LAW, BUSINESS, &

SOCIETY
11th
Edition

McGraw-Hill

2015 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives

Explain the ethical dilemmas referred

to as the digital divide and net
neutrality
Apply the requirements of personal
jurisdiction to a dispute arising in
cyberspace, both where the parties are
residents of different states and where
they are residents of different countries

18-2

Learning Objectives

Identify free speech issues that arise in

the context of the Internet and present
the competing interests that make
each particular issue difficult to resolve
Provide examples of online activities
that raise privacy concerns
Explain the differences in online
privacy protection between the United
States and the European Union
18-3

Learning Objectives

Describe several Internet-related

crimes, including cyberstalking and
cybersecurity
Explain the impact of the Electronic
Signatures in Global and National
Commerce Act (E-SIGN)
Discuss the legal effect of click-wrap
agreements
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Learning Objectives

Discuss standard-essential patents and

give an example
Explain the copyright doctrines of fair
use and first sale
Explain the trademark issues described
in the text affecting Google and eBay
Identify and discuss the basic tax issue
that arises from cyberspace
transactions
18-5

Internet and Globalization

Internet is a catalyst for continuing

globalization
Breaks down national boundaries and rules

to allow free exchange of communications,

ideas, goods, and services

Global communication system

Raises an issue of what law and standards

people require to govern Internet activities

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Market, Law, and Ethics

Policy makers and users are concerned

about the degree to which the force of
law will be imposed on the Internet
Peaceful and dependable conflict solutions

require an established dispute resolution

mechanism
Judicial decisions need to be based on
shared principles

18-7

Market Forces and

Government Regulation
Global norms are required in regulating
the functioning of the Internet
Governments do not censor private
communications between users

Seek information from carriers about the

existence of participants and try to access to

the content

Market forces have little bearing on

government access to private
information
18-8

Internet Access

Digital divide
Divide in the U.S. is along race, age,

economic, and geographic lines

Access is highly imbalanced at global level
Problems relate to availability, user cost, and
training

18-9

Internet Access

Net neutrality
ISPs cannot discriminate against the traffic of

content provider
Wish to charge content providers with heavy
traffic for the bandwidth used to access their
sites, products, and services

Federal Communications Commission (FCC)

issued rules to address neutrality issues

Prohibited blocking of lawful content,
applications, services, or non-harmful devices

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Internet Access
Compelled disclosure on network
performance and the principles that would
be used to manage network congestion
Blocking of consumer access to lawful
websites and applications that compete with
the providers voice or video telephony
services was prohibited

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Jurisdiction to Adjudicate

Parties must take their claim to a court

that has subject-matter and personal
jurisdiction
In the U.S., personal jurisdiction over

nonresidents depends on constitutional

requirement of due process
Minimum contacts test - The contacts in the
Internet business are electronic and fleeting

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Jurisdiction in International
Suits

Types
Jurisdiction to prescribe
Jurisdiction to adjudicate
Jurisdiction to enforce

Restatement of Foreign Relations Law

Identifies circumstances in which countries

exercised their jurisdiction to adjudicate

When a person is present in the territory,
other than transitorily
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Jurisdiction in International
Suits
When a person is domiciled, a resident, or a
national of that country
When a person regularly carries on business
in that country
When a person has carried on an activity in
the country and that activity is the subject of
the dispute
When a person has done something outside
the country that has a substantial, direct,
and foreseeable effect within the country
and that effect forms the subject of the suit
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Case: Jurisdiction to Adjudicate

Case
YAHOO! v. La Ligue Contre Le Racisme Et

LAntisemitisme
169 F.Supp.2d 1181 (N.D. Cal. 2001)

Issue
Defendants filed a civil complaint against

Yahoo! in the French Court for including

Nazi and Third Reich-related objects in its
auction site
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Constitutional Law: Speech

A court cannot restrain free speech by

ordering someone not to post
defamatory or copyrighted material
The damaged party can sue for defamation

or copyright infringement after the posting

Internet free speech issues

Protection of children from online

pornography
Prevention of child pornography
18-16

Anonymous Speech

Persons decision to remain anonymous

is protected by the First Amendment
Anonymity on the Internet makes
individuals bolder about asserting
untruths
Victims can request the hosting site to

remove the material

Communications Decency Act - Rests
liability on the information content provider
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Case: Anonymous Speech

Case
Immunomedics v. Jean Doe
775 A.2d 773 (N.J. Super. 2001)
Trial court

Issue
Defendant argued that the First

Amendment prohibits Yahoo! from

responding to a subpoena from
Immunomedics seeking her true identity
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Commercial Speech

Online advertising is subject to

government oversight
Spam - Mass commercial messages
Can be deceptive, fraudulent, or contain

objectionable content
CAN-SPAM Act, 2003
Established civil and criminal penalties for
violations of its provisions

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Constitutional Law: Privacy

The Internet provides access to

excessive amount of data
Browser search can provide information

from the public pages of social media sites

Social media is creating a wide impact and is
not covered by the legal system

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Data Mining

Building profiles of individuals by

organizing pieces of information
collected in the course of business
Helps provide better services
Drawbacks
Permits price discrimination
Concern for security of personal

information

18-21

Cross-Device Tracking

Websites collect user-specific

information across multiple devices
and platforms
Example - Google, Apple, and Microsoft do

cross-device tracking through their

devices, apps, and browsers

18-22

Aggregators

Create detailed individual profiles by

combining data from various sources
Major source - Cookies

No state or federal law prohibits the

collection of data by third parties
Do not have privacy agreements with
the individuals who are profiled
May have no agreement with the data

source to restrict the use of the data

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Privacy of Employees

State laws prohibit employers from

requiring employees social media logon credentials
Software is used to track employees
and their Internet activities
Employers should have their employees

sign an acknowledgement to implement

monitoring programs

18-24

Regulation

U.S. has no privacy law addressing the

Internet environment
Privacy of users is managed by selfregulation of service and content
providers
Advertisers and content providers track the

behavior of users to target their specific

interests
Browsers have user-controlled Do Not Track
settings
18-25

Regulation

FTC takes action against companies

that violate the stated privacy policies
Childrens Online Privacy Protection Act
(COPPA)
Prohibits websites from collecting personal

information from children under 13 without

parental permission
Allows parents to review and correct any
information collected about their children
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Crime

Laws that criminalize online behavior

CANSPAM and PROTECT acts
Computer Pornography and Child

Exploitation Prevention Act, 1999

Prohibits the use of computer to solicit, lure, or
entice a child or engage in sexual offenses
with a child

Computer Fraud and Abuse Act, 1986

Bars individuals from accessing networked
computers without authorization or obtaining
unauthorized information
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Crime

Pre-Internet criminal laws can be

applied to online and offline behavior
Cyberstalking
Repeated use of electronic media to harass

or threaten another person

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Cybersecurity

Hackers
Break into computers, destroy data or

networks
Engage in identity theft

Cyber-espionage
Stealing military and economic secrets and

intellectual property

Obama administration issued voluntary

cybersecurity guidelines for certain
industries
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International ComputerFacilitated Crime

Convention on Cybercrime
Effort to address computer-facilitated

crime
Requires the criminalization of many
computer activities
Obliges nations to assist each others
investigations

Countries criminalize behaviors on the

basis of their moral attitudes
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Contracts and Uniform Laws

Ingredients of a binding contract apply

to Internet transactions
E-mail exchange with contract

requirements result in an enforceable

agreement

Electronic Signatures in Global and

National Commerce Act (E-SIGN)
Provides e-signatures the same legal

stature as handwritten ones

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Contracts and Uniform Laws

Uniform Computer Information

Transactions Act (UCITA) - Proposed law
Currently, the UCC, state and federal laws,

and the common law of contracts govern

electronic contractual arrangements

Click-wrap agreements - Software

license terms provided during
installation
Enforceable if the buyer has a reasonable

opportunity to review the terms

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Intellectual Property

Patents
U.S. Patent and Trademark Office overhauled

online patent processes due to early

controversies

Patent wars
Disputes focus on license fees for standard-

essential patents and patent infringement

allegations
Standard-essential patents - Address basic
communication and data handling matters that
support industrywide standards
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Intellectual Property

Copyrights
All information available online is protected

by the U.S. Copyright Act

Fullest protection can be achieved by:
Placing a copyright notice on the work
Registering the copyright with the U.S.
Copyright Office

Berne Convention - Copyright treaty that

provides international protection

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Intellectual Property
Rights of a copyright holder
Reproduce copyrighted work and prepare
adaptations based on the material
Distribute, perform or display the material
Exceptions
Fair use doctrine - Allows the use of
copyrighted material without permission
under some conditions
First sale doctrine - Owner of a copy of a
copyrighted work can resell it without
infringing the authors rights
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Case: Copyrights

Case
Metro-Goldwyn-Mayer Studios v. Grokster
125 S.Ct. 2764 (2005)
Supreme Court

Issue
Plaintiffs sued Grokster for copyright

infringement and alleged that their

software enabled users to reproduce and
distribute copyrighted works
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Trademarks

Words, names, symbols, devices, or

combinations used to distinguish one
sellers products from those of another
Service marks - Associated with service

businesses

Protects mark owners by:

Prohibiting unauthorized use of the mark
Preventing loss of reputation and value

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Trademark Disputes

Google and Louis Vuitton

Google sold ad space to Vuittons

competitors while displaying search results

for Vuitton products

eBay
Luxury goods manufacturers sued the

company for selling counterfeit goods

Removed items when advised by the
trademark holder and improved processes,
after being sued
18-38

Domain Names

Internet address for a Web page

Internet Corporation for Assigned Names

and Numbers (ICANN)

Oversees the Domain Name System (DNS)
Rights are secured by being the first to
request a name and pay the registration fee

Anticybersquatting Consumer
Protection Act, 1999
Takes action if a trademark is infringed by

anothers registration of a domain name

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Taxes

States have joined to streamline, simplify,

and coordinate their sales tax laws
Online businesses do not voluntarily submit to

collection of taxes in states where they are not

physically present

Organization for Economic Cooperation

and Development (OECD)
Member countries adopted that consumption

taxes can be collected by the jurisdiction

where consumption takes place
18-40