller Test. As we
have discussed, the Test is dependent on contemporary community standards. In cyberspace,
communities exist independently of geographic boundaries.
Cyberspace complicates jurisdiction by making it possible, for example, for a person
in Tennessee, where the tolerance for pornography is relatively low, to view a site in California,
where the tolerance is high (Feature: United States v. Thomas: Reviewing the Question
of Jurisdiction).
The Internet has characteristics similar to those of broadcast media and print media;
yet there are problems with applying traditional regulations to publishing on the Web.
Broadcasting is considered highly pervasive. The Internet resembles broadcasting in its
ability to reach a broad audience with little or no warning. [***FCC vs. Pacifica Foundation
438 U.S. 726 (1978).***] The regulation of printed media focuses on the audience
and less on the content of the material. Defined as non-content-related means (an effort to
control the audience rather than the material), print restrictions allow an adult to purchase
and view pornographic material, but limit an adolescent’s ability to obtain that material.
The Internet can mimic non-content related means by requiring users to provide identification
before entering specific sites.
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7.4.3 Children and the Internet
Elementary and junior high schools implement Web-based learning in much the same way
as high schools and universities. Most public libraries provide visitors with Internet access.
Often, younger Internet audiences are able to gain access to the same information as adults
without the constraints that might be found in real space (our physical environment). The
Internet is not subject to the same zoning laws that would prohibit a pornography store from
establishing itself near an elementary school.
E-Fact 7.1
Frederick Lane, author of Obscene Profits, estimates that pornography sites on the Internet
now number between 30,000 and 60,000 [***B. Headlam, “How the Web Changed the
Smut Business,” The New York Times 13 January 2000: D14.***] 7.1
For example, suppose a parent has a fourth grader who has been assigned to write a
report on the White House. The teacher has requested that the students conduct their
research on the Internet. The correct Web site for the White House is www.whitehouse.
gov. However, while working on the project, the fourth grader stumbles across
www.whitehouse.com, a pornography site, and other undesirable sites targeted toward
unsuspecting viewers (the correct address for the White House is www.whitehouse.
gov).
This example presents a complicated issue. Parents are concerned with protecting their
children. Yet, by limiting speech in an effort to protect younger audiences, we run the risk
of infringing upon the constitutional right to the freedom of expression for adults. For
example, www.whitehouse.com is protected under the First Amendment. Adults have
the right to construct, own or visit sites of this nature.
The Communications Decency Act of 1996 (CDA) and the Child Online Protection Act
of 1998 (COPA) were designed to restrict Internet pornography, particularly to protect children.
Both CDA and COPA, however, have flaws. CDA and COPA were accused of being
United States v. Thomas: Reviewing the Question of Jurisdiction
Thomas, an Internet business owner in California, established a pornographic Web site
from which merchandise could be ordered. The Web site was membership based, and
a review of all applications was conducted before passwords were distributed to users.
By California community standards, the Web site was legitimate.
In court, Thomas was found guilty of distributing obscenity to a Tennessee resident,
even though his site was established in California, where the items were considered
pornography. The determining factor, and Thomas’s critical mistake, was in the
application process. The court argued that Thomas knew that the applicant was from
Tennessee; the applicant’s address and phone number appeared on the application. It
suggested that, having this knowledge, Thomas should have denied any individual
from an area of less tolerant community standards access to his Web site.
How, then, should the Internet be regulated to protect individuals like Thomas?
The site, however disagreeable to some, was legal as far as his resident state was concerned.
To answer this question, the courts have looked at the regulation of broadcasting
and print (see Section 7.4.2).
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overbroad—that is, reaching beyond the groups they intended to protect. They attempted
to enforce regulation when sites offered information that was “patently offensive,” “indecent”
and “harmful to minors.” Arguments rest on the ambiguity of these defining terms.
Opponents of CDA and COPA argue that decisions become arbitrary when the actual crime
is too difficult to define. As a result, individuals could limit their speech to avoid a lawsuit.
This situation is commonly referred to as the chilling effect.
Children’s privacy is also a concern. The Children’s Online Privacy Protection Act of
2000 (COPPA) prohibits Web sites from collecting personal information from children
under the age of 13 without parental consent. While COPPA may be effective in protecting
younger children, studies have indicated that teenagers are more likely than children to
divulge information and are, therefore, at greater risk. [***K. Thomas, “For a Net Gift,
Teens Will Share Wealth of Family Info,” USA Today 15 March 2000: 7D. ***] Web
sites will often target this group by running promotions and contests geared toward them.
7.4.4 Intellectual Property: Copyright and Patents
Copyright, according to the U.S. Copyright Office, is the protection given to the author of
an original piece, including “literary, dramatic, musical, artistic and certain other intellectual
works,” whether the work has been published or not. For example, copyright protection
is provided for literature, music, sculpture and architecture. Copyright protects only the expression
or form of an idea, and not the idea itself.
Copyright protection provides incentive to the creators of original material by guaranteeing
them credit for their work for a given amount of time. Currently, copyright protection
is guaranteed for the life of the author plus 70 years. Because of the ease with which
material can be reproduced on the Internet, and because digital copies are perfect duplicates
of the original, concerns have been raised regarding the level of protection of intellectual
property offered through traditional law (see the feature “File Sharing and the Copyright
Debate”.
E-Fact 7.2
According to the Business Software Alliance, approximately 33 percent of Microsoft software
currently in use has been pirated [***M. Romano, “The Next Piracy Panic: Software,”
The Industry Standard 28 August 2000: 122.***] 7.2
File Sharing and the Copyright Debate
File sharing, or peer-to-peer networking of information, has presented significant challenges
to the traditional treatment of copyright protection. Services such as Napster
(www.napster.com), Aimster (www.aimster.com) and Gnutella (gnutella.
wego.com) offer mechanisms by which information can be exchanged from one
user to another for free.
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Napster, a file-sharing service, offers software that allows users to download MP3
files from the hard drives of other members. MP3 is a compression method used to
reduce the size of audio files, without significant reduction in sound quality.
[***RIAA vs. Diamond Multimedia Systems, 180 F. 3d. 1072 at _ (9th Cir.
1999).***] This compression method facilitates the exchange of audio files over the
Internet. Additional technologies, such as Advanced Audio Coding (AAC), provide
more extensive compression capabilities, allowing files to be reduced 30 percent more
than when using MP3 technology. [***J. Dvorak, "A Higher Standard for Digital
Music," Computer Shopper May 2001: 41.***]
Napster’s central servers help users locate MP3 files stored on other Napster members’
hard drives. After locating the files, Napster members can download these files to
their own hard drives; the files are not stored on Napster’s servers. Consequently, Napster
has contended that it cannot control the use (or misuse) of those files, and therefore
it is not violating copyright laws. [***“Napster Closes 300,000 Music Accounts,”
The New York Times 12 May 2000: C6.***]
Gnutella differs from Napster in that it is a decentralized service. Rather than
passing information through a central server, individual computers with Gnutella software
installed operate as both clients and servers. This means that searches made by
one user that cannot be fulfilled by another are passed on to other users until the search
can be fulfilled. Gnutella also differs from Napster in that it allows text files, images,
video, MP3 files, etc., to be exchanged.
Debate is currently centered on the freedom of speech that exchange systems of
Gnutella’s type enable versus copyright infringement. The distribution of information
cannot be limited by censorship under these circumstances, and the potential audience
size is larger than that of most traditional forums. For example, to distribute your opinions
over television or to broadcast them on the radio requires that certain standards are
met (see the feature “United States v. Thomas: Reviewing the Question of Jurisdiction”).
However, as previously discussed, the original purpose of copyright was to protect
creative efforts to provide incentives for further creative efforts; if copyrighted
works are unregulated, creators will have less incentive to continue generating original
works.
Aimster differs from Gnutella in that members have control over the recipient of
exchanged files (includes documents, pictures and music) and Napster in that it is a
decentralized service. Using AOL’s Buddy List (a list designed by AOL members of
other AOL Instant Messenger members), users can only share files with their buddies
in a private network. Messages an encrypted when exchanged to ensure security. Aimster
suggests that breaking this encyrption and revealing Aimster users and the documents
they exchange is a violation of their own privacy policy. Under federal law, an
ISP is only required to interfere with the exchange of copyrighted materials if it is
aware of it. [***A. Harmon, "Copyright Rules Get Another Challenger," The
New York Times 7 May 2001: C4.***] A walkthrough of Aimster’s service is available
at www.aimster.com by clicking the “What is Aimster” link.
File Sharing and the Copyright Debate (Cont.)
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In a landmark case, United States v. LaMacchia, Congress recognized the inability of
traditional copyright law in the United States to regulate the Internet. As a result, several
attempts were made to ensure that content creators (i.e., software developers, writers, art-
In all cases, the concern lies in the assignment of responsibility. For example, Sony
released the Betamax in 1984, enabling users to tape television programs and televised
movies. The motion picture industry filed a suit suggesting that the release of this
product would result in lost revenue. The courts ruled in favor of Sony, suggesting that
the Betamax provided other uses, namely recording for personal viewing, that justified
its existence; obeying copyright law was the responsibility of the user, and not of the
technology. Similarly, Napster’s argument focused on the scores of unsigned artists
represented. By posting their music on Napster, these artists can market themselves to
the general population by word of mouth. Chat rooms and instant messenger services
are also available through Napster.
In the summer of 2000, Napster received an injunction against a ruling that would
have forced it off the Web. By Fall, 2000, Napster received funding from Bertelsmann,
the third largest media company in the world, to legitimize Napster’s MP3 transactions.
In short, Napster agreed to redesign itself to charge participants a small monthly fee for
use of the service. The revenue will go to the artists as royalities for the use of their
music. If Napster complies, then Bertelsmann (BMG) has agreed to drop its lawsuit and
take an active role in developing Napster into a forum for trading a variety of media.
This would include books, movies, DVDs and other copyright protected materials. By
July, 2001, Napster is expected to collect a monthly service fee from its users.
In addition, by court order issued in March, 2001, Napster is required to block
users from accessing copyrighted material. To do this, recording labels submit a list of
song titles to Napster. In theory, once these titles are entered in Napster’s database as
blocked files, users will no longer be able to access them. However, Napster users keep
MP3 files on their hard drives, often stored by familar song lyrics and not under the correct
titles. Users are able to circumvent the block by searching for songs under a different,
or misspelled, title. At the time of publication, Napster was implementing new
strategies to deter this practice.
Gnutella is also being targeted by the entertainment industry. As we discuss, Gnutella’s
users operate on a decentralized peer-to-peer service. However, this does not
inhibit others from tracking the source of exchanged files. When a file is exchanged, it
is accompanied by the user’s IP address. Using this address, the Motion Picture Association
of America (MPAA) has begun to track the service providers allowing these
exchanges to occur. Once the service provider, is known, it can help to reduce the
number of exchanges of copyrighted material. [***L. Gomes, "Entertainment
Firms Target Gnutella," The Wall Street Journal 4 May 2001: B6.***]
File Sharing and the Copyright Debate (Cont.)
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ists, etc.) and resource providers could maintain the same protection for digitally transmitted
material as is afforded for other material under the law.
The Digital Millennium Copyright Act of 1998 (DMCA) represents the rights of creative
bodies to protect their work, as well as the rights of educators and resource providers
to access that work. The DMCA makes it illegal to delete or otherwise alter the identifying
information of the copyright owner. It prevents the circumvention of protection mechanisms
and/or the sale of circumvention mechanisms, but limits this restriction to activity
outside research, encryption, technological development and the testing of security measures.
The DMCA protects the rights of ISPs by providing a safe-harbor provision in which
the publishing of such property can be permitted by the purchase of licenses. Finally, the
DMCA protects the fair use of copyrighted material [***D. Young, “Congress Modifies
Copyright Protection for the Digital Age,” Legal Backgrounder Vol 14, No. 6.***]
Fair use is defined as the use of a copyrighted work for education, research, criticism,
etc. Four criteria have been established to determine whether fair use can be applied to the
reproduction of a copyrighted work.
First, the purpose of the copyrighted work is examined. For example, was the reproduction
of the copyrighted material for commercial use? Second, the nature of the copyrighted
work is taken into account. When determining the nature of a reproduction, the
court looks at whether the original material was factual or fictitious. It is the expression of
ideas that receives protection, not the ideas themselves. Third, the amount of the material
that has been reproduced is reviewed. This criterion creates a gray area, in that it is impossible
to determine whether the amount of material reproduced is guaranteed copyright protection.
So, it is the significance of the material that is examined here: How crucial was the
piece of information to the whole work? Fourth, the effect of the reproduction is taken into
consideration: How does the reproduction of the copyrighted material affect the potential
market?
United States v. Lamacchia: Copyright Infringement and the
“Commercial Gain” Loophole
In 1994, the U.S. Supreme Court made a landmark decision that changed the face of
copyright protection. The case involved an M.I.T. student who had posted computer
software on his Web site. Users could access his site and download the copyrighted material
for free, costing computer software companies lost sales.
Although the material posted was not original, the courts could not find LaMacchia
guilty of copyright infringement according to the Copyright Act of 1976. To be guilty
of copyright infringement under the Act, the violation must have been conducted “willfully
and for purposes of commercial advantage or private financial gain.” [***U.S.
vs. LaMacchia, 871 F. Supp. 535 at _ (D. Mass. 1994).***] In this particular case,
LaMacchia did not profit from the copyright violations and could not be tried as such.
The case was used to alter copyright protection.
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However, the DMCA does not address all the concerns facing copyright protection. For
example, issues such as first sale, which allows an owner to sell a used item and permits the
reproduction of material used in distance-learning programs, still need to be addressed.
[***D. Young, Vol 14, No. 6.***] Opponents of the legislation also feel that it is too
restrictive, because it limits the progression of open-source code, or code that is able to be
accessed and modified by anyone.
New technologies are being developed and distributed to protect companies and individuals
against copyright infringement (see eXtensible Rights Markup Language (XrML) Feature).
Netsertion’s (www.netsertion.com) Digital Asset Recognition Technology
(DART) translates a Web site’s “look and feel” into a unique code using algorithms. Netsertion
sends a series of spiders (programs that search the Web for pre-specified material) to
crawl the Web in search of a specific code. The spider then reports the use of the copyrighted
material. [***”Spiders’ Latest Web Challenge,” The Financial Times 15 March 2001:
12.***]
eXtensible Rights Markup Language (XrML)
Many people feel that the answer to piracy protection is the eXtensible Rights Markup
Language (XrML). [***S. Sanborn, “Protecting Intellectual Property on the
Web,” Infoworld <www.infoworld.com> 19 June 2000.***] This XML-based
language will help to define policies, rights and permissions for digital content. XrML
is designed to prevent the illegal use of copyrighted materials by standardizing the technology
used to protect these materials. XrML is an XML extension of DPRL (Digital
Property Rights Language), a technology created by Xerox to prevent the illegal use of
copyrighted material. [***<www.xrml.org>***]
Digital content creators work with publishers and distributors to ensure that their
content is protected with XrML. The process begins when the content creator submits
material to the publisher. Once the content is determined to be complete, the rights
policy, pricing data and restrictions are encoded into the file using XML. The rights
holder determines the rights assigned to a given product. The product is then sent to distributors,
who price the product based on the guidelines set by the publisher in the
XrML code.
XrML defines the usage rules for the content. For instance, a document protected
with XrML will define the transfer, printing and resale restrictions. A person will be
prevented from copying and redistributing the material to others without the express
permission of the rights holder. In the past, publishers put trust in the consumer, often
relying on honesty and ethics to prevent the piracy of materials. XrML places the control
in the computer itself. A user will not be able to manipulate a document that is designated
as “unalterable” by the XrML code.
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7.5 Patents
Patents, which grant the creator sole rights to the use of a new discovery or the right to sell
right to that discovery, present another issue. There are disputes over the duration of patents.
Given the growth rate of the Internet, some argue that the 20-year duration of patents
discourages continuous software development and improvement.
In 1998, federal regulations governing the distribution of patents increased the scope
of patented discoveries to include “methods of doing business.” [***L. Lessig, “Patent
Problems,” The Industry Standard 31 January 2000: 47.***] To be granted a patent for
a method of doing business, the idea must be new and not obvious to a skilled person.
[***R. Libshon, “Madness In the Method: Will Method of Doing Business’ Patents
Undermine the Web?” Net Commerce Magazine March 2000: 8.***]
To some, the inability to share information freely appears to be in opposition to the
advantages afforded by the Internet, and the ability to restrict competition would hinder the
growth of e-commerce (see the feature “Amazon.com and the 1-Click Patent”).
Publications authored with XrML will rely on trusted systems to protect and
present the data. Trusted systems are designed to read and execute XrML data. These
system will be developed to protect all platforms that provide consumer access to copyrighted
material including computers, radios, VCRs and DVD players. Trusted systems
will operate according to the rights and restrictions encoded in the documents. [***M.
Stefik and A. Silverman, “The Bit and the Pendulum,: Balancing the Interests of
Stakeholders in Digital Publishing,” (white paper) (Palo Alto: Xerox Palo Alto
Research Center, 1997) 4-7.***] Trusted systems are programmed to assign the
appropriate rules to a given consumer. For instance, if a consumer buys the right to print
a document, the trusted system would then allow the consumer to print that document.
If the printing rights are not licensed, then the trusted system will prevent the consumer
from copying that document. [***R. Cover, “The XML Cover Pages,”
<www.oasis-open.org/cover/xrml.html> 4 August 2000.***]
The music industry has tried to eliminate piracy of its content by preventing the
unauthorized transfer of high-quality music over the Internet in the form of MP3 files.
If an XrML document is encoded into a particular MP3 file, this type of transfer can be
prevented. For instance, if a musician wanted to send a copy of a new song to all fanclub
members, but did not want to give access to the general public, the musician could
offer selective access using XrML.
eXtensible Rights Markup Language (XrML)
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7.5.1 Trademark and Domain Name Registration
A trademark is an officially registered name or symbol that grants the holder rights of ownership.
There are several ways in which one can commit trademark infringement in cyberspace.
One way is by becoming a parasite. A parasite selects a domain name based on
common typos made when entering a popular domain name. Another way is called cybersquatting.
A cybersquatter buys an assortment of domain names that are obvious representations
(common misspellings, pluralization, etc.) of the names of brick-and-mortar
companies. When these previously established companies make the transition to the Internet,
they are forced to buy the domain names from the cybersquatter.
Congress enacted the Anticybersquatting Consumer Protection Act of 1999 (ACPA) to
protect traditional trademarking in cyberspace. Consumer fraud, decreased revenue for
trademark holders and the hindrance of e-commerce all led to the ACPA.
Registering a domain name that is similar to an established trademark to cause confusion,
to deceive or to dilute the established trademark is illegal. However, persons registering
domain names are protected from prosecution if they have a legitimate claim to the
domain name, such as if it is their first or last name or if the domain name was registered
prior to the first use of the registered trademark. [***Section 4, Anti-cybersquatting
Consumer Protection Act.***] In addition, domain names cannot be registered with the
intention of resale to the rightful trademark owner.
Cybersquatting is not a clearly defined issue—there are legitimate cases in which a
trademarked name can be used by a third party. Business owners should give careful consideration
to purchasing different versions of their domain name to protect themselves
against criticism. For example, X Auto Body Parts might select www.xauto.com as its
Amazon.com and the 1-ClickSM Patent
Amazon.com recently settled a dispute regarding patent grants. The innovator of the
1-ClickSM system, Amazon.com received a patent on this new method of online purchasing
in September 1999. [***R. Libshon, 8.***] The 1-Click system allows
Amazon.com users to make future purchases on the site in a single action rather than
filling out shipping and billing information for every purchase.
This technology is significant, as studies show that approximately 65 percent of
online shopping carts are abandoned before a purchase is complete. While there are
several reasons that users typically abandon their shopping carts, the dominant theory
suggests that the long and complicated checkout process is the most significant.
[***R. Libshon, 8.***]
The 1-Click patent gives Amazon.com an advantage over its competitors, enabling
Amazon.com to provide faster, more efficient service to its customers. Barnesandnoble.
com quickly discovered the value of this system after losing a legal dispute
involving its checkout technology, Express Lane [***R. Libshon, 8.***]
According to the criteria for a method-of-doing-business patent, the 1-Click
system was correctly protected by a patent. The system was unlike any checkout system
on the Internet, and the patent’s usefulness was adequately demonstrated by the similar
version created by Barnesandnoble.com.
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domain name. To many consumers, this might be the obvious domain name. However, suppose
one of the mechanics makes a mistake one day, failing to fix a customer’s car properly
and this customer decides to establish a Web site to warn others against choosing X Auto
Body Parts. This site is named www.x_autoparts.com. Many consumers may not
know the correct Web address, and type www.x_autoparts.com, leading them to the
wrong site and possibly causing them to choose another mechanic. In other cases, an individual
or a group will choose a domain name that indicates it is a Web site for criticism.
For example, the disgruntled customer may select www.xautostinks.com. This particular
situation has cost large organizations significant amounts of money as they often
must pay large fees to obtain ownership of these sites.
7.5.2 Unsolicited Commercial E-Mail (Spam)
E-mail is a popular form of communication. It is less expensive than postal mail, especially
when mailing in bulk. As a result, many organizations will target consumers via e-mail with
promotions. These unsolicited messages are often referred to as spam and can include “get
rich quick” schemes and pornography.
Unsolicited promotions and advertisements received through wireless devices are
spam. This type of marketing is different from the mail received via the U.S. Postal Service.
Direct mail printing, packaging and postage fees are absorbed by the advertiser. For unsolicited
promotions via the Internet and wireless communication, a large part of the cost is
incurred by the recipient through wireless access fees. According to the Telephone Consumer
Protection Act (TCPA) making calls at a cost to the user without the user’s authorization
is illegal. However, whether the law includes short message service (SMS) text, a
common method of delivering wireless advertising, is unclear. [***P. Ross, “Taking
Aim at Wireless Spam,” <news.cnet.com/news/0-1004-200-
5261488.html>.***]Wireless Advertising is discussed in detail in Chapter 4, e-Marketing.
Wireless spam presents problems other than cost to the user. Often, it is difficult to
determine where the unsolicited mail originated. The conversion from e-mail to SMS
sometimes deletes the e-mail’s header—and with it, the original sender—inhibiting the
user from requesting to be taken off the sender’s mailing list.
7.5.3 Online Auctions
Sites such as eBay and Bidland allow Internet users to post and search for a wide variety of
items available for auction. Auctions are regulated by government on several levels. North
Carolina, for example, has had a law in effect for several years requiring that auctioneers
be licensed to conduct an auction. The state has decided to enforce the regulation of auctions
on the Internet as well. This means that to sell an item on an auction Web site, an individual
must take a state certification exam and pay various fees. Anyone posting an item
without a license is subject to a fine. [***S. Collett, “States to Require License for Online
Auctioneers,” Computer World 6 December 1999: 4.***]
Many countries, including Germany, France, Italy and the Netherlands, only allow certified
auctioneers to conduct auction. They also place restrictions on the merchandise that
can be auctioned. For example, France demanded that Yahoo! pay antiracist groups for
allowing neo-Nazi merchandise to be auctioned online. The site was given two months to
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discontinue access in France due to violations of French laws against racism.
[***“French Court Says Yahoo Broke Racial Law,” The New York Times 23 May
2000: C27.***]
Copyright infringement is another pressing issue for online auction sites. eBay, the
most popular auction site, earns commissions from transactions completed at its site. Comprehensive
auction sites that use intelligent agents, or programs that continually search for
Web for information designated by the user, continually search the Web for this information.
As a result, the livelihood of one site depends on taking information from others. In a
recent court decision, the courts awarded eBay an injunction to protect its site against copyright
infringement.[***B. Gruley and B. Simpson, “eBay Battles Yahoo! and Other
Web Giants Over Privacy Protection,” The Wall Street Journal 10 April 2000:
B1.***]
Designed to protect the compiled lists of organizations like eBay, The Collection of
Information Antipiracy Act (CIAA) makes it easier to prosecute any group that takes listings
from one organization and, in doing so, harms the original organization. A lack of protection
of this sort, proponents argue, would cause sites like eBay to create restrictions for
access to the sites. Opponents argue that the CIAA will limit the growth potential of the
Internet by limiting access to public information, making it more difficult to conduct comparison
shopping. [***B. Gruley and B. Simpson, B1.***]
Fraud is another problem for online auction sites. Fraudulent activity can consist of
bogus bidding, bids that are unsubstantiated and shill bidding, when sellers or their cohorts
bid for their own items to increase the bid price.
7.5.4 Online Contracts
The Electronic Signatures in Global and National Commerce Act of 2000, otherwise
known as the E-Sign bill, is designed to promote online commerce by legitimizing online
contractual agreements. Under this bill, digital agreements are as valid as their hard-copy
counterparts. The bill also allows cooperating parties to establish their own contracts. This
provision is expected to reduce the time and expense of contractual paperwork.
Security features, which are discussed in greater detail in Chapter 6, Security, can be
used to validate online contracts. Digital signatures, the electronic equivalent of handwritten
signatures, are used to authenticate participating parties and ensure the integrity of
the message.
7.5.5 User Agreements
In many cases, a Web site will require users to agree to certain terms regarding the service
or product provided by the site before the user may enter the site. This agreement is sometimes
called a shrink-wrap agreement. The agreement is printed on the outside of the package
holding the product and becomes binding when the consumer opens the package. In the
Internet arena, user agreements are often provided as click-throughs presented in a pop-up
screen to which users must agree before they can continue.
Depending on their phrasing, these types of agreements can be considered valid by the
U. S. courts. The agreements must be easy to find and understandable to Web users. Users
must actively indicate their acceptance of the conditions of such agreements. This is usually
done by clicking on an “I accept” or “I agree” button. Web-site owners should keep a record
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of each agreement. [***J. Darby, “Drafting enforceable, understandable click-wrap’
agreements for the Web,” Mass High Tech 8 May 2000: 51.***]