E-commerce disputes: legislation and litigation are the brave new world.

• Author: Lunseth, John B., II

"Linking," "meta-tags," "framing"--they're all part of the new world, but are they infringements? That's the question for the next cases

Y2K (otherwise known as the year 2000) turned out to be an interesting one for the digital economy. The dreaded meltdown didn't occur, but many other issues pushed their way to the front pages. In the last quarter of the year, the big news was the bursting of the dot.com bubble, with more than 210 Internet companies closing their doors, taking with them more than $1.5 billion in investment money.

Despite these "growth pains," electronic commerce continued to expand. Consumers increased their online shopping by 46 percent, making purchases of about $56 billion in sales in U.S. dollars for the year. By 2010, ActivMedia Research projects business-to-consumer (B2C) sales will exceed $1.1 trillion. Other sectors of the Internet economy, notably business-to-business (B2B) are growing at an even faster rate, and by 2010, B2C transactions will comprise only a third of the total Internet economy.(1)

This rate of growth has dramatically impacted the law and law firms. Lawyers now operate in ways markedly different from just five years ago. E-mail communication with clients, opposing counsel and even the courts is becoming the norm. The first place prospective clients go to find information about lawyers and law firms is the Internet and the law firm's web site. Insurance carriers are writing insurance policies to cover new types of potential liability that did not exist just a few years ago.

A comment is appropriate about the quality and nature of the authorities cited. There are two unique things about Internet and e-commerce law that make research different.

First, the Internet reaches everywhere, and issues of first impression may arise in the United Kingdom, a European country, China or who knows where. Since the reach of material put on the Internet is truly worldwide, it is no longer possible to ignore legal rules and decisions in other countries because clients' websites are accessible there, or web sites hosted in those countries are accessible in homes and businesses in the United States. On the other hand, it is not always easy to get copies of decisions or easy to understand what they mean in the context of the local legal regime.

Second, the Internet is a place of instant communication, but it has not yet learned the value of documentation. Word of novel complaints or decisions spreads around the Internet instantly, often even before it is published by the court or by a reporting service. A week or a month later the Internet community has moved on to a new issue, and the posted document is deleted or replaced with other material because it is no longer "cutting edge." All that is left is discussion of the cases archived by news sources and a few law firm websites. When a writer provides a citation or hyperlink to the material, the citation means the material was there when the site was visited, but it may not be there when the reader tries to access it.

What are some of the e-commerce issues and disputes currently being litigated? First, a look at the principal new federal legislation aimed at e-commerce and then the legal disputes.

NEW LEGISLATION

The rapid development of new technologies has severely taxed the ability of existing laws to protect intellectual property. A number of statutes have been enacted at the federal level to deal with this problem, notably the Digital Millennium Copyright Act and the No Electronic Theft Act, both of which deal primarily with copyright issues, and the Anticybersquatting Consumer Protection Act, which relates to Internet domain names. These acts are complex, but a summary of them is important.

1. Digital Millennium Copyright Act

   The Digital Millennium Copyright Act (DCMA) is five separate acts dealing with separate subjects, ranging from the copyrightability of vessel hulls to computer maintenance. There is a detailed summary posted by the U.S. Copyright Office at . Titles I and II of DCMA are worth noting.

   1. Title I--The WIPO Copyright and Performances and Phonograms Treaties Implementation Act of 1998

      Title I implements two World Intellectual Property Organization (WIPO) treaties--the Copyright Treaty and the Performances and Phonograms Treaty--which obligate member states to prevent circumvention of technological measures used to protect copyrighted works and to prevent tampering with the integrity of copyright management information. The provisions implementing these treaties are found at 17 U.S.C. [sections] 1201 et seq. Section 1201 deals with circumvention of technological measures used to protect copyrighted works, while Section 1202 deals with the integrity of copyright management information, and subsequent sections deal with remedies.

      Section 1201 divides technological measures into two categories, those that prevent unauthorized access to a copyrighted work and those that prevent unauthorized copying. With some exceptions, Section 1201 prohibits the making or selling of devices or services that are used to circumvent either category of technological measure. It makes the act of circumvention itself unlawful as to the first category (measures preventing access), but not the second (measures preventing unauthorized copying). The reason for the distinction was to preserve the public's right of fair use, which often involves unauthorized copying of a work to which the public already has authorized access.

      Circumventing measures controlling access to copyrighted works became unlawful on October 28, 2000. The manufacture or sale of circumvention devices became unlawful on enactment of the statute in 1998.

      Section 1201 applies to devices that meet any of three requirements:

      * they are made or designed primarily to circumvent control measures,

      * they have only limited commercially significant purposes or uses other than circumvention, or

      * they are marketed for use in circumventing control measures.

      Section 1201 (c) contains savings clauses preserving certain existing rights and copyright infringement defenses. Subsections (c)(1) and (2) preserve all existing rights, remedies and defenses to copyright infringement, including fair use, and make clear that the act does not change vicarious or contributory liability. Subsection (c)(3) provides that nothing in the act requires that any consumer electronic, telecommunication or computing product respond to any particular technological measure protecting the rights of a copyright owner. Subsection (c)(4) preserves rights of free speech and press for activities using consumer electronics, telecommunications, or computing products.

      Section 1201 is subject to a number of exceptions, the broadest of which is Section 1201(a)(1)(B)-(E), which establishes ongoing administrative rule-making procedures for creating new exemptions. Two other provisions create exemptions for nonprofit libraries, archives and educational institutions and law enforcement.

      The rest of the exceptions have some significance to commerce on the Internet. They are:

      * Reverse engineering (Section 1201 (f)). Permits the development of technological means for circumvention and actual circumvention by a person who has lawfully obtained a right to use a copy of a computer program for the sole purpose of identifying and analyzing elements of the program necessary to achieve interoperability with other programs, to the extent that such acts are permitted under copyright law.

      * Encryption research (Section 1201 (g)). Permits the development of technological means for circumvention and actual circumvention, in order to identify flaws and vulnerabilities of encryption technologies. It contains an elaborate list of criteria to determine what is legitimate encryption research and who is qualified to enjoy the exemption.

      * Protection of minors (Section 1201 (h)). Allows a court applying the prohibition to consider necessity for technology that prevents access of minors to material on the Internet.

      * Personal privacy (Section 1201(i)). Permits circumvention when the technological measure or the work it protects is capable of collecting or disseminating personally identifying information about the online activities of a natural person.

      * Security testing (Section 1201(j)). Permits the development of technological means for circumvention and actual circumvention for the purpose of testing the security of a computer, system or network, with the authorization of its owner or operator.

      17 U.S.C.A. [sections] 1202 implements the WIPO treaty obligation to protect digital copyright management information. "Copyright management information" is defined as any of the following information conveyed in connection with copies or phono records of a work or performances or displays of a work, including in digital form, except information about the user:

      * the title and other information identifying the work, including the notice of copyright,

      * name and other identifying information about the author,

      * name and other identifying information about the copyright owner, including that contained in the copyright notice,

      * except for public performances by radio and television broadcast stations, the name and other identifying information about a performer whose performance is fixed in a work other than an audiovisual work,

      * except for public performances by radio and television broadcast stations, name and other identifying information about a writer, performer or director of an audiovisual work

      * terms and conditions for use of the work, and

      * other information the U.S. Register of Copyrights may prescribe by regulation.

      Subsection (a) prohibits the knowing provision or distribution of false management information done with the intent to induce, enable, facilitate or conceal infringement. Subsection (b) prohibits unauthorized and intentional removal or alteration, or the dissemination of management information or copies of works knowing...