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March 2002 Volume 3, Issue 3
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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Internet Money Scams From Nigeria Cost Millions Internet cafes in Nigeria have given new life to Nigerian money scams. Previously sent as letters, these unsolicited messages are now sent through providers such as Yahoo! from Internet cafes in Nigeria. The messages target recipients who want to participate in the false promise of massive profits in exchange for helping the message sender recover millions of dollars in frozen or hidden assets. Unfortunately, the Internet return addresses invariably lead to public computers at Internet cafes in Nigeria and seldom produce solid leads. According to U.S. Treasury officials, annual losses attributed to these Nigerian scams are in the hundreds of millions of dollars. The anonymity of Internet messaging has helped these scams reach thousands of new message recipients. The e-mails typically arrive with headlines such as “Strictly Confidential,” with the sender claiming to be a prominent Nigerian connected to the nation’s government or banking system. The scammers claim that the recipients must contribute a certain amount of money, usually in the form of fraudulent fees, in order to receive a share of the non-existent booty. The U.S. Secret Service has gone so far as to set up a special e-mail address for reporting Nigerian money scams: 419.fcd@usss.treas.gov. Credit: newsbytes.com. E-Bay Settles Disputes Over Use of the e-Bay Name BidBay.com and BrickBay.com have both agreed to stop using the distinctive term “bay” in their own corporate and Internet site names. According to e-Bay, its claim of trademark infringement is intended to prevent other companies from incorporating “bay” into their corporate and Internet site names, thus eliminating the possibility of creating an association with e-Bay. BidBay.com has agreed to change its name to AuctionDiner.com and to pay an undisclosed sum of money to e-Bay as part of its settlement, while BrickBay.com has changed its name to BrinkLink.com. Credit: wallstreetjournal.com Internet Casino Operators Face New Problems In the past it might have been assumed that online casinos’ biggest worry was with regulators and law enforcement agencies. Recently, however, these online casinos have seen a much more troublesome problem develop. A growing number of credit card companies and banks are refusing to process payment for Internet gambling. The credit card companies and banks have begun to conclude that online gambling is more trouble than it is worth because it is illegal in many states, and in many instances, customers have simply refused to pay their credit card bills after running up large gambling debts. A recent California case involved a woman who lost more than $100,000 in online gambling but had those debts wiped clean in a court-ordered settlement after persuading a court that gambling debts were not enforceable. As a result, some Internet casino owners say that four of every five transaction requests are being denied by the credit card companies, with some gambling sites, particularly those serving the U.S. market, experiencing revenue losses of at least 30 percent. Several banks, including Wells Fargo, Providian Financial, and MBNA, have rejected gambling transactions. Casino operators are complaining that the credit card companies and banks are acting too much like the police; however, with approximately half the states in the U.S. forbidding residents from placing bets on the Internet, and with all states holding it illegal to operate an Internet casino, Internet casino operators have moved offshore and are now trying to find ways around the credit card crunch. Credit: nytimes.com Latest Internet Sex Charges Filed In New Zealand, a 39-year-old man faces extradition to Australia on sex charges involving a 14-year-old girl he met in an Internet chat room. Allegedly, the man initially communicated with the girl through an Internet chat room, which led to regular e-mail contact and ultimately, personal meetings. New Zealand police say this is just another example of Internet users not being who they seem to be and using the Internet to prey on young girls. Credit: it.mycareer.com.au Defensive Publishing on the Internet Grows Significantly Plantronics, a small telephone headset manufacturer, has developed a new technology for reducing microphone noise. Unable to use the invention right away, the company posted a description of its invention on “IP.com.” This Website markets itself as providing inventors a “mechanism for releasing their innovation into the public domain” and allowing “inventors to retain the freedom to practice their innovation without fear of being threatened by competitive patents.” Plantronics is seeking to prevent competitors from patenting an identical or similar invention by doing what is known as “defensive publishing”. With the growth of the Internet, more and more companies are using it to publish descriptions of their innovations. Credit: nytimes.com Four New Zealand Judges Under Pressure to Resign for Logging on to Internet Sex Sites To the embarrassment of the New Zealand Judiciary, a scan of court computers revealed that four judges had logged on to sex sites and accessed sexual material. In the interest of maintaining public confidence in judges, several critics are demanding the judges’ resignations. The New Zealand Department for Courts has a policy regarding Internet use, and staff had been warned that there would be periodic audits of Internet access with inappropriate access resulting in management action. The policy for judges was similar to that for other staff. One commentator said that if the judges were bored, “there’s always the computer games if you are waiting for a jury verdict.” Credit: nzherald.co.nz Florida Man Settles Internet Pyramid Scheme Charges A Ft. Lauderdale man has agreed to pay the government the $30,000 he earned selling dangerous dietary supplements on the Internet. According to the Federal Trade Commission, the scam took millions of dollars from thousands of Americans. The promotion advertised a business opportunity where people would sell healthcare products and recruit others for a commission, with some ads offering continuous monthly earnings of $2,000. The case against the company, Streamline, is still pending. Credit: siliconvalley.com Ohio Woman Admits Internet Anthrax Hoax and Presidential Threat A 23-year-old Ohio woman has pled guilty to sending e-mails threatening to kill President George W. Bush and send anthrax letters to thousands of colleges and middle schools. The woman’s e-mails might have gone unnoticed had she not sent them directly to an FBI Internet site that is used to collect tips on terrorist activity. For each count, the woman faces penalties of up to five years in prison and a fine of up to $250,000. Credit: newsbytes.com Investment Banker Fires Four Bankers for Internet Abuse UBS Warburg has recently fired four of its investment bankers who accessed a competitor’s Website and copied research on the site. The Warburg bankers used a website established by Morgan Stanley to access password-protected pages that had crucial research on stocks, bonds and currencies. The copied research information was spotted by a client of Morgan Stanley after one of its salesmen left to join UBS Warburg. Warburg has vowed that the unauthorized access has been stopped. Credit: guardian.co.uk SEC Takes Several Enforcement Actions Against Technology Companies The Securities and Exchange Commission (SEC) has taken enforcement actions against several Internet and e-mail investment schemes. The SEC accused New Energy Corp.’s investment banker of orchestrating a “pump-and-dump” scheme using the Internet and mass e-mail campaigns in order to splash “buy” recommendations across the Internet. The SEC says that the fake press releases helped to artificially inflate New Energy’s stock price by 122 percent and that company officials and others involved in the scam promptly sold their New Energy shares as the market rose. Separately, two former executives of Critical Path, Inc., a California-based e-mail service provider, were accused of routinely understating the company’s net losses. Credit: newsbytes.com British Telecom’s Linking Patent Goes to Court The trial of a case involving how users link to other websites is just beginning in a U.S. Federal Court. British Telecom (BT) believes it holds a patent covering hypertext links and sued the Internet Service Provider Prodigy to determine whether it can commercialize this potentially lucrative patent. BT intends to file suit against other Internet Service Providers if it is successful against Prodigy. Observers have said that this patent is easily among the Top 10 most controversial patents in the world. Lawyers for Prodigy hope to show a 1968 film clip of Stanford computer researchers demonstrating what they believe to be hypertext linking, which Prodigy alleges that if true, could invalidate the BT patent. CyberWatch will continue to follow this trial. Credit: wired.com Former Curator for National Archives Caught Selling Artifacts on e-Bay Shawn Aubitz, a former curator for The National Archives, has been charged with selling items on e-Bay that include presidential pardons signed by Abraham Lincoln and a collection of photographs taken in space by U.S. astronauts. Aubitz has said he will plead guilty to the attempted sale of the items, worth approximately $100,000. In all, the former curator has admitted to stealing hundreds of documents and photographs, with some dating back centuries, and selling them on the e-Bay site. Credit: siliconvalley.com Additional Credits: BNA
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