Introduction

There is a great deal of potential third party liability created by activities in cyberspace. Partially this is due to the difficulty in holding persons responsible for their actions on the Internet, either because of international jurisdiction issues, or simply because of an inability to find them due to their anonymity or sheer numbers. As a result, third parties such as service providers and systems operators are often targeted instead. Employers, as well, are often targets of liability for actions of their employees.

Cases involving third party liability have been brought in a number of legal areas, including defamation, copyright infringement, trademark infringement, and unfair competition. Defamation and copyright, however, have been the primary source of third party liability claims in cyberspace.

Third Party Liability for Defamation

Liability of third parties for defamation traditionally depends on whether the court sees the third party as a “publisher,” “distributor,” or “common carrier.” A publisher is presumed to exercise control over the contents of what is published, and is therefore usually liable for those contents. A distributor is presumed not to have control over the contents of what is distributed and is therefore only potentially liable for those contents if the nature of the contents, and any alleged legal problems created by them, is brought to the distributor's attention and the distributor does nothing in response to notification.

Introduction

“Common Law” is frequently characterized as “judge-made law.” It is the law of precedent, created through a process of constant evolution as courts interpret and apply previous judicial decisions. While it is true that, as many people insist, judges do not make laws (lower case “l”) but legislatures do, judges do shape society's legal fabric – its Law (upper case “L”) – through this interpretive process.

“Statutory Law” is the law of “statutes” or what we commonly refer to simply as “laws,” created by legislative bodies such as Congress, state legislative counterparts of Congress, or other such bodies. Unlike Common Law, Statutory Law is a product of attempts to take a broad view and, usually, to make major adjustments to the Law. Common Law is built in a more piece-by-piece fashion, one brick at a time, by practitioners who are not concerned with the big picture, but rather with the case at hand.

The U.S. Federal Court system is essentially a three-tiered system, resembling a pyramid. At the lowest level are the District Courts, scattered all over the country. There are currently ninety-four federal District Courts. Each state has at least one, as do the District of Columbia and Puerto Rico. Three Territories of the United States also have Federal District Courts – Puerto Rico, Guam, and the Northern Mariana Islands. The District Courts are usually the starting point for litigation or prosecution if federal courts have jurisdiction over a case (which will be discussed in Chapter 15).

Definition

The most common response to the question “What is a contract?” is “an agreement,” but a contract is more than that. The generally accepted legal definition of a contract is that it is a promise, or set of promises, that the law sees as a duty, for the breach of which the law will provide a remedy in the form of an action for damages. Thus a contract is a legally enforceable agreement.

Some Contracts Terminology

Promisee – A person to whom a promise is made

Promisor – A person who makes a promise

Offeree – A person to whom an offer is made

Offeror – A person who makes an offer

Contract Formation: Elements of a Contract

In order to make an agreement legally enforceable, three elements must be present – offer, acceptance, and consideration.

Offer

What is an offer? An offer is simply a manifestation of an intention to form a contract. The legal test of whether something is an offer is whether a reasonable person in the position of the offeree believes that acceptance creates a contract.

Introduction

A “trade secret” is information that is secret and has economic value by virtue of the fact that it is kept secret. Examples of the types of information that is commonly protected as trade secrets include customer lists, formulas for products, the contents of databases, and even software code itself.

One great advantage of using trade secrecy to protect intellectual property is that trade secrets can potentially last forever, unlike patents and copyrights. Patent protection now lasts for twenty years from the date the patent application is filed (although design patents expire fourteen years from the date the patent is issued); copyright protection, as we have seen in the previous chapter, now lasts for the life of the author plus seventy years or for a total of ninety-five years if the copyright is owned by a corporation.

Trade secrets do not require absolute secrecy. “Non-disclosure agreements” are used extensively to bar the recipients of trade secret information from disclosing the information. Non-disclosure agreements are simply another form of contract and, if properly executed, are binding on the individuals or entities agreeing to them.

Despite the fact that trade secrets do not require absolute secrecy, the owner of the trade secret must take reasonable steps to keep the secret in order to preserve the status of the information as a trade secret.

Introduction

Before a court can hear a case, two types of jurisdiction are required: subject matter jurisdiction and personal jurisdiction.

Subject Matter Jurisdiction

Subject matter jurisdiction is the power to decide the particular type of dispute. Only state courts have subject matter jurisdiction over civil suits between citizens of the same state. Every state has at least one court of general jurisdiction. (That is, it can hear any kind of claim between any parties – unless specifically prohibited from hearing certain types of cases, for example probate or family law cases, for which special courts are provided.)

Federal courts are all courts of limited jurisdiction (as opposed to general). That is, federal courts can hear cases only as specifically authorized by the statutes creating the court. For federal courts, the outer bounds of jurisdiction are set by the Constitution, Article III, Sec. 2. Congress can limit federal courts to less subject matter jurisdiction, but cannot grant more than allowed in the Constitution.

Federal courts have subject matter jurisdiction in three instances:

1. when there is jurisdiction based on “diversity” of the parties;

2. when the case involves a federal question; and

3. when the court has supplemental jurisdiction (which permits a defendant with a counter-claim to bring it in federal court if the court would have had jurisdiction over the original claim).

Federal courts have subject matter jurisdiction based on diversity of the parties (“Diversity Jurisdiction”) in several instances:

1. when the suit is between citizens of different states,

2. when the suit is between a citizen of a state and a subject of a foreign country,

3. […]

Unlike most inventions and technologies, the development of computing is a story of unintended consequences. The elevator was invented to permit the vertical growth of cities; the automobile was invented to speed transportation; the telegraph and telephone to enhance communication across distances. Those inventions have retained their original purpose. The computer, on the other hand, was devised as a machine to speed up mathematical calculations. No one foresaw that it would ultimately become the single most ubiquitous communication device known and the portal for each computer user on the Net to a vast new world called cyberspace, with its own social norms and, consequently, a significant impact on law.

Perhaps the single most critical issue we must confront in foreseeing (for we may in the end be powerless to decide) the future of cyberspace and its effect on the legal system is the issue of accountability versus anonymity. Traditional notions of personal jurisdiction, for example, rely on being able to identify the party over whom jurisdiction is asserted; conduct, such as gambling, cannot be effectively regulated absent the ability to identify the party whose conduct is to be controlled, or sovereignty over the place in which the conduct is “happening.” The level of protection accorded to personal privacy is, and always has been, a balancing act between society's interest in promoting freedom of personal expression and activity versus society's interest in protecting itself and its members from harm, with the latter goal predicated on identification.

Introduction

The “Right of Publicity” is a fascinating legal topic. The cases on this issue tend to be extremely entertaining because the right of publicity is available only to those whose identities have publicity value – that is, the famous.

The “right of privacy” and the “right of publicity” are different. The right of privacy primarily prevents intrusion into a person's “private” life; financial loss is irrelevant to an individual's ability to sue. The right of publicity protects against financial loss through appropriation of a person's identity.

The right of publicity is protected in a minority of states. Sometimes it is protected through the common law. In some states it is protected by statute. While not every state explicitly recognizes the right of publicity, similar – although not identical – protections can be obtained in all states via the Lanham Act, the federal law that governs trade practices and, among other things, prohibits false endorsements. Note that, as usual, caution must be exercised in assessing possibilities regarding recovery under the right of privacy in cyberspace because of the borderless nature of the Net. To be on the safe side, abide by the laws as applied in the most restrictive jurisdiction.

The right of publicity is not absolute. There are First Amendment exceptions for use of a person's name or likeness (or identity) for the purposes of news reporting, political commentary, satire, or parody. The question is one of balancing a person's right of publicity against the need for free expression.

A Constitutional Law Primer and How the First Amendment Fits In

We will focus here largely on First Amendment issues, although we deal with other constitutional issues, such as the Fourth Amendment obviously, in Chapters 9 and 10. Remember that the First Amendment applies only to federal (and state) government restrictions on free speech. It does not apply to restriction on speech by private employers, sysops, or access providers. For example, if AOL refuses to post e-mail critical of its policies that is not a constitutional problem.

Freedom of speech is a fundamental right and as such gets the “strict scrutiny” standard of review. Here is a summary of the standards and what they mean.

Strict Scrutiny

This is the highest standard of review. If the constitutionality of a law is challenged and this standard applies, the government has the burden of proving that the law is necessary for a compelling state interest. This is the standard used in reviewing laws involving “suspect classifications” and fundamental rights.

“Suspect classifications” refer to things like race or ethnicity, for example, so laws classifying people based on such criteria will be reviewed under strict scrutiny. While the burden of meeting the strict scrutiny standard is on the government, the plaintiff or plaintiffs (those challenging the constitutionality of the law) must demonstrate that the law in question has a discriminatory purpose, not merely a discriminatory impact.

The strict scrutiny standard also applies to:

• Affirmative action issues. Laws regarding affirmative action issues are usually upheld when the purpose of the law is to correct past identifiable discrimination, not merely some general societal discrimination. If the purpose of the law is to address the latter, it will usually be struck down.

• […]

Introduction

Products have trademarks. Services have service marks. The two will generally be referred to in this chapter generically as “trademarks,” but it is important to be aware of the distinction.

Trademarks can be almost anything, including:

• Words or phrases

• Pictures and symbols (like the Nike “swoosh”)

• Numerals and letters (MCI)

• Abbreviations and nicknames (Coke)

• Colors (Owens Corning has a trademark on the pink color of its fiberglass insulation)

• Sounds and music

• Domain names

• Smells (as is true of a particular scented yarn)

• Buildings themselves (the Photomat “huts” for example)

Trademarks are easy to acquire. Simply select a mark and then use it in commerce. Ownership does not begin until the mark is used in commerce. However, application for a registration with the Patent and Trademark Office (PTO) can be made (and protection can begin) under an “Intent to Use” application for six-month intervals up to a maximum of thirty-six months. At some point during that time, a “Statement of Use” must be filed with the PTO, establishing that the mark has actually been used in commerce.

“Use in commerce” begins at the time the public first has a chance to associate the goods with the mark. Usually, this is when the goods are shipped or the services are first performed. Use in interstate commerce is required for federal, as opposed to state, registration, but this is easily established. Simply having customers from out of state is sufficient, and when the commerce is on the Net that is almost always the case.

This book is intended to provide its readers with an awareness of legal issues associated with computing – particularly in the massively networked context of the Internet. It assumes no previous knowledge of the law or any special knowledge of programming or computer science. It is not a law school “casebook,” although there are many cases presented here (in redacted form). The unredacted cases are available at a website (www.cambridge.org/9780521886505) associated with this volume, with the portions that were ultimately redacted highlighted to make them easy to find.

Of necessity, the book contains a considerable amount of very basic legal information on a variety of topics. It is impossible to consider the workings of the law in cyberspace without at least some knowledge of the fundamental workings of the law in physical space. Again, this information is unsuitably elementary for the professional lawyer or the law student. They have enough information tailored to their needs. My hope is to reach people who do not have much legal knowledge.

Because the book is aimed at a more general audience, the format of the presentation of the cases is unusual. Judicial opinions can be very difficult reading for the non-lawyer or non–law student. Therefore, in the text of the cases, I have included in bold print comments on what is happening, on the importance of a particular statement, or on the importance of the case to “cyberlaw” in general. Many of these comments might suggest interesting topics for essays or discussion.