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Unexpected Twists In Internet Law

Vonage In Print News

Unexpected Twists In Internet Law

December 30, 2003

By Doug Isenberg

Internet law in 2003 was full of surprises, with the Australian government joining the US and the UK in passing antispam bills, the courts blessing pop-up advertising, the music industry losing lawsuits and the Supreme Court finally upholding an Internet law.

And those are just a few of the highlights from a year in which technology and the law saw their biggest clashes yet.

US Passes Antispam Law

After years of trying without success, the U.S. Congress finally passed an antispam bill, though the impact of this new law is at best uncertain. The Can-Spam Act of 2003 (an acronym for "Controlling the Assault of Non-Solicited Pornography and Marketing") pre-empts more than 30 state laws, bringing much-needed uniformity to the legal effort to combat spam.

However, critics point out that the new federal law is less restrictive than some of the state laws and does not outright ban the sending of unsolicited commercial e-mail (an approach many people favour but that certainly would lead to First Amendment challenges). Instead, the law mandates the use of accurate headers in e-mail messages, requires procedures for recipients to opt out of future e-mails and forbids the practice of e-mail address harvesting.

In addition, the law creates a process to study the feasibility of a "do not e-mail" registry, which would be similar to the immensely popular Do Not Call Registry the Federal Trade Commission manages. However, many people, including FTC chairman Timothy J. Muris, have said the e-mail registry would be ineffective and potentially counterproductive.

Even before Can-Spam, some Internet service providers and others successfully pursued a number spammers in courts, highlighted by the May arrest of Howard Carmack of Buffalo, N.Y. EarthLink accused the so-called "Buffalo Spammer" of sending 825 million spam messages for products such as herbal sexual stimulants.

While lawmakers were busy crafting the Can-Spam Act, software developers were busy in 2003 developing new technologies to block spam. Many ISPs and e-mail providers now offer spam-blocking tools for free, and corporations have licensed similar products. While none of the tools is 100 percent effective--most of them still let some spam seep through or occasionally block legitimate e-mail--they're likely to prove to be a more effective way to deal with spam than the law will.

Pop-Up Advertising And The Law

Despite the success of spam lawsuits, the other most annoying tactic online--pop-up advertising--seems to be avoiding the law. In at least three court decisions in 2003, judges ruled in favour of companies that provide software that delivers these advertisements.

The decisions, for now at least, vindicate the practices of WhenU, Gator (now known as Claria) and D Squared Solutions.

But, as with spam, technology rather than the law soon may prove to be more important. With the proliferation of pop-up blocking tools--including free choices from ISPs, Google and others--these exasperating ads already seem to be popping up with much less frequency.

Illegal Music File Sharing Continues

The music industry ends 2003 on a down note, losing a significant procedural fight in its attempt to pursue individuals who engage in illegal file sharing. The U.S. Court of Appeals for the District of Columbia ruled that the Recording Industry Association of America (RIAA) could not use a subpoena process under the Digital Millennium Copyright Act (DMCA) to obtain the name of a customer of Verizon Internet Services suspected of sharing about 800 sound files.

In June, the RIAA announced that it would begin filing lawsuits against hundreds of individuals, a tactic that scared many people away from the illegal practice and resulted in quick settlements with many of the defendants. But because the lawsuits relied on the DMCA's subpoena process, the RIAA will now find it more difficult to identify defendants.

Although the ruling says nothing about the substantive issue of file sharing, which overwhelmingly remains illegal, the Verizon case was the music industry's second big loss of the year. In April, a federal district court judge in California ruled against a number of movie and recording studios in their copyright infringement lawsuit against Grokster and StreamCast.

Unlike in the earlier Napster litigation, where the music industry won every legal round, the court in this case saw a distinction between centralised and decentralised file-sharing services. Grokster and StreamCast escaped liability because, the court said, they did not actively facilitate and could not stop their users' infringing activity.

Despite these legal setbacks, the music industry can take some consolation in the fact that legal, fee-based online music services finally took off in 2003, led by Apple Computer's popular iTunes and Roxio's new version of Napster. While these easy-to-use, inexpensive services likely won't end illegal music file sharing, they should help minimise the damage.

Domain Names And The Law

In the spring, US Congress quietly passed the Truth in Domain Names Act, which made it illegal to use a "misleading domain name" with the intent to deceive a person into viewing obscenity or to deceive a minor into viewing "material that is harmful to minors" on the Internet.

Though the law may suffer from ambiguities and therefore be vulnerable to a First Amendment challenge, it proved essential in bringing down John Zuccarini, a man who the courts had described as a "notorious" cybersquatter.

Zuccarini reportedly had made millions by linking porn sites to domain names similar to popular trademarks (such as 15 variations of and had evaded the law for years before being arrested in a Florida hotel room in September. In December, he pleaded guilty to 49 federal charges.

Meanwhile, the Dot Kids Implementation and Efficiency Act, which gathered many headlines in 2002, seemed to have little impact in 2003. The act mandated the creation of a child-friendly domain,, which Neustar launched in September. But, children's sites still seem destined to dominate in other domains, undermining the importance of the act.

U.S. Supreme Court And Library Filtering

Another Internet law designed to protect children, the Children's Internet Protection Act (CIPA), was upheld by the U.S. Supreme Court in June. It was the first time the nation's highest court had ruled in favour of an Internet law, surprising those who said all such laws violate the First Amendment.

CIPA requires that public libraries install software to block obscene or pornographic images and to prevent minors from accessing material harmful to them if the libraries want to receive two types of federal assistance for Internet access. "Especially because public libraries have traditionally excluded pornographic material from their other collections, US Congress could reasonably impose a parallel limitation on its Internet assistance programs," Chief Justice Rehnquist wrote.

Taxes Are Still Taxing

To the surprise of many, US Congress let the Internet Tax Freedom Act expire Nov. 1, opening the door for the imposition of Internet access taxes after a five-year ban. The failure to renew the act is an indication of both the economy and the maturation of the Internet itself, though US Congress may revisit the issue early in 2004.

Similarly, US Congress failed to pass legislation relating to the collection of sales taxes for products purchased online, prolonging the debate over whether sites should be able to collect what they believe to be significant lost revenue--up to US$45 billion by 2006, according to one study. Still, state and local governments got a boost in February, when some large retailers, under an agreement with 38 states and the District of Columbia, started voluntarily collecting taxes on their Internet sales. The stores said they hoped the change in practice would enable them to create greater ties between their online and offline operations, which had been artificially divided to avoid sales tax laws.

Other Issues And A Look Ahead

Patent law continued to prove controversial in 2003, led by Microsoft's US$521 million courtroom loss in August to Eolas Technologies and eBay's US$35 million loss to MercExchange in May. In October, the FTC issued a 315-page report on how to reform the patent process.

Perhaps the most far-reaching high-technology legal issue in 2003 involves the surprise positioning of the SCO Group over rights to the Linux software. Led by lawyer David Boies of Napster fame, SCO in March sued IBM and followed up in May with warning letters to 1,500 companies. The outcome of SCO's legal positioning could affect the future of the open-source software movement.

In addition to the ongoing legal debates over spam, file-sharing, patents and taxes, a few new Internet legal issues are likely to become prominent in 2004. Among them: Whether and how to regulate phone calls over the Internet.

The Federal Communications Commission jumped in to the debate in December, sponsoring a day-long forum on voice over Internet Protocol (VoIP). The forum followed an October ruling by a federal judge in Minnesota that barred regulators there from requiring Vonage to get a telephone operator's license.

And, in 2004, the U.S. Supreme Court will revisit the Child Online Protection Act COPA), a controversial law on which the justices first shared their opinions in May 2002. COPA restricts the online publication of "material that is harmful to minors," which the act defines with reference to "contemporary community standards."

In its first ruling on COPA, a divided Court said that definition does not by itself render the statute substantially overbroad for purposes of the First Amendment, refused to lift an injunction against enforcement of the act and sent the case back to the lower appellate court, which in March 2003 found COPA unconstitutional.

In October, the Supreme Court said it will again hear arguments on COPA, and its decision in 2004 could be the most important legal ruling yet on the Internet, either finally closing the door on attempts to regulate content online or closing the gates of the untamed high-tech frontier. Doug Isenberg, an attorney in Atlanta, is the editor and publisher of Isenberg writes and speaks frequently about Internet law and is the author of "The GigaLaw Guide to Internet Law" (Random House, 2002).

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