MGS 523 

Text
Based
Resources
 

E-commerce
Law and
Regulations

• Privacy
• Intellectual Property
• Free Speech
• Taxation
• Consumer Protection
• Legal Issues vs. Ethics issues
• Other, including
• validity of contracts
• jurisdictions
• encryption policies
• internet gambling

p. 365
Legally binding contracts require 3 parts

1. offer
2. acceptance
3. consideration

Privacy
Issues
 

Bill C-6

A lot of the hype might be premature though - government agencines have to comply soon but commercial organizations collecting personal information have until Jan. 1, 2004 to prepare for the law. 
WTGR

 Roseman's piece was about the effect of Bill C6 passing. Bill C6 is federal legislation. The legislation "requires Canadian companies and institutions to get informed consent before they collect or disclose personal information". Since so much of internet marketing is focused at target marketing - which is facilitated by gathering databanks of personal demographic information about on-line consumers, this legislated requirement will be a big topic in "e-commerce legal issues". The reason this issue has to be dealt with is that privacy concerns remain one of the principal reasons consumers hesitate to purchase products through the web.

Downey's article discusses the effect of Bill C6 which requires companies that collect and use personal information about customers, to comply with new regulations to safeguard what they can do with that information.
"Federally-regulated companies in the private sector as well as companies who  trade personal information where the information itself is the subject of the trade must comply with the Act starting Jan. 1, 2001. ...if you are a company where the public doesn't even know you've  got the data, well then there's going to be an impact because you're going to  have to let people know."

Barshack explains that "for e-businesses that want to sell successfully online and instill trust in their customers, privacy is not always a black and white matter. The shades of gray inherent in the privacy debate are many, which is why different approaches to Web privacy can be appropriate and important for different types of consumers and the online businesses that serve them."

His article discussed
five things that e-businesses need to think about when tackling the big "P."

1. "Privacy means different things to different audiences". 
In B2B companies accept that the seller keep s as much detailed ifnromation about the customer as possibile to facilitate reordering. In B2C customers think detailed information on their previous product purchases and demographic information about them is an infringement and can be abusedif the infromation is shared
WTGR
2. "Honesty is always the best policy, period."
"Companies need to clearly and conspicuously disclose their  privacy policies." says Barshack
3. "Show your Web visitors that knowledge and a better  understanding of them can work in their favor."
You can be more successful at asking for, and receiving detailed information on customers' interests if you can prove to them it is an advantage to do so - either saving money or more accurate product selection
WTGR
4. "Separate business from the personal without sacrificing  personalization."
"There's a big difference between understanding buying patterns on a business-to-business or business-to-consumer commerce site for the purpose of improving the site and the visitor's experience (i.e. personalization) on the one hand, versus following Web surfers into chat rooms and through Internet activities completely unrelated to their commercial interests."
5. "The flip side of privacy: It's a two-way street."
"E-businesses have privacy concerns, just as consumers do. Especially with B2B sites, companies are often opening up their  entire enterprise to the public, a potentially vulnerable situation...Show your customers that you are serious about  protecting their information, just as you are serious about protecting your own"

Solomon warns that "Industry provinces and public organizations are now preparing for a fight over  regulations to be set by Ottawa before the law comes into effect Jan. 1, (2001) which could exempt gatherers of open personal data such as mortgage information  from following some parts of the law... So-called public domain information — everything from telephone books to court  records to information in newspapers — are a major source of personal material  grabbed by companies and marketing agencies. "

This is a particularly good article on the effect of Bill C-6 and is strongly recommended reading
WTGR

E-mail

E-mail filtering systems have developed at companies were the excessively large volume of e-mail has created problems for the hardware capacity and as a result there have been investigations as to why volume has been so high. In some companies they read only the subject heading of email to determine the % of personal vs. corporate, in other companies they read the entire message, or use software programs that pick out key words.
 

article online by Sandra Rubin titled
"You've got mail, but who else reads it?; E-mail filtering is controversial, but prevalent"
 

Class
13
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Class
13

Nov
1

includes links to articles such as
Patent Protection for E-Commerce Business Models
from the law firm of

"A consumer today is likely to discover numerous competitive Internet Web sites offering the same or similar information, products or services. To succeed in this competitive e-commerce market, a business must attract as many consumers as possible to its Web site, while building and retaining consumer loyalty. Sometimes, a Web site is more attractive to consumers because it is built with cutting edge technology that provides advanced audio/visual user interfaces, services and security measures. E-commerce proprietors have recognized that a competitive advantage may be gained by securing patent protection for such technological innovations."
(to read more, click here)
Patent Protection for E-Commerce Business Models

•      copyright concerns; 
•      domain name concerns; 
•      trademark concerns; 
•      defamation; and 
•      linking and framing. 

The most interesting point coming out of the trial was the judge's
"rejecting Yahoo's argument that French courts did not have the power to impose French law ... when French people tapped in to Yahoo's English language portal"
Reuters
The next hearing is scheduled for 6 Nov 2000

By Tim McDonald  www.NewsFactor.com,   Part of the NewsFactor Network   November 8, 2001  listed on E-Commerce Times site

"A federal [United States] judge said Wednesday [Nov 2001] that Yahoo! (Nasdaq: YHOO) is protected by the  First Amendment of the U.S. Constitution from French groups trying to force the  company to ban Nazi memorabilia on its auction sites.  Yahoo! was sued last year by anti-racism groups in France, despite the fact that the Nazi memorabilia was selling on a U.S. auction site aimed at U.S. customers, because French users were able to access the site.  Though Yahoo! has already taken most Nazi-related items off its global auction sites, the Internet portal asked U.S. District Judge Jeremy Fogel in San Jose, California to consider whether a French court could impose French law on a U.S.-based Internet company. Fogel ruled that Yahoo! would not have to comply with the French order to ban the items."

Class
13

Domenic Crolla, a lawyer in the Ottawa office of Gowlings spoke at COMDEX 2000 in Toronto on the issue of Internet jrisdiction issues. An excellent article by him was also published in Gowlings in house newsletter and a cyber copy was also put on Gowlings web site
 http://www.gowlings.com/cgi-bin/gow.exe?mode=article&number=393&w_text=

Mr. Crolla writes
"When conducting business across national or provincial boundaries, which jurisdiction’s laws apply to your  online transactions, or even merely to you or your employee’s online actions? In what jurisdiction would you enforce  your rights stemming from online activity?...

You should read this article because it mentions a number of precedent setting cases by which subsequent cases are being judged.

Crolla writes "... there are some principles with which any Canadian business with a website should try to become familiar. The leading American case on Internet jurisdiction, decided three years ago, is Zippo Manufacturing Company v. Zippo Dot Com, Inc. (“Zippo”) ... In Zippo, the [American] Court establishes a three-pronged test for determining when an American court is to exercise jurisdiction over a non-resident (including a Canadian business).... What is most interesting about Zippo is the analysis that the Court makes about websites. The Court focusses on the nature and quality of commercial activity of company websites and created a “sliding scale” to determine if any  website in the world could be the subject of a lawsuit in an American jurisdiction. The “sliding scale” has two  extremes. At one end, websites which allow for commercial transactions are considered to be “active”. At the other  end, websites which merely provide information to be accessed by others are considered to be “passive”.... A Canadian business which publishes brochureware (brochures converted into HTML code to be placed on the company website), and does not conduct business with anyone outside of Canada, should not have to worry about American courts exercising jurisdiction over the company website."

Nov
1

Tax
Issues
 
 
 
 
 

Tax
Issues

• local taxes of the citizens inside their political boundaries
• fees for services and use of facilities
• money transfer from provincial/state and national government agencies

Because the provincial/state and national government agencies are suffering taxation strain, local government is are always looking for better ways to tax existing businesses and new ways to tax new business. The point being that individuals in many countries are being taxed at higher and higher rates and it is politically impossible to raise personal tax rates since the particular government that does this will get voted out next election.

Many local and regional governments are looking to the revenue generated from internet business as a way to alleviate the problems. The problem at present (summer of 2000) is local governments find it difficult to determine the process andmethod of collecting tax from cyber oriented businesses and furthermore they find it challenging to ascertain the jurstictional issues - that is to say do they even have the legal authority to collect such new taxes.

WTGR

The page containing this chapter is at
 http://socrates.berkeley.edu/~newman/chap6.html

If you print this chapter it will be about 22 pages, depending on how your browser breaks up the text. The most important section is at the beginning and some of the key points are as follows.

"...the new technology of the Internet and the global economic changes accompanying it promise to deal a final body blow to the financial security of local governments. Local governments could once count on local economic development to produce local jobs where local employees could spend money in local stores, thereby generating local tax revenue for further development. This virtuous cycle has been fatally undermined by the new technology of cyberspace. Even as many states and local areas hope for increased revenue due to high technology-based growth, it becomes harder and harder for local government to capture much of that growth in local tax revenue".

ICANN is the new non-profit corporation that is assuming responsibility from the U.S.
Government for coordinating certain Internet technical functions, including the management of Internet domain name system. More information about ICANN can be found at www.icann.org.

applies toChapter 10, page 356

"4.   Mandatory Administrative Proceeding.
4a. Applicable Disputes. You are required to submit to a mandatory administrative proceeding in the event that a third party (a "complainant") asserts to the applicable Provider, in compliance with the Rules of  Procedure, that

                  (i) your domain name is identical or confusingly similar to a
                  trademark or service mark in which the complainant has
                  rights; and
                  (ii) you have no rights or legitimate interests in respect of the
                  domain name; and
                  (iii) your domain name has been registered and is being used
                  in bad faith."

read the original story about eResolution in Computer World Canada
 http://www.itworldcanada.com/cw/archive/cw16-10/cw_wtemplate.cfm?filename=c1610n3.htm

"eResolution plays the role of court clerk, registering complaints, handling evidence, transmitting case documents to the decision makers, and communicating any judgement to the applicable parties"

see eResolution's press releases to find out more
 http://www.eresolution.com/pr/03_01_00_1.htm

eResolution's press release says 
"... there are believed to be over 10,000 disputed domain names..."

Hamilton describes how some small and medium sized businesses are being scammed by companies contacting a firm and telling the firm that there is an attempt being made to register the same domain that they presently own, but with a different ending such as .org or .net.

Hamilton explains that " ... the owners of  Aufgang Travel, a Bathurst St. travel agency, received an unsolicited fax that read ``urgent notice.'' The fax was very official-looking. It was authoritative and a bit intimidating. And it explained in legal-like jargon that somebody was attempting to register the domain name http://www.aufgangtravel.net - a variation of the ``.com'' address that Rodach  and Aufgang had registered in February. The company that sent the fax - Electronic Domain Name Monitoring (EDNM), a division of Toronto-based NDNRegistry - gave Aufgang Travel ``first-right-to-use'' to register the ``.net'' name. It also offered to register the name on Rodach's and Aufgang's behalf for $70. Was somebody else actually going after the ``.net'' version? It wasn't immediately   clear, though it's always possible that it was being hijacked by a cybersquatter looking for a substantial ransom, a scenario outlined in the fax...  What was clear is that Rodach and Aufgang didn't feel comfortable with what seemed like an overly aggressive marketing tactic.  ``My gut said right away that it was a scam, but I wasn't sure,'' says Rodach,  explaining that he found it odd that, of all the names in the world to register, somebody would try to go after a unique local Web address based on a not-so-popular family name. .. ``It plays on people's anxieties,'' says Brian O'Shaughnessy, a spokesperson for Network Solutions Inc. of Herndon, Va. ``I've seen it before, and it's the price you're  going to pay for having an open domain name system.'' ... Network Solutions used to have a monopoly over the registration of Web addresses ending in .com, .net and .org, but the U.S. government decided in 1998 to open up the  market. Since then, hundreds of registrars have entered the market with their own creative ways to drum up business. ..NDNRegistry isn't doing anything illegal, says Detective Walter Turczyn of the  Toronto police fraud squad. "

The original story by Hamilton is at
 http://www.thestar.com/back_issues/ED20000825/money/20000825BUS01d_FI-NAME.html
 

Campbell, like Hamilton, tells the story of a Toronto company that received a fax urging them to reply quickly because someone was trying to register an identical domain name with the .net or .org ending. The company that writers Campbell and Hamilton discovered, which is carrying out this questionable activity, is EDNM which calls itself Electronic Domain Name Monitoring and lists two offices in Atlanta and Toronto. Both Campbell and Hamilton got unsatisfactory responses when they tried to contact EDNM to obtain their side of the story.
Campbell told Tim Richardson Sept 22nd  "The story may get deeper" so I suggest that students watch the Star for further articles on this topic to see where it goes.

"Obtaining identifiable names to use for branded products on the web can be just as important as ensuring legal trademark protection for an existing brand investment".
 

applies toChapter 10, page 356

ICANN

"4.   Mandatory Administrative Proceeding.
4a. Applicable Disputes. You are required to submit to a mandatory administrative proceeding in the event that a third party (a "complainant") asserts to the applicable Provider, in compliance with the Rules of  Procedure, that

                  (i) your domain name is identical or confusingly similar to a
                  trademark or service mark in which the complainant has
                  rights; and
                  (ii) you have no rights or legitimate interests in respect of the
                  domain name; and
                  (iii) your domain name has been registered and is being used
                  in bad faith."

read the original story about eResolution in Computer World Canada
 http://www.itworldcanada.com/cw/archive/cw16-10/cw_wtemplate.cfm?filename=c1610n3.htm

"eResolution plays the role of court clerk, registering complaints, handling evidence, transmitting case documents to the decision makers, and communicating any judgement to the applicable parties"

see eResolution's press releases to find out more
 http://www.eresolution.com/pr/03_01_00_1.htm

eResolution's press release says 
"... there are believed to be over 10,000 disputed domain names..."

The story, written by Vito Pilieci, was still available online a month later so perhaps it might still be online now.
 http://www.nationalpost.com/search/story.html?f=/stories/000607/309916.html

Campbell, like Hamilton, tells the story of a Toronto company that received a fax urging them to reply quickly because someone was trying to register an identical domain name with the .net or .org ending. The company that writers Campbell and Hamilton discovered, which is carrying out this questionable activity, is EDNM which calls itself Electronic Domain Name Monitoring and lists two offices in Atlanta and Toronto. Both Campbell and Hamilton got unsatisfactory responses when they tried to contact EDNM to obtain their side of the story.
Campbell told Tim Richardson Sept 22nd  "The story may get deeper" so I suggest that students watch the Star for further articles on this topic to see where it goes.

Read the story about Columbia Insurance Company and the problem they had with cyber-squatters on their domain

Reviewed topics covered to date and how you apply these to the Report you are working on.

Ken K. Campbell
"Click through the Clutter"

Probably not a very good title to this article since it doesn't lead a reader to understand what the subject is about, but, you are strongly encouraged to cover the whole piece.

Essentially Ken outlines the problem that a lot of companies are facing is that their message online is cluttered and with an increasing number of pages being published, people browsing for information pay less and less attention to advertising like [ie. banner ads] content.
 

• increasing their site traffic, 
• building online brands and, most important, 
• convincing visitors to divulge their e-mail addresses willingly."

If you go to Jupiter's web site at  http://jup.com/home.jsp you can find an interesting article about web sites not effectively understanding the impact of their promotional content.  http://jup.com/company/pressrelease.jsp?doc=pr001031

Jupiter was mentioned in an article written by K.K. Campbell in Profit Magazine, online version, May 2000
 www.profitguide.com/magazine/issues_article.asp?ID=250
 

"Toronto-based developer Tridel Corp. recently finished a 12-week online contest promoting a downtown condominium complex. By offering a free condo, it actually convinced 30,000 people to complete an 81-question online survey that asked about lifestyles and incomes. The contest was aimed at "Generation Y" first-time homebuyers — people with good salaries but no equity to put into a condo."

Nov 28th, 2000, Tim Richardson spoke by phone with Ms. Daniel Fiedler, Marketing Manager at Tridel and she provided some helpful comments and perspective on the online contest. Ms. Fiedler noted that traditional mass media advertising is not used by them in the same way as in the past and that they are very enthusiastic about the opportunities to market through the internet. Not only do they get better qualified leads through online circumstances, but they also get a higher conversion rate, meaning Tridel's communication with a prospect who makes contact after having seen material on the web site is a prospect that has better information about the real estate item and therefore is more likely to have a strong interest in carrying through to purchase whereas prospects that make contact through leads developed in mass advertising (newspaper, radio, billboards) need a lot of "work" to bring up to the "strong interest" level.
 

Tridel was mentioned in an article written by K.K. Campbell in Profit Magazine, online version, May 2000
 www.profitguide.com/magazine/issues_article.asp?ID=250

IT Journalist Ken Campbell noted a Montreal ad agency called BAM! Solutions  www.bam.net/e_index.html  which can put together a contest for $3,000 - $10,000 which includes the design and managing of the entries. Some companies, like Net Results Internet Advertising Inc. [which Campbell notes did the Tridel contest] can bill in the $50,000 range.