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