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July 2001 Volume 2, Issue 7
Editors: Cherie W. Blackburn Robert W. Pearce, Jr. John C. McElwaine
For more
information contact 1-800-237-2000 Nelson Mullins has more
than 250 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
Office 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
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South
Africa Wins First Battle for Domain Name South
Africa’s Department of Communications has claimed victory in the first
round of its battle for the domain name southafrica.com.
According to the department, a New York court ruled that it did
not have jurisdiction over the dispute and would not prevent the
government from turning to the World Intellectual Property Organization
(WIPO) for arbitration. In
March, the department filed documents with the WIPO arguing that both
the official and common names of countries should be protected against
domain registration by others, and that such domains previously
registered should revert to the countries in question.
The proposed policy states “no second level domain name can be
registered in any small generic Top Level Domain (gTLD) which is the
same as the official common name of a sovereign nation, except by the
sovereign nation itself, or upon the authority of that nation, and any
nation has the right to have any existing such registrations cancelled
and/or transferred to the sovereign.”
The proposal argues that the country-specific domain names were
registered at a time when developing nations did not have access to the
Internet and did not recognize the importance of domain names.
Virtual Countries, the American company that has owned and
operated South Africa.com for five years, filed suit in the U. S.
District Court for the Southern District of New York last year to
prevent South Africa’s Department of Communications from going forward
in the WIPO proceedings. The
New York court’s ruling that it did not have jurisdiction over the
dispute allows the department to continue its proceeding with WIPO. Web
Commerce Dominated by Four Sites Four
Web sites, America Online, Yahoo!, Microsoft, and Napster, control more
than half of the time spent online in e-commerce, according to a recent
study by Jupiter Media Metrix. This development is indicative of a rapidly- growing
oligarchical structure for surfing time.
Just two years ago, 11 companies, instead of the present-day
four, controlled 50 percent of surfing time.
The study dispels the commonly believed myth that online
dominance would be impossible to achieve and maintain, as the most
powerful companies, including the recently merged AOL- Time Warner,
continue to consolidate and control the way that Internet “traffic”
is deployed. Yahoo!, AOL
and similar sites consolidate their control by directing traffic through
their own network of sites. Employer
Monitoring on the Rise According
to the American Management Association (AMA), the number of U.S.
businesses that electronically monitor their employees has more than
doubled in the last five years and is now up to 75 percent.
Keystroke and screen capture software allows employers to track
what employees are working on at any given time by monitoring e-mail,
voice mail and Web usage. As the proliferation of Internet and Web technology has
developed, federal regulatory laws have not kept pace.
As an AMA representative stated, “Workplace privacy is a
contradiction in terms. It’s
an oxymoron.” Employer
goals of increased production and security are likely behind the
increased surveillance. Environmentalist
Given “Ticket to Ride” by Arbitrator Mark
Elsis, promoter and organizer of the environmental group LovEarth, lost
his bid to maintain various Internet addresses named for the surviving
members of the Beatles—including such names as GeorgeHarrison.com,
Paul-McCartney.com, ePaulMcCartney.com, eGeorgeHarrison.com and
Ringo-Starr.net. Unlike
many individuals who lose battles with the celebrities under dispute
resolution rules of the Internet Corporation for Assigned Names and
Numbers (ICANN), Elsis was not trying to profit from his use of these
domain names. Instead, he
has been enlisting the Beatles’ names and hundreds of other
famous-sounding addresses to promote a campaign to protect the
environment. Attorneys for
the former Beatles argued that the musicians’ names had value and that
Elsis’s appropriation of those names was in bad faith, regardless of
any benevolent purpose that he might hold.
Essentially, by using the names, Elsis forced Harrison,
McCartney, and Starr to
support an environmental view that they might not have necessarily held.
The mediators, working on five complaints, ordered that Elsis
turn over 12 Beatle domain names, stating that the fact that he did not
ask for money from the celebrities did not excuse him from the Uniform
Domain Name Dispute Resolution Policy (UDRP)
rules defining “bad faith” use of others trademarks. McDonald’s
Experiments With E-Payment System In
the greater Chicago area, McDonald’s has implemented a program to
hasten the rate of transactions in drive through and indoor lines.
Customers use a transponder, often kept on the customer’s key
chain, which sends a signal to the customer’s credit card account, and
the purchase is automatically included on the next month’s credit card
bill. The program, which
has now spread to 29 stores in the Boise, Idaho area, achieves its
expediency by eliminating the time it takes for customers and store
clerks to fumble around for change.
Using the data gathered from the two test areas, McDonald’s
will make a decision on whether to take the program nationwide. Jurisdictional
Problems Grow From the Proliferation of the Internet As
e-commerce is increasingly used as a method of economic exchange,
conventional notions of jurisdiction beg for modification.
Negotiators from 50 countries are meeting to discuss
jurisdictional issues at the Hague Convention on Jurisdiction and
Foreign Judgments. The
convention was begun at the behest of the United States in 1992, before
the exponential growth of the Internet.
With potential restrictions on e-commerce looming, it is now the
United States, as the world’s largest Internet consumer, that has the
most to lose. Department
of Commerce Teams Up With IBM The U.S. Department of Commerce, working with IBM, has developed a new cyber marketplace, BuyUSA.com, to aid small and mid-size businesses in finding buyers and distributors for their products in foreign countries. The service is free for companies seeking to purchase goods, but sellers are charged a subscription fee ranging from $300 to $825. Critics fear that BuyUSA will put the U. S. government in direct competition with private entrepreneurs. Market analysts, however, acknowledge that the government has historically, in some fashion, managed trade between the United States and foreign countries. CyberWatch
by the Numbers 2.4
billion:
The
estimated number of Internet-activated devices in 2004. $140
million:
Amount
spent on virus detection and Internet security in 2000. $1.7 billion: The estimated cost of Internet security and virus protection in 2005. Search
for Leonardo Three
Parisian judges rejected a claim by the French financial company,
Transasia/Leonardo Finances, that search engine searches that bring up
sites for the Association Leonardo, Leonardo Journal, Leonardo DiCaprio
and Leonardo DaVinci,
diluted the value of its trademark.
Transasia asked for $1 million in damages from Association
Leonardo, a nonprofit arts and sciences organization.
The claim was based on a theory known as “initial interest
confusion.” The theory is based on the momentary confusion felt by a
Web user who thinks he is going to one page and is instead led to
another. Critics argue, and it is reasonable to assume that the
Parisian panel of judges agreed, that “initial interest confusion”
is not a workable theory within the expanse of the Internet.
“The notion of ‘initial interest confusion’ when you have a
mature Internet just sweeps way too broadly and includes too much,”
said Jessica Litman, law professor at Wayne State University. “Courts are beginning to say that that kind of confusion
without . . . some kind of bad faith isn’t enough to be actionable.” European
Union Hopeful That .eu Domain Name Will Be Approved In
early June, the Internet Corporation for Assigned Names and Numbers (ICANN)
met in Stockholm in an attempt to relieve the .com, .org, and .edu
domain name pressure that has concurrently developed with the
exponential growth of the Internet.
ICANN would like for organizations to use domain names that
indicate the type of activity, such as .biz or .pro.
The European Union, in an effort to symbolize its strong
geographical component, seeks to adopt a .eu domain name.
The plan, developed last December, is an attempt by the European
Union to promote e-commerce and highlight the pan-European nature of the
European Union. The
European Union has already submitted the proposal to ICANN for
consideration. No decision has been made, but ICANN chairman Vint Cerf
believes that the proposal will be successful.
Many tentative supporters of the .eu domain name, including
Eurochambers, a commerce group, would like to see the European Union
adopt privacy rules for the .eu domain that would make it a safer place
for conducting business, with a competitive advantage over other
domains. By mid-July, the
European Parliament will establish firm plans for the proposed domain
name. Turkish
Law Extends Press Controls to Internet In
early June, Turkey’s Parliament passed a law subjecting the Internet
to the same libel rules that governprint media.
The Parliament passed a more limited version of the bill than
ones previously considered. In
earlier drafts, the government would have required permission from local
government authorities to establish a Web site. Also, owners of Web sites would have been required to furnish
local officials with daily printed copies of the site.
The law also reformed the way that violations of broadcasting
standards are reprimanded. Previously, violators were subject to temporary closure, but
under the new law, they are fined instead.
Similarly, the new law punishes Internet offenders with fines of
up to $85,000 for “untrue news, insults and similar material.” EEOC
Report Finds Internet Pornography Disruptive In
1997, the city of Minneapolis gave its library patrons free and
unlimited access to the Internet. The
policy arose as a means of providing a key First Amendment tool for the
local community. Flaws in the unfettered approach quickly became apparent,
however, as patrons would surf the Web for pictures of all types of
pornography. One librarian
recalled how she would be leading children to books only to look up and
see computer screens filled with pornographic images, which she
described as “demoralizing and depressing.”
After several librarians complained, the Minneapolis branch of
the Equal Employment Opportunity Commission (EEOC) investigated and
found that the library, by subjecting its staff to these
sexually-explicit images, had effectively created a hostile work
environment. Alarmed proponents of free speech worry that the EEOC finding
will enable libraries to closely monitor patron’s Internet habits, or
to install restrictive filtering software. Credit
Card Fraud Impacts the Web Despite
the best efforts of the FBI and other law enforcement organizations,
fraud still costs American companies an overwhelming $400 billion each
year. With the relatively
recent growth of the Internet into a global economic force, credit card
fraud has become more prevalent. British officials estimate that $1.575 billion is lost every
year to telecom fraud.
Authorities employ many methods, including forensic data mining,
to weed out fraud. Forensic
data mining examines transactions and billing data, seeking out
unwarranted patterns. For example, when a credit card is used twice within 30
minutes in two separate, geographically distant locations, a red flag is
raised. . Forensic data
mining combines neural
networks and expansive computer databases to analyze the links between
apparently unrelated bits of information.
Analysts believe that online fraud, which has historically been
underreported, is increasing at the astounding rate of 20 percent
annually. In spite of overt
evidence of the prevalence of fraud, many companies are reluctant to
take steps to prevent it. The
costs of software that effectively insulates businesses from fraud is so
costly it is not economically
feasible. Intellectual
Property Claim Service Available to .biz Applicants NeuLevel,
the company charged with running the registry for .biz, one of the seven
new general top-level Internet domains,
has established July 9 as the deadline for filing claims with its
Intellectual Property Claim Service.
Through the Intellectual Property
Claim Service, a trademark or service mark holder can file its claim to
a particular .biz domain name. The
Intellectual Property Claim Service is available to owners of trademarks
that have been registered with any national trademark office, owners of
trademarks that are in the application process, and owners of common-law
trademarks that have used their respective marks and have common law
rights as a result of such use. Parties
who file a claim still have to file an application; however, filing the
claim provides a trademark owner with certain advantages.
One such advantage is that only trademark owners that have filed
an IP Claim can take advantage of the Start-up Trademark Opposition
Policy (STOP) approved by the Internet Corporation for Assigned Names
and Numbers should any
conflict occur during the .biz launch scheduled for October 1. Under the STOP Policy, a trademark owner must demonstrate
that either the domain name was registered in bad faith or used in bad
faith, as opposed to demonstrating both as required by the Uniform
Dispute Resolution Policy . Once
all the domain name applications have been processed, NeuLevel will
place an automatic 30-day hold on all .biz registrations with a claim
against them prior to launch, giving claimants time to act before .biz
goes live. Trademark
Filings Hit Digital Milestone The
U.S. Patent and Trademark Office has reached a new milestone: the
100,000th trademark application has been filed electronically
via its Web-based application system. The U.S. Patent and Trademark Office unveiled its Web-based
application system in 1998. On
June 4, General Electric Company filed the 100,000th
electronic application. According
to Craig Morris, project manager for the electronic system, the system
saves time and reduces the chance of error.
An applicant receives its trademark serial number within seconds
of submission, in contrast to the paper system which can take up to two
weeks. In addition, the information does not have to be retyped,
thereby lessening chance for error.
According to the U.S. Patent and Trademark Office, 25 percent of
all trademark applications currently are filed electronically. AOL
Files Trademark Suit Against Aimster AOL
filed a federal lawsuit against the peer-to-peer file-swapping service
Aimster, claiming that the company is intentionally piggy-backing on the
AOL Instant Messager (AIM) trademark in order to confuse AOL users.
The lawsuit comes a month after an arbitration panel ruled in
favor AOL in a cybersquatting dispute over Aimster’s domain name,
aimster.com. According to
Aimster CEO Johnnie Deep, Aimster’s name derives from two sources,
neither of which has anything to do with AOL’s AIM service.
Deep stated that the company was named after his 16- year-old
daughter Aimee, as well as the concept of targeting, which is depicted
on the site through use of a bull’s-eye in the Aimster corporate logo.
When the company was launched 10 months ago, it operated only
through AIM’s platform. Since
then, however, it has been reconfigured so that users can swap files
while operating Napster or Gnutella file-sharing networks or while using
other instant messaging platforms, such as those owned by Microsoft and
Yahoo! Credits: Newsfactor.com; Siliconvalley.co;,Wired.com; NY Times; NZHerald.com; Newsbytes.com; EcommerceTimes.com; cnet.com; theregister.co.uk; Lycos Network; The Internet Newsletter, NLP IP Company; The Industry Standard.
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