Some Aspects of
Cyberlaw Related to
B2B Marketing
Jurisdiction
• The authority of a court
of hear a case and
resolve a dispute.
• Personal Jurisdiction is
the court’s authority and
power to make the
defendant obey a court
order.
Suits Against Online Firms
• Try for the “home court advantage.”
– Litigation occurs where defendant’s primary
business is located, rather than in the plaintiff’s
home state or country.
• With U.S.-based firms, this usually means
the suit is litigated in federal court, rather
than state court.
Why the Home Court Advantage
is Important
• Local law will apply.
• Defendant’s attorneys normally don’t have
to travel to another jurisdiction for
depositions and other kinds of discovery.
• Jury is more likely to be familiar with and
sympathetic to the e-business.
• Lawyer should be familiar with the local
judges and their decisions.
State “Long-Arm” Statutes
• Authorize state courts to claim personal
jurisdiction over a nonresident defendant.
• Varies from state to state.
• Limited by the 5th and 14th Amendments to the
United States Constitution. (Due Process)
• Under Due Process, for a court to exert personal
jurisdiction over a non-resident:
– The defendant must have sufficient minimum contacts
in the state.
– Exerting jurisdiction will not offend traditional notions of
fair play and substantial justice.
Passive vs. Interactive Web Sites
• Passive
– Only provides
information
– Does not solicit
business
– Is not usually subject to
personal jurisdiction in
a foreign country or
state
• Interactive
– Provides information for
users to make
purchasing decisions.
– Actively solicits
business
– May be subject to
personal jurisdiction in
a foreign country or
state
Trademarks & the Web
• Domain Names
– Merely a business
address on the Internet
– Registered with either
Network Solutions
(NSI) or Internet
Corporation for
Assigned Names and
Numbers (ICANN)
Do Domain Names Violate
Trademark Laws?
• Yes and No.
• No.
– If the domain name user has registered the
name with NSI or ICANN
• Yes.
– If the trademark owner has also registered the
name as it’s domain name with NSI/ICANN and
registered the domain name with the U.S. Patent
& Trademark Office (PTO).
Key Difference
• Trademarks
– Different companies can use the same
trademark for different classes of goods
and services – Delta Airlines and Delta
Dental.
• Domain Names
– Only ONE company can register a
particular dot.com domain name – jsu.edu
Burden of Proof & Defenses in
Trademark Infringement
• PLAINTIFF
– Must prove it owns the
trademark
– The mark is distinctive
and famous
– Defendant’s use is
causing dilution
• DEFENSES
– Ownership of a
registered trademark
– Fair use of the mark in
promoting its goods or
identifying competing
goods
– Noncommercial use of
the mark
– Any form of news
reporting or
commentary
Defining the Terms
• Trademark Dilution
– Trademark is used by another company in such a
manner as to cause its identity to diminish over time.
• Dilution by Tarnishment
– Mark has been associated by defendant’s conduct with
unwholesome, unsavory, or shoddy quality products.
– Hasbro sued The Internet Entertainment Group for using
its registered trademark “Candyland” as a domain name
for a pornography site.
Defining the Terms
• Dilution by Blurring
– Value of a famous trademark is diminished
over time by its use on dissimilar products
– Toys R Us sued Richard Feinburg. Domain
name of gunsareus.com was held to NOT
dilute by blurring.
Copyrights
• An original work of authorship.
• Copyright Act of 1976 (Lanham Act)
– Amended by the Sonny Bono Copyright Term
Extension Act (CETA) in 1998.
– Works created prior to 1/1/78 – copyright
endures for 28 years with option to renew for
another 67.
– If created after 1/1/78 – copyright endures for
life of the author plus another 70 beyond the
author’s death.
What Can Be Copyrighted?
•
•
•
•
•
•
•
•
Literary works
Musical works
Dramatic works
Pantomimes/choreographi
c works
Pictorial, graphic and
sculptural works
Motion pictures &
audiovisual works
Sound recordings
Architectural works
Exclusive Statutory Rights of a
Copyright Owner
• To reproduce the copyrighted work.
• To sell, rent, lease, or otherwise
distribute copies of the work to the
public
• To prepare derivative works based on
the copyrighted work
• To perform and display publicly the
copyrighted work
Copyright Infringement
• Direct Infringement
– Direct actor who, with/without a specific intent
to infringe, is primary party that violates one of
the copyright owner’s exclusive statutory rights.
• Contributory Infringement
– Tort (civil wrong not based on contract) of
contributing to direct infringement of another.
• Vicarious Infringement
– Party receives direct financial benefit from the
infringement by another party and had right and
ability to supervise infringement activity.
Limits on Exclusive Rights
• Fair Use Doctrine
– Purpose and character of the use
• Commercial vs. educational use
– Nature of the material
• Merely informational or factual?
– Amount of the copyrighted material used
• Just a page or two vs. the whole thing
– Impact of use on potential market value
Limits on Exclusive Rights
• First Sale Doctrine
– Exclusive rights end when purchased by
another.
– Sale of used text books vs. sale of a licensed
computer program
• Public Domain
– All works of the U.S. Government
– Works whose copyright term has expired
Taxation
• Sales tax
– A tax paid by the customer at the point of
purchase on tangible personal property and is
collected by the seller/vendor.
– 6600 state and local jurisdictions impose sales
and use taxes
• Use tax
– A tax imposed on the customer for tangible
goods purchased out of state for use within the
taxing state.
When States Can Tax ECommerce
• State must have tax jurisdiction over
the out-of-state merchant.
• For there to be tax jurisdiction, the
company must have a physical
presence in the state
• This is called a Substantial Nexus
Commerce Clause Test for Tax
Purposes
• E-business needs a substantial nexus
with the taxing state
• The tax must be fairly apportioned
• The tax cannot discriminate
• The tax must be fairly related to the
services provided by the state
Physical Presence Nexus Test for
E-Commerce
•
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Renting an office or warehouse
Holding trade shows
Using a Web Merchant’s server
Maintaining inventory in a taxing state
Licensing software to licensees in a taxing state
Hiring agents in a taxing state
Falling under the market maintenance theory
– Vendor’s state activities are significantly associated
with the taxpayer’s ability to establish and maintain a
market in the state for its sales.
Internet Tax Freedom Act of 1998
(ITFA)
• Prevents federal, state and local
governments from imposing any new taxes
on the Internet for a period of 3 years.
• Existing Internet taxes may continue to be
imposed on Internet transactions.
• Advisory Commission on Electronic
Commerce recommended to Congress that
the ITFA be extended until 2006 (which it
did).
Privacy, Obscenity, &
Defamation on the Net
Privacy
• No express or
enumerated right to
privacy in the
Constitution
• Do have an implied or
penumbral right to
privacy under the
constitution
• 4th, 5th & 9th
Amendments
9th Amendment
• “The enumeration in this constitution
of certain rights shall not be construed
to deny or disparage others retained
by the people.”
• Weak implication of privacy.
4th Amendment
• “The right of the people
• to be secure in their persons, houses, papers, and
effects,
• against unreasonable searches and seizures,
• shall not be violated; and
• no Warrants shall issue, but
• upon probable cause,
• supported by oath or affirmation, and
• particularly describing the place to be searched,
and
• the persons or things to be seized.”
4th Amendment Creates a “Zone
of Privacy”
• Establishes a “reasonable expectation
of privacy”
• Minimum requirements for a
reasonable expectation of privacy:
– A person exhibits an actual expectation of
privacy.
– Society recognizes the expectation as
reasonable.
5th Amendment
• “No person … shall be compelled, in any
criminal case, to be a witness against
himself.”
• Doe vs. United States, 487 U.S. 201 (1988)
– With a valid search warrant, law enforcement
agencies can obtain an encrypted file, but
– The defendant cannot be forced to supply the
private key, password, or code that enables
decryption or decoding (and thereby, access).
Common Law Torts for Invasion
of Privacy
• Torts recognized as common laws, and
• By the Restatement (Second) of Torts.
– Intrusion upon Seclusion
– Public Disclosure of Private Facts Causing
Injury to Reputation
– Publicly Placing Another in a False Light
– Misappropriation of a Person’s Name or
Likeness Causing Injury to Reputation
Intrusion upon Seclusion
• Intentionally intruding, physically or
otherwise, upon the solitude or seclusion
of another or his private affairs or
concerns.
• Must prove the following:
– Intent to intrude or knowledge that the
intrusion would be wrong
– Reasonable Expectation of Privacy
– Intrusion was substantial and highly offensive
to a reasonable person
Public Disclosure of Private Facts
Causing Injury to Reputation
• Can be associated with defamation
• Must be able to prove:
– Intent or knowledge
– Highly offensive to reasonable person
– Facts must be private
– Communication or publicity must be disclosed
to a significant segment of the community (I.e.,
information becomes public knowledge)
Publicity Placing Another in a
False Light
• Also associated with Defamation
• Involves falsely connecting a person to
an immoral, illegal or embarrassing
situation resulting in injury to the
person’s reputation.
• Same basic requirements as the
previous torts.
Misappropriation of Person’s Name or
Likeness Causing Injury to Reputation
• Usually applies in cases where name or
picture of a LIVING person is used for
commercial (non-newsworthy) purposes
w/o the person’s permission.
• Must prove
– Name, portrait or picture was used
– For purposes of trade or advertising
– Without plaintiff’s written consent
• Howard Stern vs. Delphi Services
Corporation
Federal Privacy Laws
• Privacy Protection Act (1980)
– Allows 4th Amendment protection against
unreasonable searches and seizures
– If 4th Amendment requirements are met, court
would likely uphold a search of electronic
publishers if
• There was probable cause to believe the materials
were being used for criminal purposes
• Or if the search was necessary to prevent a
person’s injury or death
Federal Privacy Laws
• Privacy Act of 1994
– Government can disclose records and
documents containing personal information
about an individual if
• Obtain written consent unless the purpose of the
disclosure is consistent with that for which the
records are being retained
• Furnish copies of the records to the individual upon
request
• Allow the individual to correct any misinformation
contained in the records
• Make reasonable efforts to inform the individual that
his/her records have been disclosed
Federal Privacy Laws
• Cable Communication Protection Act (1984)
– Requires cable operators to
• Obtain permission of its subscribers before
collecting personal data about them
• Notify subscribers annually regarding the extent to
which personal information about them is disclosed
or used and the purpose for which it is gathered
• Allow the subscriber to examine the data and make
corrections of any errors or mistakes
• Not disclose the data except as may be required by
law or court order
– Could apply to web site operators that offer
cable-like entertainment
Federal Privacy Laws
• Video Privacy Protection Act (1988)
– Expands the Cable Communications Protection
Act
– Prohibits use and disclosure of private
information about the videocassettes and
related products that an individual rents or
purchases unless written permission is
obtained.
Federal Privacy Laws
• Telephone Consumer Protection Act (1991)
– Illegal to make a phone call by means of an automatic
dialing system or pre-recorded (or artificial) voice that
results in the party called being charged for the call
(includes cell phone calls)
– Prohibits use of any device to send an unsolicited
advertisement to a fax machine
– Must set up “do not call” lists for those who do not wish
to receive telemarketing calls. Consumers also have the
right to have their names removed from existing lists.
– Prohibits unsolicited telemarketing calls to police, fire,
or other emergency phone numbers.
– Most likely related to spamming.
Federal Privacy Laws
• Fair Credit Reporting Act (1970)
– Ensures that credit reports are accurate,
impartial, and respect privacy.
– In general, credit reporting agencies must
obtain the individual’s permission to release
credit information
– Consumers also have the right to obtain
information about their credit status from credit
bureaus.
Federal Privacy Laws
• Computer Fraud and Abuse Act (1986)
– Protects national security by prohibiting the
intentional access of data stored in computers
belonging to or benefiting the U.S. government.
– Also makes it a felony to intentionally access
information about a consumer contained in the
financial records of a financial institution or a
file of a consumer reporting agency.
Federal Privacy Laws
• Electronic Communications Privacy Act
(1986)
– Title I applies to the interception and disclosure
of wire, oral, and electronic communications
– Title II applies to stored wire, transactional, and
electronic communications.
– It does NOT, in absence of an agreement to the
contrary, prohibit disclosure of the contents of
an e-mail message by the intended recipient.
Federal Privacy Laws
• ECPA Title I
– Prohibits any person from intentionally intercepting any
wire, oral, or electronic communication;
– Prohibits any person from intentionally using or
disclosing the contents of any wire, oral, or electronic
communication to another person;
– Prohibits an Internet Service Provider (ISP) from
intentionally disclosing the contents of a
communication to any person or entity other than the
addressee or intended recipient.
Federal Privacy Laws
• ECPA Title I Exceptions
– Internet Service Providers (ISPs)
– Business Extension Rule or “Ordinary Course
of Business”
– Prior consent to interception of electronic
communications
– Government and law enforcement agencies
Federal Regulation of Cyberporn
• Communications Decency Act of 1996
– It is a crime for anyone to knowingly transport obscene
material for sale or distribution either in foreign or
interstate commerce or through the use of an interactive
computer service.
– It is also a crime to knowingly transmit obscene online
communications that involve “comments, requests,
suggestions, proposals, images, or other
communication which is obscene, lewd, lascivious,
filthy or indecent made with the intent to annoy, abuse,
threaten, or harass another person.
– It is a crime to knowingly transmit the described
material to a person under the age of eighteen.
Federal Regulation of Cyberporn
• CDA Defenses
– Access service provider, not the content
provider
– Efforts to block access to the site
– Good Samaritan defense
– Social value
Federal Regulation of Cyberporn
• Child Pornography Prevention Act of 1996
– Child pornography is any depiction, including
any photograph, film video, picture, or computer
or computer-generated image or picture,
whether made or produced by electronic,
mechanical, or other means, of sexually explicit
conduct, where --
Federal Regulation of Cyberporn
– The production of such visual depiction
involves the use of a minor engaging in sexually
explicit conduct;
– Such visual depiction is, or appears to be, of a
minor engaging in sexually explicit conduct
– Such visual depiction has been created,
adapted, or modified to appear that n
identifiable minor is engaging in sexually
explicit conduct; or
– Such visual depiction is advertised, promoted,
described, or distributed in such a manner that
conveys the impression that the material is or
contains a visual depiction of a minor engaging
in sexually explicit conduct.
Defamation
• Oral or written false statements that
wrongfully harm a person’s reputation.
• Slander: oral defamation
• Libel: written or published defamation
• Internet material can be classified as
published and as having a degree of
permanence, thus it would be classified as
libel, not slander.
Defamation Proof Requirements
• A false statement of fact, not opinion,
about the plaintiff
• Publication of the statement without a
privilege to do so
• Fault or negligence
– If public official/figure, must prove actual
malice
• Damages – actual or presumed
Defenses to Defamation
• Truth
– An absolute or complete defense to defamation
• Absolute Privilege
– Statements associated with the effective
furtherance of the operations of the government
• Qualified Privilege
– Reasonable rebuttals to previous defamations
– Publisher and 3rd party have a common and
legitimate interest in the plaintiff.