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January 2002 Volume 3, Issue 1
Editors Cherie W. Blackburn Robert W. Pearce, Jr. John C. McElwaine
1-800-237-2000 Nelson Mullins has more
than 275 attorneys firm-wide, with over 25 attorneys having
significant representation of e-commerce clients in areas including
patent, copyright and trademark protection; business planning,
securities and venture capital; and licensing, distribution and
contract preparation. Atlanta Contacts Neil Grayson Cherie
Blackburn Robert
Pearce John
McElwaine Charlotte Contact Jason
Sprenkle Myrtle Beach Contact Franklin
Daniels Columbia Contact Mark Dukes Greenville Contact Marvin
Quattlebaum William
Herlong Munich Contact Stefan Lode CyberWatch is an Internet Law Group news digest published as a service to Nelson Mullins’ clients and friends. The articles are summaries of particular developments in the law and are not intended to be a solicitation or to render legal advice. This publication can be considered advertising under applicable laws.
CyberWatch
is a trademark of Nelson Mullins Riley & Scarborough, L.L.P.
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A Little New Year Perspective on the Growth of the Internet According to a recent article in the Wall Street Journal, the incredible one-day performance of the initial public offering (IPO) of Netscape in 1995 launched the Internet in the mind of the public. Since that IPO a little more than 2,000 days ago, more than three billion public Web pages have been created, and over twenty million Web sites have been established. In addition, individuals and businesses now send approximately 3.5 trillion e-mail messages each year via the Internet. While not changing everything as was predicted, the Internet has become a universal information port allowing constant access to the full text of the Encyclopedia Britannica; stock quotes in real time; precise map directions from anywhere to anywhere in the country; local weather reports with radar; tickets to just about anything; and 24/7 e-mail. Who knows what the next 2,000 days will hold? California Court Awards $775,000 in Internet Libel Case In a case brought by Varian Medical Systems against two research scientists, the California Superior Court awarded $425,000 in actual damages and $350,000 in punitive damages to Varian. The scientists, former employees of Varian, had posted more than 14,000 malicious and defamatory messages on the Internet. The messages accused Varian executives of being homophobic and of harassing workers at the company. The former employees argued that they had the right to make such statements under the First Amendment; however, the court found that they had acted with malice, fraud and oppression. The defendants intend to file an appeal. Anthrax Scare Prompts U.S. Supreme Court to Accept Non-Original Filings After the Anthrax scare closed the U.S. Supreme Court building in October 2001, the Court experienced interruptions in mail delivery and heightened security measures. The shutdown taxed the Court’s traditional paper-based system for processing thousands of appeals each year. As a result, the Court accepted e-mailed or faxed backup copies of legal filings. These recent interruptions prompted observers to suggest that the Court needs to move to electronic filing; however, the Court has concerns about potential breaches of security using Internet-oriented filings. Cuba Blocks Opposition Web Site It only took about a week, but Fidel Castro’s government blocked access to the first Web site run by Cuba’s opposition activists. The site, launched on December 7, 2001, included one of the most extensive lists available of local dissident organizations, with approximately 132 groups representing 21,000 activists listed. In the first few days before it was blocked, the Web site received more than 80,000 visits. The site’s popularity was due in part to its inclusion of reports on the Cuban economy, with opinion articles and photos showing a much more grim Cuban economy than that represented by the Cuban government. Expiring Web Sites Grabbed by Porn Operators Look out if your domain name expires either intentionally or merely due to neglect. Pornography operators on the Web have been quick to scoop up expired domain names and link the sites to various adult entertainment Web sites. The Diocese of Brooklyn, New York Web site was linked to several pornography sites by a porn operator in Europe. The Web site was offered back to the Diocese for $1,500. Another example was the Ballet Theater of Maryland Web site, which was bought by a pornographer just after it expired and linked to “some performances of a rather unwholesome variety.” Internet executives claim that these domain grabs are greatly on the increase, with hundreds of Web sites being picked up by operators of overseas gambling and adult entertainment every day. If the names used in the Web sites are not trademarked, they are very difficult to reclaim and, with many of these Web sites previously belonging to religious and civic groups, local governments and non-profit organizations, the prior owners usually cannot afford to buy back their names. These operators appear to be looking for Web sites with many links attached to the domain name so that the site will score high in search engines such as Google. Consumers Still Not Rushing to Use Online Bill Paying Despite interruptions and threats related to the Anthrax scare, consumers have not rushed to use online bill payment systems. Apparently, the online billing systems are still viewed as being too limited and cumbersome. Many of the leaders in online bill payment, including Bank of America, BancOne, and Wells Fargo, say that they have seen no significant change in consumer usage growth rates. One difficulty is that only about one in five monthly bills can be viewed online by an average household, and observers believe that consumers will not move to online bill payment systems until one-third or more of their bills can be viewed online. Consumers appear to be concerned about the security of Internet-related payment systems, and it will take increased consumer demand to push companies to provide online payment opportunities. Federal Officials Raid Internet Groups Conducting Software Piracy In what is being billed by the U.S. Customs Service as only the first step, raids were conducted in December 2001 on universities and high tech businesses in 27 cities as part of an international crackdown on underground groups that trade illicit copies of software and digital media. The Customs Service says that its investigation underscores the severity and scope of a multibillion-dollar software swindle over the Internet and those new raids, including potential strikes outside the country, are planned. The 129 computers seized by the Customs Service hold so much pirated software and media that it took 4,000 pages to list all the titles. One seized system alone had more than 5,000 movies stored, including the just released “Harry Potter” movie. Arrest warrants are expected to be issued shortly for many of the suspects in the case. FBI Confirms Existence of Secret Internet Project The FBI confirmed in December 2001 that the U.S. Government is working on a controversial Internet spying technology that will be used to eavesdrop on computer communications by suspected criminals. The technology, code named “Magic Lantern,” has not yet been deployed but is far along in development. Previously, the FBI acknowledged that it uses software that records each keystroke typed into a particular computer in order to try and obtain passwords to read encrypted e-mail and other documents. Under Magic Lantern, the FBI could plant a “trojan horse” keystroke logger on a target’s PC by sending a computer virus over the Internet rather than needing physical access to the computer as is currently required through the controversial Carnivore technology. As might be expected, civil libertarians are saying that the FBI could easily abuse this new technology. Washington State Law Allows Claims Against Spammers In a string of recent court cases, Washington State citizens have invoked the state’s new law against unsolicited bulk e-mail and won damages against “spammers.” The state’s new law allows actions under its Consumer Protection Act with damages of up to $2,000 per violation if the suit is brought by the state, and $1,000 per violation if brought by a consumer. In addition, the judge has the ability to treble the damages. The U.S. Supreme Court recently rejected an appeal to review the law by attorneys for a spammer. California Sells Birth Data to Web Site In an interesting development, the State of California recently sold the birth records of more than 24 million Californians to a genealogy Web site, offering easy access to critical information needed by criminals to create fake identities. By accessing the Web site individuals can gain access to personal data, such as place of birth and mother’s maiden name. Several state leaders have expressed shock by this sale due to the rapidly increasing incidence of identity theft. Such concerns have been heightened by news that several of the September 11 hijackers obtained fake driver’s licenses in Florida and Virginia. State leaders promised to review the current law that allows California to sell both birth and death records. One other state, Texas, has also provided similar information to the genealogy Web site. Computer Selling Scam Results in Two Year Prison Sentence A 25-year-old Illinois man was sentenced recently to two years in prison for running a computer-selling scam over the Internet. The individual pleaded guilty to two felony counts of mail fraud, two felony counts of wire fraud, and one felony count of income tax evasion. The scam was run through a Web site that offered computers and computer parts for sale. Inventory was purchased by using customers’ credit card information, and UPS and Federal Express account numbers from suppliers were used to pay for shipments to customers. Boom in Wireless Networking for the Home A growing number of households now have two or more personal computers, representing a potential opportunity for companies that manufacture networking equipment. Home networking technology has begun spreading to mainstream consumers who want to split their fast Internet connection obtained through a cable modem or digital subscriber line among several PCs. The networking also allows the sharing of computer files and other equipment such as printers and scanners. The most popular home-networking method appears to be wireless networking, thus avoiding the considerable cost of running network cable through walls. Another advantage to wireless systems is the ease of moving laptop PCs from one room to another without loss of network connections. Market research firm IDC expects the market for wireless networking equipment to double this year, as these mainstream consumers seek to increase the use of all those Dell and Gateway computers purchased during the last couple of years. Total Number of Internet Addresses Decreases in December For only the second time in nearly six years, the total number of Internet addresses fell in December 2001 as a fall off in domain name speculation continued. According to a survey by Netcraft, people are no longer willing to pay large dollars for domain names. Since the Internet crash, there has been a huge drop in the perceived value of attractive generic domain names. Netcraft’s survey predicted that the percentage of “active” Internet addresses would decrease as the drop off in domain name speculation continued. Trademark Owners Continue to Win Big in UDRP Actions As a follow-up to a prior article we ran last year, a recent survey by the Brobeck Law Firm shows that trademark owners have a very high win rate in domain name dispute proceedings. For two years, a non-profit group, the Internet Corporation for Assigned Names and Numbers (“ICANN”) has largely handled domain name disputes. As of December 2001, ICANN had rendered 6,966 decisions involving disputes over domain names on the Web. Of those decisions, 5,412 resulted in the domain name being transferred to the plaintiff in the action. While ICANN decisions are not absolutely binding, the appeals process to the federal court system has been used very infrequently. Observers believe that trademark and business owners will continue to win these ICANN decisions at a very high rate. Credits: Wall Street Journal; Newsbytes.com; ABCNews.go.com; Cnet.com; USAToday.com; Forbes.com; SiliconValley.com; ChicagoTribune.com. |
