Online Law: the SPA's Legal Guide to Doing Business on the Internet / Edition 1

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The Internet is changing the way people communicate and the way companies dobusiness. At the same time, it is transforming the law. Whether you buy or sellgoods and services online, publish information via the World-Wide Web, exchangemessages via e-mail, electronically distribute digital content, or makepayments online, you will be faced with new legal questions that arechallenging businesses and attorneys alike.

Written for the layperson, but extensively annotated for the experiencedlawyer, Online Law provides clear guidance through the rapidlydeveloping law of electronic commerce. Based on sound legal principles, thiscomprehensive handbook draws on the extensive knowledge of experiencedattorneys at the forefront of today's emerging online legal issues.

Online Law provides answers to the toughest online legal questions,such as:

  • What rules govern advertising online?
  • What are the legal issues involved in setting up a Web site?
  • How do you create and enforce online contracts?
  • How can you use digital signatures to facilitate electronic commerce?
  • Who owns the rights to online information?
  • When can you "borrow" online materials from others?
  • What are the rules for using sexually explicit material on the Net?
  • What constitutes illegal conduct online?
  • Can employers legally read their employees' e-mail?

A collaborative effort, Online Law was written by the attorneysof the Information Technology Law Department at McBride Baker & Coles andsponsored by the Software Publishers Association.

Thomas J. Smedinghoff, J.D., editor and lead author of OnlineLaw, cochairs the Information Technology Law Department of the Chicagolaw firm of McBride Baker & Coles, chairs the Electronic Commerce andInformation Technology Division of the American Bar Association, and serves asintellectual property counsel to the Software Publishers Association. He is theauthor of The Software Publishers Association Legal Guide to Multimedia(Addison-Wesley, 1994).

The Software Publishers Association is the principaltrade association of the PC software industry. With over 1,200 membercompanies, it has been a leading force in fostering electronic commerce andprotecting intellectual property in a digital world.


Here is a complete reference to the law as it applies to the online world. Clearly explaining laws pertaining to copyright infringement, obscenity, privacy, liability, and more, it also offers clear guidance to online vendors and consumers for transacting business on the Net.

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Editorial Reviews

Library Journal
Very much a book on Internet law, this thorough resource provides access to over 500 pages of complex legal material. It offers intriguing chapters on jurisdiction and taxation of online commerce, and the section on a signed writing and the statute of frauds is written from a telecommunications perspective. Annotated endnotes are done in legal citation. The only drawback is the insertion of sometimes confusing cross references. A member (like his contributors) of McBride Baker & Coles, a Chicago law firm, editor Smedinghoff has written extensively on the legal aspects of software. His book is more accessible and readable than Edward A. Cavazos and Gavin Morin's Cyberspace and the Law (MIT, 1994) and is a sure companion for any computer law course. Recommended for all libraries and essential for law libraries.Alan Schroeder, Chapman Univ. Sch. of Law, Huntington Beach, Cal.
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Product Details

  • ISBN-13: 9780201489804
  • Publisher: Addison-Wesley
  • Publication date: 4/19/1996
  • Edition number: 1
  • Pages: 576
  • Product dimensions: 7.28 (w) x 8.96 (h) x 1.10 (d)

Meet the Author

Thomas J. Smedinghoff, J.D., is a partner in the Chicago Law firm of McBride, Baker & Coles, where he co-chairs the firm's Information/Technology Law Department. He is the intellectual property counsel to the Software Publishers Association and vice-chair of the EDI and Information Technology Division of the Section on Science and Technology of the American Bar Association.


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Table of Contents



About the Authors.

1. Online Law … What's New and Different?

What's New: Issues of Online Law.

Applying Old Law to a New Online World.

Categorizing the Issues.


2. From Websites to Online Sales: A Road Map to the Legal Issues.

Communication-Sending and Receiving Messages.

Information Security.

Rights in Information.

Regulation of Content.

Regulation of Conduct.

Electronic Publishing and Distribution.

Rights in Information.

Regulation of Content.

Regulation of Online Conduct.

Online Advertising.

Buying and Selling Goods and Services Online.

Online Contracts.

Electronic Payment.

Information Security.

Regulation of Online Conduct.

Websites: Putting It All Together.

Before You Start: Who Owns the Domain Name?

Building the Website: Rights to Use Content.

Links to and from Other Websites.

Rights in Completed Websites.

Websites as Advertising.

Websites as Publishing.

Relationships with Customers and Users.

Websites as Marketplaces for Buying and Selling.


Regulating Website Activity.

Tackling the Issues.


3. The Legal Role of Information Security.

Legal Requirements for Online Communications.




Writing and Signature.


Problems Introduced by Online Communications.

Satisfying the Legal Requirements.

Real-Time Communications and Open Networks.

The Solution Offered by Information Security.

Defining Security.

Using Information Security to Satisfy Legal Requirements.

Recognition of the Legal Effect of Security.


4. Digital Signatures.

Using Digital Signatures.

What Is a Digital Signature?

How Is an Electronic Communication DigitallySigned?

Verifying a Digital Signature.

Prerequisites for the Use of Digital Signatures.

Certification Authorities.

Function and Role.

Who Can Be a Certification Authority?

Verifying a Certification Authority's Digital Signature.

Protecting the Parties to the Transaction.

Certification Practice Statements.

Certificate Revocation Lists.

Certificate Expiration.

Limits of Liability.

Obligations of the Parties.


Certification Authority.

Relying Party.

The Legal Effect of a Digital Signature.




Writing and Signature Requirements.

Right to Rely.

New Paradigm Shift.

What Digital Signatures Do Not Accomplish and Other Cryptographic Applications.

Encryption for Confidentiality.

Date/Time Stamping.

Steganography: Digital Watermarks.

Endnotes .

5. Electronic Recordkeeping.

The Need for Records.

The Goals of Electronic Recordkeeping.

Record Retention.

Types and Form of Records to Retain.

Retention Periods.

Records Destruction.

Long-Term Records Availability.

Backup Procedures.

Media Integrity.



System Documentation.



6. Creating Contracts Online.

How Can Contracts Be Formed Online?

Contracts Formed via E-Mail, Websites, and Online Services.

Electronic Data Interchange (EDI).

Other Forms of Electronic Contracts.

Online Offers and Acceptances.

Online Offers.

Online Acceptances: E-Mail, Mouseclicks, and Other Methods.

Offers and Acceptances by Computer.

Timing of Acceptances: The Mailbox Rule.

The Requirement of a Signed Writing: The Statute of Frauds.

The Writing Requirement.

The Signature Requirement.

What Are the Terms of the Online Contract?

General Principles.


Shrinkwrap and Webwrap Contracts.



Mistakes in Electronic Communications.

Impostors and Persons without Authority.


Persons Without Authority to Contract.

Whose Law Applies?


7. Online Payment Options.

Introduction to Payment Mechanisms.

Electronic Funds Transfers.

Business-to-Business EFT: Financial EDI.

Consumer-Based EFT.

Online Credit-Card Payment.

Secure Credit-Card Payment.

Registry Credit-Card Payment.

Electronic Checks.

Digital Cash.

The Role of Information Security.



8. Understanding Electronic Property Rights.

What Does It Mean to “Own” Information?

Ownership Is Not Equated with Possession.

Ownership Involves Multiple Legal Rights.

Ownership May Be Split Among Multiple Persons.

Ownership Is Limited in Scope.

Ownership Is Subject to Numerous Exceptions.

An Example.

Impact of Digital Form on Ownership Rights.

Two Perspectives: Owners and Users.


9. Copyrights in Digital Information.

What Is a Copyright?

Applicability of Copyright to Online Communications.

Digital Forms of Information Protected.

Online Conduct Always Implicates Copyright.

Digital Challenges to Copyright Owners.

Digital Challenges to Copyright Users.

Copyright on Global Information Networks.

Information Protected by Copyright.

Acquiring and Perfecting a Copyright.

Automatic Protection.

Requirements to Qualify.

Copyright Notice.

Copyright Registration.

Who Owns the Copyright?

Works Created by Employees.

Works Created by Independent Contractors.


10. Online Rights of Copyright Owners.

Reproduction Right.

Adaptation Right.

Distribution Right.

Public Performance Right.

Public Display Right.

Remedies Available to Copyright Owners.

Civil Remedies.

Criminal Penalties.


11. Online Rights of Copyright Users.

Implied Licenses.


Custom and Usage and Functionality.

Copyright Owner Conduct.

Scope of License.

Fair Use.

The Fair-Use Factors.

Fair Use Online.

De Minimis Copying of Copyrighted Information.

Public Domain.

When Is a Work “Public Domain?”

Risks in Using Public-Domain Information.

First-Sale Doctrine.

Noncopyrightable Aspects of a Work.


Databases of Facts.


Words, Phrases, and Titles.


12. Protecting Trade Secrets Online.

What Is a Trade Secret?

Acquiring and Preserving Trade Secret Rights.

Requirements to Qualify.

Establishing a Confidential Relationship Online.

Provide Notice of Trade Secret Claim.

How Trade Secret Rights Can Be Lost.

Protecting Trade Secrets Communicated Electronically.

Rights of Trade Secret Owners.

Right to Control Access.

Right to Control Use.

Right to Control Disclosure.

Rights of Non-Owners of Trade Secret Information.

Trade Secrets in Other Countries.


13. Trademark Rights.

Trademark Fundamentals.

The Role of Trademarks Online.

Cyberspace: Media and Marketplace.

Use of Trademarks in Cyberspace.

Acquiring Trademark Rights Online.


Selecting a Strong Trademark.

Meeting Use Requirements.

Obtaining Federal Registration.

Foreign Registration.

Proper Trademark Notice.

Enforcing Trademark Rights Online.

Trademark Infringement.

Limitations of Trademark Owners' Rights.

Online Infringement Problems.

Remedies for Trademark Infringement.

Avoiding Trademark Disputes.

Clearing Marks for Use Online.

Consent and Concurrent Use Arrangements.


14. Rights to Domain Names.

Understanding Domain Names.

What Is a Domain Name?

Domain-Name Conflicts.

Acquiring Rights in a Domain Name.

Obtaining a Domain Name.

Protecting a Domain Name as a Trademark.

Preventing Use of a Mark as a Domain Name.

Network Solutions' Dispute Resolution Procedure.

Lanham Act Remedies.

Dilution Claims.

Reverse Domain-Name Hijacking.


15. Role of Patents Online.

Patent Fundamentals.

What Is a Patent?

Types of Patents.

Patent Claims.

Patent Infringement.

Assignment and License.

What Can Be Patented?

Patentable Subject Matter.





The Role of Patents in Electronic Commerce.

Patents That Touch Online Commerce.

Impact on End-Users.

Impact on Developers.

Impact on Software Distributors.

Enforcing Patent Rights Online.

Scope of Patentee's Rights.

Remedies for Patent Infringement.

Limitations on Patent Rights.

Geographic Scope of Patent Monopoly.

Obtaining a Patent.

Qualified Applicant.

Patent Application Process.

Statutory Bar: Loss of Rights.

Obtaining Patents in Foreign Countries.

Ownership of Patent Rights.

Inventions by Contractors.

Inventions by Employees.


16. Right of Publicity.

What Is the Right of Publicity?

First Amendment Exception.

Who Is Protected by the Right of Publicity?

Does the Right of Publicity Continue After Death?


17. Right of Privacy.

The Many Aspects of Privacy.

Privacy of a Person's Persona.

False Light.


Private Facts.


Privacy of Data About a Person.

Privacy Act of 1974.

Financial Information.

Health and Medical Records.

Insurance Records.

Employment Records.

Other Privacy Legislation.

European Privacy Directive.

Privacy of a Person's Online Communications.

Interception of Electronic Communications.

Accessing Stored Electronic Communications.

Anonymity of Communications.


18. Licensing Rights in Information Owned by Others.

Understanding Licensing.

What Is a License?

License versus Sale.

How Does Licensing Relate to Online Commerce?

What Rights Must Be Licensed?

When Is a License Required?

When Is a License Not Required?

Special Issues in Online Licensing.

Obtaining the Rights You Need.

The Right to Sublicense.

The New Media Problem.

Identifying the Proper Owner.

Structuring the License.

Subject Matter.


Scope of Rights Granted.

Restrictions on Use.

Rights of Other Parties.



License Fees and Royalties.


Limitation of Liability.


Right to Assign.



19. The Role of the First Amendment Online.

The Guarantees of the First Amendment.

Regulating Speech-Related Conduct.

Regulating the Content of Speech.

Obscenity and Child Pornography.

Defamatory Speech.

Inciting Lawless Action.

Fighting Words.

Advertising and Other Commercial Speech.

Regulating Speech Based on the Medium: Where Will Online Communications Fit In?


20. Sexually Explicit Materials in a Digital World.



Defining Obscenity.

Possession versus Distribution.

Obscenity in the Online World.

Special Rules for Child Pornography.

Indecent Material.


21. Defamation Online.

Defamation in an Online World.

What Is Defamation?

False and Defamatory Communication.

Of and Concerning the Plaintiff.

Publication to a Third Party.


Injury and Damages.

Who Is Liable?

Defenses to Defamation.

Product Disparagement.


22. Advertising Online.


What Is Advertising?

Regulation of Advertising.

The Regulators.

Federal Trade Commission.

Food and Drug Administration.

Bureau of Alcohol, Tobacco, and Firearms.

Federal Communications Commission.

Department of Transportation.


Principles of Advertising Regulation.

Tell the Truth.

The Whole Truth.

International Consequences.

Intellectual Property Issues.



Publicity and Privacy.



23. Who Has Jurisdiction?

Jurisdiction: The Key to Enforcing Rights.

Territorial Limits of Personal Jurisdiction.

Jurisdiction over Residents.

Jurisdiction over Nonresidents.

Criminal Jurisdiction.

Jurisdiction over International Transactions.


24. Taxation of Online Commerce.


Nexus: The Basis of the Power to Tax Online Transactions.

The Power of a State to Tax.

The Power of a Country to Tax.

Types of Tax.

Sales Tax and Use Tax.

Excise Tax.

Customs Duties and Tariffs.



25. Export Controls and Transnational Data Flow.

Overview of U.S. Export Controls.

What Is Regulated?

Export Licenses.

Commerce Department Commodity Control List.

State Department Munitions Control List.

Export Controls on Encryption Software.

Overview of Transnational Data Flow Laws.

United States Policy.

Privacy and Data Protection in Other Countries.


26. E-Mail in the Workplace.

The Issues.

Employer Monitoring of E-Mail.


Federal Law Governing Employer Monitoring.

State Law Governing Employer Monitoring.

Improper Use of Monitored E-Mail.

Employer Liability for Employee E-Mail.

Discovery Requests: E-Mail as Evidence.

Employer E-Mail Policies.

How E-Mail Policies Protect Employers.

What Every E-Mail Policy Should Contain.


27. Contracts for Making the Online Connection.


Value-Added Network Agreements.

Checklist of Drafting Issues.

Scope of Services.

Customer Operating Environment.

EDI Standard.

Materials Provided by the VAN.

Commencement Date for the Service.

Fees, Charges, and Payment Terms.



Confidentiality and Protection of the Proprietary and Intellectual Property of the Parties.

Security Procedures.

Reliability, Availability, and Capacity of the System.

Force Majeure.



Limitation of Liabilities.

Online Service Agreements.

Checklist of Drafting Issues.

Commencement of the Relationship.

Responsibilities of the Member.

Conduct of the Member Online.

Rights of the Online Service.

Treatment of Copyrighted and Proprietary Materials.

Third-Party Sales and Services.

Limitation of Liability and Disclaimers of Warranty.

Software Licensing.

Internet Access Agreements.

Checklist of Drafting Issues.

Conduct of the User.

Rights of the IAP.

Treatment of Copyrighted Materials.

Limitation of Liability and Disclaimers of Warranty.

Software Licensing.

Service Options.

Availability of the System.


28. Unfair Competition and Deceptive Trade Practices.


Trademark and Trade Name Infringement.

False Advertising and Trade Libel.

Unfair Practices in Connection with Creative Works.

False or Misleading Copyright Notices.

Improper Credit or Attribution.

Misrepresentations About the Currency of a Work.

Unauthorized Modifications or Editing.

Use of Titles and Characters.



False Endorsements.

Confusion Arising from Web Page Links.

Reverse Passing Off.

Trade Dress Infringement.

Anti-Dilution Laws.

Other Practices.


29. Liability for Conduct of Others.

Direct Copyright Infringement.

Secondary Liability for Copyright Infringement.

Contributory Infringement.

Vicarious Liability.

Secondary Liability for Defamation.


30. Criminal Online Conduct.



Prohibited Conduct.

Unauthorized Access/Use.

State Law.

Computer Fraud and Abuse Act.

Electronic Communications Privacy Act.

Alteration or Destruction of Data.

Theft of Computer Services.

Computer Fraud.

Telephone Cases.

Credit Fraud Cases.

Other Schemes.

Index. 0201489805T04062001

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