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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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Cybersecurity Legislation Early this year, the Cybersecurity Enhancement Act of 2001 was introduced by U.S. Representatives Sherwood Boehlert and Lamar Smith. The new law would require the U.S. Sentencing Commission to consider factors unique to cybercrimes when creating sentencing guidelines. Guideline considerations would include: the potential and actual loss resulting from on-line crimes; the level of sophistication used in planning the crime; the motive (personal or financial benefit); the effect (if any) on Internet user privacy; and the degree of compromise (if any) to government computer systems. The bill also seeks $57.5 million in funding for the FBI’s National Infrastructure Protection Center to serve as a lead agency for critical infrastructure threat assessments, warnings and investigations. Additionally, Internet service providers (ISP) are exempted from liability while assisting law enforcement in locating on-line criminals who may have used the ISP’s services when committing a crime. Microsoft Sues Over Lindows Microsoft recently filed a trademark infringement action against Lindows, a San Diego-based company. Lindows was launched in January 2002 by Michael Robertson, former CEO of MP3.com. Lindows is developing a version of the Linux operating system that will run applications written for Microsoft’s Windows operating system. Microsoft holds that Lindows went beyond spoofing Microsoft’s trademarks and has engaged in use of the Windows trademark, creating potential of confusion in the marketplace. Domain Names Drop For only the second time in nearly six years, the total number of registered domain names worldwide fell in December 2001. The failure to renew many domain names registered in the rampant speculation of 1999 contributed to the decline in domain name registrations. Names have been abandoned. Furthermore, since the Internet bubble burst, the perceived value of attractive generic domain names has fallen. Others speculate that as the recession has continued, casual buyers and speculators have slowed their buying or allowed unused domain names to expire. Dot-Aero Domain Names Ready to Take Flight The Societe Internationale de Telecommunications Aeronautiques (SITA) announced in January 2002 that in March 2002 they would begin selling Dot-Aero Internet domains to qualified applicants. Dot-Aero is one of the seven top-level Internet domains approved for introduction by ICANN in November 2000. Dot-Aero is exclusively available to people, associations, organizations, companies and government agencies who participate in the efficient, safe and secure transport of people and cargo by air. WIPO Uses Wayback Machine to Decide UDRP Case In an interesting use of modern archival technology, a WIPO panel deciding a UDRP case recently used a web archive program to uncover the 1998 attempt of a registrant to sell the domain name to the rightful trademark owner. The registrant had maintained that she registered the domain name vodafone.com for use with a voter phone service allowing voting via telephone. The web archive revealed that as early as 1998 the registrant’s Web site displayed the following text: “We know that many people will be trying to reach you by typing xxx.vodaphone.com . . . the proof of this is that from Day One, when this site went up over half a year ago, it’s been averaging around 150 hits per day!” Based partially upon this evidence, the WIPO panel found that the domain name had been registered in bad faith and transferred the domain name to Vodaphone Group, PLC. Earthlink Class Action Will Go Forward Internet service provider Earthlink recently lost its battle to dismiss a class action lawsuit against the company by California residents. A California state court judge refused to dismiss the lawsuit, holding that the California Earthlink subscribers had alleged sufficient facts to support their claims for unfair business practices and deceptive practices. The Complaint alleges that Earthlink did not construct a telecommunications infrastructure sufficient for its DSL service demands. As a result, Earthlink was unable to provide the DSL service and attributes that it had marketed and advertised. Cybercourt in Michigan In January 2002, Michigan Governor John Engler signed into law a bill that creates an on-line state court system. Engler stated his belief that the on-line system will make Michigan uniquely attractive for new economy businesses. The Cybercourt has jurisdiction over businesses and commercial complaints in which a dispute exceeds $25,000. A judge presides over the on-line court system that requires electronic document filing and teleconferencing for arguments. There is no jury. State Representative Mark Shulman, sponsor of the bill, said that with Michigan’s technology-rich economy, the state needed a court that understood cutting-edge technology issues. Chat Room Criticism Brings Lawsuit The Atlanta Humane Society has filed a $75,000 defamation lawsuit against a woman for defamatory comments made in an Internet chat room. Cathy Mills criticized the Atlanta Humane Society executive director, calling him “Mr. Kill” after a television station reported that the Society was killing animals without really trying to find homes. Additionally, Mills wrote in the chat room that she was withdrawing her support from the society until it hires “a leader who does not delight in slaughtering pets for fun and profit . . . He is evil and it is time for the Atlanta Rescue Community to unite in ending his long and tragic career.” On-Line Piracy Ring Nabbed During the recent Operation Buccaneer raids, two California men were charged in a massive software piracy ring with copying movies, games and other programs and distributing them over the Internet. The two men were the first members of the “DrinkorDie” ring from which stored copies of movies like Harry Potter and software programs such as Windows’ XP operating system were seized. Maximum penalties for the crimes are five years in prison, fines of $250,000 and payment of restitution. The DrinkorDie group was one of several targeted in the December Operation Buccaneer raids that resulted in 58 search warrants served in the United States, Austria, Finland, England and Norway. The group operated by hiding pirated programs in files located at major institutions such universities and banks. From there the groups were able to take advantage of high-speed communications without having to pay for the broadband connections needed to swap large files such as software and movies. The U.S. Gets Tough Against Ukraine for Piracy In January 2002 the United States imposed trade sanctions against Ukraine restricting steel and other metal exports. The trade sanctions followed allegations that Ukraine is virtually ignoring illegal production of CDs within its borders. The U.S. record industry estimates the lax copyright protection in the Ukraine is costs the industry $200 million annually. According to expert estimates, the country produces roughly 70 million CDs annually, far exceeding local demands for CDs within the Ukraine. Bootleg CDs, priced at about $2 each, are available at street kiosks throughout Kiev. Prior to the sanctions, the Ukrainian Parliament approved a bill aimed at regulating compact disc production in an effort to head off more severe economic sanctions. However, the legislation failed to satisfy U.S. demands. The sanctions, effective January 23, 2002, are expected to cost Ukraine $470 million annually, likely leading to the loss of thousands of Ukrainian jobs.
Olympic Relay Torches For Sale Twenty torches used in the Olympic Relay were recently listed for sale on e-Bay. Bidding has been aggressive, routinely reaching in excess of $2,000 per torch. As the relay crossed the United States 11,500 torches were used. Torch bearers could purchase the torches they carried for $335. Elcom Soft Seeks Dismissal of DMCA Lawsuit Elcom Soft, a Moscow-based software company, has been charged with violating the Digital Millennium Copyright Act (DMCA) for selling a program that enables people who use Adobe systems’ eBook reader to copy, print and transfer electronic books. The DMCA bars creation or distribution of technology that could be used to infringe upon copyright protection, and Elcom Soft potentially faces up to $2.25 million in fines if convicted. Elcom Soft filed a motion to dismiss, arguing that the DMCA is overly broad, vague, and infringes upon the First Amendment right to free speech. A hearing on the motion is scheduled for March 4, 2002. Dot-Coop Domain Names Now Available DotCoop, a subsidiary of the National Cooperative Business Association, has announced that its registry for dot-coop domain names recently went live. DotCoop is the new TLD reserved for employee-owned businesses. Dot-coop domain names are available only to credit unions, cooperatives and co-op support organizations. Hot Stock The Securities and Exchange Commission (SEC) recently announced their design of an Internet investment scam that received 150,000 hits in three days. The Internet hoax was intended to highlight an investor-awareness project concerning online stock scams. The SEC created a fictitious company called McWhortle Enterprises and designed a Web site at www.mcwhortle.com touting the fake company’s initial public offering. The Web site lures potential investors, announcing that McWhortle “is an established and well-known manufacturer of biological defense mechanisms.” However, once potential investors click on a link indicating that they are interested in investing, the web page announces “if you responded to an investment idea like this. . . you could get scammed!” FBI Raids Anarchist Site FBI agents recently raided the home of a Los Angeles teenager suspected of hacking into several Web sites to post anarchist messages and using his own site to publish bomb-making information. Sherman Austin is believed to have violated the Computer Fraud and Abuse Act (CFAA) and statutes prohibiting the dissemination of bomb-making information. Austin’s Web site commented that “anyone actively disagreeing with policies of the U.S. is now automatically rendered a ‘terrorist’ in the eyes of national security.” Credits: Newsbytes.com; Cnet.com; www.nic.aero website; WIPO Decision Case No. D2001-1037; Wired News; SiliconValley.com; www.archive.org; yahoo.com news; news.com
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