The Internet has ushered in a new information age, allowing people across the globe to connect with one another and conveniently access and share information. The Internet however has created a number of serious legal issues involving intellectual property, privacy, and First Amendment rights.
Commerce on the Internet is booming - more and more consumers are looking to the Internet to search for products and services. As e-commerce has grown, so too have the number of online business disputes. Such disputes may involve intellectual property disputes, contractual and licensing matters, online advertising, business interruption, anti trust issues, or claims of unfair competition. Such disputes often involve complex and novel issues involving business, technology, and the law, requiring an innovative and multidisciplinary level of understanding and sophistication.
Businesses and Internet pioneers are increasingly facing major intellectual property and e-commerce disputes involving trademark infringement, cybersquatting, spamming, breach of contract, hacker liability, and unfair competition.
Online Legal Issues
Copyright Law & Litigation On the Internet
The Internet and digital technology has allowed a variety of copyrighted material such as audio recordings, movies, photography, software, and literary and graphic works to be copied, modified, and distributed on a massive scale.
Widespread online copyright piracy has prompted major studios and trade organizations such as the Recording Industry Association of America to file suits against both companies and individuals.
Napster, an online directory that enabled Internet users to copy, trade and distribute copyrighted materials such as music files over the Internet, was the subject of fierce litigation, eventually resulting in the demise of Napster.
The death of Napster however was only a temporary victory for copyright holders. Newer online peer-to-peer file sharing services such as KaZaA and Gnutella which allow individuals to directly transfer copyrighted materials such as music files to one another over the Internet have made policing and enforcing copyright much harder. Such peer-to-peer file sharing services have prompted the music and entertainment industries to become even more aggressive in their efforts.
Linking & Framing
The Internet has also raised novel issues such as hyper-linking and framing. A link is a connection between the content of two different files. A link may lead either to another file in the same web site, or to a file on a different computer located elsewhere on the Internet. In most cases providing a link to another website raising little or no legal issues – in most cases, providing a link to another website is analogous to providing simply providing an address which the user can use to visit that website. The World Wide Web is built on and depends on linking.
However, some types of linking can raise serious copyright and trademark issues. For example one type of linking, called in-line linking, is a means by which the author/owner of a webpage incorporates into their own webpage copyrighted materials (such as graphic files) taken from another person's website or server (via a link). In such cases, the linking web site owner is essentially using and displaying copyrighted material belonging to another person or entity on their website without permission of the rightful copyright owner. Another instance where linking can lead to copyright infringement is when a website links to a website that contains infringing material – in such cases, the linking party may be liable for contributory copyright infringement.
Another practice, called framing, is a technique whereby a webpage is divided into two or more sections with each frame displaying live content from other non-affiliated webpages, but ostensibly appearing to the Internet user as single webpage. Framing of another person's webpage material may raise copyright issues. Framing may also raise trademark issues such as passing-off, where the viewer of the webpage is misled as to the source of the webpage's content.
Contributory Copyright Infringement
Internet Service Providers (ISP) and website hosts may be held liable for copyright infringement even if they do not directly participate in the copying or distribution of copyrighted material.
Under Copyright law a party may be held liable for infringement if they cause or contribute to the infringing conduct of another with knowledge of the other party's infringing activities. This typically occurs when a copyright owner notifies the ISP of infringing activity and the ISP fails to do anything.
Additionally, a party may also be liable for the infringing activities of another, even without knowledge, if the party has the right and ability to control the infringer's acts and receives a direct financial benefit from the infringement.
Trademark & Unfair Competition Issues on the Internet
The rapid growth of the Internet has resulted in a multitude of trademark infringement litigation, most involving domain name disputes.
Domain names can be simply described as website addresses. People find and connect to websites and send emails using domain names. For example, the domain name/Internet address for the website of internet service provider America Online is "AOL.com". If a person wanted to visit the America Online website, they would type "www.aol.com" in their Internet web browser.
There several classes of domain names, each with there own unique suffix. For example the most popular types of domains are called top-level domains - these domains include the suffix ".com" (for commercial), ".net" (for Internet), and ".org" (for organization). Other domains classes include ".info" (for information), ".biz." (for business) and ."us" (for the United States), ".edu" (for education), and ".gov" (for government). It is possible to register the same name on more than one domain class. However, some domains have specific registration requirements. For example, ".gov" domain names are reserved for government entities and ".edu" are reserved for educational institutions.
An individual, business, or website host acquires a domain name by registering and paying a small fee to a domain registry. There are numerous domain registries. The Internet Corporation for the Assignment of Names and Numbers (ICANN) accredits and oversees these registries.
Domain Name Disputes & Cybersquatting
Businesses and marketers agree that a domain name that matches your company's name or brand is extremely important in establishing an strong online presence. Consumers expect a businesses to own and use domain names incorporating their company's name and brand. Domain names consisting of a famous brand or mark carry the goodwill or reputation associated with that brand or mark.
Domain disputes typically arise when a person acquires or uses a domain name that consists of or incorporates the identical or confusingly similar trademark of another.
Cybersquatting is the practice of acquiring a domain name consisting or incorporating the trademark of another for the purpose of selling that domain to the trademark owner or person who may have a rightful property interest in the name. Businesses and individuals sometimes acquire countless domains incorporating famous marks and brands for the purpose of selling the domain back to the "rightful owner" for large sums of money.
In some cases cybersquatter may register and use a domain name incorporating a competitor's identical or confusingly similar tradename or brand for the purpose of unfairly competing against them. Moreover, by registering and using a domain that incorporates the name, brand, or mark of a competitor, the wrongful registrant/user may be able to "pass off" his own goods and services as those of his competitor and take advantage of the goodwill associated with the name, brand, or mark. Consumers may assume that the wrongful registrant's website is somehow affiliated with or sponsored by the mark's rightful owner. Additionally, many consumers may be diverted to the wrongful registrant's website decreasing the traffic and effectiveness of the mark owner's own website and online business.In some cases a cybersquatter may simply "sit" on the name, depriving the trademark's owner use of the domain. Often a cybersquatter will simply "sit" on a name for the purpose of pressuring the trademark owner to pay the cybersquatter money to relinquish the domain name to the trademark holder.
Examples of cybersquatting and online trademark infringement would be registration and/or use of identical or confusingly similar marks across one or more types of domains (e.g. .com, .net, .biz, .org). A confusingly similar mark can include a variation of the mark or even a misspelling of the mark. For example, in one case, "Yahooo.com", "Yahhoo.com", "Atlantayahoo.com", "Bostonyahoo.com" and "Youhoo.com" were found to infringe on Yahoo! Inc's mark.
In some cases trademark infringement may be less obvious. Many webpages on the World Wide Web contain hidden words and phrases in the webpage's underlying code called "meta tags". Many Internet users use search engines to look for websites concerning a particular topic, product, or service. When an Internet user conduct a search on certain search engines, the search engine looks for matches between the search term entered and and the meta tags of millions of webpages on the Internet. If there is a match, the website will be listed in the search results, allowing the search engine user to click on the listing to visit the website. Some individuals insert meta tags consisting of or incorporating the marks of others for the purpose diverting customers using search engines to their own websites.
It is extremely important for trademark owners to actively police and enforce their trademarks online, as continued failure to stop infringing activities could result in loss of their rights in the trademark.
Litigation & the Cybersquatting Protection Act
Utilizing another person, company, or organization's mark, name, or brand online in a manner that is likely to create confusion, mistake or deception as to source or sponsorship of the website or goods or services offered on the website, may give give rise to a lawsuit for trademark infringement or unfair competition. Additionally, if the mark is famous, the trademark owner may have a claim for trademark dilution, where a likelihood of confusion need not be shown.
In addition to trademark and unfair competition claims, a person may be able to bring a legal claim under the Anti-Cybersquatting Protection Act. The act allows the owner of a mark to sue a person that registers, traffics, or uses a domain name that is identical or confusingly similar to the mark, with the bad faith intent to profit from that mark.
It is important to note that there are many cases where use of another's mark is permissible. For example, an online vendor selling a genuine brand name product or service on their website may use that brand name to describe those bona fide products or services, so long as the website does not create confusion or deception as to the ownership or sponsorship of the website. Also, there are instances where use of another person's trademark online may constitute fair use and not be actionable. For example, a website that incorporates a famous mark for purposes of legitimate, non commercial use, such as for news or criticism, may be permissible so long as it does not create consumer confusion or deception.
Domain Dispute Arbitration
A quicker and less costly alternative to litigation is to file a domain dispute arbitration claim with the World Intellectual Property Organization (WIPO). The Internet Corporation for the Assignment of Names and Numbers (ICANN) has created a Uniform Domain Name Dispute Resolution Policy (UDRP) that is used by all accredited domain name registrars. Under the UDRP policy, the owner of a trademark initiate a proceeding to challenge the existing domain name. The owner of the mark must show that: 1) he or she owns the mark (whether registered or unregistered), 2) the domain name being challenged is the same or confusingly similar to the owner's mark, 3) the domain registrant has no legitimate interest or right in the domain name and 4) the domain was registered and used in bad faith.
The registrant/defendant may prove a legitimate interest in the mark may be showing that the mark is being or will be used for the bona fide offering of goods or services. The registrant/defendant may also show a legitimate interest in the mark by showing that he/she is making fair use of the domain without the intent of commercial gain, misleadingly diverting consumers, or tarnishing the trademark.
A trademark owner may prove bad faith by showing that: 1) the domain name registrant registered the name primarily for the purpose of selling or transferring the domain name to the trademark owner, 2) the domain name registrant registered the name primarily to disrupt the business of a competitor, 3) the domain name registrant is using the domain to confuse and mislead consumer to his own site for commercial gain, and 4) the domain name registrant has a history registering the marks of others in order to prevent use of the marks by the trademark owner.
A trademark owner that prevails in the arbitration has the option of either canceling the domain registration or having the domain transferred to his or her control. Unlike trademark or unfair competition legal claims, UDRP arbitration does not allow monetary damages.
Linking and Framing
In addition to possible copyright concerns, the process of linking and framing may also give rise to trademark or unfair competition claims. Framing the content of another website within owns own website template may confuse consumers as to the source of the content. Linking or framing used to "pass off" another person's work as one's own -referred to as "reverse passing" -may also violate trademark and unfair competition laws.
Contributory Trademark Infringement
An Internet Service Provider (ISP), website hosting company, search engine, or online advertising service, may be liable for contributory trademark infringement liability if they knowingly cause or contribute to the infringing conduct of another - such as when the ISP or other entity receives notice of the infringing activity and fails to act.
For example, a business posts a paid advertisement on an Internet search engine that is confusing similar to another business' mark. The trademark owner notifies the search engine of the infringing ad and the search engine does nothing. In this case the trademark owner would have a potential claim against the search engine for contributory infringement.
Online businesses and commercial transactions on the Internet are increasing. Consumers are relying on the Internet for quick and convenient access to information, goods and services. Internet sales have consistently grown each year. Most major businesses have adopted the Internet as an effective marketing and sales tool.
However, the rapid growth of online businesses and online transactions have created a number of legal issues. Major Internet based corporations such as AOL online have been accused of a variety of unlawful activities including consumer and investor fraud. Poorly or hastily drafted agreements dealing with complex e-commerce technology have resulted in major contract disputes involving multi-million dollar ownership or licensing rights.
One relatively recent development that has been the subject of legal dispute is the development of e-commerce or e-business patents. Such patents usually a hybrid mix of business method and software patents. Perhaps the most famous example of such a patent was Amazon.com's "one-click" shopping patent that allowed quicker online shopping. Critics of such patents have criticized such e-patents as obvious and not worthy of patent protection and have stirred a great deal of controversy and litigation.
Spam is the word used to refer to unsolicited mass electronic mailings (emails) sent to computer users and businesses. The most common form of spam are mass advertisements emailed by businesses to thousands or millions of consumers and businesses.
Mass emailings absorb a large amount of network resources, effectively "clogging" computer networks and greatly slowing Internet traffic. The Internet congestion caused by spam results is a slower computer network, which translates in less productivity for many businesses. Additionally, employees flooded with spam emailings must take the time to review and delete such messages further interfering with productivity. Several major lawsuits have been filed against spammers.
States and the federal government are currently addressing the "spam" problem and are proposing serious penalties for spam senders. Law providing large penalties already exist in some countries.
In September 2003, California signed signed into law a groundbreaking bill aimed at banning often offensive "spam" advertisements from the online mailboxes of millions of California computer users. The law makes it illegal for spam marketers to e-mail Californians, unless the recipient specifically requested it or had had a prior business relationship with the advertiser. Violators face fines of $1,000 for each unsolicited message and up to $1 million for campaigns in which hundreds of thousands or even millions of unsolicited emails are sent out daily. Currently, only California and Delaware have laws against spam, although pressure is being put other states and the federal government to pass similar anti-spam legislation.
Hacking & Cyber Attacks
Online businesses are capable of reaching millions of consumers worldwide - however, they are also subject to various cyber attacks which severely cripple their businesses. Computer "viruses", "worms" and "trojans" are malicious computer programs that cause a variety of damage. They can effectively shut down a website, destroy important computer data, cause physical damage to computer systems, or even give one complete access to a business' computer systems. These malicious programs can spread through the Internet, email, and local computer networks. Such cyber attacks are often the work of "hackers" who target the Internet and computer users indiscriminately for notoriety and "bragging rights". In other cases attacks are targeted specifically at an online business for the purpose harming or interrupting that business or stealing data. Businesses have pursued claims against such "hackers" under various legal theories, including trespass, interruption of business, privacy violations, and trade secret violations. In addition to civil actions, such malicious activities also may result in criminal liability.
Privacy Issues & Identity Theft
Some software contains "spyware" which is a program that collects and sends information about the user's computer and/or Internet use, without the user's knowledge.
In other instances "hackers" may invade your computer through a variety of means. In some cases, hackers may breech computer database systems linked to the Internet and steel personal, financial, and medical information, such as name, address, telephone numbers, credit card numbers, passwords, and even social security numbers. Such information can give rise to identity theft, where personal information thieves use the stolen information for various illicit purposes. Computer viruses and worms, which have become increasingly sophisticated and commonplace, may leave computers especially vulnerable to security breaches.
Privacy concerns have prompted federal and state lawmakers to enact laws to protect personal data in the health care, financial services and Internet sectors. Congress issued the Children's Online Privacy Protection Act of 1998 (COPPA), requires that commercial websites obtain verifiable parental consent before collecting personal information from a child under the age of 13 (age 12 and under). A failure to obtain such consent is an unfair and deceptive trade practice. Additionally, Congress recently enacted the Health Insurance Portability and Accountability Act, or HIPAA, requires health care companies to keep patient records secure online. The strict regulations have prompted many health care companies to upgrade their computers, database systems and online security.
In the wake of 9/11 terrorists attacks there has been a tremendous concern for security and national safety prompting new laws, policies, and technologies involving the tracking, surveillance, and collection of personal data from individuals. Privacy advocates and lawmakers are debating whether such legislative proposals and technologies run contrary to privacy protections afforded by the U.S. Constitution.
The same legal rules that apply to defamation offline in publications such as print or TV apply to defamatory statements made on the Internet. A person will be liable for defamation if they knowingly publish a false statement that damages the reputation of another person.
The issue of whether liability exists for Internet service providers, which host or operate online services such as chat rooms or message boards containing libelous or defamatory statements, is still uncertain. Courts had previously ruled that Internet service providers enjoyed absolute immunity under federal law as "distributors" of defamatory material. However, a recent ruling may change that. Under the recent ruling Internet service providers as well as individual users may now be liable for intentionally distributing defamatory information online. If the new ruling stands, then Internet giants like Yahoo and eBay may be required to police their sites and possibly remove postings from chat rooms and message groups whenever someone complains about a defamatory statement made by third party.