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August 2001 Volume 2, Issue 8
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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China
Closes 2000 Cybercafes The
Chinese government has closed almost 2,000 cybercafes and ordered
another 6,000 Internet cafes to suspend business and make changes. According to Chinese officials, the move was designed to
“clear up” the establishments and bring Internet use in line with
regulations introduced by the Chinese Ministry of Information and
Industry. The Chinese have
been worried about the psychological and physical health of children who
seem to be spending too much time in Internet cafes. AOL
Botches Online Prize Contest A
computer glitch that generated false messages mistakenly told dozens and
possibly hundreds of AOL users that they had each won up to $10,000.
The online contest, which was co-sponsored by Coca-Cola, involved
correctly answering a question in a “POP-THE-TOP” contest and then
clicking on a soda bottle icon to see if the participant had won.
In each event, the computer showed that the contestant had won
$10,000. Several of the apparent winners confirmed that they had won and
were assured by AOL that their prize affidavits would be in the mail
within five days. Later,
however, “winning” contestants were told that instead of receiving
the expected cash, they would receive a $200 gift certificate from
Target and three free months of AOL.
AOL says that it has already apologized to these customers for
any inconvenience and confusion. U.S.
Officials Warn Against the “Code Red” Internet Worm U.S.
government officials, including representatives from the White House and
the FBI, have decided to take the unusual step of imploring
organizations worldwide to protect themselves in the face of one of the
largest-ever virus dangers to the Internet.
The “Code Red” worm resembles a virus and could cause
widespread slow downs and sporadic outages.
Officials are frustrated that many computers are still
defenseless against this attack despite a software inoculation being
made available before the first attack.
Because the government relies on the Internet for everything from
defense networks to financial systems, the threat from worms like
“Code Red” poses a distinct danger, according to the FBI. South
Carolina Turns Computer Technicians into Child Pornography Police Critics
already have begun challenging a new South Carolina law that requires
computer technicians in the state to report to police any potential
child pornography on anyone’s computer.
The critics say that this law may be unenforceable and an
invasion of privacy, but supporters of the law state that it is merely
an extension of a current South Carolina law whereby film processors are
required to report to police any child pornography found during the
printing of photographs. Organized
Crime Case Raises Computer Privacy Questions A
federal court will rule soon on whether to throw out evidence gathered
by a new controversial law enforcement technology system that records
every key-stroke typed on an individual’s computer, including the
individual’s password. Encrypted
data was taken from the computer of “Little Nicky” Scarfo who has
been awaiting trial on charges of running gambling and loan sharking
operations for the Gambino crime family.
The encrypted information was obtained by the FBI through use of
an Internet wire tap system. Defense lawyers are claiming that this poses a severe threat
to personal privacy and sets a very serious precedent for government’s
monitoring of individuals’ private files. Movies
Showing Up on Internet Even Before Release Two
weeks before its scheduled box office release, copies of the new movie
“American Pie 2” were already circulating on the Internet.
Within hours of its release in theaters, copies of the new movie
“Planet of the Apes” were also available on the Internet.
These pirated copies have created quite a dilemma for movie
studios and also for Internet service providers (ISPs).
Studio executives believe that they are losing a great deal of
revenue and want the ISPs to block the distribution of these illegally
obtained copies of movies. Studios
are putting great pressure on ISPs to terminate the accounts of those
found to be offering pirated movies. Movie studios estimate there are
currently about a million copies of Hollywood movies available online,
and they expect movie piracy to grow exponentially as high speed
connections become more widely available. MSNBC.com
Releases Results of its 2000 Online Cybersex Survey MSNBC.com,
the number one Internet news site, recently released the results of its
2000 online Cybersex survey. The
survey showed that almost one in 10 respondents said that they were
addicted to sex on the Internet. The
survey received more than 38,000 responses from Internet users who spent
on average of three hours online each week in sexual activities.
When broken down by gender, 9.9 percent of men surveyed reported
an addiction to sex on the Internet, compared to 6 percent of women.
Approximately one in four respondents acknowledged that on at
least one occasion their online sexual activities had caused problems in
their everyday lives. Sixty-three
percent of respondents said online sexual activities did not have a
positive effect on off-line relationships. The average age of men taking the survey was 36 and the
average age of women was 32. MSNBC.com
said that the Internet attracts a young population looking for sexuality
online due to its easy access, affordability and anonymity. Annual
Survey Shows Value of Brands According
to a recent annual survey carried out by Interbrand with the help of
Citibank, Coca-Cola is about to lose its status as the world’s most
valuable brand to Microsoft. The
survey points to a watershed event in the history of brands as the most
famous brands of the old economy appear to be making way for those of
the new economy. The survey
estimated that the value of the Coca-Cola name is estimated to have
tumbled by 13 percent to $72.5 billion amid a gloomy analysis of
Coke’s future growth prospects. In contrast the value of new economy brands soared, with
Microsoft’s value jumping 24 percent to $70.2 billion. The
survey showed that after Coca-Cola, technology companies now account for
four of the world’s top five brands: Microsoft, IBM, Intel and Nokia.
The annual survey calculates the value of a brand according to
estimates of its future earnings potential based on the company’s
financial statements and analyst’s reports. Software
Download Patent Gets New Life Recently
the U.S. Court of Appeals for the Federal Circuit handed down a decision
that is a set back for software makers, including Intuit and others.
In a case that began in 1995, a small New Jersey company named
E-Data claimed that it had a patent that covered all downloading of
software over the Internet and that it was entitled to licensing fees
for all such Internet software downloads.
According to one defense attorney, if E-Data prevails in its
view, “they stand to be wealthier than Microsoft.”
The appeals court recently decided that a prior ruling had too
narrowly interpreted the patent. As a result, the case has been sent back to the District
Court for a new hearing. CyberWatch
by the Numbers 92%:
The percentage of Internet users who say they have surfed the Web
to shop for or purchase products, according to a new report from the NPD
Group. 51%:
The percentage of consumers who say they typically shop on the
Web but purchase off-line. 726:
The total of Internet-related mergers and acquisitions that
occurred during the first half of 2001, according to Webmergers. $29
Billion:
The total
dollar amount of these Internet-related mergers and acquisitions during
the first half of 2001. 23%:
The percentage increase by U.S. workers logging on to the
Internet from their jobs for work or non-work related activities,
according to a survey by Nielsen. Nader
Group Files Complaint with FTC over Web Search Engines Commercial
Alert, a three-year old group founded by consumer activist Ralph Nader,
has filed a complaint with the Federal Trade Commission asking for an
investigation of eight of the Internet’s largest search engines. The group alleges violation of federal laws by selling search
result top spots to the highest bidders.
The complaint asserts that many online search engines conceal the
impact that special fees paid by advertisers have on search results by
Internet users. Search
engines have increasingly accepted payments from businesses interested
in receiving a higher ranking in certain categories or ensuring that
their sites are reviewed more frequently.
The complaint alleges that the search engine’s paid listings
are equivalent to television commercials masquerading as independent TV
programming. New
Jersey Court Upholds Anonymity on Internet Bulletin Board In
a recent ruling, the Appellate Division of the New Jersey Superior Court
held that a corporation cannot unmask the identity of an anonymous user
of an Internet message board unless it can prove that it has suffered
“harm” as a result of the user’s posts.
The decision prevented a corporation from discovering the true
name of a “John Doe” defendant.
The court set up a four-step series of guidelines for courts to
follow before forcing Internet service providers to disclose the
identity of anonymous posters. Step
one requires that the plaintiff notify the anonymous posters that they
are the subjects of subpoenas by posting messages on the pertinent
message boards. The
guidelines include a requirement that the plaintiff identify and set
forth the “exact statements purported to constitute actionable
speech” and a review by the court to see if the plaintiff can show a
“prima facie case” against the anonymous defendant based on
evidence. Insurer
Has No Duty to Defend E-Commerce Action In
a recent decision, an Illinois state court judge held that an insurer
has no duty to defend an arbitration proceeding arising from a hardware
store’s use of a domain name on its Web site.
Western State Insurance Company sought a court declaration that
it had no duty under a commercial general liability policy to defend the
hardware store in a domain name proceeding.
The hardware store had argued that the insurer breached its duty
to defend, but the court stated that it could not find that the parties
intended coverage for the relief requested in the arbitration
proceeding. Eli
Lilly Releases Patients’ E-Mail Addresses Drugmaker
Eli Lilly inadvertently divulged the e-mail addresses of many patients
who suffer from depression, bulimia or obsessive-compulsive disorders.
An e-mail message that Eli Lilly routinely sends as a reminder
about taking the company’s Prozac medicine included the e-mail
addresses of all recipients. A
spokesman for Eli Lilly simply stated, “we apologize for this
error.” Internet
Auction Sites Have Banner Month In
May, 2001, Internet auction sites grossed record revenues of $556
million, with eBay.com leading the pack with 64.3 percent of auction
revenues. According to this most recent survey from Nielsen, auction
revenue accounted for more than 10 percent of total consumer e-commerce
spending in May 2001, rising from 8 percent the previous year.
More than $6.2 million Web surfers made online purchases at
auction sites in May, jumping 22 percent from $5.1 million in May 2000.
Additional
CyberWatch by the Numbers More
than 20 Million:
The number of Americans who have purchased airline tickets or
made other travel arrangements over the Internet, according to a new
study from PhoCusWright. $14.5
Billion:
The amount of online sales booked in 2000 by the travel industry. $40
Billion:
The estimated amount that Americans will spend by 2003 on online
travel-related purchases. Credits:
TheRegister.com; SiliconValley.com; Wired News; SiliconValley.com;
NewYorkTimes.com; NewYorkTimes.com; Yahoo.com; FinancialTimes.com;
WallStreetJournal.com; C-netNews.com; Newsbytes.com; Mealey’s
CyberTech Litigation Report; CyberAtlas; Cnet.com.
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