Corrections or additions?
This article by Bart Jackson was prepared for the February 28,
2001 edition of U.S. 1 Newspaper. All rights reserved.
Law Comes to Cyberspace
Back in the days when no law lay west of the Pecos,
a fella could at least strap on his shootin’ iron and run rustlers
out of town. But on the new cyberfrontier, where legal precedents
are scarce as circuit judges, the rustlers simply appear and vanish
like desert oases. And more often than not, a man just can’t find
a black hat to go after.
But law hunts down rustlers everywhere, and Computer-land falls more
and more to protective legal fencings. Exactly what these latest
and Internet laws are, whom they help and whom they hem in, and how
business users need respond will all be unraveled at a day-long New
Jersey Institute for Continuing Legal Education (ICLE) seminar on
Friday, March 2, at 9 a.m. at the New Jersey Law Center in New
An eight-person panel of attorneys speaks on "E-commerce and
Law," followed by individual
topics, including patents, intellectual property rights, privacy,
registering a domain, disclaimers, and jurisdictional disputes. Cost:
$209. Call 732-214-8500.
In addition, says panel moderator Michael Schaff, an attorney
with Wilentz, Goldman & Spitzer, "the program will overlap legal
aspects with how-to business information — how to set up a
framing, advertising, stock issues, and other strategic problems."
The recent legal battles over fair use reproduction of materials have
shown how old copyright laws fumble when confronted with new
Since 1999 Napster has rolled blissfully along, providing the
through which 58 million users have shared hundreds of millions of
music downloads without paying one cent, while public libraries,
schools, and colleges have been hauled over legal coals for digitizing
too many classroom handouts. Laws that allowed document sharing if
there was "no commercial benefit" or which created "no
substantial commercial impact" seemed inapplicable. Now Napster
has been brought to heel by a panel of three Federal judges in San
Francisco who ruled in mid-February that the site
should be prohibited from enabling the swapping of copyrighted music.
"But there exists no enforceable law," says patent attorney
and panelist Raymond Moser, "that effectively inhibits some
enterprising sharer from engineering Napster II and again setting
college computer systems all ajam with the hum of ripoff
Yet if the Internet has made copyright’s legal pasture a bit soggy,
the field of intellectual property rights has become an absolute
Since his firm was founded in 1994, Moser and the 35 lawyers at
Thomason, Moser & Patterson have specialized almost exclusively in
what he calls "intellectual property mining." Moser’s mining
is simply a method of analyzing where E-business’ legal
lie and what protections are prudent. And, while he is the first to
admit that not every little basement mail order house demands the
expensive contracts of total legal coverage, he cautions that most
E-firms, now typically rushing into business with never a thought
of any protection, need to shore up basic ownership rights.
This is the case for the New Jersey Intellectual Property Law
(NJIPLA). Allen Bloom, past president of that association and
a partner with the Lenox Drive law firm of Dechert Price & Rhoads,
law firm is using a domain name that is very similar to NJIPLA.com.
"This is a case," he says, "where the association has
been around for a long time and the law firm thought the name would
bring it business." The association had registered its domain
name, but has now gone further. "We also applied for trademark
protection," says Bloom. "They had been using the name as
a trademark, but had not bothered to trademark it. But with all these
cybersquatters, it’s the best thing to do."
Barry Werbin, head of the intellectual property
new media practice Herrick Feinstein, a law firm with offices in
Center, proposes an additional defensive tactic. Buy up `Sucks.com’
domain names for your company, he says, before someone beats you to
it. These sites take a company name, say `G.M.,’ or a product name,
maybe `Buick,’ and add `Sucks.com’ in front of it, creating
or BuickSucks.com. A client of Werbin’s, a major title company, had
a Sucks.com problem. Its name, paired with Sucks.com, led to a website
where it was being vilified. "The case law to date," Werbin
says, "is if someone buys Sucks.com to vent spleen — `It’s
a terrible company. I got terrible service.’ — most of the time,
it’s protected under the First Amendment right to free speech."
In the case of the title company, the holder of the Sucks.com site
went beyond expressing an opinion, an activity protected by the First
Amendment, and posted false statements. That moved it into the area
of illegal activity, and gave the title company legal standing to
shut it down. Absent that transgression, the trouble maker might well
have been able to maintain its Sucks.com site. Werbin says he now
advises all of his corporate clients to buy up all the Sucks.com
domain names that match their name and their products’ names.
FAO Schwarz, the famous toy store, is a client of Werbin’s, and, on
his advice, bought up all the Sucks.com names not only for the correct
spelling of its name, but for any close matches. "We just
four names for them," Werbin says. "Someone had changed one
letter," thereby creating similar names. As ‘Net surfers often
make typos, these names would bring a fair number of visitors to bogus
sites. Werbin was successful in getting the names away from the
by proving bad faith.
Anyone who holds the name of an easily-recognized company, but is
not able to show a legitimate business purpose for doing so, is
to be operating in bad faith, Werbin says. Other indications of bad
faith include asking the company for an amount of money for the name
that is more than was paid to register it. "That’s extortion,"
Werbin says. Still, he often advises clients to pay to get control
of a name. "If arbitration costs $5,000, and they want $2,500,
it’s a no brainer. It hurts to write the check, but it’s a business
decision." Besides saving legal fees, paying off the holder of
a domain name has the advantage of getting it back right away.
Cybersquatting is illegal under laws passed by Congress and
of ICANN, the international organization that regulates Internet
names, Werbin says. Often, the best way to win back control of a
name is through arbitration, he says. "It’s quick. It’s easy.
And it’s cheap." The decision of an arbitrator can get a domain
name back, but it doesn’t provide monetary compensation for the
party. Companies seeking that relief need to go through the courts.
Protecting a name on the Internet is far from a company’s only worry.
In a recent case, Werbin defended a New Jersey-based horse boarding
farm whose name was being sullied in the chat rooms of the online
version of a horse breeding publication. "Someone starting posting
terribly libelous comments," he says.
Werbin tried to shut down
the Internet Service Provider, which, in this case, was the publisher
itself. It didn’t work, he says, because of a safe harbor exemption
that frees ISPs from responsibility for comments individuals post
in chat rooms they host. Going after the people who post the comments
is not easy either. "They often use aliases," he says. Werbin
finally was successful in getting the publication to remove the
material from its chat rooms, but this case illustrates how easily
a reputation can be harmed on the Internet and how important ongoing
Internet surveillance is for companies large and small.
Another case, this one involving theft of a left wing publisher’s
material by a website espousing a socialist philosophy, illustrates
the level of vigilance companies need exercise over the Internet.
The publisher found large amounts of his material posted verbatim
on the socialist site. "They said they didn’t believe in property
rights, and thought the left wing publisher should agree," Werbin
says of the transgressor’s defense. The purity of the claim was
a bit by the fact that they were caught selling the publisher’s
on a CD. The socialists finally removed the pirated material, but
Werbin says, it could pop up again at any time on a `mirror’ site
anywhere in the world. The left wing publisher is now paying to have
a Herrick Feinstein paralegal scan the Internet once a month looking
for misuse of its material. Werbin says large companies with
legal departments can do this themselves, and that every company
instituting such a program of ‘Net watching.
High profile individuals would do well to keep an eye on the Internet
as well. In a recent case, a judge found the name of singer Celene
Dion had been illegally appropriated as the name of a website,
www.celinedion.com, by one Jeff Burgar, who claimed he was using
the name for a fan club, and not for commercial gain. An arbitrator
for the U.N. World Intellectual Property Organization ruled that the
name’s rights belonged with Dion. Burgar, the arbitrator found, had
a history of registering the names of celebrities. Werbin says the
mere amassing of hundreds of domain names can constitute bad faith.
Courts are ruling that names aren’t the only part of a website that
deserve protection. In Chicago, the Recruiter’s Bible, a directory
of free Internet recruiting sites, has just won a settlement in a
copyright infringement case brought against a recruiting firm called
in Personnel. The recruiting firm had appropriated the Recruiter’s
Bible’s directory, posting it on its own website. An attorney for
the company says this is a violation of copyright law because the
directory is a hand-selected, filtered list of websites, rather than
a simple compilation of every recruiting site in existence. The
in this case not only agreed to remove the directory, but also to
give a cash award to the directory’s owner, and a donation to a
union or other group that performs pro bono work for writers whose
copyrights have been infringed.
But while Dion, the Recruiter’s Bible, FAO Schwarz, and Werbin’s left
wing publisher were successful in halting misuse of name and content
on the Internet, doing so is not automatic — or easy. Ken
president of the East Windsor law firm Watov & Kipnes says that the
of protecting rights on the Internet is "completely a gray
There is no telling where courts will rule on any number of issues,
he says, and the process of getting a decision can take a long time.
Legal considerations go beyond copyright, Watov says, and into matters
of trademark and patent.
One of Watov’s clients, a company that uses the Internet in product
testing, was accused of appropriating a competitor’s website format.
"Even how they lay out pages for test results can be
he says. His client ended up changing its web page format as a result
of the charge. Watov says he now advises clients to run copyright,
trademark, and patent searches before they put up a website.
But even those searches are not as simple as they might be because
ownership and control of a website, and all of its elements, is not
always obvious. Website developer contracts are notoriously full of
loopholes. After companies have hired a young techno-wizard to whip
up a website, they are frequently amazed to learn how little of it
is really theirs. Even the firm’s trademark, if not separated, could
become part of the young wizard’s resalable design. Most likely, the
company’s employees worked with the contracted developer in aligning
the design. Yet the company may not hold automatically exclusive or
even partial right to the own website. Those spiffy graphics to which
you deliberately nailed down the rights from your designer, may very
likely not have been hers to sell. She may have sub-contracted or
For this and other reasons, Richard Ravin, former chair of the
New Jersey Bar’s Internet Law Committee (co-sponsor of this
boldly goes so far as to say, "`Website owner’ is not really a
definitive legal term." Its intellectual properties, he says,
are too intangible and too many people are involved in its evolving
Here are some of the complex legal issues surrounding rights
protects the expression of your business — the verbiage on your
site, and its graphics. Trademarks protect its name, source, and good
will. A patent will guard your method of business if it is unique.
You will at least want the first. However, before you go lavishing
costly time and funds on copyright, trademark and patents, remember,
these registrations are merely ammunition, not protections. You must
hunt down the infringer yourself, and haul him before the judge, and
document his transgressions.
effect in the U.S. In the meantime, your business may have evolved
totally, perhaps making the patent meaningless. But in many foreign
nations, patents take effect immediately. You may want that
up, you may want to dig beneath its surface and build some legal
around any original business functions transacted over the Internet.
Big boys like Priceline with its "name your own price" program
and Amazon.com with its single-click-purchase program, felt it worth
the investment. "However, the rapidity and piggy-backing of
technology," says Ravin, "frequently makes such programs
For example, Amazon.com has been unable to make stick an injunction
against Barnes and Noble when that company swiftly adopted the
or some other independent will be handling your site. "These sites
are not static properties," says Ravin. "They’re dynamic,
evolving. Most sites begin with an over-the-counter software program
which is customized, then re-customized." Again, the E-commerce
owner must, Ravin says "maintain, at the very least, a
right to all his website’s technology and functions."
developers actually invent business processes from the software up
and leave them unprotected. Not only should your original software
be patented, but the credit and use-exclusivity contract should be
Moser ticks off an additional long list of E-commerce pitfalls, such
as liability when the system fails, fulfillment failure
tax collection problems — both domestic and foreign. The legal
mine field of cyberspace goes on. Says Moser: "The truth is,
E-trade, which everyone views as wild and free, demands more,
not fewer legal considerations than selling goods over the
But the biggest legal bombshell in Computer-land, we’ve saved for
the question of Domain. "Just recently," says Ravin, "the
Virginia Supreme Court has ruled that domain names are not personal
property, rather they are merely `a right to service contract.’"
This means that if you launch an Internet bookstore entitled `Books
R Us,’ you can use and control that name, but it cannot be added as
an asset of your firm. So when you go to the bank, they won’t value
that name or all its good will as collateral.
So while E-commerce remains the easiest business to go into, it is
full of legal ambushes. If you want to bet your money on an Internet
startup, says Moser, go with the company that knows more than software
and more than its own product — "go with the firm that
knows the laws of its own business."
— Bart Jackson
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