Special Topics in Internet Law
Intersession-January, 2003
L. Pinsky
• Seven 2-hour classes with a final on the last
class day (Friday, Jan. 10).
• Course web-page available from:
http://www.uh.edu/~lpinsky
• My email address: pinsky@uh.edu
Intersession-January, 2003
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The Law of the “Cyber-Horse”
• Is anything Novel to be learned from the
study of Cyberlaw?
• Should the law attempt to make the Cyberworld change to conform to existing legal
theories, or
• Should the law change in response to these
novel situations…?
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Internet Organization
• ISOC-Internet Society—Overall Governance
• ICANN-Empowered by ISOC (& US) to
govern Internet Assigned Names Policies
• IANA-To be subsummed by ICANN (in
principle) to administer assigning names…
• IAB-Empowered by ISOC to control
physical internet structure.
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Important Features of Cyberspace
• Authentication is problematic
– Identifying the user
– Being aware of surveillance
• Jurisdiction is problematic
– Regulatory
– Enforcement
• Routine encryption is easy and accessible
• Information bandwidth is high and cheap.
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Regulation of Cyberspace
• Direct Governmental Regulation
– Works better when “Code” is “private”
– Does not work well when the “Code” is “common”
• Regulation of the Architecture
– Possibly “transparent”
– Possibly over-broad…
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A Brief Intro to IP Law
&
The Internet
•
•
•
•
Copyright Law
Patent Law
Trade Secret Law
Trademark Law
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IP Law is PROPERTY Law
• Property implies a bundle of individually
alienable rights possessed by the owner that
attach to the property.
• One cannot convey better title than one
possesses.
• Privity is not required to establish a
relationship.
• Trespass (Infringement) is a form of tort…
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Copyright Law
• Generally Statutory, but:
– Constitutional in the US
(IP Clause-Art. I, §8, cl.8)—17 USC
• Economic justification—To encourage authors…
• Explicit Works Made For Hire doctrine not
generally found in Europe.
– Viewed as a Moral Right in Europe
• A natural right that inherently accrues to authors…
• Includes rights such as Attribution, and Integrity
that are not generally found in US law…
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Copyright Issues:
What is Copyrightable?
• Creativity!
–
–
–
–
–
–
–
Literature (Software)
Music (Composer, Artist & Recordings)
Art (Visual & Sculpture)
Audio-Visual & Dramatic Works
Pantomimes & Choreography
Architecture
Compilations & Derivative Works
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Copyright Issues
What is NOT covered?
•
•
•
•
•
•
•
•
Facts
Function
Recipes
Fonts
Fashion
Government Documents (State and Federal)
Material in the Public Domain…
Independent Creation
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What Exclusive Rights Does the
Copyright Owner Possess
• Reproduction (Making copies…)
• Distribution
• Public Performance or Display
• To Make Derivative Works
Note: USE is not one of the exclusive rights,
and Ownership of a Copy does NOT confer
any of the exclusive rights.
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Licenses
• An Authorization to exercise one of the IP
owner’s exclusive rights…
• Licenses can be implied
• Express Licenses trump Implied Licenses
• Fair Use is not a License—Fair Use is an
Irremediable Infringement…
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Cyberlaw Examples
•
•
•
•
•
First Sale Doctrine—Software “Ownership”
Loading a program into memory
Loading a webpage into your browser
Saving a webpage on your hard drive…
Putting a link to another webpage on your
webpage.
• Printing a copy of a webpage
• Embedding another webpage in yours… (HREFs)
• Burning a music CD for personal use from
genuine original CDs
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Copyright Cases
• Copying
– A&M Records v. NAPSTER, 239 F3d 1004 (9th Cir.
2001)—Contributory Infringement
– Playboy v. Frena, 839 F.Supp 1552 (M.D. Fla 1993)—
Posting copies of pix not Fair Use
– Kelly v. Arriba-Soft, 280 F3d 934 (9th Cir. 2002)—
Thumbnails>Transformative>Fair Use
– RIAA v. Diamond Multimedia, 180 F3d 1072 (9th Cir.
1999)—Audio Home Rec, Act of 1992 [OK for Rio but
not to HD for NAPSTER…]
– UMG v. MP3.Com, 92 F.Supp2d 349 (S.D.N.Y.
2000)—MP3.Com infringed copyrights…
– But See http://gnutella.wego.com
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Copyright Cases
• Linking
– Ticketmaster v. Microsoft (Settled 1999)—Deep
linking
– Ticketmaster v Tickets.Com, 54 USPQ2d 1344 (C.D.
Cal. 2000)—Deep linking, PI denied.
– Intellectual Reserve v. Lighthouse Ministries, 75
F.Supp2d 1290 (D. Utah 1999)—Even telling people
about a website that contains infringing material is
contributory infringement
• Licensing
– NY Times v. Tasini, 59 USPQ2d 1001 (US 2001)—
License to publish in paper does not include electronic
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Copyright Cases
• Government Copyrights
– Veeck v. Southern build. Code Congress Int’l,
273 F3d 791 (5th Cir. 2002)—When
copyrighted private material is codified,
copying only the codified part is not an
infringement. But when government
sanctioned Standards Setting Organizations
adopt copyrighted standards it is an
infringement…
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Trademark Law
• 15 USC (Lanham Act)
• Intended primarily to protect the consumer,
NOT manufacturer, but recent trends are
towards protecting mark holders (dilution).
• Fundamental Principle: Likelihood of
Confusion on the part of consumers…
• Traditionally, TM Law was geographic. On
the web that is problematic.
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Dilution
• Recent advent in TM Law. Holds that
Famous marks are protected from alternate
use even when there is NO Likelihood of
Confusion. (e.g. Cadillac Cat Food)
• Possible First Amendment Issues in Parody
situations, Especially on-line.
• Be careful with computer names…
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Trademark Cases
• Catch Phrases
– AOL v. AT&T, 243 F3d 812 (4th Cir. 2001)—Use of
“You’ve Got Mail…”
• Linking
– Washington Post v. Total News (S.D.N.Y. 1997)—
Settled—Framing and confusion…
• Metatags
– Brookfield Comm. V. West Coast Entertainment,
174 F3d (9th Cir. 1999)—Use of Confusing metatag is
infringement.
– Ely Lily v. Natural Answers, 233 F3d 456 (9th Cir.
2000)—Including name in code like metatag.
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Trademark Cases
• Domain Names and Cyber-squatting…
– Hasbro v. Clue.Com, 232 F3d 1 (1st Cir. 2000)—No
relief under Dilution Theory…
• Anti-cybersquatting Consumer Protection Act
– Northern Light Tech v. Northern Light Club, 237 F3d
57 (1st Cir. 2001)—Applying ACPA to well-known
cybersquatter.
– Shields v. Zuccarini, 59 USPQ2d 1207 (3rd Cir. 2001)—
Invalidating typo-similar registrations for profit
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Trade Secret Law
•
•
•
•
Generally State Law
Enforces Employment Agreements
Penalizes Industrial Espionage
Trade Secrets
– Must be secret, but not necessarily unknown outside
– Generally, employment agreements are required,
whether actual or implied
• Comunication of Known Stolen Trade Secrets is
actionable… (Lots of Scientology cases…), but
Prior Restraint is generally not granted…
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Jurisdictional Issues
• Personal Jurisdiction
– Domestic US Law
– The International Problem
• Venue
• Choice of Law
– Conflict of Laws
– Notice
• Enforcement
– Do any of the above issues matter if judgments against
foreign defendants are unenforceable?
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Domestic US Personal Jurisdiction
• Personal Physical Presence
– Being in the Airspace is sufficient…
• Meaningful Asset Presence
• Long Arm Statutes (General and Specific Jurisdict.)
– “Purposeful Availment…”
– Satisfying notions of “fair play and substantial justice…”
International Shoe v. Washington, 326 US 310 (1945)
[Int. Shoe had to pay employment taxes in Washington]
– Reasonable anticipation of “being hailed into court
there…” Worldwide VW v. Woodson,444 US 286 (1980)
[Car sold in NY to NY residents got into an accident in
Oklahoma—sufficient for in personam Jurisdiction over
the NY dealer in a Products Liability Suit]
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In Personam US Jurisdiction
• Specific Jurisdiction
– “…exists when the nonresident defendant's
contacts with the forum state arise from, or are
directly related to, the cause of action.
• General Jurisdiction
– “…exists when a defendant's contacts with the
forum state are unrelated to the cause of action
but are ‘continuous and systematic.’ ”
Helicopteros Nacionales de Columbia, S.A. v.
Hall , 466 US 408 (1984)
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The Zippo Sliding Spectrum…
• Zippo v. Zippo Dot Com, 952 F.Supp 1119
(W.D.Pa 1997)
• General In Personam jurisdiction IS proper when:
– a defendant clearly does business over the
Internet by entering into contracts with residents of
other states which “involve the knowing and
repeated transmission of computer files over the
Internet....”
– See CompuServe, Inc. v. Patterson, 89 F.3d
1257 (6th Cir. 1996)
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The Middle of the Zippo Spectrum
• The issue of In Personam jurisdiction must be
decided on a case by case basis when:
– a defendant has a website that allows a user to
exchange information with a host computer. In this
middle ground, “the exercise of jurisdiction is
determined by the level of interactivity and
commercial nature of the exchange of information
that occurs on the Website.”
– See Maritz Inc. v. Cybergold Inc., 947 F. Supp.
1328 (E.D. Mo. 1996).
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The Lower End of the Zippo
Spectrum
• Personal Jurisdiction is NOT proper when:
– “…a defendant merely establishes a passive
website that does nothing more than advertise on
the Internet. With passive websites, personal
jurisdiction is not appropriate.”
– See Bensusan Restaurant Corp. v. King, 937 F.
Supp. 295 (S.D.N.Y. 1996), aff'd, 126 F.3d 25 (2d
Cir. 1997)
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Interesting In Personam Internet Cases
• Verizon Online Services, Inc. v. Ralsky, No.
01-432 (E.D.Va 2002)
– Jurisdiction (& venue) proper for Spammer who
sent Spam messages through servers located in
Reston, Va.
• Pavlovich v. DVD-CCA [Cal. Sup. Ct.],
Available at:
http://www.eff.org/IP/Video/DVDCCA_case/20021125_pavlovich
_opinion.pdf
– [Bunner was an original Co-defendant, but is the sole CA resident]
– Held, Texas student cannot be hailed into court in California to
defend himself in a Trade Secrets case where the sole connection
with California is that it is widely known that the entertainment
industry has a significant presence there… [US Cert. Pending]
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Interesting International InternetRelated Jurisdictional Cases
• Soma Medical Int'l v. Standard Chartered
Bank, 196 F3d 1292 (10th Cir. 1999)
– No Jurisdiction in Utah over a British Bank based on its
Website, in a cause of action by a Utah resident
customer for disbursing funds without a proper
authorizing signature.
• Dow Jones v. Gutnick, (H. C. of Aus., 12/10/02),
http://www.austlii.edu.au/au/cases/cth/high_ct/200
2/56.html
– Gutnick can sue Dow Jones in the local court in
Victoria, Australia for alledged defamation by Dow
Jones in a Barron’s article viewable on Dow’s website
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Choice of Law
• US v. Thomas, 74 F3d 701 (6th Cir. 1996)
– The Thomas’s dial-in Bulletin-Board service in CA
offered GIF’s scanned from publicly available sources in
CA. Convicted under 18 USC 1465 for Interstate
transport of porn. Issue: Not porn in CA, but considered
porn in TN.
• Yahoo! Inc. v. La Ligue Contre le Racisme et
l’Antisemitisme, 169 F.Supp2d 1181 (N.D. Cal
2001)
– A French court’s order directing Yahoo! Inc. to block
French citizens’ access to Nazi-related items and
information linked to its auction site at yahoo.com
would, if enforced in the United States, violate the First
Amendment right to free speech.
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Choice of Law…
• Cyberspace Communications Inc. v. Engler, (6th
Cir. 2001—unpublished:
http://www.michbar.org/opinions/district/2001/060
101/10546.pdf)
– 10 Non-Mich. companies sued the Gov. of Mich. For
signing into law making it a felony to distribute
sexually explicit materials on the Internet. Held—
Violated the Commerce Clause by regulating commerce
outside of Mich.
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Notice
• Briefly stated, the problem is that one is
potentially subjected to every jurisdiction in
the world, and while one might be aware of
that fact, it is a different matter practically
to be aware of the minimum standard
affecting each potential issue.
• There is also the issue of chilling, where
acceptable information in most venues may
become unavailable due to the existence of
more restrictive standards somewhere…
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Internet Enforcement Issues
• Enforcement is only Possible when:
– Personal presence or assets are physically available in the
jurisdiction (Remember the airspace rule in US law…)
– Courts in jurisdictions abroad will agree to enforce
foreign judgments…[Full Faith & Credit]
– Extradition [Usually only applies to felons who have fled,
and requires “double criminality…”
• Regardless, it is a spurious defense of a legal scheme
to say that one should not be concerned about unfair
results because they may be unenforceable…
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Database Protection Initiatives
• It all started with Feist v. Rural Telephone [499 US
340 (1991)]—Overthrowing the “sweat of the brow”
• Client—Focused generally on databases that contain
factual material that is not protected by copyright.
• Issue—Enable reaching third parties not in privity of
contract with the database owner.
• Goal—Protect investment, and in turn provide
incentives for the creation of new databases…
• Problem—Creation of property rights in facts…
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Sui Generis
• This is one area of Cyberlaw that is manifestly Sui
Generis.
• The argument is expressly that the Internet and
computer technology make databases vulnerable
to copying, so it acts as a disincentive to
investment, and ultimately results in too few
databases’s
• No form of protection currently exists to shield the
database owner from the potential
misappropriation of her efforts by third parties…
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History of Recent Database
Protection Initiatives
• Europe
– Activity began in the early 1990’s to create a sui
generis statutory protection scheme…
– European Directive 96/9/EC (1996) passed
– Currently the law in most Member States…
• US
– Competing bills last introduced in 106th Congress:
HR 106-354 (Sui Generis IP-based);
HR 106-1858 (Misappropriation-based)
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EC Database Protection Scheme
• Requirement for protection: Significant
investment in providing the database.
• Sui Generis Right granted:
– Absolute right to control subsequent public use of the
extracted information (if that information is deemed to
be significant). This is where the property right comes
in. It does not matter how the end user came into
possession of the data, so long is it can be shown to
have come from the database in question…
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SUI GENERIS RIGHT
• Article 7
– 1. Member States shall provide for a right for the maker of a
database which shows that there has been qualitatively and/or
quantitatively a substantial investment in either the obtaining,
verification or presentation of the contents to prevent extraction
and/or re-utilization of the whole or of a substantial part,
evaluated qualitatively and/or quantitatively, of the contents of that
database.
– 2. For the purposes of this Chapter:
– (a) 'extraction` shall mean the permanent or temporary transfer of
all or a substantial part of the contents of a database to another
medium by any means or in any form;
– (b) 're-utilization` shall mean any form of making available to
the public all or a substantial part of the contents of a database by
the distribution of copies, by renting, by on-line or other forms of
transmission.
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European Database Cases
• British Horseracing Board v. William Hill, (2001
WL 825162; 2002 E.C.C. 24)
– BHB assembles a database of horse races in the UK
(Dates & times, places, horses and riders). Hill
operates betting parlors in the UK and pays for access
to the data from a BHB licensee. BHB makes no
objection to Hill’s posting of the data in his parlors,
both in print form and on TV monitors. However, BHB
objects to Hill’s display of the data on his web site.
– Held: an unauthorized extraction under EC Database
Law, and Hill is permanently enjoined from such use.
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European Database Cases
• Fixtures Marketing Limited v AB Svenska Spel.
– Fixtures compiles the schedules of English and Scottish
football (soccer) matches. Essentially the dates, times,
teams and location where the match will occur.
– Among others, Svenska uses that information to allow
betting on the outcomes of the matches. It sells betting
tickets that have the date, time, team and location
information it got from Fixtures in its betting scheme.
– Fixtures is asserting that this use is an unauthorized
extraction of its data.
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HR 354—The IP Approach
• Essentially similar to the EC approach.
• Supported by the Database Industry—Introduced in the
Judiciary Committee, which has IP responsibility. (Const.
Authority: Comm. Clause)
• Required substantial investment as the only prerequisite for
inclusion
• Granted power to control the end use of the information, if
that information came from the database. Went farther
than EC Directive.
• Late attempts occurred to put in exclusions to mollify
opponents, but qualifications nullified their effect…
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HR 106-354
• 1402. Prohibition against misappropriation
– Any person who extracts, or uses in commerce, all or a substantial
part, measured either quantitatively or qualitatively, of a collection
of information gathered, organized, or maintained by another
person through the investment of substantial monetary or other
resources, so as to cause harm to the actual or potential market of
that other person…
– POTENTIAL MARKET.-THE TERM 'POTENTIAL MARKET'
MEANS ANY MARKET THAT A PERSON CLAIMING
PROTECTION UNDER SECTION 1402 HAS CURRENT
AND DEMONSTRABLE PLANS TO EXPLOIT…
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HR 1858—Misappropriation
• Introduced in the Commerce Committee by
Opponents of HR 354 as a strategy to
deflect the IP approach.
• Chose a strictly Misappropriation approach
• Initially left enforcement to FTC (No
private cause of action)
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Misappropriation
• A tort introduced by the US Supreme Court
in INS v. AP, 248 US 215 (1918)
– After Erie it became a State Law Doctrine
• Covers Use of information gathered by one business
back in competition with that business by a
competitor who “free rides” on the original
business’s effort.
• “Hot news” is the typical example from the INS v.
AP case itself.
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HR 106-1858
• SEC. 102. PROHIBITION AGAINST DISTRIBUTION OF
DUPLICATES.
–
It is unlawful for any person, by any means or instrumentality of
interstate or foreign commerce or communications, to sell or distribute to
the public a database that:
– (1) is a duplicate of another database that was collected and organized
by another person; and
– (2) is sold or distributed in commerce in competition with that other
database.
• …A DATABASE IS "A DUPLICATE" OF ANY OTHER DATABASE IF
THE DATABASE IS SUBSTANTIALLY THE SAME AS SUCH OTHER
DATABASE, AND WAS MADE BY EXTRACTING INFORMATION
FROM SUCH OTHER DATABASE…
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Verification; The Real Issue in
Database Protection
• Traditional Copyright doctrine has always held
that use of a prior work for verification of one’s
one efforts was manifestly allowed
• Map cases are the typical example. If you go out
and measure the metes and bounds for yourself, it
is a permitted use to compare your efforts to your
competitor’s published map to see where you
might have made a mistake…
• A change in this principle would be a major
philosophical change in information law…
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Verification and Modern Databases
• In any Database protection scheme, clearly only the costs
that the Second Comer avoids by using information
directly from the Original provider’s database are
relevant…
• As more information is digitized at its source and is
available online, the cost of acquiring the raw data for a
database will become negligible
• The real cost of assembling a useful database will be in
culling through the raw information to select the correct
content. That will require “intellectual capital.”
• If one can use a competitor’s database for verification
purposes, the cost saved will be significant.
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Alternative Causes of Action
• Intel v. Hamidi, 94 Cal. App. 4th 325 (2001),
Rehearing Granted…
– Held: Electronic signals sufficient to sustain Trespass to
Chattels cause of action.
• Ebay v. Bidder’s Edge, 100 F.Supp2d 1058 (N.D.
Cal 2000)
– Held: PI granted—Bidder’s Edge’s crawling activities
collecting prices from Ebay’s website is sufficient to
sustain a cause of action for Trespass to Chattels.
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Trespass to Chattels
“Little Brother of Conversion”
• A cause of action lies when “intentional
interference with personal property is the
proximate cause of injury.”
• Plaintiff must show:
– (1) defendant intentionally and without
authorization interfered with plaintiff's
possessory interest in the computer system; and
(2) defendant's unauthorized use proximately
resulted in damage to plaintiff.
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Trespass to Chattels (Ebay Court)
• Conduct that does not amount to a substantial
interference with possession, but which consists of
intermeddling with or use of another's personal
property, is sufficient to establish a cause of action
for trespass to chattel.
• A trespasser is liable when the trespass diminishes
the condition, quality or value of personal
property. The quality or value of personal property
may be diminished even though it is not physically
damaged by defendant's conduct.
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Trespass to Chattels (Hamidi Court)
• A trespass to chattels is actionable per se without
any proof of actual damage. Any unauthorized
touching or moving of a chattel is actionable at the
suit of the possessor of it, even though no harm
ensues. So it is a trespass for a shop assistant to
snatch a customer's handbag and detain it for a
few moments, or to erase a tape-recording, or to
show a private letter to an unauthorized person.
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The Regulation of Cyberspace I
Structural Regulation
• Digital Millennium Copyright Act (DMCA)
– Anti-circumvention provisions
• Computer Fraud And Abuse 18 U.S.C. § 1030
– Prohibits intentionally causing damage without
authorization, to a protected computer… Grants civil
cause of action…
• Wire Fraud 18 U.S.C. § 1343
• No Electronic Theft Act (“NET”) 17 U.S.C. §
506(a)(2), 18 U.S.C. § 2319(c)
– Criminalizes Copyright “not-for-profit” infringement
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The Regulation of Cyberspace I
Structural Regulation
(Continued)
• Texas Computer Crimes Statute 7 Texas Penal
Code 33
– Civil and Criminal liability for unauthorized access
• Electronic Communications Privacy Act
(“ECPA”)
– modified the Wiretap Act 18 U.S.C. § 2510-20
– modified the Stored Communications Act, 18 U.S.C.
2701-10
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Digital Millennium Copyright Act
(DMCA)
• …to "make digital networks safe places to
disseminate and exploit copyrighted
materials."
• §1201 "No person shall circumvent a
technological measure that effectively
controls access to a work protected under
this title."
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DMCA §1201
• No person shall manufacture, import, offer to the public,
provide, or otherwise traffic in any technology, product,
service, device, component, or part thereof, that—
– (A) is primarily designed or produced for the purpose of
circumventing a technological measure that effectively controls
access to a work protected under this title;
– (B) has only limited commercially significant purpose or use
other than to circumvent a technological measure that effectively
controls access to a work protected under this title; or
– (C) is marketed by that person or another acting in concert with
that person with that person's knowledge for use in circumventing
a technological measure that effectively controls access to a
work protected under this title.
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The Essence of DMCA §1201
• There is a ban on the act of circumventing a
copyright protection scheme by itself; and
• There is a ban on trafficking in any method or
device that is capable of circumventing a
copyright protection scheme, without regard to
how the trafficker obtained it.
• There is also a ban on trafficking in any
Technology that is capable of circumventing…
• Neither of these bans requires that there be any
associated Copyright Infringement.
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DMCA Cases
• US v. Elcom, Ltd. 62 USPQ2d 1736 (N.D. Cal.
2002)
– Criminal Prosecution for selling a software product that
allowed the user to remove use restrictions from Adobe
Acrobat PDF files placed there by the authors…
– The court rejected defenses based on First Amendment
arguments and that the software had substantial uses in
circumventing restrictions that did not infringe
copyrights…
– Jury Acquitted in Dec 2002…
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DMCA Marches On…
• DVD Cases
– Universal City Studios v. Reimerdes
• 111 F.Supp. 2d 294 (SDNY Sept. 2000)
– DVD Copy Control Association v. Bunner
• 113 Cal. Rptr. 2d 338 (6th District Nov. 2001)
• Articles
– A RIFF ON FAIR USE IN THE DIGITAL
MILLENNIUM COPYRIGHT ACT , D. Nimmer
• 48 U. Pa L. Rev. 673 (Jan. 2000)
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Reimerdes
• Jon Johansen (15 yr old) wrote a CSS
Decription Code in order to play DVD’s
under Linux
• Versions were distributed on the web.
• Hollywood sued the website owners.
• Defense: First Amendment Arguments
• Judge Kaplan: DMCA is Constitutional
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Reimerdes Real Result…
• Won the battle but lost the war…
– Linux DVD players are widely available on the
web from foreign websites where no
Anticircumvention legislation exists…[and on
US websites too numerous to chase down…]
– Problems with foreign Anti-Reverse
Engineering Prohibition laws…
– Stupidity on the part of plaintiffs… No REAL
Problem Existed!
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Bunner: A New Tactic
• Trade Secrets Approach:
– CSS is a Trade Secret, hermetically protected by
licensing agreements, that must have been broken to
produce the offending software…
– Downstream distributors should have known this
software is the product of a breach of confidentiality, so
they can be reached…
• This is the Pavlovich case we saw in the
Jurisdiction discussion. Bunner was a California
Resident and so was the lone defendant tried…
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But…
• Norway has an express law nullifying any license
provisions that preclude Reverse Engineering for
Interoperability purposes! See Sega v. Accolade,
977 F2d 1510 (9th Cir. 1992).
• So, what Jon did in Norway was legal there! See
recent Not Guilty verdict in criminal prosecution.
• Also, CA court (Acting on a PI motion) reversed
on First Amendment prior restraint grounds with
the plaintiffs conceding that the program is
speech! [Cf: Judge Kaplan’s strong treatment of
that issue in Reimerdes]
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What Is The Real Issue
• IP Law is about Economic Welfare [US/UK], and
possibly Moral Rights [Civil Law]…
• One needs to look at the broader long range goal
of protecting creativity…
• The DMCA and the Technology Provisions for the
first time use © Law to enjoin acts that are
themselves unrelated to ©.
• Innovative Technology always advances faster
than law…
• Fix REAL Problems at their root. The
Entertainment Industry wants to free-ride on new
technology and not face the issues themselves…
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Computer Fraud And Abuse
(CFAA) 18 U.S.C. § 1030
• EF Cultural Travel v. Explorica, 274 F3d
577 (1st Cir. 2001)
– Former employee used knowledge of tour
codes to enable programmer to create a
“scraper” program to search competitor’s
website for their pricing information in order to
undercut them…
– Held: Violation of 18 USC § 1030, and Plaintiff
entitled to damages…
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CFAA Cases, Continued…
• US v. Ivanov, 175 F.Supp2d 367 (D. Conn. 2001)
– Defendant, while in Russia, obtained root passwords for
the Online Information Bureau’s computers (used to
secure Internet credit card transactions). He threatened
to issue an “rm –rf” command if not paid $10,000.
Held—it did not matter that defendant was in Russia
when the acts were committed, 18 USC § 1030 applied
• US v. Lloyd, 269 F3d 228 (3rd Cir. 2001)
– One of several “timebomb” cases. Programmer placed
“timebomb” code in software he had developed for a
company. After he was fired, the “timebomb’s went off
and destroyed data. Convicted on one count of
computer sabotage…
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Wire Fraud 18 U.S.C. § 1343
Whoever, having devised or intending to devise
any scheme or artifice to defraud, or for obtaining
money or property by means of false or fraudulent
pretenses, representations, or promises, transmits or
causes to be transmitted by means of wire, radio, or
television communication in interstate or foreign
commerce, any writings, signs, signals, pictures, or
sounds for the purpose of executing such scheme or
artifice, shall be fined not more than $1,000 or
imprisoned not more than five years, or both. If the
violation affects a financial institution, such person
shall be fined not more than $1,000,000 or
imprisoned not more than 30 years, or both.
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Wire Fraud 18 U.S.C. § 1343
• U.S. v. LaMacchia, 871 F.Supp 535 (D.Mass.
1994)
– Defendant set up a BBS at MIT where users were
encouraged to upload copyrighted software. This
software was transferred to another server where it was
available for download.
– Held—NOT Wire Fraud! Copyright act has provisions
for its own enforcement. This lead to the enactment of
the No Electronic Theft Act (“NET”).
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Wire Fraud 18 U.S.C. § 1343
• US v. Gajdik, 292 F3d 555 (7th Cir. 2002)
– Defendant received over $700,000 in payments for
fraudulent items listed on eBay. Convicted on 8 counts
of Wire Fraud…
• U.S. v. Blanchett, 41 Fed. Appx. 181 (10th Cir.
2002)
– Another eBay Wire Fraud conviction for auctioning
computers with no intent to deliver. Defendant’s
sentences were enhanced following a 9th Cir. holding
that “Mass Marketing” enhancement applied to Internet
transactions…
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No Electronic Theft Act (“NET”)
17 U.S.C. § 506(a)(2), 18 U.S.C. § 2319(c)
• This act added a criminal offense to © Law for
acts not intended to be for profit.
• US v. Rothberg, 62 USPQ2d 1156 (N.D. Ill. 2002)
– “Pirates With Attitudes” (PWA) was an international
network of traffickers in pirated software. In a clublike fashion with password controlled access, senior
members decided who could get what. Over 5000
software titles were available. Ringleader (Rothberg)
sentenced to 24-30 months in jail. Ring was based at
Sherbrooke University in Canada.
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Texas Computer Crimes Statute
7 Texas Penal Code 33
• § 33.02 Texas Penal Code
– “A person commits an offense if the person
knowingly accesses a computer, computer
network, or computer system without the effective
consent of the owner.”
• Texas Civil Practice and Remedies Code,
section 143.001
– “A person who is injured or whose property has
been injured as a result of a violation under
Chapter 33, Penal Code, has a civil cause of
action if the conduct constituting the violation was
committed knowingly or intentionally.”
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Electronic Communications
Privacy Act (“ECPA”)
– modified the Wiretap Act 18 U.S.C. § 2510-20
– modified the Stored Communications Act, 18 U.S.C.
2701-10
• Steve Jackson Games v. U.S. Secret Service,
36 F. 3d 457 (5th Cir. 1994)
– Held—Goverment access of a hard drive to read and
delete private email beyond the scope of their search
warrant did NOT constitute access of stored
communications within the meaning of the ECPA.
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ECPA, Continued…
• Chance v. Ave. A, Inc., 165 F. Supp. 2d 1153
– Found the use of cookies by an banner ad company
NOT to be a violation of the ECPA.
– Related use of “web-bugs” also found NOT to be a
violation…
• Fraser v. Nationwide Ins.,135 F.Supp2d 623
– Access by an employer of (outgoing) emails stored
on a company server does NOT violate the ECPA.
Suit was brought by a fired employee, and the
company was storing outgoing messages…
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More ECPA…
• Specht v. Netcscape Communications,
WL31166784 ( 2nd Cir. 2002)
– Netscape’s license arbitration clause insufficient
to avoid liability under ECPA for a cause of
action alleging a violation by a downloaded plugin that sent information about the user’s activities
to Netscape without the user’s knowledge of
permission…
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The Regulation of Cyberspace II
Content Regulation
• Children's Internet Protection Act
(“CIPA”) 20 U.S.C. § 9134 & 47 U.S.C.
254
• Communications Decency Act (“CDA”)
47 U.S.C. § 230
• Child Online Protection Act of 1998
(“COPA”) 47 U.S.C. § 231
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The Regulation of Cyberspace II
Content Regulation
• Section 5(a) of the FTC Act, 15
U.S.C.§ 45(a)
– prohibits “unfair or deceptive acts or
practices in or affecting commerce”.
• The Regulation of Encryption
– Export controls
– Key Escrow attempts…
– Anonymity…
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A Brief Review of
First Amendment Law
•
O’Brien Test—Content Regulation [United
States v. O'Brien, 391 U.S. 367 (1968)]
1) 1) It is within the constitutional power of
the government,
2) 2) It furthers an important or
substantial government interest, and
3) is narrowly tailored to the
governmental interest.
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First Amendment Cases
• Miller v. California (1973)—Obscenity must be
determined by the trier of fact using the contemporary
community standards of the average person.
• Pacifica v. FCC (1978) — The FCC has a compelling
interest in regulating the access of minors to sexually
explicit material. So long as some venue is allowed
(e.g. late at night).
• Talley v. California (1960)—Anonymity in handbills is
guaranteed by the First Amendment. Any attempt to
do so chills political speech which is the most
protected speech. Despite the public’s curiosity, an
author is free to choose
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Communications Decency Act
(“CDA”) 47 U.S.C. § 230
• Reno v. ACLU, 521 US 824 (1997)
– CDA purported to regulate both “Obscentity” and “Indecent”
content. Court held that the Act was facially overbroad unless
“Indecent” was severed as provided for in the Act itself…
• Mainstream Loudoun v. Board of Trustees of
Loudoun County Library, 2 F.Supp2d 783 (E.D.
Va. 1998)
– Adult Library users sued claiming the installation of contentblocking software on library computers was a violation of their
First Amendment rights. Held—Once library chose to provide
Internet access, they could not deny adults access to protected
speech…
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Additional CDA Cases
• Zeran v. American Online, 129 F3d 327 (4th Cir.
1997)
– CDA provided a “Safe Harbor” for ISP’s if:
• 1) They are strictly an Internet access provider;
• 2) They are not themselves Content Providers; and
• 3) Plaintiff is seeking to hold them liable for the content
origination with a Third Party.
• Stoner v. eBay, 56 USPQ2d 1852 (Cal. Sup. Ct.
2000)
– Held: eBay was a service provider and not a content
provider…
– CDA Preempts State Law…
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Children's Online Privacy Protection Act of
1998 (“COPPA”) 15 U.S.C. § 6501-6504
• Enforced by the FTC (No private causes…)
• Applies to knowingly collecting information online from children under 13
• Requires that operators:
– (1) notify parents of their information practices;
– (2) obtain verifiable parental consent before collecting a child’s
personal information;
– (3) give parents a choice as to whether their child’s information will be
disclosed to third parties;
– (4) provide parents access to their child’s information;
– (5) let parents prevent further use of collected information;
– (6) not require a child to provide more information than is reasonably
necessary to participate in an activity; and
– (7) maintain the confidentiality, security, and integrity of the
information.
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COPPA Cases
• F.T.C. v. Toysmart.Com, 2000 U.S. Dist. LEXIS
21963 (D.Mass. 2000)
– Action to enjoin bankrupt online retailer from
auctioning off its database as an asset. The database
contained information about children under 13 that the
Defendant collected promising not to share it with any
third parties.
• FTC v. Ohio Art (Settled—$35,000 fine)
– Manufacturer of “Etch-A-Sketch” collected information
in violation of COPPA when children registered for an
“Etchy’s Birthday Club” online contest.
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Children's Internet Protection Act
(“CIPA”) 20 U.S.C. § 9134 & 47 U.S.C. 254
• American Library Association v. US, 201
F.Supp 401 (E.D.Pa. 2002)
– Law required libraries to provide Internet
Content filters as a prerequisite to receipt of
federal subsidies.
– Held: Unconstitutional—Required Libraries to
violate First Amendment rights…
– Disabling provisions insufficient to save…
– Cert. Granted Nov. 13, 2002…
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Section 5(a) of the FTC Act,
15 U.S.C.§ 45(a)
• prohibits “unfair or deceptive acts or
practices in or affecting commerce”
• FTC v. Zuccarini, (E.D.Pa. 2002)
– Defendant engaged in “hijacking” (using
misspelled and unused famous named)
and “mousetrapping” (disabling the “close”
and “back” buttons, causing them to
summon a flurrie of ad or porn pages…)
– Fined $1.9M and Permanently Enjoined…
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Encryption
• Public Key Encryption:
– Messages (Character Strings) are representable as
numbers. Long strings can be broken into multiple
packets of shorter fixed length strings.
– The recipient transmits a Public Key to the sender with
instructions on how to use it to encode the message.
– It does not matter that the world knows both the Public
Key and the encoding instructions..
– Once encoded, only the recipient can decode the
message with the corresponding Private Key..
– Breaking the code requires factoring numbers related to
the keys which are the products of large prime numbers
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Legality of Using Encryption
• Use NOT prohibited in the US, but courts can
order decryption with possible 1st, 4th and 5th
Amendment constraints…
• Generally against the law in France! This includes
sending encrypted messages via the Internet.
Exceptions for financial transactions…
• Decryption of an intercepted message by a private
third party is an unauthorized access issue.
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Bernstein v. US State Department
• Arms Export Control Act, 22 U.S.C.S. § 2778
• International Traffic in Arms Regulations, 22
C.R.F. § § 120-30
• Export Administration Act, 50 U.S.C.S. § 2401 et
seq., and
• Export Administration Regulations, 15 C.F.R. §
730
– Requires a license to export encryption software
(Source or Object code in Electronic form, but NOT in
Printed form…) Publication on Internet = Export…
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Bernstein I & II
• Daniel Bernstein sought a D.J. that His encryption
software was freely exportable, and that the attempts
to restrain that export was a prior restraint on his First
Amendment freedom of speech.
• The State Department (pursuant to the
aforementioned acts) had ruled that encryption using
more than 40 bit keys was a munition and governed
by export controls and was prohibited as such…
• Further, the State Department ruled that
communication of the encryption techniques to a
foreign national within the US constituted export.
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Bernstein III
974 F.Supp 1288 (N.D. Ca. 1997)
• The court enjoined defendants, U.S. Department
of State, Energy, and Justice, from enforcing the
regulations of the Arms Export Control Act,
International Traffic in Arms Regulations, Export
Administration Act, and Export Administration
Regulations against plaintiff individual or anyone
seeking to use plaintiff's encryption program. The
court held that the prior restraint on publication
violated the First Amendment right to free
expression.
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Junger v. Daley (Sec. of Commerce)
209 F.3d 481 (6th Cir. 2000)
• Peter Junger is a professor at the Case Western University School of Law.
Junger maintains sites on the World Wide Web that include information
about courses that he teaches, including a computers and the law course.
Junger wishes to post on his web site encryption source code that he has
written to demonstrate how computers work. Such a posting is defined as
an export under the Regulations.
• The Export Administration found that the first chapter of Junger's
textbook, Computers and the Law, was an allowable unlicensed export.
Though deciding that the printed book chapter containing encryption
code could be exported, the Export Administration stated that export of
the book in electronic form would require a license if the text contained
5D002 [Encryption] software.
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Junger…
• Dist. Ct. found that computer source code was
NOT First Amendment speech, and the Export
Regs. were permissible content-neutral
regulation…
• 6th Cir.—Reversed and Remanded—The computer
source code at issue was protected by the First
Amendment but the record had to resolve whether
national security interests outweighs interests of
free exchange of encryption code.
• Cited by the Reimerdes Court for the proposition
that speech with function can be regulated…
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Junger’s Holdings
• Because computer source code is an expressive
means for the exchange of information and ideas
about computer programming, we hold that it is
protected by the First Amendment.
• The functional capabilities of source code, and
particularly those of encryption source code,
should be considered when analyzing the
governmental interest in regulating the exchange
of this form of speech. Under intermediate
scrutiny, the regulation of speech is valid, in part,
if "it furthers an important or substantial
governmental interest." O'Brien…
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Key Escrow
• Bernstein & Junger were about telling others how to
use encryption.
• The National Security Agency’s attempt to introduce
Private Key Escrow was about preventing people from
using it. The proposal was that:
– Anyone using encryption had to deposit a copy of their
Private Keys with an agency for that purpose. Law
enforcement could need a search warrant to obtain a copy of
an escrowed key. It would be a crime to use encryption
without having first deposited the key.
– Alternative proposal. Universal Encryption Chip with Law
Enforcement “Trap Door” provision…
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Key Escrow and Chilling
• One can read ALL prior messages once a
Key is obtained.
• That compromising threat is chilling, and
acts as a Prior Restraint on Speech.
• Similarly, the First Amendment protects
against Compelled Speech.
• 5th Amendment Self Incrimination…
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Encryption & Anonymity
• Besides the principle of privacy, Encryption is also
related to the issue of anonymity.
• Tally held that Anonymity is a Constitutionally
protected right in Political Speech.
• Defamation is a conflicting issue as well…
• ACLU v. Miller (Gov. of Ga.) (N.D. Ga 1996)
(Settled)
– Governor sponsored a bill in the Ga. Legislature to
make it a crime to knowingly transmit data if it
uses a name to falsely identify the person or if it
falsely implies permission of a person.
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Tribe’s Axioms:
1. There is a vital difference between Government
and Private Action;
• 2. The Constitutional Boundaries of Private
Properties and Personalty depend of variables
deeper than Social Utility and Technological
Feasibility;
• 3. Government may NOT control Information
Content;
• 4. The Constitution is Founded on Normative
Conceptions of Humanity That Advances in Science
and Technology Cannot Disprove;
5. Constitutional Principles Should Not Vary With
Accidents of Technology.
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Taxation Issues and the Internet
• The Internet Tax Freedom Act, 9 USC §1100 et seq. (ITFA)
– Moratorium on imposition of certain NEW Internet taxes
for 3 years beginning 10/1/98 (Extended for 2 more years
in 2001, through 11/1/03)
– Precluded any NEW State access taxes (8 States do have
such taxes in place) or discriminatory taxes on electronic
commerce. Tax on Sale of tangible Internet hardware not
covered by ITFA.
– Allows taxation of adult sites that do not restrict access to
minors…
– No Federal Internet Taxes
– Encourages President to seek bi-lateral agreements to avoid
taxation by other countries…
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Sales Tax Complexity
• 7500 State, County and Local Tax Jurisdictions
– e.g. Houston: Different State, County and City Sales Taxes
• 5 States do NOT Levy Any Sales Taxes
– Alaska, Delaware, New Hampshire, Montana & Oregon
• 8 States Levy Taxes On Some Services
– Arkansas, Conn., Hawaii, Minn., N.M., Ohio, S.D. & Texas
• Most Jurisdictions Impose Dual Liability
– Buyer must Pay the Tax, but Seller must Collect it.
• No Uniformity on Exclusions between Jurisdictions
– e.g. Exclusions for clothes, drugs, certain medical services
– Then there are the so-called “Sales Tax Holidays…”
• See: http://www.revenue.state.il.us/otherstates.html
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Use Taxes
• Consider your Phone Bill
– Many different taxes from different jurisdictions
– This is one archetype for Proposed Internet Taxation
• Politicians Love to Tax Non-Constituents
– e.g. Reliant Stadium Tax on Hotel Use and Car Rentals
– The old Texas “Well-Head” Tax Scheme…
– An Internet Infrastructure Tax could collect from nonresidents whose only nexus is that their packets traveled
through Texas on their way from NY to CA…
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Sales & Use Taxes on the Internet
• Complex State by State system now in force.
– This is actually and old issue from mail order sales.
– States cannot collect sales taxes when either of the parties
(buyer or seller) has no nexus with the state. This is a
Constitutional Negative Commerce Clause issue. Actually
the issue is no Undue Burden on Interstate Commerce.
The complexity issue is the problem now…
– However, what does it take to have a sufficient nexus?
MLM firms have been ruled to have a sufficient nexus if
distributors are located within the state in question.
– Does having an Internet server in a state create a sufficient
nexus?
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Sales Tax Cases
• Quill v. North Dakota, 504 US 298 (1992)
– “Brick and Mortar” Mail-Order Seller with warehouses in
Il, Ca & Ga had no employees in ND. All deliveries by
Common Carrier. Held—ND cannot compel Quill to
collect sales taxes…
• Recent Internet Example
– Borders has bookstores in 40 states,but conducts an online
business through a wholly-owned subsidiary with offices in
MI and warehouses in TN. No subsidiary employees in
any other State and all deliveries made by Common
Carrier. Borders Online only collects sales taxes from sales
to MI and TN addresses…
• See Also: AOL v. Johnson (Pending in TN)
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Net Fair Act
• Requires “Substantial Physical Presence Within a
State” to sustain a Nexus..
• Excludes Specific Examples as NOT satisfying that
Nexus Requirement:
– Solicitation of orders where acceptance or rejection occurs
outside the state
– Presence or Use of Intangible Property within the state
– Having a Web Page Viewable from within the state
– The use of an ISP including web-hosting within the state
– The use of Independent Contractors within the state
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Potential Future Issues
• Novel Features of the Internet and Cyberspace
• Increasing Bandwidth & Computing Power
• Wireless and Remote (cell phones and
cyberspace)
• Privacy and Anonymity (Including DNA &
The Cyberworld)
• The Borderless Problem (Opportunity?)
• The Grid
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What is Novel About the Internet and
the Cyberworld?
• Ease of Access
– Empowers Individuals to Gain Access to Information
(Search Engines), and
– Empowers Individuals to Disseminate Information
(Drastically lowers the entry barriers to mass publication.)
•
•
•
•
•
•
Ease of Duplication (High Copy Integrity)
Speed of Communication (Bandwidth)
Ease of Encryption—Positive Privacy
Ease of Surveillance—Negative Privacy
Anonymity and Equality—Meritocracy of the Web
Significantly Increases Productivity
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Future Shock…
“Any sufficiently advanced technology is
indistinguishable from magic…”
Arthur C. Clarke
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Bandwidth and Computing Power
• As both available Bandwidth (data transfer rates)
and Computing Power (calculations per second &
mass storage capacity) increase in absolute terms as
well as decreasing in cost per unit capability, what
sort of new possibilities arise?
• There is a fundamental theorem in Math called
Gödel’s Theorem. One interpretation of it is that
machines cannot know everything. Another view is
that digital storage and capability will always be
behind the information curve.
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Increasing Capabilities
• Nevertheless, as capabilities increase,
accomplishments follow. Some Predictions:
– Speech Recognition, Face Recognition, Modest, but
Increasing AI.
– Bio-Integration, Nano-technology, Virtual Reality
– Full Genetic Engineering
– “Big Brother” Communication and Surveillance
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The Wireless World
• Cell Phones are just the beginning.
• Connectivity will be available everywhere,
and computers will be too…
• With connectivity comes privacy issues due
to tracking capabilities, but it also adds
safety too… New laws needed?
• Evidentiary Rules (5th Amend.) Implicated
• Encryption should keep wireless secure…
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Privacy and Anonymity
• DNA analyzing computer chips exist NOW.
No more fake IDs, or the need to fingerprint.
• Increasing connectivity will lead to a loss of
privacy and anonymity generally…
• Universal DNA databases, online…
• Real-time tracking of individuals (Available
on a voluntary basis at SuperComputing
2002. Being marketed to private industry.
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The Borderless World
• 2 Views:
– Propaganda more prolific… (Despots forever…)
– The Truth will out… (Justice Triumphant…)
• Legal Harmonization or the “Dreaded”
World Government…
• Enforcement Crisis Looming…
• Major International Law Changes Brewing.
• World Peace???
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The Grid
• Proposed in the Mid-1990’s by Ian Foster
• Use Internet to interconnect computers for
true distributed computing.
• More than sharing computer time. Sharing
of storage, data, applications and CPU
cycles globally and seamlessly.
• “Middleware” empowering Grid software
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Legal Issues and the Grid
• The definition of a machine is blurred completely.
Even the locale of the user is problematic because
of collaborative tools.
• Licensing paradigms will have to change
significantly.
• Patent issues become problematic due to
geographic validity. A US Patent holder has the
right to “Make, Use, Sell, Offer for Sale, or
Import” the patented item. (Software Patents?)
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Impact of the Grid
• Truly portends global (borderless) computing
• Sets the stage for massive increases in computing
capability
• Mammo-Grid in Europe. Online automatic
Mammogram Reading. Just the precursor of
effective Cyber-Medicine.
• Even now, Thinking in terms of manipulating
Peta-Bytes (A Million Gigabytes = 250) is
becoming routine…
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The Impact of this Course
• I hope the interesting and challenging issues
presented were at least food for thought.
• You are in the Internet Age whether you like it or
not.
• As attorneys, you will have to face the practical
issues of how this new and evolving technology
will impact your life and your professional
conduct.
• …And, how it will impact virtually every aspect
of the Law in general…
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