LEGAL STUDIES GUIDE

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Critical Thinking Questions

  1. If Barnes and Noble was found liable for infringing Amazon.com's copyright on "one-click" ordering, would its shareholders be personally liable?
  2. What three criteria did the U.S. Patent and Trademark Office look for in determining whether Priceline's "name-your-own-price" process could be patented?

Business Law On the Web

Now that the Trademark Cyberpiracy Prevention Act outlaws cybersquatting, many organizations are taking legal action to protect their Internet domain names. Visit the Web page of the Domain Name Handbook Dispute Index (http://www.domainhandbook.com/dd.html) and read about two such disputes.

  1. Who is being sued in each case-and why? What does each lawsuit seek to accomplish?
  2. What was the outcome of each lawsuit? Do you agree? Why or why not?

E-Business Case in Point: Yet2.com

  1. What does Yet2.Com do to avoid the common law tort of palming off?
  2. Why would a company describe a patent on Yet2.Com without posting all the details?

E-Business Case in Point: Napster

When Shawn Fanning was a freshman at Northeastern University in Boston, he wrote a program called Napster, which lets users swap digital music files over the Internet. He posted it on the Web for free downloading-and in just six months, he attracted nine million users. Now lawsuits filed by the Recording Industry of America (RIAA), Dr. Dre, Metallica, and others charge Napster (http://www.napster.com) with encouraging copyright infringement. The Napster suit and an RIAA suit against MP3.com-the company whose software digitizes music (http://www.mp3.com)-are shaping how intellectual property law is applied to the Internet.

MP3 and Napster both say their software provides a legitimate service and they are not liable if consumers use the software inappropriately. However, the U.S. District Court rejected this defense and found MP3 guilty of copyright infringement in the RIAA suit; damages could run to $100 million or higher. Napster also lost a legal round when another U.S. District Court ruled that Napster can be held responsible for copyright infringement because it's not merely a conduit for content. Whatever the outcome, these suits against Napster and MP3 will have a major influence on the future of intellectual property rights on the Internet.

  1. Why would the RIAA and Dr. Dre object to people using Napster software to exchange digital files of their recordings?
  2. What changes might Napster make to avoid copyright infringement when its software is used to download digital music files?

Sources: Spencer E. Ante, "Innovators," Business Week, May 15, 2000, EB 54; Lee Gomes and Martin Peers, "Napster Loses Round in Efforts By Music Industry To Shutter It," Wall Street Journal, May 9, 2000, http://www.wsj.com; Paul A. Greenberg, "Metallica Drummer Hand Delivers Evidence to Napster," E-commerce Times, May 4, 2000, http://www.ecommercetimes.com; J. William Gurley, "Want To Stop Napster? Forget It-It's Too Late," Fortune, May 1, 2000, 326; Paul A. Greenberg and Mary Hillebrand, "Court Finds MP3 Liable in Copyright Suit," E-Commerce Times, April 28, 2000, http://www.ecommercetimes.com.


E-Business and Legal Studies

E-Business Case in Point: Bidder's Edge vs. eBay

Can one Web site create a link to any page on any other Web site–without permission? That's the basic question underlying the legal battle between Bidder's Edge (http://www.biddersedge.com) and eBay (http://www.ebay.com), the largest online auction site. Bidder's Edge uses sophisticated technology to sniff out and link to auction pages for various products being sold on other auction Web sites. This allows buyers to compare numerous offers before bidding. Bidder's Edge had been linking directly to individual auction pages on the eBay site instead of to the firm's home page.

Ebay complained that Bidder's Edge might be showing customers outdated, inaccurate, and incomplete data because pages are constantly updated as auctions progress. After negotiation attempts failed, eBay won an injunction preventing Bidder's Edge from continuing to search its pages, citing computer trespassing. Bidder's Edge countersued, arguing for the free flow of information across the Internet and for consumer access. Bidder's Edge has successfully negotiated to search and list pages from four other online auction sites, but the legal wrangling with eBay remains a major focus for the coming months.

  1. Do you think the legal concept of trespass (in this case, on computer systems) should be applied to Internet activities?
  2. Should any Web site be legally allowed to link to any page of another site? Explain your answer.

Source: "Ebay Wins Round in Court," CNNfn, April 18, 2000, http://cnnfn.com/2000/04/18/technology/ebay/; Daniel Roth, "Meet Ebay's Worset Nightmare," Fortune, June 26, 2000, 199-204.

 

Current events news summaries:

When Toysmart.com went out of business, it wanted to sell its proprietary database of customer information, but attorneys general for 39 states and regulators from the Federal Trade Commission objected. How was this dispute over privacy settled?

http://www.ecommercetimes.com/news/articles2000/000728-2.shtml

The Internet is changing the way lawyers operate and advise their business clients. What do all these changes mean?

http://www.fastcompany.com/online/35/fastfunction.html

Now individuals can sign legally-binding documents with a click of the mouse, thanks to the new electronic-signatures law. How will e-signatures affect e-commerce?

http://www.zdnet.com/zdnn/stories/news/0,4586,2597132,00.html

The Federal Trade Commission requires retailers to notify customers when shipments are late. Toysrus.com (http://www.toysrus.com) and six other etailers recently paid penalties to settle charges related to notification problems from last Christmas. What happened?

http://www.cnnfn.com/2000/07/27/news/settle/

 


E-Business and Legal Studies

E-Business Case in Point: Napster

Napster (http://www.napster.com) is a company based on file-sharing software created by Shawn Fanning, a student at Boston's Northeastern University. Napster's software (currently free) allows users to locate and download music files from other users' computers. This "peer to peer" model connects users with each other rather than giving users access to a central database like the music files available on MP3.com (http://www.mp3.com). Napster says that the free site is legal because users are making private, non-commercial "fair use" of the shared files. But the Recording Industry Association of America (RIAA) and more than a dozen music publishers disagree. They've sued Napster for copyright infringement, saying that the company is encouraging the free exchange of copyrighted music without payment to the copyright holders.

Although a U.S. District Court ordered Napster to shut down, a U.S. appellate court allowed Napster to remain operational while the case moved through the courts. Then, in November 2000, the German music and media giant Bertelsmann cut a deal with Napster to start a fee-based music subscription service. Bertelsmann is lending Napster $50 million to develop the new system, which will receive monthly fees from subscribers and make music files available in exchange, paying royalties to copyright holders for the music that is downloaded. This deal raises hopes that the intellectual property issues surrounding Napster can be settled privately rather than through a court-ordered resolution.

  1. Why would Metallica and other musical groups be concerned about possible copyright violations by an online music-sharing service such as Napster?
  2. How is Napster's deal with Bertelsmann likely to affect the practical outcome of the music industry's court battle against online music-sharing services?

Sources: Jonathan Ringel, "Federal Circuitry," American Lawyer Media, October 2, 2000, http://www.law.com; "Digital Firms Urge Changes in Copyright Law," Reuters, November 29, 2000, http://www.reuters.com; Brad Stone, "The Odd Couple," Newsweek, November 13, 2000, pp. 56-57.

Sources for December, 2000 update: Lori Enos and Elizabeth Blakey, "Toysmart Will Not Sell Customer Names... For Now," E-Commerce Times, July 28, 2000, http://www.ecommercetimes.com/news/articles2000/000728-2.shtml; Keith Regan and Clare Saliba, "Privacy Watchdogs Blast Amazon," E-Commerce Times, September 14, 2000, http://www.ecommercetimes.com/news/articles2000/000914-3.shtml; "Amazon May Share Data," CNNfn.com, September 1, 2000, http://cnnfn.com/2000/09/01/technology/wires/amazon_wg/;

Current events news summaries:

MP3.com has lost a series of legal battles with music publishers over copyright violations. The company recently agreed on the amount of damages it will pay to settle the last of the court decisions. How much will MP3.com have to pay Universal?
http://cnnfn.com/2000/11/14/bizbuzz/mp3/

Music publishers and film companies protect their digitized works using access codes. Now the U.S. Library of Congress says that only two types of electronic works are exempt from the laws forbidding the cracking of these access codes. Which two are exempt?
http://www.cnn.com/2000/TECH/computing/11/01/digital.copyright.idg/

The European Union recently passed a law allowing consumers to file suit in their home countries and use local laws for redress against online shopping abuses. What does this mean for international e-commerce?
http://www.EcommerceTimes.com/perl/story/5635.html



 


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