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cyberlaw informer #68

Welcome to the 68th issue of the Mishpat Cyberlaw Informer - Law on the Internet newsletter from


In this issue:

1. Introduction

2. Help Support the Cyberlaw Informer

3. Copyright Infringement Notice and ISP Safe Harbor

4. The Cyberlaw Reader

5. Cyberlaw Resource Review - AustLII

6. Computer & Internet Law News and Updates



1. Introduction


I would like to welcome the many new subscribers who joined the Cyberlaw Informer since the previous issue, bringing the total number of subscribers to more than 4,000!


Last issue's note about "funding" the Cyberlaw Informer led to some interesting queries and comments from several readers. I have added some information on how you can help support the Cyberlaw Informer just below this introduction.


ISP liability for content stored on its servers is one of the cyberlaw issues that has received the most attention in the past few years. Under the American Digital Millenium Copyright Act (DMCA) an ISP is protected by a "safe harbor" from copyright allegations, as long as it follows several steps, including the removal of infringing material after being notified by the copyright holder. What constitutes notification under the DMCA? This issue's feature article will give the answer recently provided by the U.S. 4th Circuit Court of Appeals.

As usual you will find the recommended cyberlaw reader and the cyberlaw resource review sections, as well as a very detailed cyberlaw news summary 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 1-63) is located at:

You can recommend resources and discuss various cyberlaw topics at the message boards Please note that there is no need to register in order to post messages, but signing up will allow you to use features such as auto-notification of replies to your posts.

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



2. Help Support the Cyberlaw Informer


As you all probably understand, running the Cyberlaw Informer (CI) requires many resources, mainly time and networking resources. The CI is a free resource and will stay free, as I believe it is important to provide all with the ability to access legal information.

The question is therefor how the costs of providing free information can be covered. I believe that there are several answers to that question.

In this issue I will present two solutions geared towards corporate and law firm manager readers. In the next issue I'll announce an additional solution that will enable each one of you to receive premium information at minimal costs (and again, the CI is staying absolutely free).

If you are interested in any of the two following options please contact me at


A. Newsletter and Website Sponsorships


Do you want to reach a highly targeted readership of more than 4,000 law and IT professionals worldwide reading the CI, and the hundreds who visit our websites every day? Do you want your ad associated with the high quality content on the CI?

If your answer is positive then simply order text ads in the CI and/or banner advertising on the Mishpat.Net website. As a special bonus, all those placing an order before June 1st 2001 will receive a special 33% extra advertising space for free (e.g. if you order three ads in the CI you get an extra one for free)!

For advertising rates and further information, please contact me at


B. Content Syndication


Does your firm publish a newsletter (electronic or printed) sent out to clients and affiliates? Does your firm maintain its own website?

If your firm does any of the above then you know that content is the king - readers and visitors are interested in quality and updated information. You also probably know that producing the high quality information your clients are looking for is a time and resource consuming task.

Now you can start licensing all the original CI content (i.e. not the guest articles) including the feature articles, news summaries, resource reviews and more. Participants of the CI syndication program can pass all the material on to their readers/visitors as their own content, without mentioning the CI as the source, ad free, and without limitation to the parts used (e.g. if you practice intellectual property, you can choose only to use the IP items). CI licensors can also edit the materials to match their needs.

For information regarding the syndication program, please contact me at



Thank you all for your help and attention, and for being loyal readers of the Cyberlaw Informer.

Yours truly,

Yedidya (Didi) Melchior




3. Copyright Infringement Notice and ISP Safe Harbor



One of the most complicated Cyberlaw issues is Internet Service Provider (ISP) liability for content uploaded to its servers by its users. The question arises in three different contexts: liability for illegal content (such as child pornography), liability for defamatory content, and liability for copyright infringing material. This article discusses aspects of the third question - ISP liability for infringing content posted on its servers.

The problem arises from the fact that the ISP usually has no control over the materials a third-party users uploads to its servers, and over the messages posted in newsgroups and chat rooms hosted on the servers. However, the ISP does usually have the ability to remove a message or file from the server once notified of its content, or block a user from further postings.

Under the American Digital Millenium Copyright Act (DMCA), ISPs are granted a "safe harbor". The safe harbor is a partial immunity which ISPs receive as long as they adhere to certain rules, including the obligation to remove infringing material after being notified by the copyright holder.

But what should the notification to the ISP include in order to force the ISP to remove the material? In a recent case, the U.S. 4th Circuit Court of Appeals tackled this and other questions.


Factual Background


ALS Scan Inc. is engaged in the business of creating and marketing "adult" photographs for which it holds the copyrights.

RemarQ Communities Inc. is an Internet service provider providing its subscribing members with access to newsgroups hosted on its servers. According to RemarQ, its users post over one million articles a day. RemarQ does not monitor, regulate, or censor the content of articles posted in the newsgroup by subscribing members. It does, however, have the ability to filter information contained in the newsgroups and to screen its members from logging onto certain newsgroups.

Two of the newsgroups to which RemarQ provides its subscribers access contain ALS's name in the titles "alt.als" and "". These newsgroups contain hundreds of postings that infringe ALS's copyrights placed in these newsgroups by RemarQ's subscribers.


Upon discovering that RemarQ databases contained material that infringed ALS's copyrights, ALS sent a cease and desist letter to RemarQ, ordering the ISP to cease carrying these newsgroups within 24 hours.

RemarQ responded by refusing comply with ALS's demand but advALS that it would eliminate individual infringing items from these newsgroups if ALS identified them "with sufficient specificity".

ALS Scan answered that RemarQ had included over 10,000 copyrighted images belonging to ALS Scan in its newsgroups over the period of several months and that these newsgroups have apparently been created by RemarQ users for the express sole purpose of illegally transferring and disseminating ALS copyrighted photographs.


ALS filed suit alleging violations of the Copyright Act, the Digital Millennium Copy right Act (DMCA), as well as unfair competition. ALS alleged that RemarQ possessed actual knowledge that the newsgroups contained infringing material but had refused to remove or block access to the material.

RemarQ filed a motion to dismiss the complaint stating that it was prepared to remove articles posted in its newsgroups if the allegedly infringing articles were specifically identified.

The district court ruled on RemarQ's motion, finding that RemarQ could not be held liable for direct copyright infringement merely because it provided access to a newsgroup containing infringing material, and that RemarQ could not be held liable for contributory infringement because ALS failed to comply with the notice requirements set forth in the DMCA

ALS appealed the ruling to the 4th U.S. Circuit court of appeals.



Direct Copyright Infringement Claim


The district court relied on the landmark ruling in Religious Technology Center v. Netcom On-Line Communication Services Inc., which concluded that when an Internet provider serves, without human intervention, as a passive conduit for copyrighted material, it is not liable as a direct infringer. The Netcom court reasoned that it does not make sense to adopt a rule that could lead to liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet. The court added that it would not be workable to hold the entire Internet liable for activities that cannot reasonably be deterred.

ALS asked the court to follow Playboy Enterprises Inc. v. Frena, which held a computer bulletin board service provider liable for the copyright infringement, contrary to Netcom, when it failed to prevent the placement of plaintiff's copyrighted photographs in its system, despite the lack of any proof that the provider had any knowledge of the infringing activities.


Judge Niemeyer, writing for a unanimous appeals court, noted that not only is the Netcom court reasoning more persuasive, the DMCA codified the Netcom principles, thus providing certainty that Netcom will be the law of the land.

The DMCA distinguishes between direct infringement and secondary liability, treating each separately. As to direct infringement, liability is ruled out for passive, automatic acts engaged in through a technological process initiated by another.

Accordingly ALS direct infringement claims where dismissed.



Safe Harbor


ALS contended that it substantially complied with the notification requirements of the DMCA and thereby denied RemarQ the "safe harbor" from copyright infringement liability granted by the DMCA.

RemarQ argued that it did not have knowledge of the infringing activity according to the DMCA, because ALS failed to identify the infringing works and never provided RemarQ or the district court with the identity of the pictures forming the basis of its copyright infringement claim.


Title II of the DMCA, designated the "Online Copyright Infringement Limitation Act" defines limitations of liability for copyright infringement to which Internet service providers might otherwise be exposed. The Act defines a service provider broadly and both parties agreed that RemarQ is an Internet service provider for purposes of the DMCA.

Under the DMCA, Internet service providers are granted a safe harbor from liability for infringement of copyright, by storage at the direction of a user, of material that resides on a system or network controlled by the service provider, as long as the service provider can show that it has met all three of the following requirements:

(1) it has neither actual knowledge that its system contains infringing materials nor an awareness of facts or circumstances from which infringement is apparent, or it has expeditiously removed or disabled access to infringing material upon obtaining actual knowledge of infringement;

(2) it receives no financial benefit directly attributable to infringing activity; and

(3) it responded expeditiously to remove or disable access to material claimed to be infringing after receiving notification from the copyright holder.


The district court concluded that ALS's notice was defective in failing to comply strictly with two of the six requirements of a notification set out in the DMCA:

(1) ALS's notice did not include a list of infringing works contained on the RemarQ site and

(2) the notice did not identify the infringing works in sufficient detail to enable RemarQ to locate and disable them.

RemarQ further claimed that not all materials at the offending news groups contained material to which ALS held the copyrights. ALS responded by stating that the two news groups in question were created solely for the purpose of publishing and exchanging ALS's copyrighted images.


The appeals court explained the balance of interests in the DMCA. According to the court, the DMCA was enacted both to preserve copyright enforcement on the Internet and to provide immunity to service providers from copyright infringement liability for "passive," "automatic" actions in which a service provider's system engages through a technological process initiated by another without the knowledge of the service provider.

This immunity, however, is not presumptive, but granted only to "innocent" service providers who can prove they do not have actual or constructive knowledge of the infringement. The DMCA's protection of an innocent service provider disappears at the moment the service provider loses its innocence, i.e., at the moment it becomes aware that a third party is using its system to infringe. At that point, the Act shifts responsibility to the service provider to disable the infringing matter.


The DMCA requires that a copyright owner put the service provider on notice in a detailed manner but allows notice by means that comport with the prescribed format only "substantially," rather than perfectly.

The Act states: "To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially the following . . . ."

In addition to substantial compliance, the notification requirements are relaxed to the extent that, with respect to multiple works, not all must be identified -- only a "representative" list. And with respect to location information, the copyright holder must provide information that is "reasonably sufficient" to permit the service provider to locate this material. The subsection specifying the requirements of a notification does not seek to burden copyright holders with the responsibility of identifying every infringing work -- or even most of them -- when multiple copyrights are involved. Instead, the requirements are written so as to reduce the burden of holders of multiple copyrights who face extensive infringement of their works.

Thus, the appeals court ruled that when a letter provides notice equivalent to a list of representative works that can be easily identified by the service provider, the notice substantially complies with the notification requirements.


In this case, ALS provided RemarQ with information that:

(1) identified two news groups created for the sole purpose of publishing ALS's copyrighted works,

(2) asserted that virtually all the images at the two sites were its copyrighted material, and

(3) referred RemarQ to two web addresses where RemarQ could find pictures of ALS's models and obtain ALS's copyright inform.

In addition, it noted that material at the scould be identified as ALS's material because the material included ALS's "name and/or copyright symbol next to it."

The court ruled that with this information, ALS substantially complied with the notification requirement of providing a representative list of infringing material as well as information reasonably sufficient to enable RemarQ to locate the infringing material.

The court added that to the extent that ALS's claims about infringing materials prove to be false, RemarQ has remedies for any injury it suffers as a result of removing or disabling non-infringing material.


Accordingly, the appeals court reversed the district court's ruling and remanded the case to the district court for further proceedings.


The full ruling in ALS Scan Inc. v RemarQ Communities is available at:




4. The Cyberlaw Reader


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


* The Pros and Cons of "Cybercourts" *

By Doug Isenberg

Cybercourts could move at Internet speed, but they also could face significant practical hurdles. In this commentary, founder Doug Isenberg discusses the pros and cons of cybercourts.


* author in online discussion *

Cass Sunstein, author of the recent title, treating among other concerns the role of the First Amendment and governmental regulation on the Internet, is participating in a message forum hosted by Princeton University Press. A sample chapter is also available. Those wishing to participate can do so by going to

(Not an article, but fits in this section non the less)



5. Cyberlaw resource review


This issue's resource is the Australasian Legal Information Institute (AustLII) at


AustLII is one of my favorite legal research websites. Although the main focus of the site is (as its name indicates) Australian law, it is a very useful site for researchers worldwide.

First of all, AustLII is an excellent example of what free access to legal information is all about - the site includes full text databases (searchable using a powerful search engine) of Commonwealth and state legislation, court rulings, transcripts, commission and special tribunal decisions, treaties, as well as full texts of legal journals, and legal information from New Zealand and the South Pacific. AustLII totals more than 1.5 searchable documents.

Second, even if you do not need any information about Pacific law, the world section of AustLII at is the best collection of links to worldwide legal material.

The world directory is the most comprehensive directory of online available materials of every-country law (far better than FindLaw and the other major players).


Very highly recommended!


If you would like to recommend an Internet legal resource, please send the details to Full credit is given to contributors.

You can also recommend resources at the online bulletin board




6. Cyberlaw news and updates



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


* DoubleClick wins New York class action *

U.S. District Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York ruled that DoubleClick, the largest provider of Internet advertising, was not engaged in secret collection of private and personal data from Internet users. Plaintiffs in the class action law suit challenged DoubleClick's practice of building detailed profiles of Internet users by placing cookies on hard drives of visitors to sites affiliated with DoubleClick, and then tracking their actions on all the affiliated sites.

Judge Buchwald ruled that placing of cookies on a computer user's hard drive by an advertising agency is not an invasion of privacy. The Judge reasoned that since a visit to a Web site is a communication between the site and a computer user, DoubleClick gained legitimate access to the communication when it gained authorization from the affiliated Web site. Judge Buchwald also questioned whether the class suffered any damages at all as a result of DoubleClick's business activity.

The ruling will have no direct effect on a similar California class-action suit.


* Nuremberg Files verdict overturned *

The 9th U.S. Circuit Court of Appeals unanimously threw out a record $109 million verdict against anti-abortion activists, ruling that "The Nuremberg Files", a Web site including wanted posters branding abortion doctors "baby butchers" and criminals, were protected by the First Amendment.

The ruling came two years after a jury in Portland ordered a dozen abortion foes to pay damages to Planned Parenthood and four doctors. The defendants maintained they were political protesters collecting data on doctors in hopes of one day putting them on trial like Nazi war criminals were at Nuremberg.


* Employer can access employee email on storage *

U.S. District Judge Anita B. Brody ruled that an employer's decision to dig through an employee's emails in computer storage does not violate any federal or state wiretap laws. Judge Brody found that wiretap laws do not cover retrieval of a person's email from "post-transmission storage". According to Brody's ruling wiretap laws are violated only when an email is intercepted from "intermediate storage" or "back-up protection storage" - both of which automatically occur during the course of transmission - or if the e-mail is viewed before the intended recipient has a chance to open it.


* Microsoft identity e-stolen *

Microsoft warned computer users that someone posing as a company executive has fooled VeriSign, the leading provider of digital signatures, into issuing fraudulent electronic certificates in Microsoft's name. The false certificates could potentially be used by software virus writers or other vandals trying to trick unsuspecting users into running hostile programs on their computers.


* UK ISP ordered to reveal anonymous poster *

UK Websites and ISPs can be forced to disclose details of anonymous forum posters. A High Court ruled that the investor sites must tell ISP Totalise the identity of an anonymous poster who posted defamatory messages against Totalise. The court ruled that the Websites couldn't protect the identity of the forum posters, in the way that a newspaper can protect its sources, as no editorial control of the forums was exercised.,,12-99112,00.html


* defendant ordered to pay $65 million *

U.S. District Judge James Ware ordered Stephen Cohen to turn over related assets to Gary Kremen, a San Francisco entrepreneur who first registered the domain name in May 1994. Cohen is to pay Kremen $40 million in compensatory damages and $25 million in punitive damages. An arrest warrant for Cohen will remain in effect until he surrenders all his property to the court. Judge Ware found that Cohen fraudulently obtained the domain name and ordered him to return it to Kremen.


* Busboy accused of multimillion fraud *

Abraham Abdallah, a 32-year-old restaurant busboy is the alleged mastermind behind a scheme to cheat America's rich and famous out of $22 million. The intended victims included Steven Spielberg, Ted Turner, George Soros, and Oprah Winfrey. Abdallah broke into accounts of 217 people who were listed by Forbes Magazine last year as being among the wealthiest people in America.



Intellectual Property


* MP3Board suit against RIAA can go ahead *

U.S. District Court Judge Sidney Stein denied a motion by the Recording Industry Association of America (RIAA) to dismiss MP3Board's suit against the RIAA. MP3Board, an online music search service, seeks damages over a 10-day blackout imposed on MP3Board after its Internet service provider received notice of alleged copyright violations from the RIAA.


* Small win for TVT *

A jury awarded independent record label TVT Records $292,000 in its copyright infringement case against,1367,42913,00.html


* British pirates found guilty *

A four member British gang has been found guilty of software counterfeit, recording profits in excess of 1.5 million pounds. One of the four jumped bail and fled to his home in Pakistan.


* Jupiter settles one patent suit and files two others *

Jupiter Media Metrix settled a patent infringement lawsuit against PC Data Inc., and sued two other rivals in a move to protect its business of compiling data on computer and Internet use.


* New Hong Kong anti-piracy law *

A new Hong Kong law makes all use of pirated computer software in a business setting a criminal offence. Violators will face a maximum punishment of four years in jail and a HK$50,000 fine for each copy of pirated software they are caught with.


* Chinese e-plagiarism *

A Chinese court found that a Xiamen-based E-newspaper violated a writer's copyright for plagiarizing his story.


* Korea cracks down on piracy *

The Korean government, working together with the Software Property-right Council (SPC), has began to take action on software piracy.,,6_716451,00.html


* Nortel sues Foundry *

Nortel sued Foundry Networks' accusing the company of infringing several of its patents for networking equipment. IBM has also sent Foundry a letter accusing the company of infringing on IBM's patent.


* Verisign sued over patents *

VeriSign has been sued over claims that its security products infringe patents. Verisign denies the claims.


* Chip patent suit filed *

Cypress Semiconductor sued rival computer chip maker Integrated Circuit Systems for allegedly infringing on three of its patents.



Domain names


* ICANN approves Verisign deal *

VeriSign, which owns domain registrar Network Solutions, will continue managing the global database of popular .com addresses through 2007 while giving up control of the less popular .org addresses. VeriSign agreed to give up control of the .org database by December 2002 and to submit .net for rebidding in 2006.


* Indian court orders domain transfer *

The Delhi High Court (India) ordered a domain registration firm to transfer the domain to the pharmaceutical company Dr Reddy's Laboratories, saying it was deceptively identical to that of the latter.


* Australian domain fraud *

The Australian Competition and Consumer Commission (ACCC) alleges Stephen Henry Wayt mass-faxed businesses across Australia and tried to deceive them into paying a listing fee for a Web-based business directory, making them believe they had to register in order to maintain their domain names.


* First Japanese character UDRP decision *

A WIPO arbitrator ruled in favor of Japanese pharmaceutical company Sankyo in the first dispute over Internet domain names in an Asian alphabet, and ordered the transfer of the two-character Japanese name which corresponds to


* Canada files UDRP complaint *

The government of Canada filed UDRP claims against domain speculator David Bedford over 32 names similar to its agencies such as and



Cyber Crime


* South Korean protestors hack into Japanese education site *

South Korean hackers caused a Japanese education ministry website to crash as part of a protest against a controversial history textbook which protesters say distorts history and justifies Japan's past waaggression against Asian countries.


* Bigsmart settles pyramid charges *

Bigsmart.Com agreed to pay $5 million to settle charges that its e-commerce marketplace was actually a pyramid scheme.,1283,42657,00.html



That is all for this time,

Yedidya (Didi) M. Melchior

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