Law In Cyberspace: Imposing A Legal Frame Work On Functional Anarchy
Overview
There have been a number of key technological changes in the 20th century from the invention of flight, the telephone, television (in all its guises) leading up to the computer age (including fax and the Internet) which have changed, in some fundamental way, the face of our society.
Although all of the above made a huge impact on the world, none developed with the speed and growth of the Internet in the form of the World Wide Web (WWW). To use an over worked phrase this is indeed a paradigm shift in the way we interact and communicate as individuals and do business as corporations. The social and business implications of the WWW are challenging the way we view the world and are going to require a mind shift from anyone entering the world of cyber space. Prior to 1994 the Internet was largely self regulated and commercial activity was positively discouraged.
It has been said by some that the WWW is the "wild west", unregulated and uncontrolled. It may be uncontrolled in the sense that there is no central body who owns the WWW but it is not unregulated. The problem for users, particularly business users is that the WWW is potentially subject to the laws of every country from which someone accesses the WWW or has a presence. This involves some 200 countries at present. The problem in developing a legal frame work is dependant on solving the conflict of law that does and will exist. There is nothing unique being done in cyber space it is merely being undertaken in a unique environment that causes the difficulty in this area.
There is at this stage no such beast as Cyber law, Net law, Web law or whatever name it will be know as in the future, although as our URL is "www.weblaw.co.uk", we have a vested interest. I predict that in the not so distant future it will be a subject taught to law students, in its own right.
The more cynical among you will say that this debate is just the creation of lawyers trying to find their place in cyber space. There may be an element of that, but the reality is that for the WWW to develop as a mature global market place, those involved are going to have to know with some certainty what their rights and obligations are in cyberspace.
The rather sterile debate about whether a company should have a Web presence is no longer worth arguing about. At some point after the invention of the telephone it must have become apparent to the business world that not to be connected was unthinkable. We have all ready reached that stage with the WWW.
What is crucial is that all the parties involved in providing a service on the WWW and users should be aware of the legal issues involved in order to avoid the many and varied pitfalls that cyber space presents. There are very few cases involving the WWW and these are almost exclusively American. The legal issues involved are complex and the question of jurisdiction very difficult.
In trying to establish a legal framework, the approach to take is to look at the existing relevant legal area. Copyright for example and then place this in the context of the www. firstly from a UK perspective and then a US one, let alone any other jurisdiction. We can try to get some assistance from analogous branches of law where a similar problem was faced like International trade and broadcasting law particularly involving satellite broadcasting which also has the aspects of cross boarder operation.
So what are the major legal issues?
Intellectual property law.
Copyright.
This is the area concerning the use of intangible assets. It covers Copyright, Trade marks and patents. As there are something like 50 million pages of information on the WWW it is not surprising the Copyright is one of the key areas. People are going to be very reluctant to place valuable information on the WWW until there is some mechanism in place to prevent wholesale copying without permission. Copyright protects the following works:
- Literary works, dramatic, musical or artistic works;
- Sound recording, films, broadcasts or cable programmes;
- Typographical arrangement of published editions
- Compilations, tables and computer programmes are included as literary works.
Copyright protects the expression of an idea, not the idea itself. There must be an element of originality for the work to be protected. Viewing a page on the WWW in your browser amounts to making a copy under UK law even if you do not copy it to the hard disk or print it out. Infringement arises when certain acts are done in respect of the work which only the copy right owner is entitled to do. The difficulty as far as the WWW is concerned is enforcement against an alleged infringer.
The big issue here is the potential liability of people like CompuServe, Netcom, Pipex and the other service providers who make space available on servers for people to publish material. They have deeper pockets whereas the infringer may be penniless or not be traceable.
The Usenet groups contain huge amounts of material copied form other sources. Ownership issues arise when the author is a contractor and not an employee as copyright vests with the contractor if not assigned to the entity commissioning the work. There are certain moral rights which remain with the author even if he is no longer the copyright owner. One thing that computers are very good at is to load in a graphic and then adapt it with the use of a graphics package. This may well involve an infringement of the copyright and the moral rights of the author of the work loaded in and adapted. Every copy of a work on the WWW is a perfect copy and indistinguishable for the original. The EU and other bodies including the World Intellectual Property Organisation are looking into the question of copyright on the www. so watch this space for developments.
Trade Marks
A mark is a sign which serves to distinguish the goods or services of one undertaking from those of other undertakings. The sign may particularly consist of one or more distinctive words, letters, numbers, drawings or pictures, emblems, colours or combinations of colours, or may be three-dimensional, such as the form of containers or packages for the product (provided they are not solely dictated by their function). The sign may also consist of combinations of any of the above.
Trade marks have traditionally been used and registered in respect of geographically defined areas of use. It is common for the same Trade mark to be owned by two different companies in different countries or for the mark to be licensed for use. As soon as one of the entities use the mark on the WWW there is a potential infringement. This is a problem that is yet to be solved in respect of the WWW.
Domain names and Trade marks are another thorny issue. MacDonalds, Microsoft, Avon and many other companies have discovered when trying to register their WWW address using there Trade mark, that someone got there first. A domain name is an address and if it contains a Trademark but is not used in the course of trade, there is not much a company can do. In some countries e.g. the USA where InterNic control the .com domain names, having a federal Trade mark registration may mean the address is transferred or suspended. In the UK, Nominet who perform this function for .co.uk registrations in the UK do not have the same policy. They operate a first come first served policy. Harrods is currently involved in legal proceedings to try and get the harrods.com address back. They have registered harrods.co.uk however.
Making contracts on the WWW
There is something like $3 billion worth of business been transacted on the WWW. This sounds like a lot, but it is a fraction of the total world wide trade that is done every year. This area is growing at a phenomenal rate however. Anyone with relative ease can offer goods and services on the WWW to a global market place with around 40 million potential customers. Entering into valid contracts that include all the relevant terms and conditions and deal with the issues of consumer protection, jurisdiction and many other areas becomes of crucial importance. Rules of offer and acceptance differ from one country to another, as does consumer protection legislation.
Virgin Airlines were fined $14,000 for having out of date information on their server in the UK, when offering flights from the USA. They also failed to include all the various taxes which was a US requirement. This is a very real issue. It is a Herculean task to comply with the regulations of every country. It is possible to get some protection from properly drafted contracts containing exclusion clauses and territory statements excluding the offer to citizens of named countries. This may however not be affective.
Regulated activities
Depending on the nature of your business it is possible that you will have to consider advertising regulations in general with regard to the UK in the first place but again you will have to consider the regulations of other jurisdictions. Tobacco and alcohol have specific rules which are generally very stringent. France for example do not allow any tobacco related advertising. The WWW in a sense makes nonsense of geographical restrictions.
Any activity involving the offer of financial services will have to comply with UK legislation and also compliance with your other target markets. Gambling and pornography on the WWW provide the same challenges to our conventional understanding of what governments can do to prevent their citizens accessing such services. Before these issues are clarified they present a potential mine field.
Tax and Vat
As more and more business starts being transacted on the WWW the tax and VAT implications of the global market place will assume an ever increasing significance and a headache to the relevant institutions in each country.
Liability for information you provide.
There is potential liability for information on the WWW which if incorrect may cause personal injury, death or financial loss to someone relying on the information.. Supplying goods and services may lead to the same potential liability.
Defamation
The law of defamation comes into play in the form of libel involving postings to Usenet groups, information contained on the WWW pages or sent via Email. There is no doubt that the first two activities amount to publication, but whether Email is publication is another of those uncertain questions in this very uncertain world. This is one area that has produced case law and will no doubt produce more in the future. Defining who the publisher is, where web pages are produced on the fly drawing on information from different sources is difficult. A book is defined by the pages in a cover but a web page is a fluid article without the same boundaries. There is recent legislation in the form of the "Defamation Act 1996", designed to provide a defence to the party who is merely the conduit for publication by another. Until we have some case law the extent of this defence is uncertain.
Employee use of the WWW
It must be clear by now that there are a number of dangers involved in entering cyberspace, for the unwary and the uninformed. Employees who are allowed to access the WWW in the course of their employment must be made aware of the risks and assisted to avoid them. This will involve proper training, the provisions of a user policy and amending contracts of employment setting out the consequences of failing to comply with the policy. You will have to cover the issues of email; who can send Email and whether personal Email is allowed? Should particular signatures be appended? What can be down loaded from the WWW and what is the virus checking procedure? Are postings to Usenet groups allowed?
Any employer may be vicariously liable for the acts of employees acting in the course of their employment. This may still be the case if the act is authorised but is done in an unauthorised manner.
Conclusion
The WWW offers undreamt of opportunities to communicate do business with the world on a 24 hour basis at relatively low cost. The technology has outstripped the ability of a legal frame work to be put in place. This makes it difficult to predict how best to do business in cyber space with the minimum of risk. When the issues of payment mechanisms and security are solved and this will be sooner than later the cyber space global market will expand like the original "Big Bang". This will necessitate the creation of Web law that all users will be subject to in the first instance but which may lead to disputes being settled in a particular country under the laws of that country. We are very far from that state of affairs. Until we reach this legal Utopia, there are steps that can be taken that will provide the maximum of protection possible.
I will be looking at some of the issues raised in this article in more detail next month as well as monitoring the current legal developments.
We provide in-house seminars to companies on the legal implications involved in doing business on the WWW. We are hosting a seminar for web designers and other interested parties on 15 January 1997.
© This article is copyright Sprecher Grier Halberstam LLP.2008 and should not be construed as legal advice or opinion in any specific facts or circumstances. The contents are intended for general information purposes only. You are urged to contact a suitably qualified lawyer for specific advice.