law school outline: internet law

Basic Internet Law

  1. Introduction

  1. Importance of the internet

  1. $3.2 trillion by 2003-5
  2. is the fifth largest bookseller in US
  3. Global marketplace

  1. Do purely domestic companies exist? Legal advice must take into consideration non-domestic laws.

  1. Reduced transaction costs
  2. Lower headcount (social implications?)
  3. Inventory changes
  4. Disintermediation (eliminating an intermediary) / reintermediation (creating an intermediary).
  5. Everyone (even cement companies) are coming on-line
  6. The storefront website is only one factor (business to consumer). There is also business to business via internal networks.
  7. Multi-national small business � no physical location, but huge web presence. Used to take months to set up a foreign office � now it�s instant, and therefore the timeline is vastly shorter (therefore must look ahead much �farther� to predict problems).
  8. Plaintiff�s would much rather sue ISPs than individual users because ISPs have deep pockets.

  1. Regulation

  1. Local (city/state/federal)

  1. "First Amendment is a local ordinance." (anon.)

  1. Majority of the world does not recognize freedom of speech

  1. Enforcement of local laws may have international ramifications (CompuServe manager indicted in Germany based on their local laws re: Nazi content � resulted in worldwide ban of several hundred newsgroups).

  1. "When Bavaria wrinkles its nose, must the whole world catch a cold." (The Economist)

  1. Foreign

  1. Regulatory arbitrage

  1. Select territory which has favorable laws to establish business. Gambling web sites aren�t hosted in California � they�re located in countries where that is legal.
  2. Countries want to draw businesses to their locality so that they can eventually impose taxes, therefore countries want to create laws that are friendly to internet businesses. Most countries aren�t taxing right now to encourages establishment of net businesses.

  1. Jurisdiction

  1. Ability to make a law
  2. Ability to hear a case
  3. Ability to enforce a law

  1. Germany getting pissed at a website located in Australia; no enforcement so long as Australian doesn�t go to Germany.
  2. California judge can�t issue a search warrant to confiscate child porn on an Australian computer. Australia won�t recognize it.
  3. If foreign company has assets in America, American court can threaten those assets.

  1. Social codes of conduct (�netiquette�)
  2. Transnational internet law in the future? Difficult to establish.
  3. Technical standards (Internic, etc.)
  4. Industry consortium
  5. Owner-defined rules (person who creates the software makes the rules)
  6. Religious laws (Jewish deletion of the word "god" from a computer)

  1. Jurusdiction: Having a web site may open you up to personal jurisdiction in places you have never been.

  1. Trademarks

  1. What it is

  1. Word, symbol, color, design, sound, smell.
  2. Which identify and distinguish your goods and services from those of your competitors
  3. Common law rights are recognized: If you treat something as a trademark, you begin acquiring rights.
  4. Registration is not required, but does provide procedural and litigation advantages.

  1. Established in US by "first use in commerce".
  2. Rest of world uses "first to file."

  1. Infringement

  1. Protectable mark (evidence of use as a trademark)

  1. Inherently distinctive, or acquired secondary meaning.
  2. Fanciful, arbitrary or suggestive mark.
  3. Never a generic term.

  1. Likelihood of confusion (legal standard)

  1. Balaincing test

  1. In cyberspace

  1. Domain names

  1. Conflict between TM and domain names: TM�s allow multiple companies without likelihood of confusion to use the same name (Delta Airlines & Delta Faucets), and even more possibilities internationally. But internet only allows one second level domain (
  2. Contracts vis-a-vis hosting agreements: Ability to switch hosts while retaining domain name.
  3. Rights of publicity

  1. Disputes

  1. Cybersquatter

  1. Panavision v. Toeppen: D registered many TMs as domain names, tried to sell them to TM owners. Court held that intentional registration of TM domain name is use of domain name as TM, and actionable. "Effects" jurisdictional test means that D is subject to foreign jurisdiction when D directs his actions at jurisdiction.
  2. Avery v. Sumpton: net vs. com TLD isn�t a factor for TM infringement.

  1. Reverse domain name hijacking (innocent registration of name)

  1. Avery v. Sumpton (and Ty case): TM owner prevailed over innocent domain name owner.
  2. If your last name conflicts with a TM, TM owner wins because they can out-litigate the average person, and last name person can be required to put a disclaimer on web site. Last name owner may have a fair use defense (non-commercial use), but can�t afford the attorney fees.

  1. Conflicts between trademark owners: First of multiple trademark owners gets the domain.

  1. Brookfield v. West Coast Entertainment

  1. Linking: Linking party may be subject to contributory or vicarious liability based on infringing temporary copy created on visitor�s screen memory. Lanham Act would apply if consumer confusion about origin of a site or was unfair or deceptive. Potential fair use defenses, though.

  1. Remedies

  1. NSI complaint (registered trademarks only, not common law trademarks)

  1. Domain name must be identical to TM.
  2. If domain name owner also owns TM (in any jurisdiction?), he can keep it.
  3. If domain name owner doesn�t own TM, he�s SOL, and domain name is removed from the internet ("hold").
  4. Lawsuit in "competent jurisdiction" between parties (not NSI) freezes the status quo

  1. Trademark infringement litigation
  2. Dilution

  1. Don�t have to show likelyhood of confusion � only that P is owner of famous trademark, and D is using trademark in a way that diminishes or blurs P�s image.

  1. Hasbro v. Internet Entertainment Group
  2. Toys-R-Us v. Akkaoui (adults-r-us), but see Toys-R-Us v. Feinberg (saying there was no likelyhood of confusion or dilution with guns-r-us).
  3. Snap-On Tools v. C/Net
  4. Fry�s
  5. Defenses: Fair use, noncommercial use, and all forms of news reporting and news commentary.

  1. Defenses

  1. Domain name misuse: Federal grant of limited monopoly power (TM), misused ...?? (979 F. Supp. 684)
  2. Commercialization: TM requires use in commerce. Registering a domain name TM, but not using it for commercial use, in order to domain name squat, restricts or prevents the ability of commercial TM owner to engage in commerce, and therefore falls under TM jurisdiction. Court looks for even a minimal connection with commerce. Includes misspelled domain names.
  3. Fair use (15 USC 1125)

  1. Use other than as a mark (15 USC 1115)

  1. Playboy v. Welles: Use of "Playmate" (Playboy TM) was fair because Welles was indeed the playmate of the year.

  1. Comparative advertising (other countries contra)
  2. Noncommercial use
  3. News reporting and commentary

  1. Including consumer criticism (i.e.

  1. Parody: Must be used to make fun of TM, not TP.
  2. Caching, unless unauthorized.

  1. Future

  1. Expansion of TLD�s

  1. ICCAN will eventually take over registration
  2. NSI will continue to run the database until 9/00, but ICCAN will then probably take it over.
  3. TPs can now register domains (i.e.
  4. Country TLD�s are on their own.

  1. Strategy

  1. Domain name registrants should conduct a broad trademark search and consider international issues.
  2. TM owners should consider what TLDs to register in, whether to use demand letters (which will likely be made public by D and therefore bad publicity) vs. lawsuits, jurisdictional issues, fans of entertainment stars, settlement strategy.

  1. Meta tags and spider issues

  1. Case settlements involving disclaimers: Disclaimers should be posted as a GIF image because spiders will index text disclaimers.

  1. Commerce

  1. Selling stuff requires a K

  1. Privacy (encription technologies which are exportable)
  2. Authentication

  1. UCC 2-201: Anything that shows your intent to sign a document.
  2. Digital signature

  1. Different jurisdictions all have different definitions and requirements for digital signatures.
  2. In addition to the two parties to the K, there are also two certification authorities involved. If everyone is in different jurisdictions, it�s really messy.
  3. Best to use asymetric encription both ways (sender uses rx public and tx private, receiver uses rx private and tx public), plus hash encription. Verify all through certification authority.

  1. Symetric: One key, which gets passed around the net, and lots of people can see it.
  2. Asymetric: Key pairing, involving two keys. One is public, one is private. Owner keeps private key, public key is distributed. Something encripted with private key can be decripted with public key, and vice versa, but no other keys.
  3. Hash: Works like a checksum.

  1. Integrity (of the document)
  2. Nonrepudiation

  1. Restrictions on encription technology

  1. Export control: US does have restrictions, administered by Department of Commerce.

  1. What is the purpose? Other countries have as good or better encryption technologies than we do.

  1. Import control: US does not have restrictions.
  2. Use

  1. One proposal was for a government agency to hold an extra set of keys, for when the government had a warrant to unlock a message.

  1. Payment over internet

  1. Scheme must be transnational

  1. Some countries prefer debit or stored value cards rather than credit cards (some counties don�t have credit cards at all).
  2. Stored value card system is adventagious

  1. Banks are highly regulated � would internet scheme involving deposits into an account or stored value system have to be similarly regulated?

  1. Copyrights

  1. Requirements

  1. Tangible medium
  2. Original work
  3. Expression

  1. Literary work

  1. Including software code and the "idea" of the program.

  1. Sound
  2. Visual images
  3. Not: idea, procedure, process, system, method of operation, concept, principle or discovery.

  1. Creativity requirement: Minimal level of creativity is required to trigger copyright protection.

  1. White page telephone directory doesn�t reach that threshold, because it isn�t creative at all.
  2. Facts in a database on the internet probably isn�t protected, because it is just an arrangement of facts, and no creativity is involved. Database of selected restaurants is creative, database of all restaurants is not creative. The database itself is protected, but the facts aren�t.

  1. EU does protect databases.

  1. No creativity: Menu command hierarchies, icons, use of windows, use of menus, opening and closing objects, computer animated key pad, databases.

  1. Licenses & limitations

  1. Owner of copyright has exclusive rights, but can license those rights.
  2. Shrinkwrap

  1. Really should be on the outside of the product, so that people can enter into the K aware of the terms, before purchase. But courts have held shrinkwrap licenses to be enforceable, and that the UCC does not require money now, terms later.

  1. Clickwrap (aka Terms & Conditions)

  1. Better because you can make the license available before the K is consummated.
  2. Court has held clickwrap to be enforceable.
  3. Should include a "decline" button � not just "accept"

  1. Express license must be in writing
  2. Implied license established merely by posting material on the web is a weak defense.
  3. Buying software is really buying a license, because if you bought the actual software, the "first sale doctrine" would eliminate all rights of the previous copyright holder.

  1. Derivitave works

  1. Copyright extends only to material contributed by author of derivative work. Does not grant rights in preexisting works.

  1. Theories of liability (strict liability)

  1. Direct liability

  1. must have directly acted or had volitional conduct to the infringement. ISP which provides access (i.e. to UseNet) does not trigger volitional conduct. (Netcom)
  2. Strict liability: Imposed regardless of D intent. Courts have usually held, however, that some element of volitional conduct is required.
  3. ISP which provides space for users to put web pages is not directly liable, because the ISP acts like a public copy machine � which is not liable for users who make infringing copies.

  1. Contributory infringement (TP)

  1. Imposed where person induces, causes, or materially contributes to the infringement.

  1. Applied to ISPs when ISP has actual notice of infringement on their service, identifies the material, and demands that the material be removed. Therefore, most ISPs now have procedures for this, because ISPs could be liable if they ignore the demand letter.

  1. VCR manufacturers are not liable for contributory copyright infringement when home user tapes a show because tape recorded TV show is fair use (time shifting).

  1. Vicarious liability (TP)

  1. TP must have right and ability to supervise the infringing activity of another, and have direct financial interest in order to be liable.
  2. Dance hall cases: Dance hall owners liable when bands play copyrighted songs. Versus phone company common carrier cases, which are not liable. ISP should be a common carrier.
  3. Flea market owner charging a flat fee are liable for booth selling bootleg CD�s.
  4. Religious Technology Center (Church of Scientology) v. Netcom: Netcom not liable for user�s posting on UseNet of copyrighted materials because no direct financial interest because Netcom is flat fee. Further, Netcom didn�t have the ability to supervise what was posted (Prodigy case was contra, because Prodigy did supervise the postings on its internal boards).
  5. UseNet archival service which archives nudie pictures, including infringing photos (Playboy), can be liable because the service was selectively (albeit through an automated system) choosing what content to archive, therefore exercising control.
  6. Netcom argued that liability would impose a chilling effect.

  1. Criminal: Requires showing that D infringed for commercial exploitation.

  1. Linking

  1. TicketMaster sued MS when MS linked to a second-level TM page, thus bypassing the TM home page. TM wanted visitors to go through the home page, which contained advertising. This isn�t necessarily a legal problem � more of a business problem.
  2. Unauthorized linking isn�t really a copyright problem, but Lanham Act (15 USC 1125) may raise actions for false advertising, unfair competition, or passing off someone else�s content as your own.
  3. It could be a trademark problem though.
  4. DMCA provides limits to liability for compliance with certain requirements.

  1. Framing & Inline Links

  1. When you click on a link within a framed site, the URL won�t change despite the content change. Therefore, consumers may be confused by the URL being different from the provider of the content. However, technology exists to de-frame a web site upon opening the site. No case law exists in this situation.
  2. Inline link isn�t a per se copyright violation because a copy isn�t created on your site; however there is a risk of consumer confusion, and therefore may be actionable, and raises contributory infringement.

  1. Fair use defense

  1. Purpose and character of use

  1. Parody
  2. Software archival, backup, or temporary copies for hardware maintenence or repair.
  3. Criticism, comment, news reporting, teaching, scholarship, research (even reverse engineering).
  4. Taping TV show for future viewing, for private non-commercial use.
  5. Photocopying article for convenience.
  6. Caching

  1. Creates a copy, therefore potential copyright infringement.
  2. Web browsing not a problem in that fair use extends to the temporary copying which is only necessary because humans cannot otherwise perceive digital information. Functional equivilant of reading.

  1. Use must be noncommercial, i.e. nonprofit educational use.

  1. Nature of work
  2. Amount and substantaity of portion used
  3. Effect on potential market

  1. Digital Millennium Copyright Act

  1. Limits OSP liability for:

  1. Transmitting, routing and providing connections to infringing materials
  2. System caching
  3. Information stored by a user on OSPs system
  4. Linking or referring users to infringing material

  1. OSPs are exempt from liability for disabling access to or removing (in good faith) infringing content. Requires strict compliance with specific rules regarding policies, agents, timing, notice, counter-notice. If OSPs opt to use this feature, they cannot exercise discretion.
  2. Circumventing a scrambling of copyrighted material and such devices, such as a cable TV descrambler, is prohibited.

  1. Patents

  1. Vs. trade secret: Patent requires disclosure.
  2. Patent can be granted for "anything under the sun that is made by man."

  1. Program that merely makes insubstantial improvement over prior art is not entitled to patent protection.

  1. Protection lost through premature disclosure (which may jeapordize patent if filed in foreign jurisdiction first); if applicant isn�t original inventor; or if first patented abroad more than 12 mos ago.

  1. Trade Secrets

  1. Based on state law.
  2. Definition: Formula, pattern, device, compilation, etc. used on business which gives opportunity of advantage over competitors who do not know it, and who owner maintains secrecy.
  3. Cause of action (general; California is more specific): Trade secret exists, p is preserving its secret, and D misappropriated secret, in breach of confidential relationship, to acquire secret.
  4. Secrecy is required. Disclosure makes it available to all, even if owner wasn�t the one who disclosed it.
  5. Software may constitute or incorporate trade secrets.
  6. Former employee may be restrained from competing on the basis that former employee would "inevitably disclose" trade secret.

  1. Defamation

  1. ISPs which monitor and actively maintain content, as opposed to merely being a conduit, can be held liable.
  2. Court held that CompuServe was an electronic, for-profit library, and therefore a "distributor" and not liable as publisher. It had no editorial control. Prodigy was a publisher, which is liable regardless of knowledge or intent, because they edited postings.
  3. TCA of 1996 says that ISPs are exempt from negligence claims premised on publisher or distributor liability theories for TP defamation. Gives ISPs immunity for good faith actions voluntarily taken to restrict access of certain types of information, such as that which is defamatory.
  4. OSP liable only where OSP has reason to know of defamatory material and failed to act. Immunity for good faith screening.

  1. Pornography

  1. Child porn

  1. No First Amendment question � simply doesn�t apply, because the laws were created to protect children, not to suppress speech.
  2. Child pornography which is actual or virtual is criminal.
  3. Scienter required, so pictures of your kid running around naked are ok.
  4. State law liability of an ISP could be preempted by 47 USC 230, if a company is eligible for the exemption.

  1. Obscenity

  1. Judged by local community standards
  2. Venue is proper in any district "from, through or into which the allegedly obscene material moves."
  3. Possession is ok (privacy rights), but sale or transportation across state lines is not legal.

  1. Protection of minors

  1. Reno v. ACLU: Indecent, patently offensive

  1. Privacy

  1. Cookies
  2. Browser and computer information available to sites
  3. Common law privacy

  1. Appropriation of a name or likeness for commercial benefit (publicity)
  2. Unreasonable intrusion/intentional interference with interest in solitude or seclusion
  3. Public disclosure of private facts
  4. Publicity which places person in false light

  1. Constitutional (4th): Protects person�s subjective, yet objectively reasonable, expectation of privacy, from government agency. Usually applies when government acts without a warrant or other permissible means.

  1. EU says privacy is a fundamental right.

  1. California Constitution: Express, inalienable right.

  1. Requires showing of:

  1. Legally protectable privacy right
  2. Reasonable expectation of privacy under the circumstances
  3. Serious invasion of privacy

  1. Not limited to government conduct � it also applies to private businesses
  2. Includes electronic data
  3. Rights may be waived

  1. Statutory privacy

  1. Electronic Communications Privacy Act (18 USC 2510, et. seq.)

  1. Title I: Interception of data (doesn�t include analog phone conversation, but would include voice over IP). Makes it a felony to intercept e-mail in transit. Practically, intercepting e-mail intransit is very difficult because of TCP/IP packeting.
  2. Title II: Stored communications

  1. McVeigh v. Cohen: Military had AOL pull up McVeigh�s e-mail history to prove McVeigh was gay in order to discharge him. That was held to be a violation of the ECPA.

  1. Computer Fraud and Abuse Act

  1. Knowing access of a computer, or exceeding authorized access
  2. Protects only financial records, medical records, and a few other types of records.

  1. Fair Credit Reporting Act

  1. Prohibits disclosure of credit file (i.e. credit history, employment)
  2. Excludes credit-header information, such as name, birth date, SSN, current and former address, and phone number.

  1. Electronic Funds Transfer Act
  2. Child Online Protection Act (regulates what types of information is collected from children w/o parent consent)

  1. E-mail at work is not private. No reasonable extectation of privacy; not highly intrusive.
  2. Spamming: OSPs can block without First Amendment issue because OSP not state actor. Tort claim against spammer based on common law trespass is possible. California statutes (B&P 17511.1, 17538.45, PC 502) regulate spamming.

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