Ethical, Social, and
Legal Issues of IT
MGMT 661 - Summer 2012, Dannelly
Night 3, Lecture Part 1
loosely based on Chapter 4
Starter Question

What does Privacy and
Intellectual Property have to
do with Business?
Textbook Figure 4.1
Outline for Tonight

Legal Topics - Part 1
 SPAM
 Software Warranties
 Intellectual Property Laws
 Software Copyrights and Patents

Privacy - Part 2
 privacy
 privacy
 privacy
from your employer
from businesses
from the government
www.spam-uk.com/images/BlackPepperCan.jpg
SPAM

Costs to Business

bandwidth?

40% of email is SPAM
 consumes lots of disk space!!!

CAN SPAM Act of 2003
The law permits e-mail marketers to send unsolicited
commercial e-mail as long as it contains all of the following:




an opt-out mechanism;
a valid subject line and header (routing) information;
the legitimate physical address of the mailer; and
a label if the content is adult
http://en.wikipedia.org/wiki/Can_Spam_Act_of_2003
Software Warranties
DISCLAIMER OF WARRANTIES. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, MICROSOFT AND ITS SUPPLIERS PROVIDE TO YOU THE
SOFTWARE COMPONENT, AND ANY (IF ANY) SUPPORT SERVICES RELATED
TO THE SOFTWARE COMPONENT ("SUPPORT SERVICES") AS IS AND WITH
ALL FAULTS; AND MICROSOFT AND ITS SUPPLIERS HEREBY DISCLAIM
WITH RESPECT TO THE SOFTWARE COMPONENT AND SUPPORT SERVICES
ALL WARRANTIES AND CONDITIONS, WHETHER EXPRESS, IMPLIED OR
STATUTORY, INCLUDING, BUT NOT LIMITED TO, ANY (IF ANY)
WARRANTIES OR CONDITIONS OF OR RELATED TO: TITLE, NONINFRINGEMENT, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, LACK OF VIRUSES, ACCURACY OR COMPLETENESS OF
RESPONSES, RESULTS, LACK OF NEGLIGENCE OR LACK OF WORKMANLIKE
EFFORT, QUIET ENJOYMENT, QUIET POSSESSION, AND CORRESPONDENCE
TO DESCRIPTION. THE ENTIRE RISK ARISING OUT OF USE OR
PERFORMANCE OF THE SOFTWARE COMPONENT AND ANY SUPPORT
SERVICES REMAINS WITH YOU.
Software Warranties
Article 2 of the Uniform Commercial Code



What specifically is at issue in many cases are the disks you buy with software to load onto
your computer or the updates which are internally loaded when you agree to provisions of
what are called licensing agreements. Are these purchases/updates "transactions in
goods" under the UCC Article 2?
At first the ALI and NCCUSL decided to handle this problem by a separate section of the
UCC, which it would have called Article 2B. However, the ALI withdrew from the project
when there seemed to be no attempt to bring all such transactions under the scope of
Article 2. Thus, the remaining pieces of what was formerly 2B became a statute UCITA
("Uniform Computer Information Transactions Act"). Article 2 would then be revised to
eliminate all reference to information and UCITA would carry the burden on that front. [In
Article 2, the term "goods" does not include information.] UCITA was supposed to pick
up the slack. But, UCITA ran into a lot of difficulties and only two states have approved it.
Thus, that leaves us potentially in legal limbo regarding whether these software packages
and other similar transactions are really Article 2 transactions.
Because no statutory solution is forthcoming, action shifts to the courts.
http://www.drbilllong.com/Sales/ScopeII.html
Software Warranties
Mortenson v. Timberline Software
(≈1993)

Mortenson used a TS application when creating a bid
to build a hospital.

The software created a bid that was $2M too low.

TS knew about the bug, but had not sent an update to
Mortenson.

The State of Washington Supreme Court ruled in favor
of Timberline Software.
Software Warranties

If the software is part of a larger system
(embedded software), the software creator
is liable.

Examples:
 Toyota
acceleration due to software error
 online banking error
 elevator controls
Software Copyrights

US Constitution
The congress shall have the power to promote the progress
of science and the useful arts, by securing for limited times to
authors and inventors the exclusive rights to their respective
writings and discoveries.

Copyright extension in 1980
set of statements or instructions to be used directly
in a computer in order to bring about certain results
 must contain original ideas

Software Copyrights
These are illegal without permission:

Copying a program onto a CD to give or
sell it to someone else

Distributing a program over the internet

Preloading a program onto the hard disk
of a computer to be sold
Fair Use
Sometimes it is "fair use" to reproduce
copyrighted work without permission.
Four factors used by judges:
1.
2.
3.
4.
What is the purpose and character of the use?
What is the nature of the work being copied?
How much of the work is being used?
How will this use affect the market for the work?
Sony v Universal Studios

In 1976, Universal and Disney sued Sony
stating that the Betamax enabled people to
copy copyrighted material.

The supreme court ruled (5 to 4) that the
private, noncommercial use of copyrighted
material is "fair use".

Also, the Betamax should be legal to
own because it could copy noncopyrighted as well as copyrighted
material.
MGM v Grokster

Grokster promoted themselves as the
replacement to Napster.

MGM et.al. sued because 90% of the content
was copyrighted.

Lower court judged ruled in favor of Grokster.
 citing
Sony v Universal - selling a copier is legal. Grokster
does not control their users actions.

In 2005, Supreme Court overruled 9-0 in favor
of MGM et.al.
"Megaupload boss says innocent,
rival stops file-sharing"
(Reuters, Mon Jan 23, 2012) - The founder of file-sharing website Megaupload was
ordered to be held in custody by a New Zealand court on Monday, as he denied charges
of internet piracy and money laundering and said authorities were trying to portray the
blackest picture of him.
Prosecutor Anne Toohey argued at a bail hearing that Kim Dotcom, a German national
also known as Kim Schmitz, was a flight risk "at the extreme end of the scale" because it
was believed he had access to funds, had multiple identities and had a history of fleeing
criminal charges.
U.S. authorities want to extradite Dotcom on charges he masterminded a scheme that
made more than $175 million in a few short years by copying and distributing
music, movies and other copyrighted content without authorization. Megaupload's
lawyer has said the company simply offered online storage.
The shockwaves of the case appeared to be spreading among rival websites offering
lucrative file-sharing. FileSonic, a website providing online data storage, said in a
statement on its website that it had halted its file-sharing services.
Dotcom, 38, and three others, were arrested on Friday after New Zealand police raided
his country estate at the request of the U.S. Federal Bureau of Investigation. Police cut
Dotcom out of a safe room he had barricaded himself in, because, according to his
layer, he was frightened and panicked.
Digital Millennium Copyright Act

DMCA
 technology
to circumvent copyright protection technology is
illegal
 making any copy of a copyrighted digital work is prohibited

Example Result #1:




DVDs are equipped with a Content Scrambling System to make it hard
to copy them.
In 1999 three teenagers in Norway wrote a de-css program which was
posted by several US web sites so that linux users could play DVDs
In Norway, the teenagers were acquitted because they have the right
to the contents of the DVD they purchased.
Example Result #2:

Until July 2010, it was illegal to "jail break" your iPhone.
Can you Patent Software?

In Europe: No.

In USA: Kind of.

Only if the software is part of a
larger process.

The US Patent and Trademark
Office issues about 20,000
patents for software each year.
Amazon.com v
Barnes and Noble.com

Amazon.com developed a "one-click
express checkout" and obtained a patent

Barnes&Noble later developed a similar
interface. Amazon sued in 1999.

B&N stated that the idea did not meet the
non-obviousness test (express pay lines
are common)

Amazon won the case.
eBay v. Bidder's Edge

Bidder's Edge was an aggregate auction site. It had
permission from eBay to crawl through eBay's site and build
lists of goods.

Then eBay stopped permitting Bidder's Edge to assemble
eBay information. But, BE continued anyway stating that
the info was not proprietary.

Technically, the information does not belong to eBay.

eBay can copyright the layout and organization of the data.

eBay claimed BE was consuming costly CPU time

The judge sided with eBay.
"Ethics and Technology" by Tavani
Exercise
Management Decision Problem #2 on
page 151
1. Is gathering and reviewing such data
ethical?
2. Are the employees acting ethically?
3. What actions should be taken?
