E-Marketing 4/E
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 5: Ethical and Legal Issues
©2006 Prentice Hall
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Chapter 5 Objectives
• After reading Chapter 5 you will be able to:
• Compare and contrast ethics and law.
• Discuss the implications of ethical codes and selfregulation.
• Identify some of the main privacy concerns within
traditional and digital contexts.
• Explain some of the important copyright, patent,
trademark, and data ownership issues related to the
Internet.
• Highlight key ethical and legal concerns related to
online expression.
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Piracy Rate by Region, 2006
North America 22%
Western Europe 34%
Asia Pacific 55%
Middle East/Africa 60%
Central/Eastern Europe 68%
Latin America 66%
European Union 36%
Worldwide 35%
http://www.bsa.org/globalstudy/upload/20052006%20Global%20Piracy%20Study.pdf#search=%22world%20piracy
%20rates%202006%22
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Software Piracy
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40% of all software worldwide was pirated in 2001.
Piracy resulted in a US$10.7 billion loss for firms.
840,000 Internet sites sold counterfeited software.
Vietnam, China, Indonesia, Ukraine, and Russia have
highest piracy rates. (~90%)
• Microsoft believes that education is the best weapon
against piracy. Do you agree?
• http://www.networkworld.com/news/2006/082506owner-of-software-piracy-site.html
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Yahoo! Case study
• The legal action was brought in April 2000 by the
French organisations the International League against
Racism and Anti-semitism (ILCRA) and the French
Jewish students organisation (UEJF).
• The case was brought against Yahoo! Inc as well as
Yahoo! in France and charged that the American
company was in breach of French law for allowing
French users to access the company’s American site
where Nazi memorabilia was being auctioned, since
the sale of such items in France is illegal.
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• The case was heard in May 2000 in a Paris court by
Judge Jean-Jacques Gomez.
• The judge convened a three-member technical panel
to examine whether it was possible to block French
users from accessing parts of an American site.
• The judge found – in an order talking of “an ethical
and moral imperative – that the company was guilty,
ordered it to block access by French users to the
relevant part of the American site, and threatened
fines for non-compliance of 100,000 francs ($13,300)
a day.
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• In January 2001, Yahoo! Inc announced that it would
no longer permit the sale of Nazi memorabilia on its
American site, thereby removing access not just to
French Internet users but all users.
• Yahoo! is now appealing in an American court against
the right of a non-American court to impose penalties
on an American company.
• Megan Meier’s case
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Morally Characteristic of the Internet
• The unusual scope of the Internet in providing
many-to-many communications on a global
scale
• The way the Internet facilitates anonymous
communication
• The way material sources from the Internet can
be reproduced easily
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Ethics and Legal Issues
• Ethics and law are closely related.
• Ethics concerns the analysis of what is right
and wrong and how we judge the differences.
• Ethics is a collective (group) consensus about right
and wrong
• Modern technology presents a challenge to
marketing ethics. Critical issues include:
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Ownership of intellectual property
Freedom of expression
Use of data and its collection
Status of children (<18) and digital networks
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Legal Issues
Law:
• Also an expression of values,
• Created for broader purposes = national or sometimes
international populations,
• It is a public endeavor = made by legislatures such as
Congress or Parliament, enforced by executives or
agencies, and interpreted by the courts,
• Progress in the law can be slow, and particularly within
the new context of digital communication.
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Ethics & Codes of Ethics
• The study of ethics:
• Ethics central focus is analysis and description of basic concepts as
what is right and wrong, types of conduct that comprise ethical
behavior .
• It involves the examination of responsibilities, rights, and
obligations,
• Not limited to purely theoretical boundaries but study all levels of
human interaction,
• Important aspect: the study of professional activities,
• Groups of individuals possessing special skills or knowledge have
established codes and systems of fair practice,
• E.g. The American Marketing Association’s (AMA) Code of Ethics :
Professional codes provide members with guidelines which are specific
to their pursuits.
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Right or wrong?
• Right or wrong?
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downloading music and downloading movies
purchasing human organs on the Net
online gambling
purchasing prescription drugs
lying about who you are in an internet chat room
purchasing pirated software via Internet auctions or other means
sending unsolicited bulk mail messages
• Should companies which collect the data own the data?
• Should data which is collected be used for another purpose
without consent?
• What is “informed consent”?
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Test for ethical behavior
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Is it legal?
Is it fair?
Does it hurt anyone?
Have I been honest with those affected?
Can my conscience live with this decision?
Thought for the day:
ETHICAL BEHAVIOR WILL ALWAYS PAY
OFF IN THE LONG RUN
(Source: Ethics by Steven Hall and Dr. Ellis Langston )
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The Problem of Self-Regulation
• What are the roles of formal laws vs. free
operation of the market?
• Supporters of self-regulation stress the private
sector’s ability to identify and resolve problems.
• Critics argue that incentives for self-regulation
are insufficiently compelling and true deterrence
will not be achieved.
• The commercial internet evolved during the
Clinton Administration which believed in selfregulation –This has not continued under the
Bush Administration
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Privacy
• The concept of privacy has both ethical and
legal aspects.
• There is legal confusion regarding privacy.
• No specific privacy provision within the U.S.
Constitution.
• Privacy has been addressed in the common law of
the courts. (lawsuits-not arrests)
• Within society, privacy interests compete with
concerns for safety, economics, and need for
association with others.
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4 defined invasion of privacy
violations
1. Unreasonable intrusion into seclusion of
another
2. Unreasonable publicity of another's private life
3. The appropriation of another’s name or
likeness
4. The publication of another’s personal
information in a false light.
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Privacy
• Disagreement remains:
• The seclusion theory = the ability to remain isolated from society.
 This model encourages laws and ethical standards which are oriented
toward maintaining personal distance and punishing those who cross
the limits set by individuals.
• The access-control:
 Places its emphasis upon laws and standards which enable persons to
reasonably regulate the information which they are giving up.
• The autonomy model:
 Define what constitutes private data = those which are necessary for a
person to make life decisions.
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Privacy Within Digital Contexts
• AMA Code of Ethics for Marketing on the
Internet: “information collected from customers
should be confidential and used only for
expressed purposes.”
• Online advertising firms such as DoubleClick,
have traditionally recorded users’ clickstreams
to form user profiles for marketing purposes.
• Controversy arose in 2000 when DoubleClick
acquired consumer names, addresses and
buying histories and planned to combine the
offline data with clickstream data.
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Privacy Within Digital Contexts, cont.
• Data can be obtained through cookies.
• Cookies are packets of data that are created
and stored on the user’s hard drive in response
to instructions received from a Web page.
• Cookies allow marketers to pinpoint an
individual’s online behavior.
• www.msn.com >> 20 cookies from 4 domains
• www.cnet.com >> 21 cookies from 6 domains
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The Privacy Debate
• Supporters of systems such as DoubleClick’s
argue that users wish to receive the benefits of
targeted advertisers.
• Critics point out that most users do not
understand how computers process data.
• Preliminary terms of the FTC agreement
include:
• Obligation to provide notice of data collection.
• Ban on combining existing data with personal
information unless opt-in permission is obtained.
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The FTC and Privacy Norms
• The FTC has identified the following norms for
the ethical use of consumer information:
• Notice: Users should be aware of a site’s information policy
before data are collected
• Consent: Users should be allowed to choose participation or
exclusion from the collection
• Access: Users should have the ability to access their data
and correct them if erroneous.
• Security: Policies to ensure the integrity of data and the
prevention of misuse should be in place
• Enforcement: Users should have effective means to hold
data collectors to their policies.
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Australia National Privacy Principles
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Principle 1 - Collection
Principle 2 - Use and disclosure
Principle 3 - Data quality
Principle 4 - Data security
Principle 5 - Openness
Principle 6 - Access and correction
Principle 7 - Identifiers
Principle 8 - Anonymity
Principle 9 - Trans-border data flows
Principle 10 - Sensitive information
http://www.privacy.gov.au/publications/npps01.html
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Protection of Digital Property
• The law protects intangible or intellectual
property through 3 basic mechanisms.
• Copyright
• Patent law
• Trademark
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Copyright
• Copyright is the primary means of protecting
most expression on the Internet.
• Doctrine of Fair Use
• Ability to copy protected material for education and news
reporting.
• Doctrine of First Sale
• Limit the ability of copyright holder to obtain profit after
the initial time at which the material is sold.
• Other copyright protection under No Electronic
Theft Act (NET) and Digital Millennium
Copyright Act (DMCA).
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Trademarks
• Trademark law concerns the ownership of
intellectual property that identifies goods or
services.
• Trademark law as been applied to the Internet
naming system of domain names.
• Similarities in names may result in trademark
infringement claims.
• Cybersquatting involves the registration of domains
that resemble or duplicate existing ones.
• http://www.buydomains.com/ owned by
• http://www.namemedia.com/
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Patents
• Applying patent law to computing is an
uncertain but developing field.
• Creators of software are attempting to make
use of patent law protection.
• Advocates argue that granting of patents for
software will encourage innovation.
• Critics argue that patents will have stifling and
monopolistic effects.
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Licenses
• Licenses are increasingly popular method of
intellectual property protection.
• Allow the buyer to use the product but restrict
duplication or distribution.
• Licenses may be two basic types
• Shrinkwrap or break-the-seal licenses
• Clickwrap licenses where the user is required to
click a button to accept the terms
• Legal trend favors enforcement of software
licenses.
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Online Expression
• Freedom of expression is protected by the First
Amendment.
• Internet technology has resulted in what many
consider inappropriate or untargeted types of
consumer contact.
• Spam is the mass distribution of unsolicited
electronic mail.
• CAN-SPAM Act creates a framework for email
marketing.
• Expression directed to children remains a highly
visible issue within online law and ethics.
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Maine Spam law
• The Maine legislature enacted a new “spam”
law, 10 MRSA §1497 (the “Act”), which became
effective on September 13, 2003
• Requires Spam to adhere to certain restrictions
• Must be labeled
• Must have valid return address
• Must have opt-out method
• Question; Does the SPAM you received
conform?
Source: http://www.pierceatwood.com/showarticle.asp?Show=22
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Emerging Issues
• Online governance
• The Internet Corporation for Assigned Names and
Numbers (ICANN) was formed in 1998.
• Jurisdiction
• The ability of a court or other authority to gain
control over a party.
• Traditionally based on physical presence.
• Treaties may provide for international resolution
and enforcement.
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Emerging Issues, cont.
• Fraud
• The use of deception and false claims to obtain
profit.
• Phishing
• The Internet provides opportunities for novel
deceptions.
• Spoofing is the use of e-mail or Web sites to
impersonate individuals or corporations.
• The FTC, FBI, and state agencies have
increased their efforts to track and prosecute
fraudulent conduct.
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Conclusion
• Changes within the ethical and legal framework of
networked communication are occurring at a fast pace.
• Marketing professionals are:
• Required to remain well-informed of regulations and
accepted practices,
• Called upon to contribute to the global dialogue about
electronic spaces.
©2006 Prentice Hall