Special Topics in Internet Law Intersession-January, 2003 L ...

Special Topics in Internet Law Intersession-January, 2003 L ...

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: [email protected] Intersession-January, 2003 Pinsky-Internet Law 1 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? Intersession-January, 2003 Pinsky-Internet Law 2 Intersession-January, 2003 Pinsky-Internet Law 3 Internet Organization ISOC-Internet SocietyOverall 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. Intersession-January, 2003 Pinsky-Internet Law 4 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. Intersession-January, 2003 Pinsky-Internet Law 5 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 Intersession-January, 2003 Pinsky-Internet Law 6 A Brief Intro to IP Law & The Internet Copyright Law

Patent Law Trade Secret Law Trademark Law Intersession-January, 2003 Pinsky-Internet Law 7 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 Intersession-January, 2003 Pinsky-Internet Law 8 Copyright Law Generally Statutory, but: Constitutional in the US 17 USC (IP Clause-Art. I, 8, cl.8) Economic justificationTo 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 Intersession-January, 2003 Pinsky-Internet Law 9 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 Intersession-January, 2003 Pinsky-Internet Law 10

Copyright Issues What is NOT covered? Facts Function Recipes Fonts Fashion Government Documents (State and Federal) Material in the Public Domain Independent Creation

Intersession-January, 2003 Pinsky-Internet Law 11 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. Intersession-January, 2003 Pinsky-Internet Law 12 Licenses An Authorization to exercise one of the IP owners exclusive rights Licenses can be implied Express Licenses trump Implied Licenses Fair Use is not a LicenseFair Use is an Irremediable Infringement Intersession-January,

2003 Pinsky-Internet Law 13 Cyberlaw Examples First Sale DoctrineSoftware 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 Intersession-January, 2003 Pinsky-Internet Law 14 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 Intersession-January, 2003 Pinsky-Internet Law 15 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 Intersession-January, 2003 Pinsky-Internet Law 16 Copyright Cases

Government Copyrights Veeck v. Southern build. Code Congress Intl, 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 Intersession-January, 2003 Pinsky-Internet Law 17 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. Intersession-January, 2003 Pinsky-Internet Law 18 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 Intersession-January, 2003 Pinsky-Internet Law 19 Trademark Cases Catch Phrases AOL v. AT&T, 243 F3d 812 (4th Cir. 2001)Use of Youve Got Mail Linking Washington Post v. Total News (S.D.N.Y. 1997) SettledFraming 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. Intersession-January, 2003 Pinsky-Internet Law 20 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 Intersession-January, 2003 Pinsky-Internet Law 21 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 Intersession-January, 2003 Pinsky-Internet Law 22 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? Intersession-January, 2003 Pinsky-Internet Law 23 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 Oklahomasufficient for in personam Jurisdiction over the NY dealer in a Products Liability Suit] Intersession-January, 2003 Pinsky-Internet Law 24

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) Intersession-January, 2003 Pinsky-Internet Law 25

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) Intersession-January, 2003 Pinsky-Internet Law 26

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). Intersession-January, 2003 Pinsky-Internet Law 27

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) Intersession-January, 2003 Pinsky-Internet Law 28 Interesting In Personam Internet Cases

Verizon Online Services, Inc. v. Ralsky, No. 01432 (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_opinio n.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] Intersession-January, 2003 Pinsky-Internet Law

29 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/2002 /56.html Gutnick can sue Dow Jones in the local court in Victoria, Australia for alledged defamation by Dow Jones in a Barrons article viewable on Dows website Intersession-January, 2003

Pinsky-Internet Law 30 Choice of Law US v. Thomas, 74 F3d 701 (6th Cir. 1996) The Thomass dial-in Bulletin-Board service in CA offered GIFs 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 lAntisemitisme, 169 F.Supp2d 1181 (N.D. Cal 2001) A French courts 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. Intersession-January, 2003 Pinsky-Internet Law 31 Choice of Law Cyberspace Communications Inc. v. Engler, (6th Cir. 2001unpublished: http://www.michbar.org/ opinions/district/2001/060101/10546.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.

Intersession-January, 2003 Pinsky-Internet Law 32 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 Intersession-January,

2003 Pinsky-Internet Law 33 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 Intersession-January,

2003 Pinsky-Internet Law 34 Database Protection Initiatives It all started with Feist v. Rural Telephone [499 US 340 (1991)]Overthrowing the sweat of the brow ClientFocused generally on databases that contain factual material that is not protected by copyright. IssueEnable reaching third parties not in privity of contract with the database owner. GoalProtect investment, and in turn provide incentives for the creation of new databases ProblemCreation of property rights in facts Intersession-January, 2003

Pinsky-Internet Law 35 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 databasess No form of protection currently exists to shield the database owner from the potential misappropriation of her efforts by third parties Intersession-January, 2003 Pinsky-Internet Law

36 History of Recent Database Protection Initiatives Europe Activity began in the early 1990s 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) Intersession-January, 2003 Pinsky-Internet Law

37 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 Intersession-January, 2003 Pinsky-Internet Law 38

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. Intersession-January, 2003

Pinsky-Internet Law 39 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 Hills posting of the data in his parlors, both in print form and on TV monitors. However, BHB objects to Hills display of the data on his web site. Held: an unauthorized extraction under EC Database Law, and Hill is permanently enjoined from such use. Intersession-January, 2003

Pinsky-Internet Law 40 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. Intersession-January, 2003

Pinsky-Internet Law 41 HR 354The IP Approach Essentially similar to the EC approach. Supported by the Database IndustryIntroduced 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 Intersession-January, 2003

Pinsky-Internet Law 42 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 Intersession-January, 2003

Pinsky-Internet Law 43 HR 1858Misappropriation 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) Intersession-January, 2003 Pinsky-Internet Law 44

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 businesss effort. Hot news is the typical example from the INS v. AP case itself. Intersession-January, 2003 Pinsky-Internet Law 45 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 Intersession-January, 2003 Pinsky-Internet Law

46 Verification; The Real Issue in Database Protection Traditional Copyright doctrine has always held that use of a prior work for verification of ones 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 competitors 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 Intersession-January, 2003 Pinsky-Internet Law

47 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 providers 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 competitors database for verification purposes, the cost saved will be significant. Intersession-January, 2003

Pinsky-Internet Law 48 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. Bidders Edge, 100 F.Supp2d 1058 (N.D. Cal 2000) Held: PI grantedBidders Edges crawling activities collecting prices from Ebays website is sufficient to sustain a cause of action for Trespass to Chattels. Intersession-January, 2003 Pinsky-Internet Law

49 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. Intersession-January, 2003 Pinsky-Internet Law

50 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. Intersession-January, 2003 Pinsky-Internet Law 51

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. Intersession-January, 2003 Pinsky-Internet Law 52 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 Intersession-January, 2003 Pinsky-Internet Law 53

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 Intersession-January, 2003 Pinsky-Internet Law 54

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." Intersession-January, 2003 Pinsky-Internet Law 55 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. Intersession-January, 2003 Pinsky-Internet Law 56 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. Intersession-January, 2003 Pinsky-Internet Law 57 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 Intersession-January, 2003 Pinsky-Internet Law 58 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) Intersession-January, 2003 Pinsky-Internet Law 59 Reimerdes Jon Johansen (15 yr old) wrote a CSS Decription Code in order to play DVDs

under Linux Versions were distributed on the web. Hollywood sued the website owners. Defense: First Amendment Arguments Judge Kaplan: DMCA is Constitutional Intersession-January, 2003 Pinsky-Internet Law 60 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! Intersession-January, 2003 Pinsky-Internet Law 61 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 Intersession-January, 2003 Pinsky-Internet Law 62 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 Kaplans strong treatment of that issue in Reimerdes] Intersession-January, 2003 Pinsky-Internet Law 63 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 Intersession-January, 2003 Pinsky-Internet Law 64 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 competitors website for their pricing information in order to

undercut them Held: Violation of 18 USC 1030, and Plaintiff entitled to damages Intersession-January, 2003 Pinsky-Internet Law 65 CFAA Cases, Continued US v. Ivanov, 175 F.Supp2d 367 (D. Conn. 2001) Defendant, while in Russia, obtained root passwords for the Online Information Bureaus computers (used to secure Internet credit card transactions). He threatened to issue an rm rf command if not paid $10,000. Heldit 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 timebombs went off and destroyed data. Convicted on one count of computer sabotage Intersession-January, 2003 Pinsky-Internet Law 66 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. Intersession-January, 2003 Pinsky-Internet Law 67 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. HeldNOT Wire Fraud! Copyright act has provisions for its own enforcement. This lead to the enactment of the No Electronic Theft Act (NET). Intersession-January, 2003 Pinsky-Internet Law 68 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. Defendants sentences were enhanced following a 9th Cir. holding that Mass Marketing enhancement applied to Internet transactions Intersession-January, 2003 Pinsky-Internet Law 69 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. Intersession-January, 2003 Pinsky-Internet Law 70 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. Intersession-January, 2003 Pinsky-Internet Law 71 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) HeldGoverment 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. Intersession-January, 2003 Pinsky-Internet Law 72 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 Intersession-January, 2003 Pinsky-Internet Law 73 More ECPA Specht v. Netcscape Communications, WL31166784 ( 2nd Cir. 2002) Netscapes 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 users activities to Netscape without the users knowledge of permission Intersession-January, 2003 Pinsky-Internet Law 74 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 Intersession-January, 2003 Pinsky-Internet Law 75 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 Intersession-January, 2003 Pinsky-Internet Law 76 A Brief Review of First Amendment Law OBrien TestContent 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. Intersession-January, 2003 Pinsky-Internet Law 77 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 publics curiosity, an author is free to choose Intersession-January, 2003 Pinsky-Internet Law 78 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. HeldOnce library chose to provide Internet access, they could not deny adults access to protected speech Intersession-January, 2003 Pinsky-Internet Law 79 Additional CDA Cases Zeran v. American Online, 129 F3d 327 (4th Cir. 1997) CDA provided a Safe Harbor for ISPs 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 Intersession-January, 2003 Pinsky-Internet Law 80 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 childs personal information; (3) give parents a choice as to whether their childs information will be disclosed to third parties; (4) provide parents access to their childs 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. Intersession-January, 2003 Pinsky-Internet Law 81

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 Etchys Birthday Club online contest. Intersession-January, 2003 Pinsky-Internet Law 82

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: UnconstitutionalRequired Libraries to violate First Amendment rights Disabling provisions insufficient to save Cert. Granted Nov. 13, 2002 Intersession-January, 2003 Pinsky-Internet Law 83

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 Intersession-January, 2003 Pinsky-Internet Law 84 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 Intersession-January, 2003 Pinsky-Internet Law 85

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. Intersession-January, 2003 Pinsky-Internet Law 86 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 Intersession-January, 2003 Pinsky-Internet Law 87 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. Intersession-January, 2003 Pinsky-Internet Law 88 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. Intersession-January, 2003 Pinsky-Internet Law 89 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. Intersession-January, 2003 Pinsky-Internet Law 90

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 RemandedThe 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 Intersession-January, 2003 Pinsky-Internet Law 91

Jungers 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 Intersession-January, 2003 Pinsky-Internet Law 92

Key Escrow Bernstein & Junger were about telling others how to use encryption. The National Security Agencys 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 Intersession-January, 2003 Pinsky-Internet Law

93 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 Intersession-January, 2003 Pinsky-Internet Law 94 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. Intersession-January, 2003 Pinsky-Internet Law 95 Tribes 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. Intersession-January, 2003

Pinsky-Internet Law 96 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

Intersession-January, 2003 Pinsky-Internet Law 97 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 Intersession-January, 2003 Pinsky-Internet Law 98 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 Intersession-January, 2003 Pinsky-Internet Law 99 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? Intersession-January, 2003 Pinsky-Internet Law 100 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. HeldND 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) Intersession-January, 2003 Pinsky-Internet Law 101 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 Intersession-January, 2003 Pinsky-Internet Law 102 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 Intersession-January, 2003 Pinsky-Internet Law 103 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 EncryptionPositive Privacy Ease of SurveillanceNegative Privacy Anonymity and EqualityMeritocracy of the Web Significantly Increases Productivity Intersession-January, 2003 Pinsky-Internet Law

104 Future Shock Any sufficiently advanced technology is indistinguishable from magic Arthur C. Clarke Intersession-January, 2003 Pinsky-Internet Law 105 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 Gdels 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. Intersession-January, 2003 Pinsky-Internet Law 106 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 Intersession-January, 2003 Pinsky-Internet Law 107 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

Intersession-January, 2003 Pinsky-Internet Law 108 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. Intersession-January, 2003

Pinsky-Internet Law 109 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??? Intersession-January, 2003 Pinsky-Internet Law

110 The Grid Proposed in the Mid-1990s 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 Intersession-January, 2003 Pinsky-Internet Law 111 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?) Intersession-January, 2003 Pinsky-Internet Law 112 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 Intersession-January, 2003 Pinsky-Internet Law 113 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 Intersession-January, 2003 Pinsky-Internet Law 114

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