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cyberlaw informer #47

Welcome to the 47th issue of the weekly Mishpat Cyberlaw Informer - 

Law on the net newsletter from

This newsletter is sent only to subscribers. If you no longer 

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In this issue:

1. Introduction

2. No surprise - Microsoft broke the law

3. More on Amazon's patents

4. Cyber Patrol hack - the end?

5. Cyberlaw resource of the week

6. Computer & Internet law news and updates



1. Introduction


I would like to welcome the many new subscribers who joined the

Cyberlaw Informer this week. 

This week's newsletter focuses on three recent cyberlaw news events:

The Microsoft "findings of law"; Developments in the Cyber Patrol

case, in which Mattel sued two programs who wrote a program that

exposes Cyber Patrol's filtering list; and some more comments on the

Amazon patents discussed in the previous issue. 

As usual you will find the cyberlaw news and the weekly resource at

the end of this newsletter. 

I hope you enjoy reading the newsletter. Comments, tips, and articles

are always welcome. Send them to

The Mishpat Cyberlaw Informer Archive (issues 1-45) is located at:

Feel free to use any of the material, or forward the newsletter to a

friend. Just don't forget to mention that they can subscribe to the

Cyberlaw Informer by visiting

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2. No surprise - Microsoft broke the law


As I assume most of you have already heard, U.S. District Judge Thomas

Penfield Jackson ruled that Microsoft repeatedly violated U.S.

antitrust laws. Judge Jackson said in his decision that by using

"technological shackles" to keep rival products from effectively

competing with its Internet Explorer browser, Microsoft ran afoul of

the Sherman Act's (U.S. antitrust act) restrictions on

anti-competitive conduct. In Judge Jackson's words:

"Microsoft's anticompetitive actions trammeled the competitive process

through which the computer software industry generally stimulates

innovation and conduces to the optimum benefit of consumers."

The ruling came as no surprise for those following the trial over the

past two years. Personally I think that considering Judge Jackson's

finding of fact issued last November, any other ruling would have been

a tremendous surprise. 

Since the findings of fact made it clear that Microsoft violated the

law, the important ruling isn't this week's decision, but the decision

about the remedy that is expected within a few months. Judge Jackson's

denunciation of Microsoft's conduct indicates a potentially severe

punishment which could range from restrictions on contracts Microsoft

signs to a breakup of the world's largest software company.

Judge Jackson set May 24 to hear oral arguments regarding the remedies

portion of the case. The government has been scheduled to file its

proposed remedies to Jackson between April 25 and 28, and Microsoft

has been scheduled to file its response to those proposals, including

possible counterproposals, by May 10. Then the government has until

May 17 to offer its answer to Microsoft's response. 

The full text of Judge Jackson's ruling can be found at:

Judge Jackson's ruling came after a statement by Judge Richard Posner,

the mediator appointed by Judge Jackson, on the breakdown of the

Microsoft talks. According to Judge Posner:

" . I have endeavored to find common ground that might enable the

parties to settle their differences without further litigation.

Unfortunately, the quest has proved fruitless. . This result is

disappointing not only because of the amount of time that so many busy

professionals, officials, and executives have devoted to the

mediation, but also because the public interest would be served by

avoiding further litigation, with its potential for unsettling a key

industry in the global economy. I believed when I undertook this

assignment that it was in the national interest that the case be

settled, and I believe it even more strongly today." 

Since mediation is a confidential process, Judge Posner did not make

any comments on the merits of the litigation, the negotiating

positions of the parties, the individuals involved in the

negotiations, or the content of any of the communications between the

parties' mediation teams.

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3. More on Amazon's Patents 


Following the article I wrote in the previous issue of the Cyberlaw

Informer regarding the recent patents, I received some

interesting comments from Mr. James Wesnor from the Southern Research

Institute. While James and I disagree on many issues, I think our

correspondence includes some important arguments regarding the debate

about the online patents.

Following is a summary of 3 emails. These messages do not include any

final conclusions, just our thought about patents. I hope this summary

will help you develop your own opinions regarding this subject, and

maybe generate some further discussion.

Please send any comments, thought or ideas to

James Wrote:


First off, let me say that I am quite biased in favor of the present

patent system. I have several patents world-wide, which generate a

nice income from their assignment and royalties. My patents are not

for what lay people would consider "novel" inventions. The patents are

"process patents" and are "an improvement" of a previously existing

invention, and in these ways, I think, are similar to the


As I read your comments, I got the impression that you did not view

the patents as "valid" because they were, as most people

know, a use of an existing technology - the HTTP cookie developed by

Netscape in 1994. I do not know whether Netscape patented the cookie,

but it is a non-relevant point. A novel use of an existing invention

is, most certainly, patentable.


I don't agree with the comment that's competitors must be

forced to use less-efficient programming techniques. The present

patent law does not prevent's competitors from developing

more-efficient techniques; in fact they could be rewarded with a

patent, just as was. Whether they have the talent or

ability, or are willing to invest in their systems and processes to

that extent, is another matter. In my case, the technology application

was overlooked by the original technology developer; but because we

were diligent and did the development work, we discovered the


But in my opinion there cannot be a supportable argument for "leveling

the playing field" by a forced redistribution of technology from any

patent holder, including, to their competitors. Without the

protection available from the patent system, it's chilling to think

that a market advantage could be devalued with a simple "cut & paste".

My reply


I want to start my reply by stating that I do not oppose the patent

system as it is in most of the world. I understand the importance of

patents as catalysts of innovation and economic/ scientific progress.

Furthermore, I agree with you (and never claimed otherwise) that

improvements of "prior art" are patentable, even in situations were

lay people might not consider them "novel". I believe that in these

cases the standard applied should take into account the knowledge

prior to the improvement, and not the knowledge after the improvement

has been introduced (it always looks simple in retrospect).

My comments were aimed at a patent protection that as far as I know

exists only in the US, that is patenting business models. I believe

that the one click patent is a business model patent, not a software


The 'one click' patent is not a patent over a software system.

Basically 1-Click uses Netscape cookies (prior art developed by

Netscape in 1994) in connection with any database server. The web site

reads personal info from the cookie and then uses that information to

retrieve all the necessary data from the database (theoretically all

data could be stored in the cookie but that creates security


Reading the claims of the one click patent (located at ) it

becomes clear that they cover any system that enables "one action"

ordering (for example claim #4 covers one-action voice ordering). This

is of course not a software system (there are numerous ways of

implementing such a system, using different programming languages,

various actions (voice command, mouse click, touch screen), different

database servers (SQL servers or flat text files) and different data

fields (shipping address/ billing address etc.). The fact that this is

a business model and not a software patent is also obvious when

looking at the attached drawings, which are very simple (and even

primitive) flow charts, that do not really describe how one click

ordering is implemented.

This leads me to the main issue, which is why business model patents

are socially harmful. Patents (and copyrights) give incentives for

research and development. Granting a patent for one action ordering

stops these activities, since even systems that have not yet been

developed (such as voice activated ordering) are protected under such


This is the reason I claimed that competitors are forced to use

non-efficient solutions. Barnes and Noble were forced to add a second

conformation click. B&N needed to change the model, not any technical


If Amazon can patent one click, what would have stopped Yahoo! From

patenting web directories back in 1994, or eBay from patenting online 

auctions. What would personal web pages look like if the first

programmer to add a simple guestbook would have patented the concept

of virtual guestbooks? Should we agree that only one company should

offer electronic greeting cards? Can a business model prevent the

first free ISP (a business model based on forced advertising) prevent

other ISPs from adopting that model?

If business models are patentable, why didn't Amazon simply patent the

model of "selling books online". Unlike 1Click, it is clear that

Amazon was the innovator. It would have saved all the current

litigation against B&N...

Basically, I think that while patents help advance economics by

granting limited monopolies, business model patent go too far because

they grant total market monopoly. I think why this is the reason most

countries do not recognize such patents.

James' response


I guess that my biggest concern is that at some point we have to

decide "how does one distinguish a business model" and "how does one

differentiate between a business model and process, specifically

software, for a business that is heavily dependent on technology or


I think as far as business model patents we agree, that they should

not be patentable. But I disagree that's patent is solely a

business model patent; like you point out, if wanted to

patent their business model, they would have patented their method for

"online book selling".'s 1Click patent does pass the "duck"

test for a business model, but it also passes the "duck" test for a

technology process patent.'s business model is highly

integrated with the technology process, and it is very difficult to

parse the two.

I reviewed the flowchart, and recall that back in my early programming

classes it was generally taught that it is best to develop a flowchart

before writing code. The flowcharts are generally task-oriented, i.e.

do this and then do that, and are very similar to business flowcharts,

also task-oriented.

Although the patent does not cover a specific software technology, the

process is applicable to any software; that is to say one would use

the same task sequence for different software technologies or

programming languages.

A parallel example would be in a process patent for a chemical plant,

say for argument aspirin production. The patent would be written

something like "Reactants A and B are transferred to a Tank C, where

they react under conditions D to produce aspirin". Would the patent be

circumvented if a centrifugal pump were used to transfer the reactants

instead of a positive displacement pump, with this change not

affecting the product? I don't know of a case where this has been

held. The use of either pump to transfer a material, as well as the

use of a reaction vessel and probably other items in the patent, is

"prior art". 

Quite honestly, I would have been surprised if the 1Click patent were

to limit itself to a particular software or media. The extension to

voice is quite foreseeable. I don't know about in Israel, but in the

US, we have had voice-activated dialing and data entry for the

telephone for several years; we often get prompts such as "Say '1' if

you want to speak to sales', etc. One would simply use the caller-ID

code as the cookie, and the entire ordering process could be

transferred to a telephone-based "1Click" ordering system. 

(Also In my experience, if a patent attorney were to write the example

with a particular type pump specifically stated, he would enjoy a very

short career!)

As for the far-reaching nature of any patent description, this is

nothing new. It is intentional that most patents are written extremely

board, either to enable protection of the foreseeable advances that

would follow from the original work or to prevent specific disclosure

of actual details. Patents for mechanical inventions are noted for the

former, where an application of a machine might be made for all solid

materials, although it is a safe bet that some materials that are not

now in existence will exist at a future time; carbon fiber did not

exist 50 years ago, but it would be foolish to say that any patent for

a milling machine would not apply to carbon fiber if that machine

could be used without modification. For an example of the latter,

review any chemical or biotech patent and you will see language

similar to "reaction takes place at a temperature between 400-600

degrees C at a pressure in excess of 20 atms".

If you want to add some more comments on this issue, send them to


4. Cyber Patrol hack - the end?


Eddy Jansson and Matthew Skala, the two programmers sued by Cyber

Patrol maker, Mattel's subsidiary Microsystems Software Inc., have

settled with the filtering firm. The Swedish and Canadian programmers

agreed to grant Microsystems the rights to their software called

'cphack', which allows users to bypass Cyber Patrol filters, and

reveal the list of blocked sites.

However, Mattel's claim of victory was premature. Cphack's authors

originally released it under the GNU General Public License (GPL),

which permits unlimited distribution of the original cphack program,

even if Mattel now owns the copyright. The GPL is at the heart of the

"open source" software movement. When a software developer distributed

software subject to the GPL, he is authorizing others to use, modify

and redistribute the software, on condition that the modified form of

the software remain "open" and itself subject to the GPL.

The terms of the GPL license, include the following section:

"You are allowed to mirror this document and the related files

anywhere you see fit." 

There is no suggestion that this permission is revocable, and it

probably cannot be revoked against anyone who has already mirrored the

program and its related files. The grant of the permission is

contained in all the mirrored copies of the program, so they in turn

seem to be freely mirrorable by the terms of the license.

Matthew Skala issued a statement in which he said: "I settled because

I have made my point and don't need the headaches. I don't think it's

appropriate to characterize this as Microsystems "winning". The

document is out there, I know the mirror sites aren't going to take it

down without a fight (even with my copyright assignment), and . the

companies' public relations nightmares have only just begun."

U.S. District Judge Edward Harrington's released an order that says

anyone who is mirroring cphack must take down from their sites. 

Lawyers with the American Civil Liberties Union (ACLU) in Boston

appealed the order that barred three web site operators from posting

cphack code online. An ACLU attorney said Judge Harrington did not

have authority to issue his order in the first place, because the act

of copyright infringement occurred in different countries. What's

more, her clients did nothing unlawful, and cphack is protected free


Needless to say, cphack is available at dozens of other mirror sites,

not mentioned in Judge Harrington's order.

You can get cphack, and read more about it at: ,

You can get a copy of the GPL here:

Judge Harrington's order is at:

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5. Resource of the week


This week's resource is Legal Laughs at

Legal laughs, created by Corey Deitz, is dedicated to legal humor and

assisting law students. The sites, first sentence reads "Stop Animal

Experiments - Use Lawyers", and the main page includes links to lawyer

jokes available online.

In my opinion the best part of the site is "Diary of a Law School

Student" at Written by Deitz (currently a

first year law student) the diary is a humorous summary of Deitz's law

school experiences.

If you would like to recommend an Internet legal resource, please send

the details to Full credit is given to


You can also recommend resources at the online bulletin board


6. Cyberlaw news and updates


Each week Mishpat Cyberlaw Informer brings you the latest news about

online and computer law, with links to the full reports available

on the web.

Top news


* British ISP settles libel case * 

Demon, a UK Internet service provider, has settled a libel case

brought against it by Laurence Godfrey. Demon will pay Godfrey 15,000

Pounds plus his legal expenses. In the first case of its kind to go

before the English courts, Godfrey alleged that Demon failed to remove

defamatory material from a newsgroup it hosted. The case will affect

other ISPs - all of which host newsgroups - who fear they could become

liable for offensive material which millions of their users might


Under English law ISPs are not held to have been the publishers of

defamatory material providing they satisfy two criteria. They must

prove they took reasonable care to ensure such material was not

published, and once alerted to a problem, took steps to resolve it.

* Web archiving - not libel publishing *

Judge Francis T. Collins, a New York Judge, ruled that the continuing

publication rule cannot be employed in Internet-related defamation

actions to skirt the one-year statute of limitations that applies to

libel suits. The plaintiff alleged that the State's maintenance of an

allegedly defamatory report on its web site constituted continuous

publication, thereby triggering a virtually perpetual statute of

limitations. Judge Collins rejected that argument and held that the

act of making a document available via the Internet is no more

constitutes continuous publication than making a document available at

a library.

* Welsh hackers, who posted Bill Gates' credit number, arrested *

Two 18-year-old computer crackers who stole thousands of credit-card

numbers from e-commerce sites, including Bill Gates' card number, and

posted them online, were arrested in Wales. The men allegedly broke

into nine e-commerce sites, stole more than 26,000 credit-card numbers

and posted many of them on a Web site paid for with a stolen card.

* Online scammers targeted *

Law enforcement officials from 28 countries have conducted a massive

sweep of the Internet searching for "get-rich-quick" schemes and

scams, the U.S. Federal Trade Commission (FTC) announced. More than

1,600 sites were uncovered in the "Get-Rich-Quick.con" program, one of

several "surfs" the agency conducted looking for problems and crimes

on the Net. The sites are sent e-mail warnings, and documentation of

the sites is provided to law enforcement agencies in the various

jurisdictions, which will be able to further investigate and press

charges, if necessary.

I want to thank Cyberlaw Informer reader Boaz Guttman for sending this


Intellectual Property


* Apple wins 'OS 9' trademark lawsuit *

The U.S. District Court for the Southern District of Iowa has

dismissed Microware Systems Corporation's lawsuit seeking to enjoin

Apple from using the name "Mac OS 9" for its current operating system

release. The court held that Apple's use is "fair use". Microware,

which owns the trademark "OS-9", announced it would appeal the ruling.,7407,2504385,00.html

* Mitnick movie brings copyright lawsuit * 

A film by Disney and Miramax Productions about the world's most famous

hacker, Kevin Mitnick, has sparked a copyright lawsuit from Jonathan

Littman, author of 'The Fugitive Game' who claims the movie studios

lifted parts of his book on the same topic. The film is said to be

based on another book entitled 'Takedown: The Pursuit and Capture of

Kevin Mitnick, America's Most Wanted Computer Outlaw-By the Man Who

Did It'.,1367,35327,00.html

* Chinese online copyright suit settled *

MyWeb settled a lawsuit brought against it in China by the

IFPI, a trade organization representing 1,400 record producers and

distributors in 76 countries. Although MyWeb is headquartered in San

Francisco, the IFPI lawsuit was filed in the People's Court of

Beijing, claiming MyWeb created pages on its China-based portal that

enabled Internet users to download the sound recordings of IFPI

members in MP3 format. MyWeb agreed to pay court costs, apologizes to

the plaintiffs, and remove hyperlinks that took surfers to

unauthorized MP3 files.

* sued by music publisher * 

A lawsuit filed against by music publisher Harry Fox alleges

that is illegally distributing copyrighted music through its

new Mymp3 service. The service offers customers instant access to

digital copies of CDs they bought through partners. A similar

suit was filed a few weeks ago by the RIAA.,1367,35107,00.html

* Yahoo sued by video game companies * 

Three leading video game companies have sued Yahoo over the alleged

sale of illegal goods on its auction and stores site. Nintendo,

Electronic Arts and Sega charge that Yahoo! permitted its users to

sell illicit copies of video games and illegal devices used to copy

video games..

* MP3 trademark registration * 

The German company filed an objection to Hypermedia's

registration of 'MP3' as a trademark in the European Union, on the

last possible day such objections could be filed.

* Broadcaster sue RIAA *

The U.S. National Association of Broadcasters sued to prevent the

Recording Industry Association of America (RIAA) from charging special

royalties from radio stations that stream their signals online. The

broadcasters claim that sending over-the-air radio signals to the Web

is no violation of "digital performance" rights under a 1998 copyright

law. Over-the-air radio stations pay an annual fee to music publishers

through Broadcast Music Inc. (BMI) and the American Society of

Composers, Authors and Publishers (ASCAP). The stations argue they

should not have to pay a second fee, simply because their signals are

also delivered on the Internet.,1367,35257,00.html

* Online realtor sued over copyrighted listings *

The Austin Board of Realtors is suing one of its own members, claiming

that is violating copyright laws by allowing customers

full access to property listings meant only for registered real estate


* Qualcomm and Motorola settle patent disputes *

Telecommunications giants Qualcomm and Motorola said they agreed to

dismiss all claims and counterclaims in a series of patent

infringement lawsuits between the companies that began in March 1997.

No payments are being made in consideration for the dismissals.

* Chip maker sues Sharp and Texas Instrument *

Chip developer Tessera Inc. sued Texas Instruments and Sharp

Corporation, charging that the companies imported and sold products

using patented packaging technology without a license.,1367,35246,00.html

* Micron settles with Mosel *

Mosel Vitelic Corp. and Micron Technology settled a patent dispute a

few days before trial. Terms of the settlement were not revealed. At

issue were 10 patents related to computer memory circuits and

semiconductor manufacturing processes, with half of the patents

belonging to Mosel and the other half to Micron.,1367,35225,00.html

Domain names


* ICANN calls for Top-Level domains comments *

The International Corporation for Assigned Names and Numbers (ICANN)

is working toward formulating recommendations regarding the

introduction of new top-level domains (gTLDs) in addition to .com,

.net, .org, .edu, .int, .mil, and .gov. ICANN invites the Internet

community to comment on the proposals. 


* Cybersquatter changes name to hold on to domain name *

Doc Seagle changed his name to Oxford University as part of a battle

to hold on to the domain name In 1997, Seagle

registered the Oxford University domain name along with several

hundred other names. Seagle officially changed his name, in order to

get the right for using the name. Mr. University said despite the

court battles he didn't plan on changing his name every week to

protect his other domains.

* Trademarking e words *

LightSurf is filing a lawsuit against Belgian imaging giant

Agfa-Gevaert Group for trademarking the term e-photo. Agfa sued

LightSurf a few weeks ago to get the startup company to stop using the

term e-photo in documentation for its wireless Internet digital

photography technology. Agfa also wants LightSurf to stop using the

domain Lightsurf claims that 'e' words like e-commerce and

e-ticket should not be trademarkable.,4586,2475472,00.html

* Cosmopolitan wins domain dispute *

Jaei England was told to pay 4,000 Pounds to Cosmopolitan after he

sent a letter to the magazine's editor demanding cash for the domain

name England threatened to sell the domain to

"adult entertainment purposes" if Cosmopolitan failed to pay. He was

also ordered to turn the domain over to the publisher.

* NSI sued over whois domain name *

Domain registrant Russ Smith filed a lawsuit against the Net's biggest

domain registrar Network Solutions Inc. (NSI), alleging that NSI

unfairly registered a domain name based on the name of Smith's domain

lookup service. Smith runs his service under the name wwwhois and

offers domain name information and accesses the central domain name

database called the "Whois" database. Smith owns and NSI registered Smith claims NSI only

registered the domain name in 1998 when it discovered the existence of

Smith's company.,1283,35086,00.html

Cyber crime


* Cost of cyber attacks $266 million in 1999 *

According to a new report released by the Computer Security Institute

(CSI) and the San Francisco FBI Computer Intrusion Squad, cyber

attacks cost U.S. organizations $266 million last year. While media

reports often focus on outside computer crackers, 81% of respondents

were worried about disgruntled employees.,1151,13216,00.html

* Brazilian police arrest hacking group leader *

A leader of, one of the most famous group of hackers in

Brazil, was arrested at his house and his two PCs and other equipment

was confiscated. Microsoft helped the police by breaking the Hotmail

account used by the group. The suspect is a 22 year-old security

analyst for a company in Brazil.

* Canadian police investigate online porn scam * 

The Toronto Police is investigating an online operation that

reportedly bilked more than 100 investors out of $12,000 each with

phony promises of profits from a porn site. Investors were allegedly

guaranteed $1,000 in weekly earnings from members who would pay to

look at pornographic pictures.

* Hacker MostHateD to plead guilty *

Patrick W. Gregory, 19, known online as MostHateD, was supposed to

make a trip to Dallas and plead guilty to computer cracking and

teleconference fraud for his role as a founding member of a hacking

ring called globalHell. GlobalHell is said to have caused at least

$1.5 million in damages to various U.S. corporations and government

entities, including the White House and the U.S. Army. The arraignment

had to be postponed, because Gregory was jailed for burglarizing a

house and stealing a car.,4586,2487596,00.html

* Former Intel engineer charged with stealing secrets *

U.S. Federal prosecutors charged a former Intel engineer with stealing

documents and computer files related to Itanium, a new microprocessor

expected to be released this summer.

* Korea fights Internet gambling *

The Korean Ministry of Information and Communication announced new

initiatives to curb online gambling, including blocking access to

cyber casinos and criminal charges for operators and online bettors.

10 sites operated by foreign companies have been found to offer

services in the Korean language, and will now be blocked.

* British top-secret laptop stolen *

British police is looking for a thief who stole a secret service

computer containing confidential information on Northern Ireland. The

laptop computer was snatched while an employee of the MI5, was buying

a ticket at London's Paddington train station.,1367,35185,00.html

Privacy and Consumer protection


* Australia issues new workplace privacy guidelines *

Under new guidelines issued by the Australian Federal Government, the

privacy of workers who send personal emails or browse the Internet on

office computers will now be protected. The Guidelines on Workplace

E-mail, Web Browsing and Privacy, produced by the Privacy

Commissioner, aim to protect workers' rights while acknowledging many

employers monitor activities carried out on company equipment for

business or security reasons. The new guidelines stressed the need for

organizations to devise clear email and Web browsing policies and make

sure their employees were informed of them. Workplace policies needed

to spell out what activities were permitted and state what information

was logged.

* FTC probes Yahoo!'s privacy practices *

The U.S. Federal Trade Commission (FTC) is conducting an inquiry into

some of Yahoo!'s consumer information practices to determine whether

the company complies with consumer protection laws.

* TRUSTe warns *

TRUSTe, the net privacy program, scolds former licensee for displaying the TRUSTe seal even though its

license expired in January. The seal is meant to provide consumers

with a baseline of privacy assurances.,1151,13238,00.html

* TWA customers' e-mail addresses exposed *

Trans World Airlines Inc. (TWA) mistakenly exposed 80% of the email

addresses of subscribers to its email services. A spokesman said a

glitch involving new software caused the problem.

* Online insurance site exposed personal data *

SelectQuote Insurance Services, an Internet life insurance quotation

service, exposed the medical histories and other personal data of 20

applicants after a minor change to the site created a computer bug.

* 'Law And Order' star's data auctioned online *

Jerry Orbach, who plays in the hit police TV show "Law and Order"

found out that someone had disclosed his Social Security number

online, and that it was about to become part of an eBay auction

package, available to the highest bidder. Contracts signed by the

actor in 1958 contain Orbach's social security number and one of the

digital images of the contract shown on the eBay Web site to promote

interest in the sale, contained Orbach's social security number.

EBay's spokesperson said that as soon as the auction site became aware

of the problem it took down the offending offer.

* U.S. fight Thai online pharmacies *

Thai and U.S. authorities are pursuing legal action against operators

of three Internet pharmacies operating from Thailand, who were

arrested for illegally exporting prescription drugs to the U.S. This

is the first time the U.S. government has had a hand in closing sites

in another country selling prescription drugs for export.

* Doctor fined for prescribing Viagra online *

A doctor in Oregon was got a $5000 fine and was placed on probation

for 10 years by the state medical board for prescribing Viagra and

other drugs over the Internet to patients he never examined.



* AOL immune from incorrect stock posting *

The 10th U.S. Circuit Court of Appeals ruled that America Online

(AOL) acted solely as a service provider when it gave access to

inaccurate information regarding a company and its stock, and is

therefore immune from suit under the Communications Decency Privacy

Act (CDA). AOL publishes continuously updated stock quotation

information concerning more than 40,000 publicly traded stocks and

securities. Two independent third parties provide this information to

AOL. The original sources for this information are major national and

international stock exchanges and stock markets.

The plaintiff, Ben Ezra, Weinstein & Co., alleged that AOL published

incorrect information concerning the plaintiff's stock price and share


Section 230 of the CDA states that, "No provider ... of an interactive

computer service shall be treated as the publisher or speaker of any

information provided by another information content provider." The

Court agreed with AOL that while AOL did communicate with the

third-party content providers each time errors in the stock

information came to its attention, AOL is a service provider, not a

publisher or a content provider and is therefor immune under the CDA.

* Online stock manipulation *

Day trader Fred Moldofsky, 43, a was arrested on charges that he

violated U.S. federal securities laws by posting a fake press release

on the Internet that caused the stock Lucent Technologies to fall,

slicing $7.1 billion off its market value.

* Australian court find web adviser in contempt *

Justice William Windeyer in the New South Wales (Australia) Supreme

Court found Stephen Matthews, who posted investment reports on the

Internet, breached court orders stopping him from posting securities

reports on his investment advice website. In February last year the

Australian Securities and Investments Commission (ASIC) took Matthews

to court alleging he was in breach of the Corporations Law by

providing investment advice without a license.

* SEC charges eConnect with fraud *

The U.S. Securities and Exchange Commission (SEC) filed fraud charges

against eConnect and its president, for allegedly issuing false

statements about the company's business opportunities, thereby causing

a dramatic rise in the price of eConnect's stock from $1.39 on Feb. 28

to a high of $21.88 on March 9.

* Five class-action suits against MicroStrategy *

At least five law firms filed class-action suits against

MicroStrategy, charging the company with issuing "materially false and

misleading financial statements that materially overstated the

Company's revenue, earnings and income". MicroStrategy announced that

it is revising its 1998 and 1999 revenue statements to reflect changes

in how it counts income from complex contracts.,1151,13139,00.html

* Online grocer sued by shareholder *

Internet grocer Peapod Inc. is being sued by shareholders. Two New

York law firms filed a class-action complaint on behalf of shareholder

Lila Gold, charging Peapod and its top executives with misrepresenting

its cash funding needs. The lawsuit claims the company artificially

inflated the stock price by a statement that it had sufficient funds

to operate into the third quarter of 2000.

Online Jurisdiction


* Passive site doesn't provide jurisdiction * 

Following many precedents on this issue, A Texas court ruled that a

non-interactive site, which provided information about a company's

products and included an e-mail hyperlink, was insufficient in itself

to establish jurisdiction over a non-resident defendant in a patent

infringement suit.

* Jurisdiction asserted in NFL case *

Judge John S. Martin Jr. ruled that a suit brought by the National

Football League (NFL) against a man who runs a site called can be litigated in New York, even though the site's

alleged trademark and copyright infringements occurred in California.

Judge Martin asserted jurisdiction based on the fact that the operator earned substantial income from interstate

commerce, including selling advertising on the site in a way that

could damage the NFL and its marketing efforts in New York.

Misc. cyberlaw news


* Justice Department investigates White House email *

The U.S. Justice Department began a criminal investigation into the

disappearance of thousands of White House email messages that had been

subpoenaed in campaign-finance investigations. Investigators want to

know why the White House computer system failed to capture thousands

of emails to top White House personnel, and whether the effort was


* Palestinians get country top level domain *

Palestinians have not yet got an independent country, but they do have

online country status. The Internet Corporation for Assigned Names and

Numbers (ICANN), which regulates Internet addresses, granted the

Palestinian National Authority its own two-letter suffix for online

domain names. As with other country codes, such as .uk for the United

Kingdom, the Palestinian Authority will be able to register addresses

under its own domain .ps.

* Europe continues Microsoft antitrust probe *

The European Commission extended its antitrust probe into plans by

Microsoft to buy MediaOne's 29.7 percent stake in British cable

company Telewest Communications. Under EU regulations, the commission

has four months to decide whether to clear the deal.,1283,35116,00.html

* Microsoft executive in the Philippines accused of death threats * 

Darren Lockie, Microsoft's British 'Philippine country manager' is

facing charges of threatening the life of an executive of software

rival Lotus Development, Victor Silvino. Silvino claims Lockie

threatened to kill him and his mother when the two executives bumped

into each other in the lobby of a hotel. Lockie said it was Silvino

who threatened to kill him.

* Are Internet dial-up calls local calls? *

The U.S. Circuit Court of Appeals for the District of Columbia ruled

that regulations adopted last year by the Federal Communications

Commission (FCC) were inadequately supported. The FCC concluded that

dial-up calls to the Internet are not local, because a consumer may

access a web site based anywhere in the world, and therefore phone

companies are not required to follow the local pay scheme set out by


The court acknowledged that calls that connect consumers to the

Internet without geographic boundaries don't fit clearly into either

the local or long-distance category, but the FCC did not explain

adequately why the call doesn't stop once a caller reaches his or her

Internet provider.

* Kellstrom wants Anonymous critics identity from Yahoo! *

Anonymous postings critical of Kellstrom Industries Inc. on an online

investor forum hosted by Yahoo! prompted Kellstrom to sue Yahoo!.

Kellstrom, which is in the aircraft and engine sales and leasing

business, demanded that Yahoo! reveal the identities of two

individuals who left defamatory statements on the message board.

* EU to probe online auto site *

The European Commission is expected to review plans by General Motors,

Ford Motor, and Daimler-Chrysler AG to set up a common online

procurement network. The three major U.S. auto makers announced last

month they planned to funnel their combined $240 billion in annual

spending on supplies through a single Internet portal, creating the

world's largest virtual market.,1283,35263,00.html

* Phony listings stop promotion *, an auction operations management firm, stopped a promotion

that paid sellers $5 for each item they put up for auction, after

several sellers began posting as many as 10,000 phony listings,

including questionable items such as "a piece of fudge".

That is all for this week,

Yedidya (Didi) M. Melchior 



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