Chapter 12
The Developing Law of the Internet And Electronic Communications
Copyright © 1997 Mark Sableman, Frank Janoski & Carol Tate(Last update: 1997)
Mark Sableman, Frank Janoski & Carol Tate
Thompson Coburn
One Mercantile Center
St. Louis, Missouri 63101-1693
Telephone: (314) 552-6000
Facsimile: (314) 552-7000
For centuries paper has reigned as the supreme and ubiquitous medium for effecting formal legal transactions . . . . Today, electronic messages are dethroning the monarch . . . and installing a new order in business, in government, [and in our personal lives].1
Electronic computer-based communications and the use of the Internet have become a "new frontier" for the interchange of ideas and the dissemination of information. While the Internet is an easy, effective, and inexpensive means of communicating and sending information to large audiences, the proliferation of the use of the Internet has generated tremendous controversy over issues concerning free speech, the right to privacy, trademark, copyright infringement, obscenity, jurisdiction, and contract law.
While it is still too early to even identify all of the legal issues concerning the Internet, the early stages of the Internet have both settled and raised many legal questions. This chapter provides an overview of the law of computer-based communication and the Internet, and discusses the early cases and issues that have arisen from the use of electronic communications and the Internet.
A. What Are Computer-Based Communications?
Computer-based electronic communications occur in a variety of ways. The Internet, commercial on-line services, and electronic bulletin boards are three popular methods of computer-based communications.
The Internet is a worldwide entity whose nature is not easily defined.2 It is a network of computers which are located at various sites throughout the world. This loose-knit network allows individuals to send messages across the country; access news from remote sources; download and upload information, images and text from across the globe; advertise products; and converse about a variety of topics. The Internet was originally developed in the late 1960s as a tool by which scientists, military personnel, academics, defense contractors and researchers could share files, relate information, and engage in a dialogue through computers. However, over the past three decades, the Internet has exploded into a global, interactive medium comprised of millions of computers linked throughout the world. There are a variety of different methods of communicating and exchanging information over the Internet, many of which are constantly changing and evolving. However, the most common types of communications on the Internet include: 1) individual-to-individual messaging; 2) individual-to-group messaging; 3) distributed message databases; 4) real time communications; 5) real time remote computer utilization; 6) and remote information retrieval.3
Individual-to-individual messaging is comparable to sending a first class letter. A user sends a message to one or more people and the message takes many varying paths to ultimately reach the intended recipient.4 Individual-to-group messaging involves subscribing to "automatic mailing list services that allow communications about particular subjects of interest to a group of people."5 Distributed message databases, like individual-to-group messaging, are open discussions and exchanges on particular topics. However, users needn't subscribe in advance to access the databases.6 Real time communications allow "Internet Relay Chat" or allow two or more persons to type messages to each other that will appear almost immediately on the other person's computer screen. Thus, it is akin to having a conversation on a telephone party line. Real time remote computer allows users to access and use information using "Telnet." For example, a student could use Telnet to connect to a remote library and access that library's on-line card catalog. The last method of communicating on the Internet involves remote information retrieval. Remote information retrieval allows users to retrieve information located in remote computers. One method of locating and retrieving information utilizes "ftp" or file transfer protocols which first list the names of computer files that are accessible on a remote computer. Another method involves "gopher," a program that guides the user through various resources on a remote computer. The most well-known method of remote information retrieval is the "World Wide Web."
The World Wide Web is the fastest growing portion of the Internet and through the use of "hypertext links," users "surf" from site to site on the World Wide Web. A user accesses the Internet by using an Internet Service Provider ("ISP") which may be a commercial on-line service provider such as American Online, CompuServe, Microsoft Network, or Prodigy. On-line services offer users proprietary content and special services in addition to the Internet; these features may include e-mail privileges and access to encyclopedia databases, commercial information, shopping venues, and bulletin boards. Bulletin boards are places in cyberspace -- on the Internet, an online service, or just a direct modem link -- in which users can post, review, and download information.
The Internet is a unique form of communicating and disseminating information that is unlike print media or other forms of communication; rather, it is a decentralized network that is neither comprised of a single entity nor controlled by any one company or government. The Internet has no geographical boundaries or formal rules which govern the use or content of information disseminated over its networks. Thus, no one person or entity runs the Internet nor can any one person exercise complete control over the manner in which information is sent or received over the Internet.7 Moreover, no one can sue the Internet.
B. Internet Domain Name Trademark Disputes
Publishers (sometimes called "content providers") on the Internet often use an Internet "domain name." A domain name is a series of letters or numbers, which may incorporate a trademark, that provides the Internet publisher with a "site" or a computer address. A domain name is akin to having a telephone number or a postal address, and therefore, allows a particular computer site or location in cyberspace to be identified. Network Solutions, Inc. ("InterNIC"), a Virginia organization, grants, issues and regulates domain names in the United States. InterNIC initially provided users with domain names on a first-come-first-serve basis. However, in light of growing debates over the use of domain names, the InterNIC adopted special regulations, beginning in late 1995. InterNIC policies in effect in early 1997 require domain-name applicants to warrant to InterNIC that they are unaware of any existing and/or potential conflicts between the domain name requested and the holders of pre-existing trademarks. If an applicant is unable to make such a warranty and a dispute over the domain name subsequently arises, InterNIC will hold the domain name in abeyance and effectively remove itself from the dispute until the parties can resolve the matter. Additionally, InterNIC has special procedures which it follows in the case of complaints that a domain name will violate trademark rights.
The use of domain names has led to a growing number of disputes concerning trademark infringement. The problem concerning the use of domain names and the Internet first surfaced in MTV Networks v. Curry, 967 F. Supp. 202 (S.D. N.Y. 1994),8 where Curry, an MTV video disc jockey, obtained the right to use the domain name "mtv.com." The MTV television channel, seeking to prevent Curry from using the domain name, sued Curry, claiming that Curry's use of the name violated MTV's trademark rights. The case was ultimately settled. However, there have been numerous other disputes involving claims that a domain name address violated another's federal trademark rights. For example, The Gap, Inc. complained of the domain name "the gap.com" which was first registered by a company named Genesis Project Limited; Apple Computer (producer of the NEWTONTM hand-held personal communicator) raised a dispute over the domain name "newton.com," a name that had already been registered to Mark Newton; Fry's Electronic, Inc. disputed the use of the domain name "frys.com," a name originally obtained by Frenchy Fry; and KnowledgeNet, Inc. sued D.L. Boone & Co. over the use of the domain name "KnowledgeNet.com," a name D.L. Boone had previously registered. Basic trademark infringement principles govern these cases.
The Federal Trademark Dilution Act of 1995 may give trademark owners of famous trademarks additional protections not previously available to them under federal trademark laws. These protections have proven useful in some Internet domain name disputes. Under the new law, if the owner of a famous trademark can establish that another's use of a similar mark dilutes the distinctiveness of his trademark, then he can prevent the other individual from using the mark -- for example, as a domain name.
C. Free Speech and Indecency on the Internet
The case Reno v. American Civil Liberties Union9 has done much in the way of defining what the Internet is and how the Internet functions. In 1996, Congress passed the Communications Decency Act in attempt to curtail "indecent" and "patently offensive" speech on the Internet. The Act criminalized the use of telecommunications as a means of knowingly transmitting "indecent" communications to minors or using interactive computer services to display sexual activities to minors. In Reno, several plaintiffs including Planned Parenthood, Stop Prisoner Rape, and the ACLU challenged the constitutionality of the Communications Decency Act of 1996, a portion of the Telecommunications Act of 1996, claiming that because the information they disseminated would arguably fall within the purview of the Act, the Act would thereby chill their First Amendment right to free speech.
In Reno10, a three-judge panel in Philadelphia examined the Internet, its structure and operations, in depth and then issued a lengthy and insightful ruling concerning how the Internet works and how, in the panels' opinion, the Internet could and should be regulated. The Court found that the Internet was a decentralized, largely passive medium that merely made information available to readers who actively sought to retrieve, discover, and download the information displayed on the Internet. The Court also found that since retrieving information from the Internet required a user to take affirmative, deliberate steps to access the information, the Internet was not akin to a television or radio broadcast, but functioned more like a passive postal service. The Court held that the Communications Decency Act of 1996 was an impracticable and highly ineffective means of preventing indecent and patently offensive material from appearing on the Internet and, for a variety of reasons, that the Act unconstitutionally restricted freedom of speech as protected by the First Amendment. The court held that the use of the Internet had a place along with other forms of speech, and therefore, should be afforded protection under the First Amendment. The Court suggested that the use of alternative solutions such as screening software or adult password devices would better prevent minors from gaining access to arguably offensive or inappropriate material. The Supreme Court affirmed in a landmark decision, finding that the Communications Decency Act was facially overbroad, lacking the "precision the First Amendment requires when a statute regulates content of speech."
D. Liability of Conduits
One of the first issues that emerged concerning the use of the Internet and electronic computer-based communications was whether commercial on-line service providers and Internet access providers such as CompuServe, America Online, and Prodigy could be held liable for the actions and/or postings of their customers and users. One early online case, Cubby, Inc. d/b/a Kuttlebut v. CompuServe d/b/a Rumorville,11 established the principle that on-line service providers will not be held liable for either the actions or the content of information disseminated by their subscribers if the service providers merely funneled unedited and untouched information through their lines. In that case, the court declined to find the on-line service provider, CompuServe, liable for the content of the information placed on the Internet by its users. The court reasoned that because CompuServe functioned like a news distributor and exercised no control, literary or otherwise, over the information presented by its customers, it should not be held accountable for the adverse affects, if any, that resulted from the dissemination of the information through its lines. Another court found that if the operation of a subscription computer bulletin board service posts material with the knowledge that the material violates another individual's rights, then the bulletin board service may be liable for the posting.12
Conversely, in the widely criticized case Stratton Oakmont, Inv. v. Prodigy,13 one court held that the on-line service provider Prodigy would be held accountable for information that had been posted on one of its bulletin boards by a subscriber. There, the Court reasoned that because the on-line service provider maintained editorial control over messages posted on its bulletin boards, it acted more like a publisher than a passive distributor, and therefore, would be held to a higher standard. As a consequence, the court found that the on-line service provider could be sued for any libelous material contained in the messages. The Prodigy decision has been effectively overruled by the Telecommunications Act of 1996,14 which provides a safe harbor for on-line services.
Are Internet service providers and other conduits liable for copyright infringement that they facilitate? In Religious Technology Center v. Netcom On-Line Communication Services, Inc.,15 a court acknowledged the principle underlying Cubby decision, namely that an Internet service provider that does not monitor the activities of its subscribers will not be held liable for postings made by its subscribers. However, the Court went on to hold that a computer bulletin board service ("BBS") and its Internet service provider could be found contributorily liable for copyright infringement if the BBS or service provider either knew or should have known that the copyrighted materials had been uploaded, and hence made easily available to potential infringers. In contrast, the court in Religious Technology Center v. Lerma,16 insulated an Internet user that merely downloaded information which he found on the Internet. In that case, the court held that a newspaper that actively posted trade secrets onto the Internet would be held liable for copyright and/or trade secret infringement. However, where a user merely accessed the Internet and downloads information contained thereon, he could not be held liable for copyright infringement, because such passive interaction does not give rise to nor does it warrant a finding of liability.
Similarly, in Religious Technology Center v. F.A.C.T. NET, Inc.,17 a court declined to hold a library liable for copyright infringement where the library had only scanned copyrighted works into its computer and then placed those works into a private section of the library without providing the public the opportunity to copy or republish the works. There, the court reasoned that because the library's acts did not affect the market value of the copyrighted material, the library's actions were not violative of federal copyright laws.
E. Copyright Infringement
Two federal court decisions Playboy Enterprises, Inc. v. Frena,18 and Sega Enters. v. Maphia19 have dealt with copyright infringement and the liability of bulletin board operators. In those cases, both courts held that if users of bulletin boards upload copyrighted materials onto bulletin boards and customers or other users of the bulletin boards download those same materials, then the bulletin board operators will be held liable for any damage resulting from the reproduction of the copyrighted material. In those cases, both bulletin board operators argued that they should not be held liable for copyright infringement, because the reproduction of the copyrighted work by their customers constituted a "fair use" of the materials. "Fair use" is a recognized defense to copyright infringement and involves balancing a variety of considerations including four statutory factors: 1) the purpose and character of the used material; 2) the nature of the copyrighted work; 3) the substantiality of the portion of the work used; and 4) the effect of the use of the material on the market value of the work. The Sega and Playboy courts used this analysis to determine whether the two bulletin boards had exercised a "fair use" of the copyrighted material. Both courts found, however, that the bulletin board operators had not made a "fair use" of the material, but had infringed the rights of the owners of the copyrighted material.
Retransmission also is a controversial and unsettled area involving copyright infringement as it concerns the Internet. Specifically, is it copyright infringement to transmit a copyrighted work electronically over a computer network without regard to what is done with the work? The Clinton Administration's 1995 "White Paper" on Intellectual Property and the National Information Infrastructure recommended that the Copyright Act be amended to explicitly include a "transmission" right as one of the basic rights of a copyright owner. Internet users fear that such a right would unduly restrict the investigation and exchange of information. Construed broadly (or, according to some, literally), the transmission right would criminalize the basic and common act of browsing on the World Wide Web. In addition, Internet service providers fear that such a right would subject them to liability for contributory or vicarious copyright infringement because of the acts of their customers which they cannot control. Due to these concerns, the fate of legislation and a proposed international treaty implementing the transmission right is uncertain.20
F. Liability Based on Hypertext Linkages
Hypertext links are the signature characteristic of the World Wide Web that make jumping from one page to another both exciting and attractive to viewers. Many linkers and linkees perceive links as beneficial for reasons of commerce, prestige, and ease of Internet navigation. However, hyperlinks may create issues of trademark infringement, tarnishment, disparagement, "passing off"21 or interfering with one's business expectancies.
1. Trademark Infringement or Unfair Competition
The use of logos and trademark designs in Web pages presents one of the obvious problems. An Internet page creator who wants to link to the Walt Disney Company's official pages or fan pages,22 and who creates a Mickey Mouse icon for its hyperlink, may well receive a cease-and-desist letter from Burbank, California. Consequently, although use of a trademark on a hyperlink may be justified as a fair and descriptive use of the mark, owners of valuable trademarks are likely to view hyperlinks as more likely to create a "passing off" problem than non-hyperlink use of a trademark, particularly where famous design marks are used. Many consumers may believe that a trademark hyperlink indicates some sponsorship or a recognized or licensed association.
The economics of web page advertising also suggests that trademark owners may object to unauthorized hyperlinks. Banner advertising is a significant source of revenue for some commercial web pages, and many banner advertising contracts are written so that costs are related to the number of "hits" on a page. To the extent other linking pages siphon hits off of a page that carries advertising, the owner of the original page is likely to seek to restrain the unauthorized linking page. Trademark infringement is an obvious possible claim, and descriptive use of trademarks an obvious possible defense. Web publishers who sell advertisements on their pages may attempt preventative action by negotiating advertising charges based on total number of hits, regardless of whether the hits go directly to the publisher's home page.
Hyperlinks may also create deceptiveness problems and lead to derivative liability. If Joe's Internet Home Page for Junk Goods contains a hyperlink to your client's page, for example, your client's goods may be implicitly disparaged, and your client's trademarks tarnished, by the association of the client's goods with "junk." In a less extreme example, a company that manufactures or distributes low-quality goods could seek to upgrade its image in the marketplace (and possibly pass its goods off as associated with better-known producers) by hyperlinking to sites for top-quality producers. Hypertext links may create problems even for Internet advertisers with the best of intentions -- for example, where one party's Internet page links to a source which was considered reliable, but which turns out to contain misleading or harmful information.23
Furthermore, the combination of hyperlinks and framing technology -- a method of arranging and viewing web pages that new-generation web browsers introduced to Internet users in 1996 -- has led to intriguing intellectual property issues. In Washington Post Company v. Total News Inc.,24 the Washington Post and several other major publishers asserted claims against Total News, Inc., the operator of an independent gateway to the Internet news pages operated by the plaintiffs and others. Among other things, the plaintiffs complained that when a web surfer uses the Total News site to explore news sites, the news sites will appear "framed" within the advertising-filled borders of the Total News site. The plaintiffs alleged that by framing the news sites, Total News often cuts off from the readers the advertisements, banners, and Internet addresses of the publishers, and covers them with Total News's banners and advertising. The complaint alleged that these practices are actionable as common law misappropriation, federal and state trademark dilution, unfair competition, trademark infringement, copyright infringement, and tortious interference.
Similarly, in TicketMaster Corp. v. Microsoft Corp.25 a ticket-selling agency complained of a city guide's "unauthorized" hyperlink to its site because the link enabled Internet users to bypass the agency's "front door" (which contained paid advertising) and go directly to a page that contained event and ticket information (and was free of advertising). TicketMaster complained that by offering this bypass, the defendant was "in effect, committing electronic piracy." TicketMaster claimed that it was entitled to control "the manner in which others utilize and profit from its propriety content." TicketMaster alleged that the bypass hyperlink constituted trademark dilution and unfair competition.26
The Total News case was settled in June 1997, only four months after it was filed, with an agreement that recognized a new Internet property right -- the linking license. In the settlement, Total News was required to obtain from the Washington Post and other publisher plaintiffs licenses authorizing the hyperlinks that Total News had previously set up without authorization. Additionally, Total News was required as a condition of the license to display the linked materials only in certain ways -- for example, without deleting any text, graphics or advertising, and without "framing" the linked site with Total News's logo or advertising.
Whether or not linking licenses like the one created by the Total News settlement become the norm, the Total News and TicketMaster cases signal that hyperlinkages between business Internet sites may well lead to serious disputes. Still unsettled, in early 1997, are the legal theories and doctrines that will resolve those disputes.27
The leading publishers allied as plaintiffs in Total News have signaled the many different ways one may look at the legality of hyperlinking. Specifically, is the gist of the case a third party's use of the publisher's trademarks as the hyperlink buttons, because such use constitutes potential trademark infringement or dilution or a false designation of origin? Is the nub of the case rather the presentation of the publishers' copyrighted content, framed by intermediary's banners, and whether that constitutes an unauthorized and infringing derivative work? Or is the business of framing and linking to someone else's content an instance of business competition to be judged under the general law of unfair competition, or the specialized doctrine of misappropriation of "hot news"28: These issues, and the broader policy issue of whether a commercial Internet publisher will be permitted to attract users and advertisers by essentially providing easy links to the content of others, are likely to be vigorously litigated.
2. Copyright Infringement
The world's first widely noted hyperlink lawsuit arose out of an electronic newspaper rivalry in the Shetland Islands of Scotland. In 1996, Shetland News challenged the longer-established Shetland Times, claiming that the News's hyperlinks to some of the Times's stories constituted copyright infringement.29 The News apparently linked to the Times in order to bring its readers any news stories missed by the News.30 The Shetland News argued that hyperlinks could not constitute infringement, as free access constituted the basic principle of the Internet. The Court of Sessions in Edinburgh, by Lord Hamilton, disagreed, granting the Times an interim interdict (comparable to a preliminary injunction) preventing the News from making further hyperlinks.31 The court noted that the News's hyperlinks to certain of the Times's stories permitted readers to get access to the Times's stories while "by-passing the [Times] front page and accordingly missing any advertising material which may appear on it." This potential advertising recognition loss figured heavily in the court's decision in favor of the interim relief:
The balance of convenience clearly, in my view, favored the grant of the interim interdict . . . . It was fundamental to the setting up by the pursuers of their web site that access to their material should be gained only by accessing their web directly. While there has been no loss to date, there is a clear prospect of loss of potential advertising revenue in the foreseeable future.
This interim ruling has been appealed.
New web browsers and linking technologies may raise additional issues. For example, the developing "frames" technology may permit web publishers to display images or other content from another site, as if that content were maintained on the publisher's own site.32 Such use of the "framing" technology to create "composite web pages" appears more likely to constitute copyright infringement than ordinary hyperlinks.
Creators and users of hyperlinks are likely to claim that web traditions and practices have given rise to an implied license to link or an implied right of public access. As explained by one commentator:
The copyright owner made a deliberate choice to place his web site online, with full knowledge (presumably) of how the system operates. Linking of web sites to one another is extremely common and is, arguably, both the raison d'etre of the WWW and the reason for its success. It is custom and practice, and so if a copyright owner puts up a web site, he must expect others to link into his site. Services such as web search rights could not operate without this ability.33
Such "implied license" or "implied public access" theories may be dependent to a great extent on the evidence regarding actual web practices. In particular, if web publishers begin incorporating in their pages prohibitions against linking, or if they begin requiring prior consent to linkages, those practices would seriously undercut the implied license or consent arguments. And in instances where the linking site does more than just provide a neutral link, it would be harder to justify a right to freely link.
A linking page owner may also defend against hyperlink copyright infringement claims on grounds of non-copyrightability or fair use. Even if the copy used on the linking pages is taken from the originating page, if what is taken is short enough or descriptive enough it will probably not constitute infringement. In the Shetland case, for example, the News claimed that the Times headlines it copied onto its page were too short to be copyrightable. The flexible statutory fair use factors,34 the "transformative use" factor introduced by Campbell v. Acuff-Rose Music Inc.,35 and the holding the Sony Betamax case,36 which approved viewer-initiated time-shifting transfers, may support this defense.
G. Jurisdictional Perils
Advertising over the Internet presents the entrepreneur and the marketer with an extraordinary opportunity to promote products and services to millions of people across the country and throughout the world. However, while the Internet can be seen as an inexpensive means of advertising, one of the perils associated with advertising over the Internet involves the issue of jurisdiction. Jurisdiction is the legal power or authority to decide and rule upon a particular controversy. As a general rule, a court's jurisdictional power derives from a defendant's voluntary relation to the state in which the court sits. In the context of the Internet, jurisdiction has become an issue of great concern, because while the Internet allows users to advertise and send information from one location to another, it may also subject those users to the jurisdiction of both the laws and courts of the states and countries in which their communications are received.
A flurry of court rulings in 1996 considered whether Internet activity may subject the Internet publisher to jurisdiction in a state reached by the Internet. Most of these rulings found that the Internet activity in question sufficed to create jurisdiction. Such was the case in Inset Systems, Inc. v. Instruction Set, Inc.37 In that case, a court held that a foreign corporation that had continuously advertised its product over the Internet to Web sites located within the state of Connecticut would be subject to defending claims brought against the company within Connecticut. There, the court held that because the foreign corporation had continually advertised to Connecticut consumers for approximately twelve months over the Internet and had directly solicited consumers within Connecticut, it had purposely availed itself of the privileges of doing business within the state. Thus, the court concluded that the company should have reasonably anticipated being haled into court in Connecticut to defend a claim resulting from its in-state activities. Similarly, in CompuServe Inc. v. Patterson,38 an appellate court held that an Internet user was subject to the jurisdiction of an Ohio court, because he had used the Internet as a means of offering a software product to potential consumers in Ohio, and he had sold a significant number of sales of that product to Ohio consumers. Thus, like the court in Inset, the CompuServe court held that the Internet user's deliberate choice to relate to the state by sending advertisements to various Web sites located within the state rendered the user amenable to defending claims arising out of those contacts with the state.
In addition, in United States v. Thomas,39 the Sixth Circuit upheld a finding of jurisdiction where a California Internet user posted information on a bulletin board that was later retrieved and downloaded by another Internet user in Tennessee. In that case, the defendants challenged venue in the Western District of Tennessee and stated that the government agent, without their knowledge, accessed and downloaded the GIF files and caused the files to enter Tennessee.40 The court disagreed, holding that the offense occurred in every district in which the material touched, and, moreover, defendants foresaw that the materials would enter Tennessee:
Substantial evidence introduced at trial demonstrated that the AABBS [the Thomas's "Amateur Action Computer Bulletin Board Service"] was set up so members located in other jurisdictions could access and order GIF files which would then be instantaneously transmitted in interstate commerce. Moreover, AABBS materials were distributed to an approved AABBS member [the postal inspector] known to reside in the Western District of Tennessee. Specifically, Defendant Robert Thomas knew of, approved, and had conversed with an AABBS member in that judicial district who has his permission to access and copy GIF files that ultimately ended up there. . . . In light of the above, the effects of the Defendants' criminal conduct reached the Western District of Tennessee, and that district was suitable for accurate fact-finding. Accordingly, we conclude venue was proper in that judicial district.41
A court came to the opposite conclusion in Bensusan Restaurant Corp. v. King,42 where the owner of a Missouri nightclub, the "Blue Note," posted a Web site on the Internet to promote his club. In that case, the Missouri club owner was sued by the owner of a New York Club named the BLUE NOTE. In that case, the court held that the Missouri owner was not subject to the jurisdiction of New York, because not only would an Internet user have had to take several affirmative steps to obtain access to the owner's Web site, but even if the user were to find his way to the site, he would have had to contact the Missouri club owner directly in Missouri in order to obtain tickets and/or additional information about the nightclub. Moreover, the court found that the Missouri club owner did not mail or otherwise transmit tickets to New York residents nor did he in any way, other than post a Web site, have any further contact with the state of New York or New York residents. Consequently, the court held that because the club owner's Web site did not constitute an offer to sell goods, the club owner had not benefited from the privileges of the state of New York, and therefore, could not be haled into court within the state. The court further indicated that the mere fact that an Internet user could access a World Wide Web site would not, without more, mean that the owner of that site had solicited, targeted, or promoted the use of the site such that he would be held subject to the jurisdiction of the foreign state in which the site was displayed.
One decision declining to find jurisdiction based on Internet publishing addressed an issue of keen interest to many news organizations: whether a local news organization subjects itself to expanded jurisdiction when it posts its contents on the Internet.43 In Naxos Resources (U.S.A.) Ltd. v. Southam,44 the court held that it did not. There, a Canadian newspaper publisher was sued in California, a state where its circulation was minimal and, according to the court, insufficient to support jurisdiction. The court rejected the plaintiff's invitation to base jurisdiction instead on the publisher's republication of articles on the Internet. The court held:
The fact that Southam and SBICGI may also disseminate Vancouver Sun articles electronically via, inter alia, the Internet, LEXIS, and WESTLAW is not sufficient to confer general jurisdiction; if it were, publishers like Southam would be vulnerable to lawsuits in every state even for activities unrelated to the state.45
At least one other decision refused to find Internet activities as sufficient to support jurisdiction. In McDonough v. Fallon McElligott, Inc.,46 a photographer sought to sue a Minnesota advertising agency for copyright infringement, based on the agency's occasional sales to California and its use of a World Wide Web site. Since none of the defendant's alleged California activities gave rise to the plaintiff's action, the court refused to find jurisdiction. With respect to the Internet issue, it held:
Because the Web enables easy world-wide access, allowing computer interaction via the web to supply sufficient contacts to establish jurisdiction would eviscerate the personal jurisdiction requirement as it currently exists; the Court is not willing to take this step. Thus, the fact that Fallon has a Web site used by Californians cannot establish jurisdiction by itself.47
Using the Internet and electronic communications to conduct business may very well broaden the user's exposure and make him more vulnerable to lawsuits brought in a number of foreign forums. This sentiment was articulated in an opinion issued by the Attorney General for the State of Minnesota, wherein the Attorney General stated that any individual who disseminated information via the Internet to a site located within the state of Minnesota would be subject to both the criminal and civil laws of the state. This position statement indicated a strong desire on the part of the Minnesota Attorney General to insure that those who used the Internet would not be able to evade the laws, jurisdiction, and/or penalties associated with activities which were otherwise illegal in Minnesota. This Attorney General opinion coupled with the decisions of CompuServe, Bensusan, and Inset instruct that while the Internet offers limitless advantages to the frugal entrepreneur and promoter, it is also wrought with pitfalls for the unprepared and uninformed user.
H. Electronic Contracts
The use of the Internet and electronic communications has also raised issues concerning the validity and execution of contracts made and entered into over the Internet. While the traditional contract has involved the use of paper, the emergence of the Internet has created new wrinkles in the traditional analysis taken towards the formation, validity, and existence of contracts. The main issue involving contracts and the use of the Internet is identifying the parties to the contract and confirming that a "meeting of the minds" actually existed between those parties. Because the Internet is not controlled by any one entity, individual, or government, and because no one person can control the manner in which information is sent over the Internet, it becomes increasingly difficult, if not impossible, to verify or confirm that a contract was actually made over the Internet. For example, when a document is sent from one place to another on the Internet, it is routed through several host computers called Message Transfer Agents ("MTAs"). These MTAs relay messages and deliver them, directly or indirectly, to other MTAs that direct the message to its intended receiver. At each MTA location, the message is subject not only to electronic eavesdropping and alteration, but also to retrieval by other Internet users. Moreover, with the advent of the use of digital or scanned signaturing, a person's signature, once entered into a computer system, can be used to verify or sign off on any number of documents displayed on the Internet. Consequently, even if there were some method of proving the location and existence of a contract made over the Internet, it would be difficult to determine whether the contract had been validly consummated. Moreover, even if the validity of the contract were not at issue, it would still be difficult to ascertain which state's or country's law would govern the contract if a conflict over document were to arise. These and other questions concerning the application of traditional contract principles to the Internet and electronic communications remain unclear.
I. Invasion of Privacy
Electronic communications allow individuals to communicate with one another on-line, obtain a free-flowing access to information, and post almost anything on the Internet for world wide consumption. As a consequence, the widespread use of electronic communications and the Internet has generated tremendous concern over issues of privacy. The tort of privacy encompasses four separate torts: intrusion, disclosure of private fact, false light, and the appropriation of name or likeness. The earliest Internet, online service, and computer network cases on privacy issues provide a hint of the many privacy issues that may be triggered by publishing, monitoring, marketing and other activities involving electronic computer-based communications.
In Stern v. Delphi Internet Serv. Corp.,48 a traditional publication by an on-line service raised the issue of appropriation of a celebrity's rights of his name or likeness. In that case, Howard Stern, a radio notable, sued an on-line service for using his picture on a print advertisement without requesting or obtaining his consent. The court held that while the use of Stern's picture created a prima facie case of invasion of privacy under New York statutory law, the use of the picture fell within the "incidental use exception" of the New York statute. The "incidental use" exception of the New York statute provided that under the First Amendment, news disseminators could publicize newsworthy information and stories about celebrities without incurring liability with respect to issues of privacy. Because Stern was a celebrity and his picture was used by the on-line service provider as a means of generating a discussion on on-line forums about Stern's announcement to run for Governor of New York, the court held that the use of Stern's likeness was newsworthy, it fell within the purview of the exception, and therefore, was a protected communication.
Another issue that has arisen concerning the use of electronic communications and the right to privacy concerns the right of employers to access the voicemail and/or e-mail of their employees. The landmark case Huffeut v. Remillard & McDonald's Corp.,49 raised the issue of privacy in the private-employment context. In that case, an employee alleged that his supervisor accessed, recorded, and replayed one of his private voicemail messages in violation of federal and state wiretapping laws. By accessing the employee's private e-mail messages, the supervisor learned of the employee's extramarital affair with a co-worker and then replayed the voicemail message to the employee's wife. The case was ultimately settled before the court could issue a ruling. However, the case illustrates the real danger associated with electronic communications and the monitoring of those communications by employers.
As a general rule, many employers monitor both the e-mail communications and the computer files of their employees. While this is a general practice with many employers, an employer who monitors the e-mail or reviews the files of its employees may be subject to and found liable for violating the common law tort of intrusion upon seclusion. One way in which some employers have attempted to insulate themselves from such liability is by notifying their employees that their e-mail, voicemail, and computer files may be monitored at any time. Employers who inform their employees that the computers and all other forms of electronic media in the office are the property of the corporation and are to be used solely for business purposes are less likely to find themselves liable for violating their employees' right to privacy. This is because the employees not only have notice of the monitoring activity, but also have impliedly consented to such activity by continuing to work in the environment.
E-mail not only poses a problem in the private-employment context, but it also raises issues concerning the right to privacy over the Internet. The Internet is used to send and deliver hundreds of thousands of e-mail messages daily. However, whether an e-mail user has a reasonable expectation of privacy in e-mail or voicemail communications largely depends on the facts of the particular case. In United States v. Maxwell,50 a court held that a subscriber to an on-line computer service had an objective expectation of privacy in a stored e-mail transmission, because the messages could only be retrieved by using the subscriber's private password. Conversely, in Smith v. Maryland,51 the Supreme Court held that telephone users had no reasonable expectation of privacy in the telephone numbers they dialed from their home, and therefore, the numbers could be accessed without the home-owners' consent.
Another privacy issue raised by the use of the Internet concerns search warrants and the Fourth Amendment. This issue emerged in Steve Jackson Games, Inc. v. United States Secret Service,52 where a computer bulletin-board operator filed a lawsuit against a governmental agency, claiming that the confiscation and review of its computer programs and files by the government violated its Fourth Amendment rights and its right to privacy. In that case, the court held that the government's confiscation of the computers and the indiscriminate, intentional, and unauthorized access of the plaintiff's electronic communications violated the Privacy Protection Act and the Electronic Communication Privacy Act, both of which condemn the unauthorized search of electronic communications.
J. Obscenity, Criminal Threats and Other Illegal Materials
Prosecutors and courts have attempted to prevent the Internet from being used as a means of transmitting threats and other injurious messages on the Internet. In United States v. Baker,53 the government prosecuted an Internet user for posting a story on the Internet which involved the rape, torment, and subsequent murder of a woman. The government later dropped the claim, seeking to hold the user liable for sending Internet e-mail messages which detailed the rape and kidnapping of young women. In that case, the court ultimately quashed the indictment against the Internet user, finding that his e-mail messages, while violent, did not pose an immediate threat to any identifiable woman. Although the case was dismissed, it demonstrates the extent to which both the government and the courts are seeking to address and monitor information transmitted via the Internet.
K. Disclaimers and Consents
Disclaimers are widely used on Internet pages. Due to the impersonal nature of Internet transactions, and the special potential for misunderstanding inherent in use of others' trademarks, introductory offers, hypertext links, and offers made into many different legal jurisdictions, disclaimers are likely to play a significant part in Internet advertising and promotions.54
Traditional trademark disclaimers are common, as well as disclaimers regarding warranties or contractual promises. Disclaimers on Web pages can provide, for example, that no endorsement is implied by a hyperlink and that use of others' trademarks is intended only for descriptive purposes. Often Internet conduits, and content and shareware providers, require a party to consent to contractual terms and conditions before proceeding with the initial use of the provider's service or content. Where sales or contracts are transacted based on Internet contracts, the offering party may wish to include choice of venue and choice of law clauses in such consent forms.
Disclaimers and consents are likely to be used as at least one level of protection wherever there is a danger that an offer made on an Internet page could be accepted in a manner that would be illegal under the laws of the recipient's jurisdiction. As an example, most pages that introduce sexually explicit materials contain warnings and disclaimers, and require the user, before he proceeds further, to certify to being a consenting adult who finds the materials in issue acceptable under his community standards. Similarly, where a service offered may be legal in one jurisdiction and not in another, the disclaimer may provide that the service is not meant to be offered, and should not be accepted, in a jurisdiction where it is unlawful.
The sufficiency of disclaimers and consents, of course, depends on many factors, and there is a paucity of case law on this issue at this time. Careful counsel will utilize disclaimers and consents within a large package of prophylactic measures.
L. Unsolicited "Junk" Messages and E-Mail and "Spamming"
So far "spamming" and "junk e-mail" have been terms thrown about in discussion, but they have not been recognized as unique legal problems or claims. Rather, the first few rounds of "cyberjunk mail" litigation pointed to fairly simple rules: Any mailer can send e-mail as it wishes, and any ISP or user may block or refuse e-mail as it wishes.
An e-mail marketing firm, Cyber Promotions Inc., was the focus of the first few rounds of litigation.55 In Cyber Promotions Inc. v. America Online Inc.,56 the Court upheld America Online's right to block unsolicited e-mail from Cyber Promotions. The Court rejected Cyber Promotions' argument that AOL was subject to the First Amendment, because AOL did not engage in actual or constructive state action, and because AOL's e-mail facility was not an "essential facility."57 Cyber Promotions later settled its dispute with AOL by agreeing to permit AOL members to remove themselves from Cyber Promotions's mailing lists.58 In a related case, a federal court in Ohio held that the CompuServe online service had the right to refuse to accept unsolicited e-mail, and when Cyber Promotions continued its practices, CompuServe may have a viable claim of trespass to personal property.59 The Ohio court also agreed with the court in Cyber Promotions v. America Online that Cyber Promotions had no First Amendment right to send unsolicited e-mail messages over an online service's computers.
Additionally, as claimants attempt to fight these practices, they may try to fit their claims under existing laws regarding telephonic wireless and electronic communications. For example, the Telephone Consumer Protection Act of 1991,60 was intended to restrict the use of automatic telephone dialing systems and unsolicited facsimile advertisements. In part because of the $500-per-violation civil penalty provision, claimants may attempt to stretch it to apply to Internet practices including spamming, the sending of unsolicited advertisements, and unwanted or "junk" e-mail messages.
M. Deception in Internet Advertising
As commerce increases on the Internet, so will fraud. The Federal Trade Commission's "Online Scams" advisory has warned consumers of various on-line deceptive practices, including disguised advertisements -- i.e., statements in electronic bulletin boards and online chat groups that look like impartial endorsements but really originate with the person being "endorsed." 61 The FTC has expressed interest in protecting consumers from fraud conducted using modern technologies.62 Among other things, the FTC investigated Internet pyramid schemes on a special "Internet Pyramid Surf Day."63
Whether a trade practice is unfair or deceptive is usually judged based on a "reasonable person" standard. This standard, in turn, depends to some extent on the target audience; consumers of luxury goods may be expected to be more sophisticated than consumers of mass merchants, for example. Can Internet advertisers claim that Internet users are more sophisticated than the public at large, and hence their advertising must be judged based on such sophisticated consumers?
Both practical considerations and the government's position weigh against any such special standard for Internet advertising. As a practical matter, although the Internet is only accessed through computers, today's "point and click" and hyperlink technology does not require one to be a rocket scientist. Additionally, so much boasting has occurred about the breadth and size of the Internet audience that it will be difficult, if not impossible, for Internet users to turn about and convince policy makers that their audience is really small and sophisticated, not large and diverse. Finally, one of the Federal Trade Commission's initial warnings about cyberscams and frauds makes it clear that the FTC staff views the Internet audience as just as susceptible to advertising frauds and ploys as the world at large.64
Conclusion
Electronic communication via computers and the use of the Internet are becoming the standards rather than optional forms of disseminating information and communicating. As the Internet expands, more and more people will use it. This use will raise new legal issues with which the courts and Congress will have to grapple.
1. Benjamin Wright, The Law of Electronic Commerce EDI, E-mail, and Internet: Technology, Proof, and Liability, at xxxi (2d ed. 1996).
2. Religious Technology Center, Inc. v. Netcom On-Line Comm. Serv., Inc., 907 F. Supp. 1361, 1365 n.2.
3. American Civil Liberties Union v. Reno, 929 F. Supp. 824 (E.D. Pa. 1996), aff'd, 117 S. Ct. 2329 (1997).
4. Id. at 834-35.
5. Id.
6. Id.
7. Religious Technology Ctr., Inc. v. Netcom On-Line Comm. Serv., Inc., 907 F. Supp. 1361, 1365 n.2.
8. MTV Networks v. Curry, 967 F. Supp. 202 (S.D.N.Y. 1994).
9. Reno v. American Civil Liberties Union, 117 S. Ct. 2329 (1997).
10. American Civil Liberties Union v. Reno, 929 F. Supp. 824 (E.D. Pa. 1996), aff'd, 117 S. Ct. 2329 (1997).
11. 776 F. Supp. 135 (S.D.N.Y. 1991).
12. Playboy Enterprises v. Frena, 839 F. Supp. 1522, 22 Media L. Rptr. 1301 (M.D. Fla. 1993).
13. 23 Media L. Rptr. 1794 (N.Y. Sup. Ct. 1995).
14. 47 U.S.C. § 223(e) (1994).
15. 907 F. Supp. 1361 (N.D. Cal. 1995).
16. 908 F. Supp. 1353 (E.D. Va. 1995).
17. 901 F. Supp. 1519 (D. Colo 1995).
18. 839 F. Supp. 1552 (M.D. Fla. 1993).
19. 857 F. Supp. 679 (N.D. Cal. 1994).
20. "Administration Reconsiders Indecision of `Transmission' in Copyright Act Revision," 2 BNA Elect. Info. Policy & Law Rpt. 154 (1997).
21. "Passing off" refers to deceptive marketing in which one party attempts to "pass off" its goods or services as those of another. See Restatement of Unfair Competition § 4 (1995).
22. Fan pages are pages established by fans of entertainers devoted to information, tributes and discussion concerning the entertainer.
23. Mark Sableman, Business on the Internet, Part II: Liability Issues, 53 J.Mo.Bar 223, 224.
24. 97 Civ. 1190 (PKL) (S.D.N.Y. filed Feb. 20, 1997).
25. No. 97-3055 DDP (C.D. Calif. filed April 28, 1997).
26. No. 97-3055 DDP (C.D. Calif. filed April 28, 1997).
27. Mark Sableman, Business on the Internet, Part II: Liability Issues, 53 J.Mo.Bar 223, 225.
28. See Associated Press v. International News Service v. Associated Press, 248 U.S. 215 (1918).
29. See "Internet Links Could Take a Hit in Scottish Feud," Christian Science Monitor, Dec. 3, 1996; "War in the Shetlands! - Internet Style," Editor & Publisher, Oct. 30-31, 1996.
30. See Statement of Shetland News Editor Dr. Jonathan Wills at http://www.shetland-news.co.uk.
31. The Shetland Times Ltd. Dr. Jonathan Wills & Zetnews, Ltd. (1996) Outer House Cases (Court of Session, Edinburgh, Oct. 24, 1996) (available on LEXIS).
32. See "'Framing' Muddles Issue of Content Ownership; Technology Lets Sites Alter Presentation of Others' Web Pages," Wall Street Journal, Jan. 31, 1997.
33. Professor Charles Oppenheim, "The Internet Copyright Case and its Implications for Users of the WWW," Dec. 6, 1996. See http://www.shetland-news.uk.
34. 17 U.S.C. § 107.
35. 510 U.S. 569 (1994).
36. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).
37. 937 F. Supp. 161 (D.Conn. 1996).
38. 89 F.3d 1257 (6th Cir. 1996).
39. 74 F.3d 701 (6th Cir. 1996).
40. Mark Sableman, Business on the Internet, Part I: Jurisdiction, 53 J.Mo.Bar 137-38.
41. United States v. Thomas, 74 F.3d 710 (6th Cir. 1996).
42. 937 F. Supp. 295 (S.D.N.Y. 1996).
43. Mark Sableman, Business on the Internet, Part I: Jurisdiction, 53 J.Mo.Bar 140-41.
44. 24 Media L.Rptr. 2265 (C.D. Calif. 1996).
45. Id. at 2267.
46. 40 U.S.P.Q. 2d 1826 (S.D. Cal. 1996).
47. Id.
626 N.Y.S.2d 694, (N.Y. Sup. Ct. 1995).
94-CV-6589T (W.D.N.Y. 12/6/1994).
42 M.J. 568 (U.S.A.F. Ct. Crim. App. 1995).
422 U.S. 735, 742 (1979).
36 F.3d 457 (5th Cir. 1994).
1995 U.S. Dist. Lexis 8977 (E.D. Mich. June 21, 1995).
54. Mark Sableman, Business on the Internet, Part II: Liability Issues, 53 J.Mo.Bar 226-227.
55. Cyber Promotions and its president "are in the business of sending unsolicited e-mail advertisements on behalf of themselves and their clients to hundreds of thousands of Internet users." CompuServe Inc. v. Cyber Promotions, Inc., ___ F.Supp. ___, No. C2-96-1070 (S.D. Ohio Feb. 3, 1997).
56. 948 F.Supp. 436 and 948 F.Supp. 456 (E.D. Pa. 1996).
57. The Court's First Amendment holding was that "in the absence of state action, the private online service has the right to prevent unsolicited e-mail solicitations from reaching its subscribers over the Internet." 948 F.Supp. 436 (E.D. Pa. 1996).
58. "AOL, Spammer Settle Suit; CompuServe Wins Injunction," Media Daily, Feb. 5, 1997.
59. CompuServe Inc. v. Cyber Promotions, Inc., ___ F.Supp. ___, No. C2-96-1070 (S.D.Ohio Feb. 3, 1997). The fact that CompuServe had demanded that Cyber Promotions stop was important because the court found that "there is at least a tacit invitation for anyone on the Internet to utilize plaintiff's computer equipment to send e-mail to its subscribers." Id.
60. 47 U.S.C. § 227.
61. Mark Sableman, Business on the Internet, Part II: Liability Issues, 53 J.Mo.Bar at 227.
62. See 16 C.F.R. § 310 (1997).
63. FTC Uncovers Plenty of Pyramid Scams on World Wide Web, Seeks to Curb Them, 1 Elect. Info. Policy and L.Rep. (BNA) 907 (1996).
64. See "Online Scams: Road Hazards on the Information Superhighway," at http://www.ftc.gov.bep/ scamsol.htm.