cyberlaw informer #66

The recent ruling in Napster's appeal against an injunction that threatened to shut Napster down drew international attention to cyber-copyrights. In the following article I have summarized the main sections of the ruling by the U.S. 9^th Circuit Court of Appeals, delivered by Judge Beezer.

This article focuses on the legal standards adopted by the court, standards that will probably influence the outcome of other pending disputes involving copyrights in cyberspace.

This article does not follow the ruling's impact on Napster itself, rather it analyzes the impact on other online services. You can find updated news about the Napster developments in the cyberlaw news section below.

Napster

=========

In 1987, the Moving Picture Experts Group set a standard file format for the storage of audio recordings in a digital format called MPEG-3, abbreviated as MP3. Ripping software allows a computer owner to copy an audio compact disk directly onto a computer's hard drive by compressing the audio information on the CD into the MP3 format. The MP3's compressed format allows for rapid transmission of digital audio files from one computer to another by electronic mail or any other file transfer protocol.

Napster facilitates the transmission of MP3 files between and among its users. Through a process commonly called "peer-to-peer" (P2P) file sharing, Napster allows its users to:

(1) make MP3 music files stored on individual computer hard drives available for copying by other Napster users;

(2) search for MP3 music files stored on other users' computers; and

(3) transfer exact copies of the contents of other users' MP3 files from one computer to another via the Internet.

These functions are made possible by Napster's MusicShare software, available free of charge from Napster's web site, and Napster's network servers and server-side software. Napster provides technical support for the indexing and searching of MP3 files, as well as for its other functions, including a "chat room," where users can meet to discuss music, and a directory where participating artists can provide information about their music.

In order to copy MP3 files through the Napster system, a user must first access Napster's Internet site and download the MusicShare software to his computer. Once the software is installed, the user can access the Napster system. A first-time user is required to register with the Napster system by choosing a username and password.

If a registered user wants to list available files stored in his computer's hard drive on Napster for others to access, he must first create a "user library" directory on his computer. The user then saves his MP3 files in the library directory, using self-designated file names. He must next log into the Napster system using his user name and password. His MusicShare software then searches his user library and verifies that the available files are properly formatted. If in the correct MP3 format, the names of the MP3 files will be uploaded from the user's computer to the Napster servers. The content of the MP3 files remains stored in the user's computer.

Once uploaded to the Napster servers, the user's MP3 file names are stored in a server-side "library" under the user's name and become part of a "collective directory" of files available for transfer during the time the user is logged onto the Napster system.

To search the files available from Napster users currently connected to the network servers, the individual user accesses a form in the MusicShare software and enters either the name of a song or an artist as the object of the search. The form is then transmitted to a Napster server and automatically compared to the MP3 file names listed in the server's search index. The Napster server does not search the contents of any MP3 file; rather, the search is limited to a text search of the file names.

Napster also offers a "hotlist" search function. To use hotlist, the Napster user creates a list of other users' names from whom he has obtained MP3 files in the past. When logged onto Napster's servers, the system alerts the user if any user on his list (a "hotlisted user") is also logged onto the system. If so, the user can access an index of all MP3 file names in a particular hotlisted user's library and request a file in the library by selecting the file name. The contents of the hotlisted user's MP3 file are not stored on the Napster system.

To transfer a copy of the contents of a requested MP3 file, the Napster server software obtains the Internet address of the requesting user and the Internet address of the host user. The Napster servers then communicate the host user's Internet address to the requesting user. The requesting user's computer uses this information to establish a connection with the host user and downloads a copy of the contents of the MP3 file from one computer to the other over the Internet, peer-to-peer.

Complaint

============

The music industry's complaint alleges that Napster, Inc. (Napster) is a contributory and vicarious copyright infringer. On July 26, 2000, the district court granted plaintiffs' motion for a preliminary injunction, that enjoined Napster "from engaging in, or facilitating others in copying, downloading, uploading, transmitting, or distributing plaintiffs' copyrighted musical compositions and sound recordings, protected by either federal or state law, without express permission of the rights owner.

The appeals court entered a temporary stay of the preliminary injunction pending resolution of this appeal.

Fair Use

============

Napster contends that its users do ndirectly infringe plaintiffs' copyrights because the users are engaged in fair use of the material. Napster identifies three specific alleged fair uses: sampling, where users make temporary copies of a work before purchasing; space-shifting, where users access a sound recording through the Napster system that they already own in audio CD format; and permissive distribution of recordings by both new and established artists.

The appeals court agreed with the district's court conclusion that Napster users do not engage in fair use of the copyrighted materials. Fair use is determined by evaluating four factors:

1. Purpose and Character of the Use

--------------------------------------------

This factor focuses on whether the new work merely replaces the object of the original creation or insadds a further purpose or different character, the question is to what extent the new work is transformative.

The court concluded that downloading MP3 files does not transform the copyrighted work.

This "purpose and character" element also requires the district court to determine whether the allegedly infringing use is commercial or noncommercial. A commercial use weighs against a finding of fair use but is not conclusive on the issue.

Direct economic benefit is not required to demonstrate a commercial use. Rather, repeated and exploitative copying of copyrighted works, even if the copies are not offered for sale, may constitute a commercial use. In this case, commercial use is demonstrated by a showing that repeated and exploitative unauthorized copies of copyrighted works were made to save the expense of purchasing authorized copies.

2. The Nature of the Use

----------------------------------

Works that are creative in nature are "closer to the core of intended copyright protection" than are more fact-based works. The plaintiffs' copyrighted musical compositions and sound recordings are creative in nature, which cuts against a finding of fair use under the second factor.

3. The Portion Used

----------------------------

Napster users engage in "wholesale copying" of copyrighted work because file transfer necessarily involves copying the entirety of the copyrighted work. However, under certain circumstances, a court will conclude that a use is fair even when the protected work is copied in its entirety.

4. Effect of Use on Market

-------------------------------------

Fair use is limited to copying by others which does not materially impair the marketability of the work which is copied.

The district court ruled that Napster harms the market in at least two ways: it reduces audio CD sales among college students and it raises barriers to plaintiffs' entry into the market for the digital downloading of music.

The appeals court concluded that the district court made sound findings related to Napster's deleterious effect on the present and future digital download market. Moreover, lack of harm to an established market cannot deprive the copyright holder of the right to develop alternative markets for the works.

5. Identified Uses

-------------------------

a. Sampling

Napster argued that its users download MP3 files to "sample" the music in order to decide whether to purchase the recording. The district court determined that sampling remains a commercial use even if some users eventually purchase the music.

The appeals court found no error in the district court's determination. The court noted that the record shows that the record companies collect royalties for song samples available on retail Internet sites. Furthermore, the free downloads provided by the record companies consist of thirty-to-sixty second samples or are full songs programmed to "time out," that is, exist only for a short time on the downloader's computer. In comparison, Napster users download a full, free and permanent copy of the recording.

The appeals court agreed that the record supports the district court's preliminary determinations that: (1) the more music that sampling users download, the less likely they are to eventually purchase the recordings on audio CD; and (2) even if the audio CD market is not harmed, Napster has adverse effects on the developing digital download market.

b. Space-Shifting

Napster also maintained that space-shifting is a fair use. Space-shifting occurs when a Napster user downloads MP3 music files in order to listen to music he already owns on audio CD.

The court rejected Napster's claims and noted that the "shifting" claim is only valid when the methods of shifting do not also simultaneously involve distribution of the copyrighted material to the general public (e.g. recording a TV show for home use).

The court said that it is obvious that once a user lists a copy of music he already owns on the Napster system in order to access the music from another location, the song becomes available to millions of other individuals, not just the original CD owner.

C. Permissive Reproduction

Napster also claimed that permissive reproduction by either independent or established artists is fair use. However, since plaintiffs did not seek to enjoin this and any other non-infringing use of the Napster system, these uses were not challenged.

For the above reasons the appeals court found no error in the district court's determination that plaintiffs will likely succeed in establishing that Napster users do not have a fair use defense.

Contributory Copyright Infringement

===========================

One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a 'contributory' infringer.

The court ruled that Napster, by its conduct, knowingly encourages and assists the infringement of plaintiffs' copyrights.

A. Knowledge

--------------------

The court made a clear distinction between the architecture of the Napster system and Napster's conduct in relation to the operational capacity of the system.

In the famous Sony case, the court refused to hold the manufacturer and retailers of video tape recorders liable for contributory infringement despite evidence that such machines could be and were used to infringe plaintiffs' copyrighted television shows.

The Sony Court declined to impute the requisite level of knowledge where the defendants made and sold equipment capable of both infringing and "substantial non-infringing uses."

The appeals court followed Sony, and said that it will not impute the requisite level of knowledge to Napster merely because peer-to-peer file sharing technology may be used to infringe plaintiffs' copyrights.

In an online context, evidence of actual knowledge of specific acts of infringement is required to hold a computer system operator liable for contributory copyright infringement. If a computer system operator learns of specific infringing material available on his system and fails to purge such material from the system, the operator knows of and contributes to direct infringement. Conversely, absent of any specific information which identifies infringing activity, a computer system operator cannot be liable for contributory infringement merely because the structure of the system allows for the exchange of copyrighted material.

The court nevertheless concluded that sufficient knowledge exists to impose contributory liability when linked to demonstrated infringing use of the Napster system. The record supports the district court's finding that Napster has actual knowledge that specific infringing material is available using its system. The Recording Industry Association of America (RIAA) informed Napster of more than 12,000 infringing files, (some of which are still available), that it could block access to the system by suppliers of the infringing material, and that it failed to remove the material.

B. Material Contribution

---------------------------------

The appeals court agreed with the district court that Napster provides the site and facilities for direct infringement, and found that Napster materially contributes to direct infringement.

Therefor the appeals court affirmed the district court's conclusionthat plaintiffs demonstrated a likelihood of success on the merits of the contributory copyright infringement claim.

Vicarious Copyright Infringement

=====================================

In the context of copyright law, vicarious liability extends to cases in which a defendant has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities.

Financial Benefit

-----------------------------

Financial benefit exists where the availability of infringing material acts as a 'draw' for customers. Napster's future revenue is directly dependent upon increases in user-base. More users register with the Napster system as the quality and quantity of available music increases.

Supervision

---------------------

The ability to block infringers' access to a environment for any reason whatsoever is evidence of the right and ability to supervise.

Napster has an express reservation of rights policy, stating on its website that it reserves the right to refuse service and terminate accounts in its discretion, including, but not limited to, if Napster believes that user conduct violates applicable law.

To escape imposition of vicarious liability, the reserved right to police must be exercised to its fullest extent. Turning a blind eye to detectable acts of infringement for the sake of profit gives rise to liability.

The appeals court ruled that the district court correctly determined that Napster had the right and ability to police its system and failed to exercise that right to prevent the exchange of copyrighted material. The district court, however, failed to recognize that the boundaries of the premises that Napster "controls and patrols" are limited. Napster's reserved "right and ability" to police is cabined by the system's current architecture.

The Napster system does not "read" the content of indexed files, other than to check that they are in the proper MP3 format. Napster, however, has the ability to locate infringing material listed on its search indices, and the right to terminate users' access to the system. The file name indices, therefore, are within the "premises" that Napster has the ability to police.

The court recognized that the files are user-named and may not match copyrighted material exactly. For Napster to function effectively, however, file names must reasonably or roughly correspond to the material contained in the files, otherwise no user could ever locate any desired music. As a practical matter, Napster, its users and the record company plaintiffs have equal access to infringing material by employing Napster's search function.

Napster's failure to police the system's "premises," combined with a showing that Napster financially benefits from the continuing availability of infringing files on its system, leads to the imposition of vicarious liability.

The Injunction

===================

The appeals court concluded that the scope of the injunction needs modification in light of its opinion.

Contributory liability may potentially be imposed only to the extent that Napster:

1. Receives reasonable knowledge of specific infringing files with copyrighted musical compositions and sound recordings;

2. Knows or should know that such files are available on the Napster system; and

3. Fails to act to prevent viral distribution of the works.

The mere existence of the Napster system, absent actual notice and Napster's demonstrated failure to remove the offending material, is insufficient to impose contributory liability.

Conversely, Napster may be vicariously liable when it fails to affirmatively use its ability to patrol its system and preclude access to potentially infringing files listed in its search index. Napster has both the ability to use its search function to identify infringing musical recordings and the right to bar participation of users who engage in the transmission of infringing files.

The court placed the burden on plaintiffs to provide notice to Napster of copyrighted works and files containing such works available on the Napster system before Napster has the duty to disable access to the offending content. Napster, however, also bears the burden of policing the system within the limits of the system.

The court ordered a partial remand for the limited purpose of permitting the district court to proceed with the settlement and entry of the modified preliminary injunction.

Comments

==============

The Napster case has received extensive coverage, so I will only add a few short comments to the above summary.

I believe that it is important to differentiate between the ruling's effect on Napster Inc. and the ruling's effect on online copyright law.

It seems clear that since the court found that Napster's activities have, at least in the past, infringed upon the plaintiff's rights (subject to factual finding during the trial phase), Napster Inc. might have to pay monetary damages to plaintiffs (that is unless a settlement, similar to the one reached with Bertelsmann, is reached).

Such monetary damages might lead Napster Inc. to bankruptcy, and that would of course be tragic ending for the popular music swapping service, and for the millions of Napster users.

However, on a totally different level, this ruling should be considered as a loss to the copyright holders organizations. The ruling will affect not only other peer-to-peer services (such as the music swapping service Gnutella) but also other services that enable access to infringing files, such as search engines.

While the ruling might lead to the end of Napster Inc., it is also a victory for those seeking to limit the powers of copyright holders.

First, it is important to note that the court based its decision on the architecture of the Napster system, and the control this architecture provides the system operators. This means that if a system is designed in a manner which minimizes the operator's control (either by limiting the operators' ability to know how the system is used by specific users, or by limiting the policing possibilities), copyright holders will not be able to sue over infringing uses of the system.

A good example is the music swapping service Gnutella. Gnutella is not operated by any one company, it is more similar to a protocol than an application. Therefor copyright organizations have no specific operator to go after. Furthermore, unlike Napster, Gnutella has no centralized servers. Each Gnutella user runs both the client and the server protocols. That means that even if copyright associations go after the Gnutella protocol or application developers, since those developers don't have any policing powers, they can not be found liable for vicarious copyright infringement.

These developers can also not be found liable for contributory infringement due to the de-centralized nature of Gnutella. The developers can't remove any specific user, nor can they have knowledge of any specific infringing use.

Finally, the Napster appeal should be considered a defeat in the copyright holder's battle against linking to infringing files, and specifically against search engines that link to infringing files.

Search engines, such as Google, AltaVista, Inktomi and HotBot, use software known as "spiders" or "robots" that automatically scan web pages and index their content. Those engines also index pages that include infringing content.

Under the Napster ruling, since search engines provide substantial non-infringing use, search engines can only be found liable if they have actual knowledge of the specific infringing activities and do not terminate that use.

Since the "spiders" collect the information automatically, they have no means of knowing if any specific page contains infringing content. That shifts the burden of policing to the copyright owner which must notify the search engine operator of the specific URLs that contain the infringing material, before the operator shall (if at all) remove the links to the infringing page.

Furthermore, unlike Napster which knows that the swapping of all copyrighted files is an infringing activity (except for the few cases in wartists gave explicit permission to swap their files, or files were in the public domain), search engines have no way of knowing if a copyrighted file is infringing or not.

For example, if a search engine indexes an image file titled "Mickey Mouse", even if it has the ability to know that it is really an image containing a picture of Disney's famous mouse (and most engines don't), it has no knowledge whether the use of the file is infringing or not. There are several possibilities of legitimate use such as the web site operator has a license to use the file, it is a picture the user took during his visit to Disneyland, or the user has fair-use protection.

In conclusion, what might seem as a victory for the record industry, might well turn out to be a defeat for the copyrights owners' attempt to extend their rights in cyb.

Your comments are welcome,

Yedidya (Didi) Melchior

The full Napster ruling is available at:

http://laws.findlaw.com/9th/0016401.html

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3. The Cyberlaw Reader

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Each issue of the Cyberlaw Reader links to new articles related to cyberlaw and online legal research. Your recommendations are welcome, send suggestions to mailto:editor@mishpat.net

* Privacy and Power: Computer Databases and Metaphors for Information Privacy *

By Daniel J. Solove

Online privacy problems are often described using the 'Big Brother' metaphor. In this article, Daniel J. Solove, an assistant professor at Seton Hall Law School in New Jersey, claims the more appropriate metaphor is Franz Kafka's harrowing tale 'The Trial'.

http://papers2.ssrn.com/paper.taf?ABSTRACT_ID=248300

* Password Crackers - Ensuring the Security of Your Password *

by A. Cliff

This article describes password crackers used by computer hackers, and how those same tools can be used to generate more secure passwords.

http://www.securityfocus.com/focus/basics/articles/passcrack.html

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4. Cyberlaw news and updates

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The Cyberlaw Informer brings you the latest news about online and computer law, with links to the full reports available on the web.

Top news

========

* 1-Click Injunction Lifted *

A federal appeals court in Washington allowed Barnesandnoble.com to use the 1-Click system that allows customers to buy books on its site with one mouse click, until a trial considers claims by Amazon.com that such transactions infringe its patent.

In December 1999, a federal judge in Seattle issued an injunction against Barnesandnoble, ruling that Amazon had a substantial likelihood of prevailing in its suit.

The three-judge appeal panel agreed with the lower court that Barnesandnoble's feature probably violated Amazon's business model patent, but lifted the injunction, saying that Barnesandnoble had "substantial questions" about whether the patent was valid in the first place. Specifically, Barnesandnoble claimed it found several examples of systems that predated Amazon's that allowed users to make purchases with a single click.

Full ruling at:

http://laws.lp.findlaw.com/fed/001109.html

* Controversial ruling stops eRefree from using referee *

A US federal judge ordered eReferee.com to stop using the word "referee" in all of its domain names or in conjunction with any other word in a domain name. The ruling is extremely unusual because it reverses an earlier decision under Uniform Domain Name Dispute Resolution Policy (UDRP) arbitration procedure.

In issuing the court ruling, the court sided with Referee magazine, a periodical holding the trademark to the word "referee" for the purposes of publication. Critics claim the ruling gives overly broad rights to a commonly used word. eReferee.com is a site targeted at referees, including news stories, advice columns, and forums for trading refereeing tips. eReferee appealed the injunction.

http://news.cnet.com/news/0-1005-201-4839749-0.html

* Napster news *

Judge Marilyn Hall Patel set March 2 for a hearing on the injunction sought by record labels barring unauthorized songs from being traded on the Napster system. Lawyers for both sides will have a chance to argue exactly what the scope of the modified injunction should be.

http://www.thestandard.com/article/display/0,1151,22412,00.html

Napster's offered the music industry $1 billion over 5 years to settle the copyright-infringement lawsuit. Many record industry executives rejected the $1 billion offer as too small. Other analysts expressed skepticism as to whether Napster will be able generate the revenue it needs to pay for its use of copyrighted material.

http://www.washingtonpost.com/wp-dyn/articles/A37786-2001Feb21.html

* Hackers stole Clinton's & Gates' credit card number *

The World Economic Forum announced that computer hackers tapped into a database and stole credit-card numbers of about 1,400 prominent people attending the annual Davos conference. The victims include former US president Bill Clinton, South African President Mbeki and Microsoft's Bill Gates.

http://www.washingtonpost.com/wp-dyn/articles/A29969-2001Feb5.html

* Microsoft's new antitrust problems *

US Federal antitrust investigators are investigating whether Microsoft's stake in rival Corel reduces competition in the market for business software. Microsoft recently invested $135 million in Corel which manufactures the famous WordPerfect that competes with the Microsoft Office software suit.

http://news.cnet.com/news/0-1003-200-4813794.html

* Man accused of luring girl to Greece *

Konstantin Baehring, 35, a German who lives in Greece, was arrested after an international police investigation into the disappearance five months ago of a 15-year-old girl from Florida. Baehring who allegedly lured the girl to Greece over the Internet, was charged with kidnapping and sexual assault. The girl was released from protective custody to her mother.

http://www.nandotimes.com/technology/story/0,1643,500306399-500491458-503416091-0,00.html

* ISP accountable for child porn *

BuffNET, a regional ISP located near Buffalo, pleaded guilty before a New York State Court to knowingly providing access to child pornography. BuffNET failed to take action after it was notified that one of its newsgroups was distrchild porn. This case marks the first time an ISP has been held accountable for allowing access to child pornography.

http://www.wired.com/news/culture/0,1284,41878,00.html

Intellectual Property

===============

* British Colombia rules in favor of "sucks" site *

The British Columbia Supreme Court ruled that a trade union, representing workers at unionized offices of the British Columbia Automobile Association (BCAA), that setup a strike website using bcaaonstrike.com as one of its domain names, and BCAA in its meta tags, was not infringing on BCAA's intellectual property.

Full ruling:

http://www.courts.gov.bc.ca/jdb-txt/SC/01/01/2001BCSC0156.htm

* Trademark dispute delays Microsoft's Xbox *

Xbox Technologies, a holding company of software businesses, threatens to take Microsoft to court, as the software giant plans to introduce its Xbox game console.

http://news.cnet.com/news/0-1006-200-4709644.html

* CNNfn against satire website *

CNN's CNNfn requested a temporary restraining order against a computer consultant running CNNdn, , "the financial crash network" which is a website take-off on CNNfn.

http://www.wired.com/news/politics/0,1283,41566,00.html

* Hallmark drops patent suit *

Hallmark Cards Inc. dropped its patent suit against rival American Greetings Corp., saying it had discovered that one of the claims made by the original patent holder was questionable.

http://www0.mercurycenter.com/svtech/news/breaking/merc/docs/024790.htm

* Belgian police search music swappers' homes *

Belgian police, acting on complaints from the music industry, raided homes of people using music-sharing sites, looking for evidence of copyright infringement.

http://news.cnet.com/news/0-1005-200-4838654.html

* SIIA settles with pirate *

The Software & Information Industry Association (SIIA) settled a case against an alleged software pirate, in return for an undisclosed sum, and to handing over the names of all the people to whom he had sold pirated software.

http://www.newsbytes.com/news/01/161786.html

* Video game pirates sued *

12 video game manufacturers sued 4 alleged software pirates accused of distributing unauthorized copies of games such as Pac-Man and Donkey Kong.

http://www0.mercurycenter.com/svtech/news/breaking/merc/docs/080322.htm

Domain names

===========

* Port loses geographical domain claim *

A WIPO Arbitrator rejected a claim by the port authority for the city of Helsinki, Finland, for the domain PortOfHelsinki.com, registered by a UK web development company with a large collection of domains reminiscent of sea ports around the world. WIPO arbitrator Henry Olsson ruled that "Port of Helsinki" was not trademarked. Olsson also said that the fact the company registered so many sea-port domains was evidence, not of cybersquatting, but that it was attempting to build a legitimate transportation portal.

http://www.newsbytes.com/news/01/161983.html

* Springsteen loses domain *

Rock star Bruce Springsteen lost his UDRP claim for brucespringsteen.com. In a split decision, a three-member panel ruled that the Canadian Jeff Burgar and the Bruce Springsteen Club had not violated the musician's rights. The majority ruled that Burgar had demonstrated that he has some rights or legitimate interests in respect of the domain.

http://arbiter.wipo.int/domains/decisions/html/2000/d2000-1532.html

* Williams and Kidman win domains *

Tennis sisters Venus and Serena Williams and actor Nicole Kidman won UDRP claims for domain names including their names. The Williams sisters won the rights for VenusAndSerenaWilliams.com (plus the .net and .org variations). A three member panel acknowledged Kidman's rights to NicholeKidman.com and NicoleKidmanNude.com, although Kidman has not trademarked her name, and although the domain include an extra "h".

http://www.newsbytes.com/news/01/161519.html

* Canadian Television looses domain to transsexual/transvestite site *

Canada's Toronto Star Newspaper, which owns a regional cable television channel named TSTV, lost its UDRP complaint over the domain name TSTV.tv, since TSTV is also a shorthand for transsexual/transvestite.

http://arbiter.wipo.int/domains/decisions-cctld/html/dtv2000-0006.html

* ICANN under US scrutiny *

The Internet Corporation for Assigned Names and Numbers (ICANN), came under attack during a US congressional hearing for allegedly using flawed process when it selected seven new top-level domains last November.

http://www.thestandard.net/article/display/0,1151,22068,00.html

* Domain name scam stopped *

A US court issued a restraining order, shutting down the sites of a company that duped at least 27,000 website owners into needlessly registering variations of their online addresses.

http://www.thestandard.com/article/display/0,1151,22243,00.html

Cyber Crime

===============

* Anna Kournikova virus creator turned himself in *

A 20-year-old Dutch man turned himself over to local authorities for creating and releasing the Anna Kournikova virus. Apparently, the author created the virus in a matter of hours.

http://www.newsbytes.com/news/01/161963.html

* British pedophiles sentenced to jail *

Seven Britons were sentenced to jail terms between 12 and 30 months for their participation in the world's largest Internet child pornography ring known as "Wonderland Club". 750,000 indecent images of children were discovered on the defendants' computers, depicting 1,263 children.

http://www.zdnet.com/zdnn/stories/news/0,4586,2685142,00.html

* British pedophiles arrested *

Thirteen suspected pedophiles were arrested and 27 computers seized in police raids in the UK's largest ever police operation against child pornography on the Internet.

http://www.zdnet.co.uk/news/2001/2/ns-20307.html

* Child porn found on computer leads to arrest *

An Oklahoma man was arrested after child porn was found on a computer he left at a pawnbroker's.

http://www.theregister.co.uk/content/8/16768.html

* Court system administrator launched DoS attack on court *

Scott Dennis, a former network administrator for the US District Court in Alaska, was sentenced to three months in jail for launching three denial-of-service attacks against the US District Court for the Eastern District of New York.

http://www.newsbytes.com/news/01/161394.html

* $38 million in online credit fraud *

Kenneth Taves operated a website that provided subscribers with access to pornography. Taves got a printout of credit card numbers belonging to nearly 4 million consumers and charged at least 800,000 credit cards $19.95 a month for a total of $38 million. Taves pleaded guilty and is scheduled to be sentenced in April.

http://dailynews.yahoo.com/htx/2000/20010122/lo/296482_1.html

* Father and sun accused of auctioning fraud *

Afather and son are accused of making more than $100,000 by auctioning Sony's hard-to-find PlayStation 2 video-game consoles over the web, but never delivering.

http://news.cnet.com/news/0-1006-200-4827095.html

* Indian hackers arrested *

Delhi (India) Police arrested two men for allegedly hacking go2nextjob.com, a site which provides support and information to job-seekers and employers.

http://news.bbc.co.uk/hi/english/world/south_asia/newsid_1162000/1162245.stm

* FTC settles with pagejacker *

The US Federal Trade Commission settled charges with Gregory Lasrado of Australia, accused of participating in a "pagejacking" scheme to redirect Internet users to pages containing sexually explicit material.

http://www.newsbytes.com/news/01/161831.html

* Porn case against couple dropped *

Prosecutors agreed to drop an obscenity case against a woman who appeared nude online and her husband after they promised not to work in sex-oriented businesses in their area.

http://www0.mercurycenter.com/svtech/news/breaking/ap/docs/828182l.htm

* Brazilian scam yields credit card data *

Credit card numbers and other information from 10,000 Brazilians where stolen by con men who sent a fake email asking them to register with Brazil's biggest Internet portal.

http://www0.mercurycenter.com/svtech/news/breaking/ap/docs/857018l.htm

* Hong Kong teenagers arrested for online bank fraud *

Two 16 year old teenagers were arrested inside banks in Hong Kong onsuspicion of banking fraud. Police sources said the allegations were linked to the movement of money from one or more customers' accounts via the Internet.

http://www.zdnetasia.com/news/dailynews/story/0,2000010021,20182293,00.htm

* Hacker group launches attack *

A group of hackers calling themselves Sm0ked Crew hit sites of technology giants such as Hewlett-Packard, Compaq, Gateway and Intel. Other victims include AltaVista, Disney's Go.com and the New York Times online.

http://news.cnet.com/news/0-1006-200-4837854.html

* Hong Kong cyber-stalker sent to jail *

A Hong Kong court sentenced a computer hacker to a year in jail for harassing two young women with obscene email.

http://www.newsbytes.com/news/01/162147.html

Securities

========

* SEC claims against virtual stock exchange dismissed *

A US federal judge dismissed Securities and Exchange Commission's attempts to shut down StockGeneration, a site that ran a "virtual stock exchange", saying the site is clearly labeled a game.

http://www0.mercurycenter.com/svtech/news/breaking/ap/docs/805193l.htm

Privacy & Spam

===============

* Research claims spam costs users $9.4 Billion *

A new study released by the European Commission claims that unsolicited email costs Internet users $9.4 billion.

http://www.newsbytes.com/news/01/161432.html

* End to Toysmart customer data *

US Bankruptcy Court Judge Carol Kenner approved a plan by bankrupt toy e-tailer Toysmart to destroy a customer list that became the focal point of privacy concerns after the company offered to sell it to the highest bidder. Toysmart will receive $50,000, provided that it agrees to destroy the customer list at the completion of the liquidation proceedings later this year.

http://www.newsbytes.com/news/01/161230.html

* VeriSign selling customer data *

 VeriSign Inc., owner of Network Solutions the oldest and largest seller domain names, is selling parts of its massive customer list to marketers. According to the company, it is only selling information about corporate customers, who the company identified by matching its database to Dunn & Bradstreet's master list of worldwide businesses.

http://www.thestandard.com/article/display/0,1151,22298,00.html

* Masseuse tries sues anonymous newsgroup poster *

Massage therapist Kristine Jackson filed a lawsuit against an anonymous newsgroup poster that allegedly disrupted her business.

http://www.theregister.co.uk/content/6/16998.html

* N2H2 will not sell data *

N2H2, a major Internet filtering company, will stop collecting and selling data about the surfing habits of millions of schoolchildren who use its product.

http://www0.mercurycenter.com/svtech/news/breaking/merc/docs/082264.htm

Online Speech

================

* Chinese man on trial for pro democracy postings *

Huang Qi, a Chinese entrepreneur, was put on trial on subversion charges after articles commemorating the 1989 Tiananmen Square pro-democracy protests appeared on his website.

http://www.wired.com/news/politics/0,1283,41779,00.html

* High school student wins damages in web parody case *

Karl Beidler, a former high school student who was suspended for creating a parody Internet site, will receive $10,000 in damages from North Thurston School District for actions it took that violated his free speech rights.

http://www.aclu.org/news/2001/n022001a.html

* Malaysia bans critical news site *

Malaysia's government ordered that reporters from Malaysiakini.com, a critical Internet newspaper, be banned from official functions and news conferences.

http://www.wired.com/news/politics/0,1283,41610,00.html

* No email for inmates *

A California Court of Appeal overturned a lower court ruling, and ruled that officials at California's most notorious prison had the right to block inmates from receiving printed email messages through the regular US mail. The court accepted the prison's argument that email, even in printed form, could threaten prison security.

http://www.securityfocus.com/templates/article.html?id=148

* Site critical of Turkish army shut down *

A Turkish site that invited soldiers to complain about the military has been taken offline by its web host, after rousing the ire of the powerful Chief of Staff.

http://www0.mercurycenter.com/svtech/news/breaking/internet/docs/859078l.htm

* Yahoo UK blocks access to US adult chat rooms *

Yahoo changed its UK Instant Messenger client so that it blocks access to adult chat rooms based in the US, in order to comply with British law.

http://news.cnet.com/news/0-1005-201-4796518-0.html

* Suit claims Vermont cyber-smut law unconstitutional *

Civil liberties advocates filed suit challenging the constitutionality of a Vermont statute, which restricts the rights of websites to display material that can be considered "harmful to minors."

http://www.internetworld.com/news/archive/02082001b.jsp

* Chinese Internet cafes install filtering software *

More than 1,700 Internet cafes in Chongqing, China, began installing software named the "Internet Cafe Security Management System". The software, that was jointly developed by the police and a local software firm, prevsurfers from accessing the objectionable material.

http://www.chinaonline.com/topstories/010201/1/C01013004.asp

E-commerce

===============

* Bidder's Edge

Bidder's Edge, the online auction aggregator involved in a landmark intellectual property dispute with eBay, over rights to crawl eBay's database, shut down its service due to financing problems. In granting a preliminary injunction against Bidder's Edge last May, a US District court judge said it was likely that the queries generated by Bidder's search spider constituted a form of trespass.

http://www.newsbytes.com/news/01/162050.html

* 143 almost free airline tickets *

United Airlines will honor 143 tickets sold on its website during a 55-minute period when flights for international destinations were mistakenly offered for as low as $25.

http://news.cnet.com/news/0-1007-200-4868458.html

* Germany approves digital signature law *

The German Parliament's lower house passed an electronic signature directive.

http://www.newsbytes.com/news/01/162088.html

* US consumer groups call to end online cars sale ban *

Two US consumer groups called for an end to state laws prohibiting Internet car sales.

http://www.washingtonpost.com/wp-dyn/articles/A47275-2001Feb8.html

* China approves online brokers *

The China Securities Regulatory Commission certified 23 securities brokerages to trade online.

http://www.chinaonline.com/topstories/010213/1/C01021209.asp

Misc.

=====

* TechnoLawyer announces legal award winners *

TechnoLawyer, a leading technology for lawyers community, announced the winners of the yearly TechnoLawyer @ Awards chosen by the TechnoLawyer members and editorial staff.

http://www.technolawyer.com/awards.html

* Covad wins round in DSL dispute *

A judge ruled in favor of Covad Communications in a case brought against the company by an Internet service provider cut off from Covad's high-speed connection.

http://news.cnet.com/news/0-1004-200-4841016.html

* Microsoft and Bristol settle *

http://www0.mercurycenter.com/svtech/news/breaking/ap/docs/877999l.htm

* No jurisdiction over Egghead sucks *

E-tailer Egghead.com sued Eggheadsucks.com, a site that criticizes and makes fun at Egghead. A California judge granted a motion by Eggheadsucks to dismiss the suit since the site is outside California and the court had no jurisdiction over it.

http://news.cnet.com/news/0-1007-200-4771995.html

* FDA warns site *

The US Food and Drug Administration warned Ocean Spray Cranberries to stop making unapproved health claims about its juices on the company's website. Following the warning, Ocean Spray removed claims that its juices "may help the body fight cancer".

http://www.nytimes.com/2001/02/14/technology/14FOOD.html

That is all for this time,

Yedidya (Didi) M. Melchior

Editor