California Bar Journal
OFFICIAL PUBLICATION OF THE STATE BAR OF CALIFORNIA - SEPTEMBER 1998
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California Bar Journal

The State Bar of California


REGULARS

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Front Page - September 1998
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News
Need info about bar members? Look on the net
Western State law school wins provisional approval for ABA accreditation
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You Need to Know
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From the President - A privilege gone awry
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Opinion
In defense of opinion
Thomas can think as he chooses
Time to drain the 'BOG'
Let's build a stronger forum
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Letters to the Editor
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Trials Digest
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Legal Tech - 10 reasons to ignore 2000 problem
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New Products & Services
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Law Practice - When mediating, let your imagination run loose
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MCLE Self-Study
The Internet and Global Implications
Self-Assessment Test
MCLE Calendar of Events
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Discipline
Ethics Byte - 'He said, she said' rule for sex
Attorney disbarred after investing client's assets
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Annual Meeting
Did you know these Monterey Peninsula facts?
Scenic, legal visions on the menu
Four vie to lead embattled State Bar
11 seek five seats on bar board
District 2: Three-way race in capital and environs
District 4: Unopposed in San Francisco, Albers is ready
District 7, Office 1: 3 seek southern seat...
District 7, Office 2: ...and also in Los Angeles...
District 3: Two-way race develops in South, East Bay region

MCLE SELF-STUDY

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THE INTERNET AND GLOBAL IMPLICATIONS
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AS INTERNET USE INCREASES, SO DOES THE LIKELIHOOD OF THE APPLICATION OF WORLDWIDE LAWS
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By SA'ID MOSTESHAR
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All laws are prima facie territorial (American Banana Co. v. United Fruit Co., 213 US 347, 357 (1909)). International computer networks like the Internet subvert a system of rulemaking based on territory.

They affect the link between geographic location and

1. the power of local governments to control behavior;

2. the effects of behavior on individuals and things;

3. the legitimacy of the effort of a local sovereign to enforce rules applicable to global activity; and

4. the ability of physical location to give notice of which set of rules applies.

Therefore, when considering Internet activities, it is essential to deal with international implications. This article outlines a few of the relevant issues.

Regulation of systems

The construction and use of telecommunications networks is regulated by national licensing. The Internet infrastructure, a network of networks, is regulated by such licenses. A network may also be subject to licensing under national mass communication laws. These laws are generally concerned with the regulation of services, content and concentration of ownership.

As Internet services become more akin to television programming, the likelihood of the application of these laws increases (See UK Broadcasting Act, 1990, 46).

Network authorization can depend on the nature of the traffic carried. Regulation of networks carrying audiovisual traffic, like cable systems, differs from those of digital data networks, such as the Internet.

Even within the U.S., different regulations apply to the provision of specific types of traffic. Before 1996, cable companies were not allowed to carry voice traffic, and telephone companies were excluded from providing audiovisual services (U.S. Telecommunications Act, 1996).

Rules affecting content

Laws affecting content seek to safeguard societal interests and national security, with obscenity laws and prohibition of seditious speech, or to protect private rights, such as copyright. Trading considerations are also present, such as European requirements for a minimum percentage of European-origin broadcasting, partly to protect domestic industries.

Local standards. Standards on obscenity and the depiction of violence differ from country to country, and even from state to state. In U.S. v. Thomas (74 F 3d 701 (1994)), an “amateur action” bulletin board operating out of Milpitas, Calif., was held to violate “contemporary community standards” of Memphis, Tenn. The operators were convicted on federal charges of transmitting obscene images across state lines.

Private rights. Private rights affecting content are important to Internet service providers and users. The scope and duration of these rights vary, as do their effectiveness in specific circumstances.

Confidentiality and trade secrets. The protection of confidential information may be distinct from protection of a trade secret, or, as in England and some other jurisdictions, trade secrets may be protected as confidential information. Both require that the information is kept secret, which can be difficult on the Internet.

Even where secrecy is not perfect, information may continue to be “confidential.” In Attorney General v. Guardian Newspapers (no. 2) ((1990) AC 109 at 260F), despite widespread publication of information outside Britain, it proved possible to restrain publication in Britain.

Unfair competition. Multi-jurisdiction Internet operation lacks unfair competition restrictions. Unlike U.S. law, neither English nor Australian law recognizes unfair competition. However, the German Unfair Competition Act prohibits a wide range of unfair commercial practices (Kohl KG v. Ringelhan & Rennett AS (Case 177/83) 1984 ECR 3651).

Marks. Internet domain names act as both addresses and identifiers of web sites, associating a site with the owner and its product. They often include trademarks. Unlike traditional trademarks, domain names cannot co-exist within the same generic top level domains (gTLD), namely .com, .org or .net, administered by InterNIC. This creates conflict between the domain names system, operated on a first-come, first-served basis, and trademarks.

While trademarks can be protected, there is no recognized right to a domain name per se. The U.S. Patent and Trademark Office only registers domain names that are trademarks. Use of a domain name may be prevented if it infringes trademark or creates unfair competition or confusion in the market (Cardservice International Inc. v. McGee, 950 F Supp 737 (ED Va 1997)). A successful claimant to an Internet domain name in one jurisdiction will have an international exclusive right to the name due to the scope of the Internet. But, a domain name registrant may not be immune to suit in a territory where the name is another’s trademark.

Copyright. International copyright conventions extend national protection to works of foreign origin, creating different rights in the same work.

Public performance rights will gain importance as audiovisual works become widely available on the Internet. Public accessibility of such works on the Internet can constitute a public performance of the work, even if the material is only available to a limited number of paying subscribers who request the material at different times. In the analogous case of pay-per-view cable services, courts in many jurisdictions have held public access to material amounts to “public performance.”

Protection of databases. Creation of rights in databases, over and above the copyright that exists in the arrangement, is still debated. The European Commission Database Directive provides some measure of protection for electronic databases, with rights against unauthorized extraction or re-utilization of the data (Dir. 96/9 (Council Directive on Legal Protection of Databases) 1996 OJ L77/20).

Privacy laws and trans-border data flow regulations also limit the use of databases.

Moral rights. Civil law countries, the European Union, India, Switzerland and others, grant to the creator inalienable moral rights which prevent unauthorized distortion or modification of his work. Consequently, an assignee of copyright may not enjoy all the rights to the work in some jurisdictions.

This raises a serious issue for Internet providers, particularly interactive web sites where the user can manipulate the work by coloring and adding figures or sounds.

Defamation. There is wide variation between jurisdictions as to whether a statement is defamatory, and in who is liable for defamatory statements (Stratton Oakmont Inc. v. Prodigy (NY 1994) held Prodigy to be a publisher of defamatory posting on its bulletin board). Nor is it easy to ascertain what constitutes publication.

There are also differences in the rules establishing jurisdiction over a defendant. To avoid potential defamation claims, awareness of the prevailing standards in all jurisdictions in which the material is accessible is essential. The author, editor, publisher of the statement and others might be liable.

Disclaimers

Notices aimed at reducing liability for content are common, either by declaring that the material is not intended for viewing in particular jurisdictions or by disclaiming liability for the content. There is no U.S. decision that liability for a foreign web site can be avoided by declaring that it is not intended for access in the U.S.

The information provider cannot be confident of the effectiveness of a disclaimer without considering the relevant laws of each country. For example, English law limits the application of disclaimers not negotiated at arm’s length. French law requires all terms of a consumer contract to be in French.

Jurisdiction

U.S. jurisdiction may be established by purposeful contact with residents of another state, including Internet-service advertising, transmission of e-mail or provision of passwords. (Zippo Manufacturing Co. v. Zippo Dot Com Inc., 1997 U.S. Dist LEXIS 107.)

The U.S. minimum contact standard (International Shoe 326 U.S. 310, 316 (1945)) is not met by unilateral act of others (Hansen v. Denc-kla, U.S. 235 (1958)).

In Asahi v. Superior Court (480 U.S. 162 (1987)), the placing of a product in the stream of commerce was not sufficient to establish a basis for jurisdiction.

Other jurisdictions may have different standards.

Sa’id Mosteshar of Mosteshar Mackenzie, with offices in San Diego and London, practices communications law and space law. He is an advisor on the executive committee of the International Law Section.