E-LAW UPDATE #9, PART 1
by David J. Loundy and Blake A. Bell
January 6, 1999

A searchable Archive of all issues of Bell Cyberlaw Update and all issues
of E-Law Update is available at
http://www.cyberlaw.se/english/nyhetsbr1.htm.  E-Law Update, in French, is
available at http://www.digiplace.com/e-law/ and
http://www.juriscom.net/droit/elaw/sommaire.htm.

To report Internet Law developments for inclusion in the next newsletter,
contact b_bell@stblaw.com or David@Loundy.com.

CYBERLAW YEAR END SUMMARIES AND 1999 PROGNOSTICATIONS:  With 1998 now drawn
to a close and 1999 upon us, it is time to reflect on Cyberlaw developments
in 1998 and to consider what may lie ahead for Cyberlawyers in 1999.  For
the best articles on these topics, see Carl S. Kaplan, A Major Growth Year
for Cyberlaw, The New York Times on the Web, Dec. 25, 1998,
http://www.nytimes.com/library/tech/98/12/cyber/cyberlaw/25law.html; Carl
S. Kaplan, Major Court Decisions Will Shape the Internet in 1999, The New
York Times on the Web, Jan. 1, 1999,
http://www.nytimes.com/library/tech/99/01/cyber/cyberlaw/01law.html; Wendy
R. Leivowitz, Lawyers and Technology:  High-Tech Issues To Watch in 1999,
Law Journal Extra! Nat'l L.J., Dec. 22, 1998,
http://www.ljx.com/cgi-bin/f_cat?prod/ljextra/data/texts/1998_1222_33.html;
The Industry Standard, The Year in Review - The 10 Stories That Shook the
Net, Dec. 21, 1998, http://www.thestandard.com/articles/special/?home;
Elizabeth Wasserman, A New Year Brings Talk of New Rules, The Industry
Standard, Dec. 31, 1998,
http://www.thestandard.com/articles/display/0,1449,3019,00.html?01; Bob
Tedeschi, '99:  A Year To Make Good on Electronic Commerce, The New York
Times on the Web, Dec. 29, 1998,
http://www.nytimes.com/library/tech/98/12/cyber/commerce/29commerce.html;
Pamela Mendels, Education:  Issues That Defined the Year for Schools and
Computers, The New York Times on the Web, Dec. 30, 1998,
http://www.nytimes.com/library/tech/98/12/cyber/education/30education.html;
Alan N. Sutin, Tech Trends:  Cyber Law - High Tech Agenda in Congress,
N.Y.L.J., Dec. 21, 1998,
http://www.ljx.com/cgi-bin/f_cat?prod/ljextra/data/texts/122198t2.htm;
David Plotnikoff, Time To Cast A Wide Net for 1999 Predictions, The Dallas
Morning News Online, Jan. 5, 1999,
http://www.dallasnews.com/technology-nf/techbiz301.htm; and Courtney
Macavinta, Civil Liberties Online -- The Year That Was, c/net News.com,
Dec. 30, 1998, http://www.news.com/News/Item/0,4,30400,00.html.

CYBERJURISDICTION:  On November 24, the Honorable Lawrence M. McKenna of
the United States District Court for the Southern District of New York
issued an interesting decision in K.C.P.L. Inc. v. Nash, No. 98 Civ. 3773
(LMM) (S.D.N.Y., Nov. 24, 1998).  In its decision, the Court granted
defendant's motion to dismiss for lack of personal jurisdiction.  The Court
held that the defendant, a California resident, had not "transacted
business" within New York as required for jurisdiction under the New York
long arm statute (New York Civil Practice Law and Rules 302) by virtue of
the defendant's offer to sell the domain name "reaction.com" to the owner
of the trademark "REACTION."  The Court distinguished the Ninth Circuit's
decision in Panavision Int'l LP v. Toeppen, 141 F.3d 1316 (9th Cir. 1998)
by holding that the requirements for finding personal jurisdiction under
New York's long arm statute are more stringent than those required under
California's long arm statute.  The Court also noted that the case before
it was distinguishable from the Panavision v. Toeppen case because in the
case before it, the facts as alleged did not support a finding that the
defendant was a cybersquatter.  A copy of the decision is available at
http://www.bna.com/e-law/cases/kcpl.html.  See also Court Proceedings:
Jurisdiction - Offer To Sell Domain Name Does Not Create Contacts To
Satisfy New York Long-Arm Law, 3(48) Electronic Commerce & Law (BNA), Dec.
23, 1998; News:  Trademarks - Allegations of 'Cyber-Piracy' Did Not Suffice
To Establish Jurisdiction Over Non-Resident, 57(1405) Patent, Trademark &
Copyright J. (BNA), Dec. 17, 1998.

CYBERLIBEL (ISP LIABILITY):  On December 28, a significant ISP cyberlibel
decision was released by the New York Appellate Division, Second Department
in a case entitled Alexander G. Lunney v. Prodigy Services Co.  The court
reversed Westchester County Supreme Court Justice Joan B. Lefkowitz's
January 18, 1998 denial of Prodigy's motion for summary judgment dismissing
the plaintiff's claims for cyberlibel, negligence, harassment and
intentional infliction of emotional distress.  The suit was brought on
behalf of a young member of the Boy Scouts of America.  It seems that in
1994, an anonymous practical joker sent a leader of the plaintiff's Boy
Scout Troop an abusive, obscene and threatening e-mail message.  The
"joker" also posted inappropriate bulletin board messages using service
accounts that were opened in the boy's name without his knowledge.  The
boy's Scout Master reportedly was told of the message, went to the boy's
home and confronted him in front of his mother.  Prodigy also wrote the boy
and said that his account had been suspended.  Additionally, the boy
claimed that internal Prodigy papers erroneously described him as a
delinquent who had committed credit card fraud and had transmitted obscene
material.  When the fraudulent accounts were tracked down, Prodigy
apologized to the boy, who then sued.  Interestingly, in reversing the
lower court's decision and granting summary judgment dismissing the claims,
the Second Department disagreed with the decision in Stratton Oakmont Inc.
v. Prodigy Services Co., No. 31063/94, 1995 WL 323710 (N.Y. Sup. Ct., May
24, 1995).  In that case, the Court held Prodigy liable as a publisher of
defamatory postings of a third party on Money Talk, a Prodigy bulletin
board.  Prodigy held itself out as exercising editorial control over the
content of postings on its bulletin boards, using filtering software to
block offensive postings and posting guidelines describing prohibited
conduct.  Id. at *4.  The widely-criticized decision in the Stratton
Oakmong case quickly led to the enactment of Section 230(c) of the
Communications Decency Act of 1996, 47 U.S.C.A. 230(c) which states, in
part, that "[n]o provider or user of an interactive computer service shall
be treated as the publisher or speaker of any information provided by
another information content provider."  For a very informative article
about the Second Department's December 28 decision, see
http://www.lawnewsnetwork.com/stories/jan/e010499g.html.  See also
http://www.cnnfn.com/digitaljam/9901/04/prodigy/;
http://www.wired.com/news/news/email/member/politics/story/17148.html;
http://www.news.com/News/Item/0,4,30491,00.html; and Kara Swisher, Prodigy
Cleared by Appeals court of Responsibility for Nasty E-Mail, Wall St. J.
Interactive Ed., Jan. 5, 1999 (available via search at
http://interactive.wsj.com).

CYBERLIBEL (CORPORATE CYBERSMEARS):  Dean Dumont of Milford, New Hampshire
recently thought it would be a good idea to log on to Silicon Investor to
discuss the performance of some of the stocks in which he has invested.  He
recently had been engaged in heated postings of comments on a company that
he was following -- Legacy Software.  What he found when he logged on was
an electronic posting of a cyberlibel complaint filed against him and two
other defendants by Legacy Software alleging that the defendants had posted
defamatory comments on the message board.  For an interesting article about
the suit, filed in the United States District Court for the District of New
Hampshire, see http://www.wired.com/news/news/business/story/16785.html.

INTERNET COPYRIGHT ISSUES (ONLINE MUSIC):  On December 15, members of the
recording industry announced a plan labeled the Secure Digital Music
Initiative (SDMI).  The plan will provide a "voluntary framework" to
provide online music through secure means to reduce the risk of digital
piracy.  The move reportedly is viewed by some as a frontal assault on
those who download MP3 music files from the Web.  The industry has been
mobilized in the face of the purported "threat" represented by Diamond
Multimedia Systems Inc. and its Rio PMP300, a small device that allows its
owner to download MP3 music files, to store those files and to replay up to
sixty minutes of digital MP3 music files from the Web.  See E-Law Update #
6, http://www.cyberlaw.se/english/Elaw-I/6.htm, E-Law Update #7,
http://www.cyberlaw.se/english/elaw-7.htm, and E-Law Update #8,
http://www.cyberlaw.se/english/elaw-i-8.htm.  The industry reportedly fears
the Rio and other such devices and the ease with which they may be used to
engage in digital piracy.  See News:  Copyrights - Music Firms Unite To
Devise Pirate-Proof Platform for Online Distribution of Sounds, 3(48)
Electronic Commerce & Law Rep. (BNA), Dec. 23, 1998.

SPAM (AOL SPAM SUIT VICTORIES AND NEW LAWSUITS AGAINST SPAMMERS):  On
December 21, America Online announced that it has prevailed in three
lawsuits that it brought against spammers earlier this year and that it has
filed nine additional suits.  See
http://www-db.aol.com/corp/news/press/view?release=531&.  See also
http://www.thestandard.com/articles/display/0,1449,2941,00.html?ext.nl,
http://www.news.com/News/Item/0%2C4%2C30181%2C00.html?dd.ne.tx.ts2.1221,
http://www.internetnews.com/bus-news/1998/12/2101-aol.html,
http://www.washingtonpost.com/wp-srv/WPlate/1998-12/22/0711-122298-idx.html
,
http://www.wired.com/news/print_version/politics/story/16976.html?wnpg=all,
http://www.ljx.com/LJXfiles/aol_spam.html,
http://www.mercurycenter.com/business/tech/docs/043456.htm,
http://www.infobeat.com/stories/cgi/story.cgi?id=2557676833-b9e,
http://www.idg.co.nz/nzweb/c256.html,
http://www.latimes.com/HOME/NEWS/WIRES/WBUSINESS/tCB00V0937.1.html,
http://www.mercurycenter.com/business/top/082071.htm,
http://www.nytimes.com/library/tech/98/12/biztech/articles/20spam.html, and
http://www.techserver.com/noframes/story/0,2294,3059-5206-37554-0,00.html.
What follows immediately below is information about each of the three
victories:

America Online Inc. v. LCGM, Inc., Civil Action No. 98-102-A (E.D. Va.,
complaint filed Jan. 22, 1998).  According to AOL, the court found that by
forging e-mail headers using the AOL.com domain name, LCGM infringed on
AOL's trademark.  The court found evidence of fraud and "applied both state
(VA) and federal computer fraud laws."  The court ordered LCGM to cease its
spam to AOL members and ordered LCGM to pay damages and costs to AOL,
including attorneys' fees.  The Complaint in the case may be found at
http://legal.web.aol.com/decisions/dljunk/lcgmcomp.html.  For AOL's press
release about the initial filing of the suit, see
http://legal.web.aol.com/decisions/dljunk/lcgmpres.html.  For further
background, see Bell Cyberlaw Update #25,
http://www.cyberlaw.se/english/newpage23.htm.  Readers will recall that
LCGM also was successfully sued by Hotmail for spamming Hotmail users.  See
Bell Cyberlaw Update #24, http://www.cyberlaw.se/english/newpage22.htm;
Bell Cyberlaw Update #36, http://www.cyberlaw.se/english/bell9.htm; and
Bell Cyberlaw Update #41, http://www.cyberlaw.se/english/bell13.htm.

America Online Inc. v. Prime Data Systems, Inc., et al., Civil Action No.
97-1652-A (E.D. Va., complaint filed Oct. 17, 1997).  AOL says that the
Court awarded compensatory and trebled punitive damages against Prime Data
Systems and its principal operator, Vernon Hale.  The Court also reportedly
found that the defendants' conduct violated AOL's trademark rights and,
thus, awarded AOL its attorneys' fees.  Additionally, the Court reportedly
permanently enjoined the defendants from sending spam to AOL or its
customers.  AOL's Complaint is found at
http://legal.web.aol.com/decisions/dljunk/primecom.html.  AOL's press
releases about the initial filing of the suit and subsequent developments
in the suit may be found at
http://legal.web.aol.com/decisions/dljunk/primep10.html,
http://legal.web.aol.com/decisions/dljunk/primep35.html, and
http://legal.web.aol.com/decisions/dljunk/primep311.html.  For further
background, see Bell Cyberlaw Update #18,
http://www.cyberlaw.se/english/newpage16.htm; and Bell Cyberlaw Update #28,
http://www.cyberlaw.se/english/newpage26.htm.

America Online Inc. v. IMS, et al., Case No. 98-0011-A (E.D. Va., complaint
filed January 6, 1998).  AOL says that the Court ruled against IMS, its
principal (Joe Melle), Brian Robbins and Neil Byron Goodson finding each
liable for compensatory damages and trebled punitive damages.  The Court
reportedly granted AOL permanent injunctive relief barring the defendants
from sending spam to AOL or its customers and further barred them from
using AOL's services for any reason.  The Complaint is at
http://legal.web.aol/decisions/dljunk/imscomp.html.  AOL's Memorandum of
Points and Authorities In Support of Its Motion for Preliminary Injunction
Against Defendant Joseph J. Melle, Jr. may be found at
http://legal.web.aol/decisions/dljunk/imsmemo.html.  An earlier Memorandum
Opinion entered in the case may be found at
http://legal.web.aol.com/decisions/dljunk/imsopin.html.  A press release
about the initial filing of the suit may be found at
http://legal.web.aol.com/decisions/dljunk/imspress.html.  For further
background, see Bell Cyberlaw Update #21,
http://www.cyberlaw.se/english/newpage19.htm.  Readers will also recall
that Juno filed suit against IMS earlier as well.  See Bell Cyberlaw Update
#15, http://www.cyberlaw.se/english/newpage13.htm.

What follows is information about each of the nine new lawsuits filed by
AOL:  (1) AOL v. Power Promo and Dayton (E.D. Va.) - seeks relief for
spamming and to hold Power Promo accountible for the manufacture and
distribution of spam software; (2) AOL v. GreatDeals.Net (Fairfax County
Court, Virginia) - seeks damages and an end to spam sent by GreatDeals.Net
to AOL customers; (3) AOL v. "Virtual Girlfriend" Spammer (S.D. Cal.) -
Suit against a "ring of spammers" who allegedly defraud consumers who
attempt to purchase the offered software; (4) AOL v. Michael Persaud, et
al. (S.D. Cal.) - Seeks relief against Persaud, aka J. Butterfield, Henry
Summers and Brian Crawford, for sending AOL customers millions of spams and
for "fraudulently" abusing the AOL.com domain name; (5) AOL v. USA Home
Employment (C.D. Cal.) - Seeks relief against spammer who sends "get rich
quick" envelope stuffing spams to AOL customers; (6) AOL v. National Health
Care Discounts, Inc. (N.D. Iowa, Western Division) - AOL alleges that
National Health Care uses spammers to generate sales leads by deluging AOL
customers with spam; (7) AOL v. Global Marketing Solutions, Inc. (M.D.
Fla.) - Seeks relief against spammer who sends "Guaranteed . . . $10,000
cash loan" spams and alleges that spammer has engaged in deceptive and
fraudulent practices designed to avoid AOL's filtering and blocking
efforts; (8) AOL v. First Class Advertising (M.D. Fla.) - Seeks relief
against "Beanie Baby" spammer; and (9) AOL v. Christian Brothers (S.D.N.Y.)
- Seeks relief against spammer who touts "a miracle cancer cure" that
consists of apricot seeds.

SPAM (PROPOSED FEDERAL LEGISLATION): On December 21, the Chairman of the
U.S. House of Representatives Commerce Committee, Tom Bliley (Republican -
Virginia), announced in a speech that his legislative agenda for 1999
includes federal legislation
ìto resolve the problem of computer junk
mail.î  Anti-spam group CAUCE reportedly viewed the speech as an indication
that anti-spam legislation may move forward this year.  See
http://www.wired.com/news/news/politics/story/17065.html, and
http://www.cnnfn.digitaljam/newsbytes/123679.html.

LEGAL PRACTICE AND THE INTERNET (COMPLAINT SITES): An increasingly-frequent
tactic being used in disputes between individuals and large companies is
the use of Web sites by individuals to tell their side of the story and to
encourage others to come forward and tell their horror stories regarding
their own dealings with the same companies.  A case in point:  a New Jersey
attorney recently represented a couple involved in a legal dispute with
Illinois-based moving company Bekins Van Lines Co.  The couple created a
Web site telling their story and inviting others to come forward.  The
lawyer reportedly suggested that his adversary should check out the site
and, reportedly, ten minutes later Bekins settled the claim offering total
restitution to the couple on the sole condition that they take down their
Web site.  See http://www.lawnewsnetwork.com/stories/jan/e010499a.html.
Readers will recall that recently Web sites entitled Ballysucks,
Chasemanhattansucks, U-Hell.com (U-Haul) and netscapesucks.com have been in
the Cyberlaw news.  See E-Law Update #8,
http://www.cyberlaw.se/english/elaw-i-8.htm.

INTERNET TRADEMARK LAW (DOMAIN NAME DISPUTES):  Add "Colorworks.com" to the
lengthy list of disputed domain names that have ended up in court.  Desktop
Technologies Inc. of Boyertown, Pennsylvania reportedly has filed suit in
Federal Court in Pennsylvania against a Vancouver, British Columbia company
using the domain name www.colorworks.com.  The defendant, ColorWorks
Reproduction & Design, is a Canadian company that does business in Canada
and holds the Canadian trademark to its name.  The case, which is pending
before the Honorable Ronald J. Buckwalter, alleges claims for trademark
infringement and unfair competition in violation of state law.  ColorWorks
Reproduction & Design reportedly has raised a cyberjurisdiction issue.  It
asserts that it conducts no business in Pennsylvania, has no employees in
Pennsylvania and is not qualified as a foreign corporation in Pennsylvania.
It further argues that its Website alone is insufficient to establish
jurisdiction over it in a Pennsylvania court.  For an article about the
suit, see http://www.lawnewsnetwork.com/stories/dec/e123198f.html.

INTERNET TRADEMARK LAW (DOMAIN NAME DISPUTES):  Microsoft Corporation
reportedly has filed suit against two Texans, Kurtis K. Karr and Kenny
Brewer, for allegedly registering ten domain names that infringe on
Microsoft trademarks.  The two men reportedly are involved with firms that
do business as TexasRGV.com and Trademarkdomains.com.  The suit reportedly
was filed in Federal Court in Texas during the week of December 21 and
seeks temporary and permanent injunctions against the two, alleging that
they are cybersquatters.  See
http://www.zdnet.com/zdnn/stories/news/0,4586,2180422,00.html,
http://www.usatoday.com/life/cyber/tech/cte073.htm,
http://www8.zdnet.com:80/pcweek/stories/news/0,4153,382636,00.html,
http://www.nytimes.com/library/tech/99/01/biztech/articles/01soft.html, and
http://www.news.com/News/Item/Textonly/0,25,30452,00.html.

INTERNET TRADEMARK LAW (DOMAIN NAME DISPUTES):  According to a posting to
the Cyberia-L list, the Sheriff Court in Glasgow has granted an interim
interdict (similar to a temporary restraining order) in favor of the
proprietor of www.menu.co.uk against the proprietor of www.menus.co.uk.
The owner of the latter site reportedly registered its domain name
subsequent to registration of the similar domain name www.menu.co.uk and
reportedly intended to publish takeout menus and prices for local
restaurants in a fashion similar to www.menu.co.uk.  The Court reportedly
granted the interim interdict  based on a passing off theory.  As of the
date of this writing, visitors to http://www.menus.co.uk are greeted with a
statement that "[t]his site has absolutely no connection with any other
site or with www.menu.co.uk  Unfortunately, a legal dispute has arisen
between the owners of this site and that of www.menu.co.uk.  As a mark of
good faith, we have suspended this site for 72 hours in order that a speedy
resolution of our dispute can take place and call on the owners of
www.menu.co.uk to do likewise.  Efforts to access the Web site at
http://www.menu.co.uk result in a "remote site or server may be down"
message.

INTERNET TRADEMARK LAW (DOMAIN NAME DISPUTES):  Thanks to E-Law Update
reader Valerie Sedallian, a Cyberlawyer in France who may be reached at
sedallian@argia.fr, for updating us on an important development in the
Alice.fr domain name litigation in France.  See E-Law Update #3,
http://www.cyberlaw.se/english/elaw-3.htm.  The dispute arose between an
advertising agency that registered the Alice mark for class 35 in 1975 and
a computer company founded in 1996 that registered the domain name
"alice.fr".  The lower court ordered the computer company to give up its
registration of the domain name, rejecting the concept that "first come,
first served" applied to the domain name at issue.  As Valerie Sedallian
predicted, on December 4 the Court of Appeal of Paris reversed the lower
court decision, finding among other things that because the two companies
are involved in totally different activities, there is no likelihood of
confusion among consumers.  The decision is available in French at
http://www.juriscom.net/jurisfr/alice.htm.

INTERNET TRADEMARK LAW (DOMAIN NAME DISPUTES):  On December 11, the United
States District Court for the District of Maryland issued a temporary
restraining order in a case brought by Pfizer, maker of the impotence drug
named Viagra, against Jon and Cherie Messner.  The Messners operate a
sexually-explicit Web site to which they steer users through more than 120
domain names -- including viagrafalls.com.  The Messners reportedly failed
to heed cease-and-desist letters issued by Pfizer until they were sued.
The trademark infringement suit also seeks damages.  See
http://www.wired.com/news/news/business/story/16793.html.

INTERNET TRADEMARK LAW (DOMAIN NAME ISSUES):  The U.S. Secretary of
Commerce, the National Telecommunications and Information Administration
and the National Research Council reportedly are already more than a month
behind in connection with the commencement of a study regarding domain
names and trademark law.  The study was required to begin within thirty
days of the passage of H.R. 3332.  That bill was enacted into law last
October.  The study reportedly will touch upon issues currently being
considered by the World Intellectual Property Organization which is
studying how to resolve international disputes between trademark owners and
domain name owners.  The National Research Council reportedly claims that
it cannot begin the study until the National Telecommunications and
Information Administration defines the scope of the study.  See News:
Internet - NTIA, NRC Still Working To Define Scope of Domain Names and
Trademarks Study, 3(48) Electronic Commerce & Law Rep. (BNA), Dec. 23,
1998.

DOMAIN NAME ISSUES (CYBERSQUATTING):  A small group of cybersquatters
reportedly has been registering domain names based on the names of
politicians who are expected to run for President of the United States in
2000.  Purchasers reportedly are candid:  they will sell the names to the
highest bidders and do not care if they sell to supporters or opponents of
the candidates.  For an interesting and in-depth article about the
practice, see
http://www.nytimes.com/library/tech/99/01/biztech/articles/02domain-preside
nts.html.

DOMAIN NAME ISSUES (CYBERSQUATTING):  On January 4, Omega Protein
Corporation reportedly filed a class action against Morgan L. Flom and two
companies with which he allegedly is affiliated in the United States
District Court for the Southern District of Texas.  The complaint alleges
that the defendants registered and offered to sell to Omega two domain
names that unlawfully incorporate Omega's common law trademark and
tradename:  omegaprotein.com and omegaproteins.com.  The complaint further
alleges violation of state and federal unfair competition laws and the
Texas antidilut
ion statute.  See Schirrmeister Ajamie Announces:  Omega
Protein Sues Over Ownership of Internet Domain Names, Business Wire, Jan.
4, 1999.

DOMAIN NAME ISSUES (CYBERSQUATTING):  On August 31, 1998, the Honorable
John G. Koeltl of the United States District Court for the Southern
District of New York granted summary judgment in favor of the plaintiff's
trademark dilution claims in Toys "R" Us Inc. v. Abir, No. 97 Civ. 8673
(S.D.N.Y., Aug. 31, 1998).  The court held that a cybersquatter's offer to
sell a domain name based on a registered mark to the owner of that
registered mark fulfills the "commercial use in commerce" requirement for
finding violation of federal and state antidilution laws.  See Court
Proceedings:  Trademarks - Cybersquatter's Offer To Sell Domain Name
Constitutes Commercial Use of Trademark, 3(41) Electronic Commerce & Law
Rep. (BNA), Oct. 28, 1998.

DOMAIN NAME ISSUES: The Berkman Center for Internet & Society at Harvard
Law School has announced that it is studying possible individual and
organizational membership structures for the Internet Corporation for
Assigned Names and Numbers (ICANN).  Additionally, on December 17, 1998,
ICANN announced that it had appointed the following individuals to the
ICANN Membership Advisory Committee: Izumi Aizu, Diane Cabell, George
Conrades, Greg Crew, Pavan Duggal, Kanchana Kanchanasut, Daniel Kaplan,
Siegfried Langenbach, Nii Quaynor, Oscar Robles Garay, Dan Steinberg, Tadao
Takahashi and Jonathan Zittrain (non-voting Liaison to Berkman Center
membership study).  For background, see
http://www.icann.org/icann-pr17dec98.html,
http://www.thestandard.com/articles/display/0,1449,2896,00.html?1447, and
http://www.wired.com/news/news/business/story/16907.html.

INTERNET TRADEMARK LAW (ONLINE AUCTION OF COUNTERFEIT GOODS): On December
15, online auction site eBay halted an auction of so-called "herbal
Viagara" after the maker of the Viagara impotency drug, Pfizer, learned of
and objected to the sale.  Pfizer reportedly has an employee who monitors
auction sites looking for offers to sell such products and then issues
cease and desist letters to the sellers.  For an article about the legal
risks to online auction sites in connection with such sales (quoting E-Law
Update co-editor Blake Bell), see Polly Sprenger, Tracking Bogus Brands
Online, Wired News, Dec. 16, 1998, Part 1,
http://www.wired.com/news/news/business/story/16854.html and Part 2,
http://www.wired.com/news/news/business/story/16854.html?wnpg=2.  For an
article claiming that illegal items have recently been offered for sale on
the eBay site (including an AK-47 assault rifle, a switchblade banned in
the United States, and Cuban cigars that also cannot be imported into the
United States lawfully) see
http://www.sfgate.com/cgi-bin/article.cgi?f=/chronicle/archive/1998/12/22/B
U32382.DTL&type=printable.

INTERNET TRADEMARK LAW ("YOU'VE GOT MAIL"): On December 24, Chief Judge
Claude Hilton of the United States District Court for the Eastern District
of New York denied a request by America Online Inc. for a temporary
restraining order and preliminary injunction againat AT&T's WorldNet
Internet access service.  AOL sought to block Worldnet from using the terms
"You have mail," "buddy list" and "IM" (an acronym for "Instant Message").
AOL registered the term "You've got mail" in 1989 and reportedly is "in the
process" of registering the other terms that it has been using since 1997.
See http://www.news.com/News/Item/Textonly/0,25,30479,00.html?pfv,
http://www.cnnfn.com/digitaljam/newsbytes/123820.html,
http://www.mercurycenter.com/business/tech/docs/048224.htm, and
http://www.thestandard.net/articles/display/0,1449,3039,00.html.

INTERNET TRADEMARK LAW (USE OF "PLAYBOY" AND "BUNNY" ON WEB SITE): On
November 2, following a bench trial, an interesting decision was released
in Playboy Enterprises, Inc. v. Universal Tel-A-Talk, Inc., et al., Civ.
Action No. 96-6961, 1998 U.S. Dist. LEXIS 17282 (E.D. Pa. Nov. 2, 1998).
The court held that Universal's use of the registered "Playboy" and "Bunny"
marks on its "Playboy's Private Collection" subscription Web site
constitutes counterfeiting, trademark infringement and trademark dilution.
Finding the conduct to be intentional, the court awarded statutory damages
of US$10,000 as well as costs and attorneys' fees.  The court held both the
company and its principal liable because the principal made the decision to
use Playboy's marks on the site.   Thanks to Martin H. Samson and the
Internet Library that he maintains at Phillips Nizer Benjamin Krim & Ballon
LLP for bringing this case to our attention.

INTERNET UNFAIR COMPETITION AND TRADE SECRETS LAW: There have been
developments in the dispute between Wal-Mart Stores Inc. and a group
including Amazon.com.  E-Law Update readers will recall that on October 16,
Wal-Mart brought suit in Arkansas state court against Amazon.com, venture
capital firm Kleiner Perkins, a Kleiner Perkins startup company named
Drugstore.com and Richard Dalzell, a former Wal-Mart employee now employed
by Amazon.com.  Wal-Mart alleges that Amazon.com has hired fifteen current
or former Wal-Mart employees in an effort to gain access to proprietary
information regarding Wal-Mart's information and logistics systems.  See
E-Law Update #6, http://www.cyberlaw.se/english/Elaw-II/6.htm.  On December
31, the Court in Arkansas ruled that it had jurisdiction over Amazon.com,
but not over Drugstore.com or Dalzell.  The court reportedly will rule on
whether it has jurisdiction over Kleiner Perkins later this month.  On
Monday, January 4, Amazon.com responded to the ruling by filing a second
suit almost identical to the first suit, this time in State Superior Court
in Seattle, Washington.  The second suit names as defendants the same
parties named as defendants in the first suit.  For more, see
http://www.wired.com/news/print_version/business/story/17135.html?wnpg=all,
and
http://www.news.com/News/Item/0%2C4%2C30514%2C00.html?dd.ne.htmldisp.hl.ne.

INTERNET PATENT LAW (PATENT INFRINGEMENT): Colorado-based e-mail publisher
InfoBeat reportedly has filed a patent infringement suit against Email
Publishing in the United States District Court for the District of Colorado
alleging that Email Publishing infringed a patent that it has received in
connection with its personalized e-mail technology.  See
http://www.internetnews.com/IAR/1998/12/1404-email.html.

CYBERSPEECH AND FIRST AMENDMENT ISSUES:  On December 28, United States
District Court Judge Rodney Sippel ruled that a Missouri high school
student's First Amendment  rights were violated when he was suspended from
school for posting a personal Web page that criticized his high school.
The order prohibits the school district from considering the suspension in
calculating student Brandon Beussink's grades and attendance figures and
bars the district from punishing Beussink or restricting his right to post
comments to his personal home page.  A copy of the Court's Memorandum and
Order issued in Beussink v. Woodland R-IV School District, No. I:98CV00093
RWS (E.D. Mo., Southeastern Division) may be found at
http://www.aclu.org/court/beussinkvwoodland_pi_order.html.  The ACLU's
press release about the decision may be found at
http://www.aclu.org/news/n122898a.html.  Articles about the decision may be
found at http://www.cnn.com/US/9812/29/web.lawsuit.ap/,
http://www.news.com/News/Item/0,4,30364,00.html?owv,
http://www.techserver.com/noframes/story/0,2294,2795-4776-34338-0,00.html,
http://www.zdnet.com/zdnn/storeis/news/0,4586,2180175,00.html, and
http://www.wired.com/news/news/politics/story/17068.html.  A copy of the
complaint filed August 27, 1998 may be found at
http://www.aclu.org/court/beussinkvwoodlandsd.html.  The ACLU's press
release about commencement of the suit may be found at
http://www.aclu.org/news/n082798d.html.  For articles about commencement of
the suit, see http://www.techweb.com/wire/story/TWB19980828S0005,
http://www.news.com/News/Item/0,4,25834,00.html?st.ne.ni.lh,
http://www.zdnet.com/zdnn/stories/zdnn_rc_display/0,3443,2133753,00.html,
and http://www.sacbee.com/news/beetoday/newsroom/edit/090198/edit01.html.
For further background, see E-Law Update #3,
http://www.cyberlaw.se/english/elaw-3.htm.

CYBERSPEECH, FIRST AMENDMENT, PARODY ISSUES AND THE INTERNET (RETRACTION OF
PARODY): On December 19 the President of Filtering Facts, David Burt,
posted to the Cyberia-L listserv a parody of a press release.  The release
purportedly was one issued on December 16 by People for the American Way
and was entitled "PFAW Announces
ëScarlet Letterí Day for this Wednesday."
In part, the message stated:  "People For the American Way today announced
that it will ask all concerned Americans to show their outrage over the
impeachment of President Clinton and the resignation of Speaker-elect
Livingston by participating in a ëScarlet Letter Dayí on Wednesday,
December 23rd, 1998."  On December 21, David Burt posted a message to the
same list entitled "Retraction: PFAW Threatens To Sue Me."  That message
stated, in part, as follows: "I sent out a joke ëpress releaseí yesterday
advertising a ëScarlet Letter Dayí by People for the America Way (attached
below).  PFAW called me today and threatened to ëtake legal actioní if I
didnít send an immediate retraction.  This is a retraction."  Both messages
are available at the Cyberia-L Archive located at
http://www.ljx.com/mailinglists/cyberia-l/.  A wav audio file of an
answering machine message purportedly left for Mr. Burt by a representative
of People for the American Way in which legal action is threatened unless
the joke press release is retracted may be downloaded at
http://www.filteringfacts.org/pfaw.wav.

FREE SPEECH, FIRST AMENDMENT, CONTENT REGULATION AND FILTERING ISSUES:
Valley Times Staff Writer Sam Richards reports that Kathleen R. has refiled
her lawsuit against the City of Livermore (see E-Law Update #1,
http://www.cyberlaw.se/english/elaw-1.htm and E-Law Update #6,
http://www.cyberlaw.se/english/Elaw-I/6.htm).  The new suit alleges that
the City has a constitutional duty to censor its library Internet
connection to protect minors from adult-oriented material, and that Ms. R.
has a "due process" right to determine what her children learn.  The
original suit was dismissed as barred by the "safe harbor" provision of the
Communications Decency Act that provides that a service provider is not to
be held liable for the speech of others.  On January 13, the Court
reportedly will hear arguments on a second motion to dismiss the complaint
that has been filed in response to the new complaint.  See
http://www.usatoday.com/life/cyber/tech/cte076.htm, and
http://www.sjmercury.com/business/tech/docs/074499.htm.  The American Civil
Liberties Union reportedly is ready for the continued battle over library
filtering issues.  It reportedly says that it will "file a barrage of
lawsuits in 1999 to ensure that adults can use libraries' Internet
connections" without censoring.  See
http://www.cleveland.com/news/pdnews/metro/calibe.phtml.

INTERNET PATENT LAW (WEB ADVERTISING PATENT):  On December 8, the U.S.
Patent and Trademark Office issued U.S. Letters Patent No. 5,848,396,
"Method and Apparatus for Determining Behavioral Profile of a Computer
User."  The patent reportedly covers a technology that automatically builds
a user profile based on the user's viewing activities and provides targeted
advertisements based upon that viewer activity.  The company that owns the
patent, Be Free Inc., reportedly plans to "build strategic relationships"
with those whom it now believes to be potential infringers of the patent,
but apparently is prepared to litigate patent infringement claims against
such parties. See News:  Software Patents - PTO Issues Patent for
Technology Used To Profile Web Users and Customize Ads, 3(48) Electronic
Commerce & Law Rep. (BNA), Dec. 23, 1998.

INTERNET PATENT LAW (PATENT INFRINGEMENT - ONLINE COUPONS):  A lawsuit
reportedly has been filed in the United States District Court for the
Northern District of Illinois by CoolSavings, a developer of Internet
coupons and sales promotion services against H.O.T! Coupons, Inc.,
CouponSurfer.com Inc. and emaildirect alleging infringement of its patent
for distributing printed and electronic coupons via the Internet.

INTERNET UNFAIR COMPETITION LAW:  On December 17, Hartford House, Ltd.,
doing business as Blue Mountain Arts, obtained a temporary restraining
order against Microsoft Corporation.  See Hartford House, Ltd. v. Microsoft
Corp., Case No.:  CV778550, Temporary Restraining Order and Order To Show
Cause (Superior Ct. of Calif., County of Santa Clara, Order entered Dec.
17, 1998), http://www3.bluemountain.com/home/courtorder122198.html.  Blue
Mountain provides an online greeting card service.  It seems that Microsoft
has created its own online greeting card site.  Blue Mountain claimed that
Microsoft set its Outlook Express product downloadable with Internet
Explorer 5 beta to file any e-cards from Blue Mountain into the "junk" mail
folder.  Blue Mountain also named WebTV,  a Microsoft subsidiary, as a
defendant alleging that WebTV blocks Blue Mountain's e-greetings from being
received by WebTV consumers.  For stories about the dispute, see
http://www.lasvegassun.com/sunbin/stories/tech/1998/dec/21/122200315.html,
http://www7.mercurycenter.com/business/top/040480.htm,
http://www.washingtonpost.com/wp-srv/WPlate/1998-12/22/0861-122298-idx.html
, http://www.nypost.com/business/8601.htm,
http://www.thestandard.com/articles/display/0,1449,2833,00.html?1447,
http://www.zdnet.com/zdnn/stories/news/0,4586,2174865,00.htm, and
http://www.nypost.com/business/8712.htm.   A copy of the Blue Mountain
complaint dated Dec. 8, 1998, may be found at
http://www3.bluemountain.com/home/bluemountain_vs_Microsoft.html.
Microsoft removed the case to Federal Court after it was filed, but the
Federal Court remanded the case back to the State Court.  A copy of the
Order Granting Ex Parte Motion To Remand Action To State Court may be found
at http://www3.bluemountain.com/home/FederalCourtOrder.html.  Blue
Mountain's Memorandum of Points and Authorities in Support of Plaintiff's
Application for an Order Showing Cause Why a Preliminary Injunction Should
Not Issue and a Temporary Restraining Order dated December 9, 1998 may be
found at http://www3.bluemountain.com/home/TROrequest.html.  For a
"Chronology of Lawsuit against Microsoft Corporation and WebTV," see
http://www3.bluemountain.com/home/ImportantNotice.html?122198.  The Court
has scheduled a hearing on Blue Mountain's request for a Preliminary
Injunction for January 21, 1999 at 2:00 p.m.

CLICKWRAP LICENSES (PROPOSED U.C.C. ARTICLE 2B):  On December 11, the
American Law Institute (ALI)  reportedly decided that it will not submit
proposed Article 2B of the Uniform Commercial Code to its members for a
vote next year.  In contrast, the National Conference of Commissioners on
Uniform State Laws reportedly plans to continue its efforts to gain
approval of the proposal and plans to submit the proposed article to its
members for a final vote in July 1999.  See News:  Uniform Commercial Code
- ALI Concerns About Scope, Public Policy Delay Vote on New Software
Licensing Law, 3(48) Electronic Commerce & Law Rep. (BNA), Dec. 23, 1998.
To see the December 1998 draft of U.C.C. Article 2B, see
http://www.law.upenn.edu/library/ulc/ulc.htm.  To see the September 18,
1998 draft of the Proposed Uniform Electronic Transactions Act prepared on
behalf of the National Conference of Commissioners on Uniform State Laws,
see http://www.law.upenn.edu/library/ulc/ulc.htm.  See also News:  Uniform
Commercial Code - Article 2B Proponents Respond To Critics, Prepare for
Review by American Law Institute, 3(46) Electronic Commerce & Law Rep.
(BNA), Dec. 9, 1998.

SECURITIES REGULATION AND THE INTERNET (SEC CIVIL PROCEEDINGS):  On
December 11, the U.S. Securities Exchange Commission filed a proceeding
against a Utah man and the Internet company  that the man claims to manage.
See SEC v. WARPnet Holdings LLC and Kevin Tauber, Docket No. 2:98CV-0884B
(D. Utah, complaint filed Dec. 11, 1998).  The SEC alleged that Tauber and
his company falsely represented to prospective investors that the company
had entered into agreements to provide Internet services to the Church of
Jesus Christ of Latter-day Saints, the Salt Lake City Committee for the
Olympic Winter Games of 2002, Western Governors University and the Rolling
Stones.  United States District Judge Dale Kimball promptly issued a
temporary restraining order and an asset freeze against the two defendants.
See SEC Litigation Release No. 16006, Dec. 21, 1998,
http://www.sec.gov/enforce/litigrel/lr16006.txt.  See also Court
Proceedings:  Securities Regulation - Internet Concern, Utah Man Face
Charges They Misled Investors, SEC Reports, 3(48) Electronic Commerce & Law
Rep. (BNA), Dec. 23, 1998; Federal News:  Antifraud - Internet Concern,
Utah Man Face Charges They Misled Investors, SEC Reports, 30(49) Securities
Regulation & Law Rep. (BNA), Dec. 18, 1998;
http://www8.mercurycenter.com/business/tech/docs/030792.htm;
http://www.techserver.com/newsroom/ntn/info/121598/info2_10727_noframes.htm
l; and
http://www.lasvegassun.com/sunbin/stories/tech/1998/dec/14/121400317.html.

SECURITIES REGULATION AND THE INTERNET (STOCK FRAUD SPAM):  On December 21,
the North American Securities Administrators Association announced the
results of a study that should have surprised no one.  The study analyzed
eight over-the-counter securities that had been promoted on the Internet
via spam.  None of the eight securities ever reached the projected price
levels listed in the spams and, at the time of the analysis, six of the
eight securities were trading bel
ow the purchase prices recommended in the
spams.  The analysis began as part of the "Investment Opportunity Surf Day"
that was performed by state securities regulators, the Federal Trade
Commission, the National Association of Securities Dealers Inc. and the
Commodity Futures Trading Commission on November 12.  For a copy of NASAA's
press release about the analysis, see
http://www.nasaa.org/whoweare/media/Surf%20Day%20Release.htm.  The FTC's
press release may be found at http://www.ftc.gov/opa/1998/9812/iosd.htm.
See also State News:  Investors and Investing - Investors Should Be Wary Of
Internet Stock Tips, NASAA Warns, 30(50) Securities Regulation & Law Rep.
(BNA), Dec. 25, 1998.  Other articles may be found at
http://www.canoe.ca/TechNews/981222_scams.html,
http://www.zdnet.com/zdnn/stories/news/0,4586,2178595,00.html,
http://www.news.com/News/Item/0,4,30193,00.html?dtn.head, and
http://www.techweb.com/wire/story/reuters/REU19981221S0005.

SECURITIES REGULATION AND THE INTERNET (SHAREHOLDER SUITS): More than
twenty shareholder suits reportedly have been filed against music retailer
K-Tel.  On November 3, 1998, K-Tel announced that it would sell music via
Playboyís Web site.  Itís stock price skyrocketed 93%.  On November 10 it
announced it would link its Web site for music sales to several sites
maintained by Microsoft Corporation.  Its stock price went up 98%.  On
November 17, it announced that its stock faces delisting by NASDAQ because
its net tangible assets of US$450,000 did not meet the NASDAQís US$4
million minimum.  Its stock price plunged 43%.  The suits reportedly allege
that at the time of the November 3 and November 10 announcements, K-Tel
knew or should have known that it faced a risk of delisting, but failed to
disclose the information to investors.  See
http://www.news.com/News/Item/Textonly/0,25,30377,00.html?pfd.

SECURITIES REGULATION AND THE INTERNET (ONLINE EARNINGS CONFERENCE CALLS):
This month a pilot program to permit investors to listen to earnings
conference calls from many of the top 100 companies on the NASDAQ stock
market will begin.  Audio files of the calls reportedly will be available
at two Web sites: http://www.broadcast.com and http://www.nasdaq-amex.com.
See http://www.mercurycenter.com/business/top/006225.htm.  See also Deborah
Adamson, NASDAQ Plans To Offer Online Investors An Earful, N.Y. Times
Syndicate Computer News Daily, Dec. 23, 1998 (reprinted from Los Angeles
Daily News)(available via search at http://nytsyn.com/).  Such calls could
raise interesting and intriguing issues.  Some companies reportedly have
sought recently to block the unauthorized recording and online posting of
such conference calls by reading a copyrighted prepared statement at the
outset of the call, issuing a notice of copyright statement when the call
begins, recording the calls themselves and asserting copyright interests
over the prepared statement and the recording of the call.  For a
fascinating article about the practice (which includes comments by E-Law
Update co-editor Blake Bell), see Lynn Cowan, Companies Turn To Copyright
Law To Protect Conference Calls, Dow Jones Newswires, Dec. 22, 1998
(available via search at The Wall Street Journal Interactive Edition Web
site, http://interactive.wsj.com).

SECURITIES REGULATION AND THE INTERNET (TIMING OF "AFTER-MARKET"
ANNOUNCEMENTS): Standard & Poorís is learning its lesson: global markets
are moving closer to 24-hour-a-day trading, so it is difficult -- if not
impossible -- to time announcements to occur "after the market close."  For
example, Standard & Poorís has, for years, timed index change announcements
to take place at 4:50 p.m. New York time so that they occur "after the
market close."  The timing is intended to avoid impact on share prices, but
to make the disclosure before the close of business so that business people
are likely to become aware of the announcement before the end of the day.
That is what it did when it recently announced that America Online Inc.
would be included among the prestigious S&P 500 index of Americaís biggest
companies.  The problem: AOL stock could still be traded on networks such
as Instinet until 5:15 p.m. New York time and still would be counted in Big
Board composite trading in the stock.  In the short period between 4:50
p.m. and 5:15 p.m. AOL stock jumped 15-1/8 in composite trading.  S&P plans
to review its policy.  See
http://www.internetnews.com/Reuters/1998/12/2803-sandp.html.

SECURITIES REGULATION AND THE INTERNET (ONLINE TRADING): Merrill Lynch
reportedly has delayed its plans to launch online trading for its
wealthiest customers partly due to concerns about volatility and heavy
trading in some NASDAQ stocks.  See
http://www.news.com/News/Item/0,4,30208,00.html?dtn.head.

SECURITIES REGULATION AND THE INTERNET (ONLINE TRADING): Merrill Lynch may
not be the only broker-dealer worried about market volatility and the
potentially ruinous losses for online investors.  Discount broker Charles
Schwab reportedly is now refusing to accept online trades for the stocks of
some companies on the first day of trading of such stocks.  For a short,
but interesting article about the subject, see
http://www.charlotte.com/click/wiretech/pub/061273.htm.  See also
http://www.sfgate.com/cgi-bin/article.cgi-bin/article.cgi?f=/chronicle/arch
ive/1998/12/12/BU39013.DTL&type=printable,
http://www.news.com/News/Item/0,4,29811,00.html?owv,
http://www.internetnews.com/fina-news/1998/12/1101-broker.html, and
http://www8.mercurycenter.com/business/top/079871.htm.

SECURITIES REGULATION AND THE INTERNET (INCREASING BOND PRICE
TRANSPARENCY): BondAgent.com, BondTrac and other online firms are
revolutionizing the bond industry by providing massive online lists of more
than 15,000 bonds from inventories of hundreds of broker dealers.  This is
increasing price transparency and is beginning to attract the big name
players like E*Trade which last month launched its own online trading
system for some bonds.  For more, see
http://www.news.com/News/Item/Textonly/0,25,30170.html?pfv.  See also
http://www.news.com/News/Item/0,4,29694,00.html?owv.

SECURITIES REGULATION AND THE INTERNET (STOCK FRAUD): Experts agree that
1998 was the year of the Inernet stock scam.  For a fascinating article
summarizing some of the most prevalent forms of Internet stock fraud in
1998, see http://www.usatoday.com/life/cyber/tech/cte028.htm.

SECURITIES REGULATION AND THE INTERNET (STEMMING VOLATILITY IN INTERNET
STOCKS): A NASDAQ stock market subcommittee reportedly plans to propose an
extension of the pre-trading pricing period for IPOs from five minutes to
fifteen minutes in the hope that the extension will reduce volatility in
IPOs at the outset of trading.  Additionally, the proposal reportedly will
call for a 15-minute delay in trading at those times in which the market
may open "locked" or "crossed."  That occurs when buyers appear willing to
pay more than the offered purchase price for a stock.  See
http://www.azcentral.com:80/business/1218djnnasdaq18.shtml.

SECURITIES REGULATION AND THE INTERNET (DAY TRADING AND FRAUD):
Massachusetts securities regulators are continuing their assault against
day trading firms that they allege have committed securities violations.
On December 10, the Massachusetts Securities Division reportedly filed an
administrative complaint against New Jersey-based All-Tech Investment Group
Inc. alleging that it committed securities violations including
unauthorized trading, commingling customer funds and forging signatures to
open fake accounts.  A representative for the firm reportedly blames
customer complaints for the action and allegedly told the Wall Street
Journal "[t]hey lose some money, and some people are just crybabies."  See
Rebecca Buckman, All-Tech Group Faces Allegations Of Fraud Involving 'Day
Traders,' Wall St. J. Interactive Ed., Dec. 11, 1998, available via search
at http://interactive.wsj.com.  For a recent story about the growth of
online trading, see
http://www.nytimes.com/library/tech/98/12/biztech/articles/20invest-seniors
.html
 

Blake A. Bell, b_bell@stblaw.com, is Senior Litigation Counsel with Simpson
Thacher & Bartlett in New York City.  He is a member of the firm's
Intellectual Property Group and specializes in Internet Law and Internet
Securities Regulation matters.  He is a member of the Computer Law
Committee of the Association of the Bar of the City of New York and its
Securities Law Subcommittee.  He is also a member of the Global Cyberlaw
Network.

David J. Loundy, David@Loundy.com, works in intellectual property, computer
law (including Internet issues) and entertainment law at Davis, Mannix &
McGrath in Chicago.  He has served as Chairman of the Chicago Bar
Association Computer Law Committee and is an Adjunct Professor of
Cyberspace Law at the John Marshall Law School.

The views expressed herein are those of the authors, not necessarily of
their firms.

Permission to distribute freely, with attribution, is granted.
Assume that nothing has been checked for accuracy.
 

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____________________________________________________________________
David J. Loundy                    | E-Mail: David@Loundy.com
Davis, Mannix & McGrath            | WWW: http://www.Loundy.com/
125 S. Wacker Drive, Suite 1700    |
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____________________________________________________________________
 

E-LAW UPDATE #9, PART 2
                   by David J. Loundy and Blake A. Bell
                              January 6, 1999

A searchable Archive of all issues of Bell Cyberlaw Update and all issues
of E-Law Update is available at
http://www.cyberlaw.se/english/nyhetsbr1.htm.  E-Law Update, in French, is
available at http://www.digiplace.com/e-law/ and
http://www.juriscom.net/droit/elaw/sommaire.htm.

To report Internet Law developments for inclusion in the next newsletter,
contact b_bell@stblaw.com or David@Loundy.com.

RELIGIOUS LAW RULINGS AND THE INTERNET: A highly-respected orthodox Rabbi,
Rabbi Moshe Shaul Klein, reportedly has issued a ruling that erasing the
word "God" from a computer screen or from a disk does not violate Jewish
law.  Jewish law reportedly requires that printed materials that contain
the word "elohim" in Hebrew (or manifestations of the same word in any
other language) must be stored or buried ritually.  According to the
Rabbi
’s ruling, which reportedly was published in the computer magazine
"Mahsheva Tova," computer erasure is permitted because it merely involves
destruction of an assemblage of pixels on the screen or a collection of
ones and zeroes stored in memory.  See
http://www.techserver.com/noframes/story/0,2294,2925-4986-36586-0,00.html.

THE INTERNET AND EMPLOYMENT LAW ISSUES: Four women in Colorado reportedly
have filed suit against computer giant Hewlett-Packard after they were
fired for allegedly circulating jokes over the company's e-mail network.
The women allege that the e-mails were used as a pretext by the company.
They allege that they were actually fired as part of a recently-announced
downsizing and because they are women and, in some cases, single mothers.
See United Press International, Women Canned For E-Mail Jokes File Suit,
UPI US & World, Dec. 7, 1998 at 17:34:00.

INTERNET UNFAIR TRADE PRACTICES (NEW ZEALAND):  The New Zealand Commerce
Commission is warning Internet Service Providers that if they offer
unlimited Internet access, it had better really be unlimited access or the
ISPs may be violating the Fair Trading Act.  The statements were made in
response to complaints over ISPs offering unlimited access but burying
additional restrictions in their contracts, such as a prohibition against
being connected for more than three consecutive hours.  Apparently, Ihug's
policy of such 3-hour disconnects resulted in a hacker breaking into the
ISP's system and destroying thousands of users' Web sites in protest.  See
http://www.idg.co.nz/nzweb/be7a.html.

INTERNET LAW AND BREACH OF CONTRACT ISSUES (LINKING AGREEMENTS): According
to a filing with the U.S. Securities and Exchange Commission on December
22, Yahoo! Inc. has filed a US$2 million breach of contract lawsuit against
online retailer Shopping.com.  Yahoo! reportedly claims that Shopping.com
breached the terms of an agreement to pay Yahoo! US$200,000 in an
advertising and sponsorship deal intended to include a link from Yahoo!’s
site to Shopping.com’s site.  Shopping.com allegedly concluded that the
deal was not worth going forward with, although Yahoo! claims it upheld its
end of the bargain, billed Shopping.com, but was never paid.  See
http://www.usatoday.com/life/cyber/nb/nb3.htm.  For an article describing
troubles faced by Shopping.com in connection with recently-alleged
instances of erroneous credit card charges, "endless busy signals," and
orders that allegedly were never delivered, see Jason Anders, Customer
Gripes Mount Against Shopping.com, Wall St. J. Interactive Ed., Jan. 5,
1999, http://interactive.wsj.com/articles/HeardOnTheNet.htm.

INTERNET LAW AND BREACH OF CONTRACT ISSUES (ALLEGED OVERSUBSCRIPTION BY
TIER 1 ISP): Quest Net, a Florida-based secondary ISP that relies on larger
ISPs for peering services, has filed a lawsuit against Virginia-based
PSINet (a tier 1 ISP that sells backbone services to other ISPs).  Quest
Net claims that PSINet oversubscribed its services and, thus, failed to
deliver the capacity that it promised to Quest Net.  See
http://www.techweb.com/wire/story/TWB19981211S0010, and
http://www.crn.com:80/dailies/weekending121198/dec11dig03.asp.

INTERNET LAW AND ALTERNATIVE DISPUTE RESOLUTION (ONLINE MEDIATION):  A
French law instructor in Poitiers who launched a free online mediation
service reports that since last April, when the site was launched, he and
his two assistants have handled more than 300 requests for online mediation
and contends that more than 80% of the cases have been resolved.  The
disputes reportedly have ranged from Cyberlibel, counterfeit logos and
brands to "cases of forgery on Web sites."  The site may be accessed at
http://www.iris.sgdg.org/mediation/.  For more, see
http://www.wired.com/news/news/email/member/culture/story/17018.html.

E-COMMERCE LAW (CANADA):  On December 1, Canada's Auditor General, Denis
Desautels, issued a report that concludes, among other things, that
delivery of government services via the Internet presents "new risks and
exposure that can result in legal liability for the Crown" and urges the
government to identify and to address issues of potential liability as it
introduces new e-commerce initiatives.  For a copy of the chapter of the
report entitled "Electronic Commerce:  Conducting Government Business Via
the Internet," see
http://www.oag-bvg.gc.ca/domino/reports.nsf/html/9819ce.html.  See also
News:  Electronic Commerce - Canadian Official Calls for More Study of
Government's E-Commerce Legal Risks, 3(48) Electronic Commerce & Law Rep.
(BNA), Dec. 23, 1998.

E-COMMERCE ISSUES (U.S. AND AUSTRALIA):  On November 13, the United States
and Australia issued a "Joint Statement From Australia and the United
States on Electronic Commerce."  The statement is somewhat similar to a
declaration signed by representatives of 132 countries earlier this year in
which the countries agree to refrain from imposing customs duties on
e-commerce (the World Trade Organization declaration of May 1998).  The
joint statement asserts that self-regulation of the e-commerce market --
rather than government regulation -- should be the preferred approach
because it "gives maximum control and responsibility to the individual."
For a copy of the statement, see http://www.doc.gov/ecommerce/AUfinal.htm.
See also US and Australia Issue Joint Statement on Electronic Commerce,
Guide To Computer Law (CCH), Issue No. 206, Dec. 8, 1998, at 9-10.

E-COMMERCE ISSUES (ONLINE LIQUOR SALES):  A Rhode Island law has just gone
into effect allowing people to make as many as five online alcohol
purchases a year, totaling a maximum of three gallons of hard liquor or
wine each time.  See
http://cbs.marketwatch.com/news/newsroom.htx?dist=ibeat,
http://www.wired.com/news/news/email/member/culture/story/17069.html,
http://www.boston.com/dailynews/wirehtml/360/Mail_order_and_Internet_alcoho
l_sal.shtml, and http://www.usatoday.com:80/life/cyber/tech/cte051.htm.

E-COMMERCE ISSUES (E-COMMERCE INSURANCE):  Network Risk Management Services
reportedly is building a name for itself by offering insurance for
companies that use Internet commerce and e-commerce in business.  See
http://www.amcity.com/atlanta/stories/1999/01/04/newscolumn1.html?h=Interne
t.

E-COMMERCE LAW (AIRLINE COMPUTERIZED RESERVATIONS SYSTEMS): On December 3,
the European Parliament authorized changes to Europe’s 1989 code of conduct
for non-discriminatory operation of airline computerized reservation
systems.  For a description of the measure, see News: Electronic Commerce -
EU Parliament Passes Measure on Computerized Reservation Systems, 3(47)
Electronic Commerce & Law Rep. (BNA), Dec. 16, 1998.

INTERNET PRIVACY ISSUES (PRIVACY AND COPYRIGHT ISSUES):  Dr. Laura
Schlessinger has dropped her copyright infringement and privacy invasion
lawsuit against the Internet Entertainment Group without explanation.  See
E-Law Update #7, http://www.cyberlaw.se/english/elaw-7.htm.  In the
meantime, the Internet Entertainment Group has filed suit against Starnet
Communications in Vancouver, British Columbia, a company that hosts a Web
site which posted the nude pictures of Dr. Laura for which IEG has the
Internet-use rights.  See
http://www.wired.com/news/print_version/email/explode-infobeat/politics/sto
ry/16843.html?wnpg=all.

INTERNET PRIVACY ISSUES (INDUSTRY SELF-REGULATION):  During the last two
months there has been a flurry of activity by members of the "online
industry" as they attempt to convince the Federal Trade Commission that the
industry has made meaningful progress in its efforts to create a
self-regulatory scheme to satisfy privacy concerns.  The industry is
struggling with the perception that it has not met the year-end deadline
imposed by the FTC to develop an adequate self-regulatory scheme to avoid
the imposition of a regulatory structure by government authorities.  During
the week of December 16, TRUSTe, a leading privacy seal program, conducted
separate briefings for the Federal Trade Commission, the Department of
Commerce, and the Clinton Administration, at which it reported a tenfold
increase since the end of 1997 in the number of online businesses that have
Truste-licensed Web sites.  For a press release about the briefings, see
http://www.etrust.com/about/about_report.html.  Interestingly, on November
30, 1998, The Better Business Bureau announced that its subsidiary,
BBBOnLine, has begun accepting applications for a new privacy seal program
to give consumers confidence that their personal information will be
safeguarded by companies that are licensed by the program.  A press release
about the announcement may be found at
http://www.bbb.org/alerts/bbbpriv.html.  For an article about the
industry's efforts to come up with a self-regulatory scheme, see Lead
Report:  Privacy - Industry Has High Hopes that Seal Programs Will Meet
Privacy Self-Regulation Challenge, 3(48) Electronic Commerce & Law Rep.
(BNA), Dec. 23, 1998.  For an excellent interview of Elliott Maxwell,
special advisor to Department of Commerce Secretary William M. Daley for
the emerging digital economy, regarding the importance of Internet industry
self regulation, see Lead Report:  Electronic Commerce - Commerce
Department's Internet Policy Head Favors Few if Any New Rules, 3(47)
Electronic Commerce & Law (BNA), Dec. 16, 1998.

INTERNET PRIVACY ISSUES (PRIVACY STANDARDS):  The International
Organization for Standardization reportedly will issue a final version of
its "Common Criteria for Information Technology Security Evaluation
(International Standard 15408) as early as February 1999.  The standard
will prescribe the technical basis for evaluating the security features of
computer products.  For a Web site devoted to the Common Criteria, see
http://csrc.nist.gov/cc/.  See also News:  Network Security - International
Standard To Rate Security of Health Information Technology Created, 3(48)
Electronic Commerce & Law Rep. (BNA), Dec. 23, 1998.

INTERNET PRIVACY ISSUES (ONLINE USE OF LIKENESS WITHOUT PERMISSION): A
default judgment has been awarded in favor of actress Alyssa Milano in her
lawsuit against John Lindgren, a Minnesota Web site operator.  Lindgren’s
Web site, http://www.nudecelebrity.com, claims to have 1,000 nude
photographs of famous actresses.  Milano sued Lindgren after she learned
that his site included fake nude photographs of her, as well as still
frames from a movie in which she reportedly appeared, briefly, in the nude.
She sued, alleging that the Web site operator misappropriated her identity
and violated her right to be compensated for use of her image.  The default
judgment against Lindgren reportedly would require him to pay Milano
US$230,000.  Milano’s attorney says that other Web site operators who have
posted images of Milano either are being sued or will be sued.  For an
article about the default judgment, see
http://www.zdnet.com/zdnn/stories/news/0,4586,2179417,00.html.  For
background about the original filing of the lawsuit, see Bell Cyberlaw
Update #35, http://www.cyberlaw.se/english/bell9.htm.

INTERNET PRIVACY ISSUES (ONLINE USE OF LIKENESS WITHOUT PERMISSION):
Comedian Rodney Dangerfield reportedly has settled a US$2.8 million lawsuit
that he filed against Epoch Networks Inc.  Dangerfield alleged that Epoch
used his name and likeness for its own benefit on a Web site that the
company published.  Epoch reportedly admitted no wrongdoing in the
settlement.  The dispute apparently arose from the fact that Dangerfield
entered into an agreement with Epoch in 1995 to operate a Web site for him.
See
http://www.lasvegassun.com/sunbin/stories/tech/1998/dec/03/120400628.html.

INTERNET PRIVACY ISSUES: CBS Sportsline recently ran some online contests.
Winners and everyone else who participated got a little something extra:
inadvertent public accessibility to contestants’ personal information after
they registered for the contests.  It seems that on December 18, a man who
wanted to perform some background research on a potential business partner
performed a Web search and accidentally stumbled into the entire contestant
database on the CBS Sportsline Web server.  He was able to download the
entire database directory.  After being alerted to the Snafu by the man and
by Wired News, CBS Sportsline corrected the problem.  See
http://www.wired.com/news/news/business/story/16939.html.

INTERNET PRIVACY ISSUES: On December 10, Donald W. Upson, the State of
Virginia’s Secretary of Technology, announced that Virginia plans to create
a commission to monitor whether online companies are posting and complying
with adequate privacy policies.  See News:  Electronic Commerce - Virginia
Readies Plan for Government, Industry To Enforce Net Privacy Policies,
3(47) Electronic Commerce & Law Rep. (BNA), Dec. 16, 1998.

INTERNET PRIVACY ISSUES (EU PRIVACY DIRECTIVE): On December 10, the
European Commission indicated that the European Union will support
continued negotiations with the United States to address ways in which U.S.
companies can meet the European Union’s Privacy Directive and that it hopes
such negotiations will conclude by February 1999.  See News: Privacy - EU
Supports Extending Data Privacy Talks With U.S. To Avert Data Flow Halt,
3(47) Electronic Commerce & Law Rep. (BNA), Dec. 16, 1998.

INTERNET PRIVACY ISSUES (ENCRYPTION OF HEALTH CARE DATA):  On December 7,
the Health Care Financing Administration issued a bulletin that addresses
the transfer of Privacy Act - protected information via the Internet by the
administration and its Medicare and Medicaid partners.  The bulletin
requires that encryption and identification / authentication procedures be
utilized to ensure that protected information is accessible only to
authorized persons.  For a copy of the bulletin, see
http://www.hcfa.gov/security/isecplcy.htm.  See also News:  Network
Security - HCFA Posts Security Policy for Internet Transmissions, 3(48)
Electronic Commerce & Law Rep. (BNA), Dec. 23, 1998.

THE INTERNET AND ANTI-DISCRIMINATION LAWS (AUSTRALIA): On November 2, a
hearing was held before a New South Wales State commission in a proceeding
brought by the Executive Council of Australia Jewry against a group calling
itself the Adelaide Institute.  The Adelaide Institute reportedly operates
a Web site that claims that the Holocaust never occurred.  The Executive
Council of Australia Jewry reportedly claimed that the Web site violates
Australia's "anti-discrimination laws involving the Internet."  See
http://www.sjmercury.com/business/tech/docs/019839.htm, and
http://www.lasvegassun.com/sunbin/stories/tech/1998/nov/02/110200216.html.

ENCRYPTION: The Internet Architecture Board and the Internet Engineering
Steering Group issued a joint statement on December 22 attacking the
Wassenaar Arrangement announced by the U.S. and 32 other nations earlier in
December.  According to the groups, the arrangement — which would encourage
the limitation of exports of encryption products to those that are based on
64 bit encryption algorithms (or less powerful algorithms) — will weaken
and render vulnerable e-commerce and Internet communications.  For
background about the Wassenaar Arrangement, see http://www.wassenaar.org/.
For further background, see E-Law Update # 8,
http://www.cyberlaw.se/english/elaw-ii-.htm.  See also
http://www.news.com/News/Item/0%2C4%2C30228%2C00.html?dd.ne.tx.ts2.1222.

ENCRYPTION: On December 30, the Bureau of Export Administration of the U.S.
Department of Commerce issued new interim rules that it says are an effort
to relax restrictions on export of strong encryption technologies.  The
rules primari
ly will benefit U.S. corporate subsidiaries that operate
overseas and will permit the sale of encryption products based on 128 bit
encryption algorithms to such companies.  The rules may be found at
http://bxa.fedworld.gov/whatsnew.cgi/encrypti.asc?.  See also
http://www.cnnfn.com/digitaljam/newsbytes/123701.html,
http://www.sjmercury.com/business/tech/docs/085416.htm,
http://www.canoe.com:80/TechNews/981231_scramble.html,
http://www.msnbc.com:80/news/228030.asp,
http://www.lasvegassun.com/sunbin/stories/tech/1998/dec/30/123100245.html,
and http://www.usatoday.com:80/life/cyber/tech/cte066.htm.  For further
background, see
http://www.zdnet.com/zdnn/stories/news/0,4586,2179687,00.html, and News:
Cryptography - Interim Encryption - Export Regs Expected During Week of
Dec. 14, U.S. Official Says, 3(47) Electronic Commerce & Law Rep. (BNA),
Dec. 16, 1998.

ENCRYPTION (U.K.): Britain’s proposed “Secure E-commerce Bill” may be in
trouble.  The proposed bill would prohibit service providers from "tipping
off" customers that government agencies are intercepting their encrypted
data, including secure data exchanged during ordinary e-commerce
transactions.  Britain’s leading e-commerce firms reportedly are
threatening to oppose the legislation over the "tipping off" provision.
See
http://www.sunday-times.co.uk/news/pages/sti/98/12/27/stibusnws01013.html?1
334425.

CYBERCRIME (ONLINE SALE OF TERM PAPERS TO STUDENTS):  Early last month, the
Honorable Patti B. Saris of the United States District Court for the
District of Massachusetts entered an order dismissing a lawsuit brought by
Boston University against a number of companies that it claimed were
selling term papers to students of the University via the Internet.  The
suit alleged, among other things, that the companies were violating a state
law that prohibits the sale of term papers or other research materials when
the seller knows or has reason to believe that the purchaser will use the
materials for academic credit and without attribution.  The Court found
that there is no private civil right of action under the criminal statute.
The University reportedly now plans to file another suit in Massachusetts
State Court alleging violations of State anti-fraud law against the term
paper companies.  For an article about the dismissal of the suit, see
Pamela Mendels, Education:  University Set Back in Fight Against Term Paper
Sites, N.Y. Times on the Web, Dec. 16, 1998 (available via search at
http://www.nytimes.com).  For background about the dispute, see Bell
Cyberlaw Update #5, http://www.cyberlaw.se/english/newpage2.htm, and Bell
Cyberlaw Update #27, http://www.cyberlaw.se/english/newpage25.htm.  To read
an article about the filing of the suit on October 20, 1997, see Jon
Marcus, Boston University Sues Companies That Sell Term Papers Online, N.Y.
Times on the Web, Oct. 22, 1997 (available via search at
http://www.nytimes.com).  To visit a few of the term paper sites that were
at issue in the case, see
http://www.research-assistance.com/cgi-bin/hazel-cgi/hazel.cgi,
http://www.a1-termpaper.com/, and
http://ourworld.compuserve.com/homepages/paperstore/homepage.htm.  In an
unrelated, but ironic twist, the Internet is increasingly being used
successfully by instructors throughout the world to identify plagiarized
term papers.  For a fascinating story about the development, with anecdotes
about such instances, see
http://www.cnn.com/TECH/computing/9812/26/plagiarism.ap/.

CYBERCRIME (E-MAIL HARASSMENT):  On December 11, a U.S. postal worker named
John Murillo was convicted by a federal jury following a five-day trial
conducted in Federal Court in Laredo, Texas.  The man was accused of
sending an e-mail to a co-worker in which he threatened to "go postal" and
to participate in a "shootout at the O.K. Corral."  The man was convicted
of transporting a threat across state lines because the message passed
through servers located in Tennessee, Georgia, and New Jersey before it
reached its in-state destination.  The man reportedly faces five years in
prison when he is sentenced.  See "Postal Worker Guitly in Threat Via
E-Mail," N.Y. Times, Dec. 13, 1998, at 37, col. 1.  See also
http://search.nytimes.com/search/daily/bin/fastweb?getdoc+site+iib-site+150
+0+wAAA+e-mail.

CYBERCRIME (ONLINE AUCTION FRAUD):  Online auction service eBay reportedly
has suspended a member who is being investigated for defrauding auction
customers out of more than $100,000, but reportedly is refusing to give
refunds to its duped customers.  See
http://www.wired.com/news/news/email/member/business/story/16797.html,
http://www.zdnet.com/zdnn/stories/news/0,4586,2175309,00.htm, and
http://www.techserver.com/newsroom/ntn/info/121398/info7_27852_noframes.htm
l.

CYBERCRIME (JAPAN):  News reports indicate that Japanese police are
investigating an Internet suicide Web page from which browsers reportedly
could order cyanide in order to commit suicide.  The police have been able
to track down seven customers, only one of whom was, shall we say sadly, a
satisfied customer.  Upon being contacted by the police after the first
death, the pharmacist / teacher who ran the site reportedly committed
suicide himself.  See
http://news.bbc.co.uk/hi/english/world/asia-pacific/newsid_242000/242678.st
m, and http://www.news.com/News/Item/0,4,30334,00.html?owv, and
http://www.boston.com/dailynews/wirehtml/361/Police_investigating_suicides_
after.shtml.

CYBERCRIME (HACKING):  Hackers.  Six Flags Amusement Parks' Web Page.
Pictures of naked people and hacker bragging.  By now, you know the
routine.  See http://www.2600.com/hackedphiles/sixflags/.

CYBERCRIME (HACKING):  The Norwegian Supreme Court overturned an earlier
court decision and held that a private security software company, Norman
Data Defense Systems, was not liable for attempted computer intrusion by
attempting to discover information about the University of Oslo's computer
system.  The company "fingered" a machine to verify user names, telnetted
to a mail server to verify e-mail addresses and ran a "port scan."  The
company's investigation was done for a news report on the dangers of open
systems.  A copy of the decision, in Norwegina, apparently may be found at
http://www.lovdata.no/hr/hot-98-00083b.html.  See also
http://www.wired.com/news/print_version/email/explode-infobeat/politics/sto
ry/17024.html?wnpg=all.

CYBERCRIME (HACKING):  Most would agree that many incidents of hacking are
bad, but sheesh, THAT bad?  The Yangzhou Intermediate Court in Jiangsu
Province, China reportedly has sentenced two computer hackers to death in
connection with a hack attack in which they broke into a bank computer
network and stole 260,000 yuan (US$31,400).  The two men reportedly opened
16 accounts under different names in a branch bank, broke into the branch
to install a device to permit external access to a bank computer terminal
and then used the device to wire funds to their various accounts from a
variety of other accounts maintained by third parties at other branches of
the same bank.  See http://www.sjmercury.com/business/tech/docs/051697.htm,
http://www.news.com/News/Item/0,4,30332,00.html?owv,
http://cnn.com/WORLD/asiapcf/9812/28/BC-CHINA-HACKERS.reut/,
http://www.insidechina.com:80/china/news/98122812.html, and
http://www.wired.com/news/news/email/member/politics/story/17039.html.

CYBERCRIME (HACKING): A Web site that reports on the adult-movie industry
reportedly has become a target of hackers after, the owner claims, the site
published an interview with a Hollywood "insider" who claimed to have
information about the sex lives of Hollywood’s “elite.”  The Web site
operator, Luke Ford, claims that the hack attacks against two of his sites
are retribution for release of the interview.  See
http://www.techweb.com/wire/stor
y/TWB19981222S0020?ls=twb_text.

CYBERCRIME (HACKING - SOUTH AFRICA): The official Pretoria Web site (
http://www.pretoria.co.za/) has been hacked and some modifications made.
Supposedly, the Pretoria City Council's IT Department's response was that
these kind of things happen and that there was nothing much they could do
about it.  A copy of the page, as altered, is available at
http://www.pta-online.co.za/pretnews/jan99/hckg/hacked.htm.  For more on
the incident, see http://www.pta-online.co.za/pretnews/jan99/n040102.htm.

CYBERCRIME (HACKTIVISM): On December 28, a group of 24 hackers located
around the world reportedly gathered online to map out a plan for attacking
computer networks maintained by the government of Iraq.  For an article
about the event, see
http://www.wired.com/news/print_version/politics/story/17074.html?wnpg=all.

CYBERCRIME (HACKTIVISM): China's so-called "Great Firewall" reportedly has
been breached by a group of hacktivists who claim to have breached the
firewall, defaced government Web sites and disabled a satellite.  Se
http://www.mercurycenter.com/premium/front/docs/hackers05.htm.

CYBERCRIME (CHILD PORNOGRAPHY): Although the Internet has made it easier
for pedophiles and child pornographers to exchange their illegal wares,
developments in 1998 suggest that the Internet has made it easier to
identify such people and to bring them to justice.  Vice Cops are now no
longer limited to prowling sex clubs where they are likely to identify and
arrest one or two such culprits at a time.  Rather, as the world becomes
more interconnected via the Internet, "mistakes" by a single pedophile who
lets down his or her guard and is caught in some remote corner of the world
can lead to the identification and arrest of many others with whom that
person has communicated as well as many others with whom each such contact
has had such communications.  One interesting example arose in New Zealand
barely two weeks ago.  The Censorship Compliance Unit of New Zealand's
Department of Internal Affairs used inspectors to monitor the Internet for
"legally objectionable material."  The inspectors identified a man in
Aukland who purportedly was trading in child pornography.  When the man was
arrested, "the inspectors set to work tracing where the pornography [in his
possession] had come from."  The result?  British suspects were identified.
When those suspects were investigated, additional suspects were identified
in Holland, France, Germany, Canada and the Middle East.  Ultimately, 58
people were identified and, as of December 13, 43 had been arrested.  See
"Aukland Child Porn Raid Prompts European Arrests," Nandotimes, Dec. 13,
1998,
http://www.techserver.com/newsroom/ntn/info/121398/info8_23917_noframes.htm
l.  Of course, this recent incident in New Zealand is entirely separate
>from the now-infamous "Wonderland Club" investigation.  That investigation,
which also took place in 1998, reaffirms this point.  There, investigators
followed interconnected leads.  Ultimately, raids were carried out in more
than a dozen countries and 22 U.S. States against members of the so-called
"Wonderland Club."  Police targeted 180 suspects and arrested more than
100.  See, e.g.,
http://www.techserver.com/newsroom/ntn/info/090398/info7_25539_noframes.htm
l, and http://news.bbc.co.uk/hi/english/sci/tech/newsid_164000/164101.stm.

CYBERCRIME (ONLINE PIMPING - !?!): A 44-year-old woman in North Carolina
reportedly faces three counts of child abuse after she allegedly e-mailed
nude photographs of her 17-year-old daughter to men that the mother met in
Internet chat rooms and then arranged for her daughter to have sex with the
men.  After her daughter met each of the men, the mother asked the daughter
to giver her details of the encounters.  See Woman Allegedly Sent Daughter
on Sex Liaisons With Men, San Jose Mercury News (Mercury Center), Nov. 11,
1998 (available via search at http://spyglass1.sjmercury.com/).

CYBERCRIME (COMPUTER CRIME):  Federal Marshals have caught fleeing
convicted hacker Justin Petersen.  Petersen helped with the arrest of Kevin
Mitnick before fleeing from supervised release.  Upon his capture, Petersen
was taken to the Metropolitan Detention Center in downtown Los Angeles --
where convicted hacker Kevin Mitnick is being held.  See
http://www.zdnet.com/zdtv/cybercrime/features/story/0,3700,2175248,00.html,
and http://www.zdnet.com/zdnn/stories/news/0,4586,2175287,00.html.  A
hearing in his case is scheduled for January 24 before the Honorable
Stephen V. Wilson of the United States District Court for the Central
District of California.  See
http://www.mercurycenter.com/business/tech/docs/085565.htm.

CYBERCRIME (ILLEGAL ORGAN SALES):  As an end-of-semester college prank, a
student at George Mason University advertised a kidney for sale on Yahoo!
Inc.'s auction site.  The posts were reportedly deleted, and a Yahoo!
spokesperson, while not confirming the incident, stated that such posts are
against company policy.  (Yahoo! has a policy prohibiting the posting of
kidneys for sale?!?).  See
http://www.zdnet.com/zdnn/stories/news/0,4586,2175662,00.html.

CYBERCRIME (CYBERTERRORISM AND CYBERWARFARE): The Center for Strategic
Studies’ Global Organized Crime Project has released a report entitled
“Cybercrime . . . Cyberterrorism . . . Cyberwarfare . . . Averting An
Electronic Waterloo” (Nov. 1998).  A description of the report and a
summary of its table of contents is available at
http://www.csis.org/pubs/newpubs.html.  The Foreward and Summary of
Recommendations contained in the report are available at
http://www.csis.org/pubs/cyberfor.html.

CYBERCRIME (RUSSIA): Computer technology experts reportedly have observed a
correlation between massive unemployment among computer programmers in
Russia and the increasing number of Russian Web sites devoted to software
piracy and the distribution of hacking software.  See
http://www.zdnet.com/zdnn/stories/news/0,4586,2180431,00.html.

CYBERCRIME (ONLINE SEX CRIME OFFENDERS DATABASE): Connecticut State Police
have begun posting the names, photographs, addresses, and criminal
information about convicted sex offenders in a searchable database
maintained by the Connecticut Department of Public Safety.  To access the
database, go to http://www.state.ct.us/dps/Sor.htm.  For an article about
the database, see
http://www.boston.com/dailynews/wirehtml/363/Connecticut_state_police_to_pu
t_nam.shtml.

CYBERCRIME (ONLINE SEX CRIME OFFENDERS DATABASE): Add Virginia to the list
of states that have begun posting the names and identifying information of
convicted sex offenders online.  The new online database opened on December
29 and may be found at http://www.state.va.us/vsp/vsp.htm.  For an article
about the database, see
http://www.charlette.com/click/wiretech/pub/047380.htm.

CYBERCRIME (ALLEGED ONLINE PYRAMID SCHEME): On November 24, a consent
judgment was filed in Federal Trade Commission v. FutureNet Online, Inc.,
No. 98-1113 GHK (AJX) (C.D. Cal. Nov. 24, 1998).  The FTC reportedly
brought the case on February 17, 1998 against FutureNet, Inc., FutureNet
Online, Inc. and five individuals affiliated with those companies alleging
that they had engaged in an illegal Ponzi or pyramid scheme duping
consumers into paying "fees" to become distributors of "Internet access
devices."  The court issued a temporary restraining order, an asset freeze
and appointed a receiver for the companies.  The consent judgment bars one
of the individual defendants, Larry Stephen Huff, from (among other things)
involving himself in any illegal Ponzi or pyramid scheme and participating
in any "multi-level marketing schemes."  See Court Proceedings:  Marketing
Practices - FutureNet Operator Is Barred For Life From Multi-Level
Marketing Businesses, 3(46) Electronic Commerce & Law Rep. (BNA), Dec. 9,
1998.

CYBERCRIME (COMPUTER VIRUSES):  On January 5, Finjan Inc. announced that it
has discovered a security "hole" that may permit introduction of a
devastating computer virus into a computer simply when a surfer uses the
computer to visit a Web site.  The security "hole" has been dubbed the
"Russian New Year Exploit" and is now described as "one of the most serious
in Internet history."  It is the first virus that permits the bad guys to
take control of a user's computer simply because the user visited the bad
guys' Web site.  The Russian New Year Exploit only affects users who have
Excel 95 or 97 loaded on their computers.  For more, see
http://www.cnnfn.com/digitaljam/9901/05/trap/, and
http://www.zdnet.com/zdnn/stories/news/0,4586,2182017,00.html.  See also
Don Clark, Computer Experts To Disclose Discovery of Potentially Serious
Web-Security Gap, Wall St. J. Interactive Ed., Jan. 5, 1999 (available via
search at http://interactive.wsj.com).

CYBERCRIME (COMPUTER VIRUSES): On December 17, MCI Worldcom detected a
virus that propagates itself on Windows NT networks.  The virus, called
"Remote Explorer," was quickly contained.  It  reportedly compresses
program files so they will not execute and encrypts data files so that
persons using the network cannot access the files.  See
http://www.news.com/News/Item/0%2C4%2C30167%2C00.html?dd.ne.tx.ts3.1221.
For Symantec's press release about the development and release of a tool to
remove Remote Explorer, see http://www.symantec.com/press/n981229.html.

CYBERCRIME (LURING MINORS CASES): On December 28, a federal criminal
complaint was unsealed charging a New Jersey man named Jonathan Wolf with
enticing a minor to travel to another state for the purpose of sex and
aiding and abetting such travel.  The man allegedly frequented Internet
chat rooms looking for
“a submissive woman to act as his sex toy” and began
an online relationship with a 17-year-old girl in California.  He sent the
girl money, urged her to remove the hard drive from her computer to cover
their tracks, and convinced her to travel across country to meet him in New
Jersey.  Police found two diskettes in the girl’s bedroom containing
information sufficient to track the couple and reportedly arrested Wolf on
Sunday, December 27.  See
http://www.wired.com/news/news/email/member/politics/story/17042.html,
http://www.sfgate.com/cgi-bin/article.cgi?f=chronicle/archive/1998/12/29/MN
20553.DTL&type=printable.

CYBERCRIME (LURING MINORS CASES): On December 14, Peter Badas, a
thirty-year-old man from Shelton, Connecticut, reportedly pled innocent to
two counts of second degree sexual assault and risk of injury to a minor.
The charges arise from an incident in which he lured a fifteen-year-old
girl from East Windsor, Connecticut to his home after meeting her in an
Internet chat room.  Badas reportedly claims that he did not know the girl
was underage.  See
http://www.boston.com/dailynews/wirehtml/349/Innocent_plea_in_Internet_chat
_room.shtml.

CYBERCRIME (JAPAN): On December 27, a Japanese newspaper reported that
Japanese police are setting up 13 special investigation teams intended to
target hackers and computer-relatred terrorism.  According to the report,
last year Japan experienced 262 instances of computer crime and has decided
to expend 1.95 billion yen (US$17 million) this year fighting cybercrimes.
See
http://www.techserver.com/noframes/story/0,2294,2471-4204-30967-0,00.html.

INTERNET TELECOMMUNICATIONS LAW (COLOMBIA):    One of Brazil’s largest
cellular telecommunications company’s has stopped advertising cut-rate
international Internet telephone calls after three government agencies
reportedly opened inquiries against the company, Communicacion Celular SA,
and whether it acted illegally by offering Internet-routed international
calls.  See http://www.internetnews.com/IAR/1998/12/2904-colombia.html.

INTERNET TELECOMMUNICATIONS LAW: Rejecting rulings by nearly two dozen
other District Courts, on November 25, the Honorable Barbara B. Crabb ruled
the telephone companies are barred under the 11th Amendment to the U.S.
Constitution from suing state regulators for alleged violations of the
Telecommunications Act of 1996.  See Wisconsin Bell Inc. v. Public Service
Commission of Wisconsin, No. 97-C-566-C (W.D. Wis. Nov. 25, 1998).  See
also Court Proceedings: Telecommunications - Telephone Service Providers
Can’t Sue State Regulators on Interconnection Rulings, 3(47) Electronic
Commerce & Law Rep. (BNA), Dec. 16, 1998.

INTERNET TELECOMMUNICATIONS LAW (ANTITRUST ISSUES): Although the proposed
merger of AT&T Corp. and Tele-Communications, Inc. has been approved by the
U.S. Department of Justice, about one-quarter of the cities where TCI holds
cable franchises also must grant approval.  With this in mind, a group of
telecommunications and Internet businesses in Denver, Colorado are asking
the city to condition its approval on AT&T and TCI providing open access to
its high speed network in the Denver area.  See
http://www.internetnews.com/Reuters/1999/01/0501-internet.html.  The same
tactic has been pursued in Portland and, on January 5, Portland City
Attorneys decided to deny the transfer of local cable licenses from TCI to
AT&T because AT&T refused to proide "open access" as a condition to the
transfer.  See
http://www.news.com/News/Item/0%2C4%2C30508%2C00.html?dd.ne.htmldisp.hl.ne.
The tactic is likely to spread elsewhere.

INTERNET TAX LAW (TAX EXEMPT ORGANIZATIONS AND WEB SITES):  The Director of
Exempt Organizations Division of the U.S. Internal Revenue Service (IRS),
Marcus Owens, reportedly has warned that an "emerging issue" being
considered by the IRS is whether or not tax exempt organizations affiliated
with colleges and university should be permitted to maintain their tax
exempt status if they maintain Web sites through which they offer paid
advertising or hot links to a "for profit" institution.  Owens reportedly
made his remarks to attendees of Tax Forum IV, a program conducted by the
National Association of Colleges and University Business Officers, on
December 3.  See Internet Sites May Pose Problems for Exempt Organizations,
Guide To Computer Law (CCH), Issue No. 206, Dec. 8, 1998, at 2-3.

INTERNET TAX LAW (PAPERLESS ADMINISTRATION OF RETIREMENT PLANS):  On
December 17, the U.S. Internal Revenue Service issued final regulations
(T.D. 8796), a notice of proposed rulemaking (REG-118662-98) and a notice
(Notice 99-1) regarding the use of electronic media for general plan
transactions.  Together, the documents released by the IRS provide guidance
to employers on the use of electronic media for the paperless
administration of retirement plans.  See News:  Taxation - IRS Issues
Guidance on Using New Technologies for Plan Administration, 3(48)
Electronic Commerce & Law (BNA), Dec. 23, 1998.  See also News: Electronic
Commerce - ABA Members Urge Immediate Guidance on New Technologies for
Retirement Plans, 3(47) Electronic Commerce & Law Rep. (BNA), Dec. 16,
1998.

INTERNET TAX LAW (USE OF INTERNET TO COLLECT TAXES):  On December 17, the
U.S. Internal Revenue Service released a strategic plan for use of the
Internet to collect taxes and to communicate with taxpayers.  The plan,
entitled "Electronic Tax Administration:  A Strategy for Growth," may be
found at http://www.irs.ustreas.gov/prod/elec_svs/eta-plan.html.

INTERNET TAX LAW (E-COMMERCE AND TAX ISSUES):  On December 11, ten United
States Senators including Bob Graham (Democrat - Florida) and Kit Bond
(Republican - Missouri) wrote to United States Senate Majority Leader Trent
Lott (Republican - Mississippi) to complain that the recently-appointed
19-member Advisory Commission on Electronic Commerce does not comply with
statutory requirements regarding its makeup.  The commission is supposed to
have three federal members, eight state or local members and eight
e-commerce industry representatives.  The eight state or local members must
include one member from a state without any sales tax and one member from a
state without any income tax.  Furthermore, the eight e-commerce industry
representatives must include representatives from small businesses,
consumer groups, telecommunications carriers and the like.  The commission
now has ten e-commerce industry representatives, but only six state or
local members.  Nor is there any member from a state without a sales tax.
The letter demands that Senate leaders coordinate with leaders of the U.S.
House of Representatives to bring the composition of the commission into
compliance with the statute pursuant to which it was created.  See News:
Electronic Commerce - Graham, Bond, Others Urge Leaders To Resolve
Commission Disparity, Electronic Commerce & Law Rep. (BNA), Dec. 23, 1998.
Additionally, on December 8, the National Conference of State Legislatures
announced that it will oppose any effort to assemble the Advisory
Commission on Electronic Commerce until Congress corrects the makeup of the
membership.  See News: Taxation - NCSL To Oppose Commission Work Until
Membership Complies With Law, 3(47) Electronic Commerce & Law (BNA), Dec.
16, 1998; News:  Taxation - Ration for Advisory Commission Skewed As
Gephardt, Daschle Make Appointments, 3(46) Electronic Commerce & Law Rep.
(BNA), Dec. 9, 1998.  See also
http://www.news.com/News/Item/Textonly/0,25,29888,00.html.

INTERNET TAX LAW (E-COMMERCE AND TAX ISSUES):  On December 14, the State of
California's Electronic Commerce Advisory Council issued a report entitled
"If I'm So Empowered, Why Do I Need You?".    The council was appointed by
the Governor of California to study electronic commerce.  The report
recommends an Internet e-commerce taxation scheme that would permit states
"into which physical goods are shipped" to require the seller to c
ollect
and remit sales and use taxes.   Such a plan, of course, would require
federal legislation at the national level.  For a copy of the report, see
http://www.e-commerce.ca.gov/.  See also
http://www.lasvegassun.com/sunbin/stories/text/1998/dec/14/121400497.html,
and News:  Taxation - Council Issues Report on E-Commerce, Urging Simpler
Rules, Out-of-State Collection, 3(48) Electronic Commerce & Law (BNA), Dec.
23, 1998.  For additional background, see
http://www.pathfinder.com/fortune/digitalwatch/0608als.html,
http://www.kcbs2.com/business/stories/business-stories-980511-194336.html.

INTERNET TAX LAW (MINNESOTA): On December 30, a state-appointed task force
in Minnesota met to discuss recommendations that will be made to the
Minnesota State Legislature about how to address taxation issues and the
Internet.  For an article about the tightrope being walked by the task
force as it tries to encourage Web-based business in Minnesota while
“being” fair to non-Web-based businesses in the State, see
http://www.amcity.com/twincities/stories/1998/12/28/story5.html?h=Internet.
 
 

E-LAW BIBLIOGRAPHY:  If you would like a citation to a recent Internet Law
article or an Internet Law Web site included in the E-Law Bibliography,
please forward a note to b_bell@stblaw.com with a full citation.

RIGHT OF PUBLICITY ON THE INTERNET:  Cristina Fernandez, The Right of
Publicity on the Internet, 8 Marquette Sports L.J. 289 (Spring 1998) (an
excellent and exhaustive article on the subject containing an overview of
Internet culture, an overview of the right of publicity, a legal analysis
of the right of publicity  vis-a-vis the Internet, a policy analysis of the
right of publicity including a summary of where the courts stand on the
issue, and a summary of the author's views as to how current legal analyses
should be applied in the context of the Internet).

SECURITIES REGULATION AND THE INTERNET:  Bernard S. Black, Information
Asymmetry, the Internet and Securities Offerings, SSRN Electronic Library,
May 7, 1998 (Standford Law School),
http://www.ssrn.com/papers/9805/98050705.pdf (scroll down to "Click Here To
Download  Document").

INTERNET TELECOMMUNICATIONS LAW:  Rob Frieden, Without Public Peer:  The
Potential Regulatory and Universal Service Consequences of Internet
Balkanization, 3 Va. J.L. & Tech. 8 (Fall 1998) <
http://vjolt.student.virginia.edu/graphics/vol3/home_art8.html>.

INTERNET TELECOMMUNICATIONS LAW:  Jonathan Weinberg, The Internet and
"Telecommunications Services," SSRN Electronic Library, Nov. 22, 1998
(Wayne State University Law School),
http://www.ssrn.com/papers/9812/98120904.pdf (scroll down to "Click Here To
Download Document").

E-COMMERCE AND CONSUMER PROTECTION ISSUES:  John Rothchild, Protecting the
Digital Consumer:  The Limits of Cyberspace Utopianism, SSRN Electronic
Library, Oct. 8, 1998 (University of Chicago Law School - Draft),
http://www.ssrn.com/papers/9811/98110903.pdf (scroll down to "Click Here To
Download Document").

E-COMMERCE LAW:  Amelia H. Boss, Electronic Commerce and the Symbiotic
Relationship Between International and Domestic Law Reform, SSRN Electronic
Library, April 1998 (Temple University School of Law),
http://www.ssrn.com/papers/9809/98092901.pdf (scroll down to "Click Here To
Download Document").

THE INTERNET AND INTELLECTUAL PROPERTY ISSUES:  Mark A. Lemley, Beyond
Preemption:  The Federal Law and Policy of Intellectual Property Licensing,
SSRN Electronic Library (University of Texas School of Law),
http://www.ssrn.com/papers/9806/98060232.pdf.

SPAM: Karin Mika, Information v. Commercialization: The Internet and
Unsolicited Electronic Mail, 4 Rich. J.L. & Tech 6 (Spring 1998) <
http://www.richmond.edu/~jolt/v4i3/mika.html>.

CYBERJURISDICTION: Yvonne A. Tamayo, Who? What? When? Where?: Personal
Jurisdiction and the World Wide Web, 4 Rich. J.L. & Tech. 7 (Spring 1998) <
http://www.richmond.edu/~jolt/v4i3/tamayo.html>.

CYBERJURISDICTION: Cheryl L. Conner, Compuserve v. Patterson: Creating
Jurisdiction Through Internet Contacts, 4 Rich. J.L. & Tech. 9 (Spring
1998) <http://www.richmond.edu/~jolt/v4i3/conner.html>.

CYBERJURISDICTION: Nancy L. Savitt & Parry Aftab, Tech Trends:  Web
Judicata - Grappling With Cyber-Jurisdiction, N.Y.L.J., Dec. 21, 1998 <
http://www.ljx.com/cgi-bin/f_cat?prod/ljextra/data/texts/122198t3.htm>.

CYBERJURISDICTION:  Joel P. Trachtman, Cyberspace, Modernism, Jurisdiction
and Sovereignty, SSRN Electronic Library, May 1998 (Tufts University
Fletcher School of Law and Diplomacy),
http://www.ssrn.com/papers/9806/98060502.pdf (scroll down to "Click Here To
Download Document").

INTERNET COPYRIGHT LAW:  Donald Sovie, Downloading From the Net Is
Dangerous:  Well-Intentioned Companies That Download or Hyperlink To
Copyrighted Material Online May Find Themselves Liable for Infringing,
Nat'l L.J., Dec. 14, 1998, at B05 <
http://www.ljx.com/cgi-bin/f_cat?prod/ljextra/data/texts/1998_1207_56.html
>.

INTERNET COPYRIGHT LAW:  Michael S. Mensik & Jeffrey C. Groulx, From the
Lightweight 'Rio' Flows Heavyweight Battle, Nat'l L.J., Dec. 14, 1998, at
B05 <
http://www.ljx.com/cgi-bin/f_cat?prod/ljextra/data/texts/1998_1207_57.html
>.

INTERNET COPYRIGHT LAW:  Richard Raysman & Peter Brown, Computer Law:  The
Digital Millenium Copyright Act, N.Y.L.J., Dec. 8, 1998 <
http://www.ljx.com/cgi-bin/f_cat?prod/ljextra/data/texts/120898c3.htm>.

INTERNET PRIVACY ISSUES:  Peter P. Swire, Financial Privacy and the Theory
of High-Tech Government Surveillance, SSRN Electronic Library, Sept. 1998
(Ohio State University College of Law),
http://www.ssrn.com/papers/9810/98100101.pdf (scroll down to "Click Here To
Download Document").

INTERNET PRIVACY ISSUES:  Peter H. Huang, The Law and Economics of Consumer
Privacy Versus Data Mining, SSRN Electronic Library, May 1998 (University
of Pennsylvania Law School), http://www.ssrn.com/papers/9805/98052712.pdf
(scroll down to "Click Here To Download Document").

INTERNET GOVERNANCE ISSUES:  Julie E. Cohen, Lochner in Cyberspace: The New
Economic Orthodoxy of 'Rights Management,' SSRN Electronic Library, Sept.
25, 1998 (University of Pittsburgh School of Law),
http://www.ssrn.com/papers/9809/98091701.pdf (scroll down to "Click Here To
Download Document").

THE INTERNET AND REGULATION OF ADVERTISING:  Angela J. Campbell,
Ads2Kids.com:  Should Government Regulate Advertising to Children on the
World Wide Web?, SSRN Electronic Library, May 1998 (Georgetown University
Law Center), http://www.ssrn.com/papers/9806/98060232.pdf (scroll down to
"Click Here To Download Document").

CYBERCRIME:  Hans-Werner Moritz, Pornography Prosecution in Germany Rattles
ISPs:  Internet Access Providers Face Uncertainty Regarding Liability After
Conviction of Former CEO, Nat'l L.J., Dec. 14, 1998, at B07 <
http://www.ljx.com/cgi-bin/f_cat?prod/ljextra/data/texts/1998_1207_58.html
>.
 

Blake A. Bell, b_bell@stblaw.com, is Senior Litigation Counsel with Simpson
Thacher & Bartlett in New York City.  He is a member of the firm's
Intellectual Property Group and specializes in Internet Law and Internet
Securities Regulation matters.  He is a member of the Computer Law
Committee of the Association of the Bar of the City of New York and its
Securities Law Subcommittee.  He is also a member of the Global Cyberlaw
Network.

David J. Loundy, David@Loundy.com, works in intellectual property, computer
law (including Internet issues) and entertainment law at Davis, Mannix &
McGrath in Chicago.  He has served as Chairman of the Chicago Bar
Association Computer Law Committee and is an Adjunct Professor of
Cyberspace Law at the John Marshall Law School.

The views expressed herein are those of the authors, not necessarily of
their firms.

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