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cyberlaw informer #69

Welcome to the 69th issue of the Mishpat Cyberlaw Informer - Law on the Internet newsletter from



1. Introduction


I would like to welcome the many new subscribers who joined the Cyberlaw Informer since the previous issue.

Earlier this week I took the bar exam here in Israel (it went well, the final oral exam is in two weeks) so I did not have time to write a full featured newsletter. Therefore this issue includes only the cyberlaw news section, with news summaries covering the past couple of weeks. The Cyberlaw Informer will be back to the regular format (including a feature article, resource review and recommended reading) by the next issue.

Many interesting cyberlaw happenings are detailed below, including the new European copyright directive and important privacy developments.

 Last issue's introduction of the syndication program drew many queries. If you are interested in joining the syndication program please contact me.

 Cyberlaw Informer reader Charles Davis, Executive Director of the Freedom of Information Center at the Missouri School of Journalism at <> says that the Cyberlaw Informer inspired him to launch the FOI Advocate, a newsletter devoted to freedom of information issues worldwide. If you are interested in freedom of information (which also involves many Internet related issues) you can subscribe to this excellent free monthly publication by sending a subscription request to

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 forward the newsletter to friends and colleagues. Just don't forget to mention that they can subscribe to the Cyberlaw Informer by visiting




2. 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


* EU adopts online copyright directive *

The European Union's Council of Ministers adopted by consensus a Directive establishing copyright protection for books, films and music distributed via the Internet. Member States will have 18 months to implement the new Directive in their national laws.

The Directive provides an obligatory exception for service providers, telecommunications operators and certain others in limited circumstances for particular acts of reproduction which are considered technical copies. This means ISPs will not be liable for copies of digital files created as part of the transfer of information between the remote server and the client.

The directive also includes an exhaustive list of exceptions to the reproduction right and right of communication to the public. All are optional and therefore Member States may choose to apply any or all of these exceptions. However, the list is exhaustive which means that no other exception may be applied.


* ICC stops $3.9 billion scam *

The International Chamber of Commerce shut down an Internet scam involving fake banking documents worth approximately US$3.9 billion. At least 29 different Web sites, incorporating the names of well known financial institutions, convinced potential clients to invest in "get rich quick" projects and finance schemes. Four arrests have been made in San Francisco, California and Switzerland, with more expected to follow.


* E-sting leads to the arrest of Russian hackers *

US Federal agents cracked a Russian computer-hacking ring that prosecutors say victimized dozens of e-commerce businesses through extortion and the theft of thousands of credit-card numbers. Two young hackers were arrested and indicted after the FBI set up a bogus Internet-security firm and let the men hack into it. Then, they lured the men to the US to apply for jobs.

Prosecutors say they may be linked to hundreds of crimes, including the theft of 15,700 credit-card numbers from Western Union. The two scanned the Internet for businesses using vulnerable operating systems. Once a vulnerable business was located, the hackers would break into the computer system and obtain commands giving them control of the system. In several cases the hackers offered to fix the hole for a price. The hackers also stole personal information from thousands of PayPal customers by creating a bogus mirror site, identical to PayPal's legitimate home page, they then sent PayPal users an email telling them to log onto the fake site. Once there, the customers would enter their usernames and passwords, which were recorded by the hackers and used to gain access to the PayPal accounts.


* US medical privacy rules take effect *

US President George Bush adopted sweeping rules to protect the privacy of medical records issued by President Bill Clinton, but noted that the rules could later be revised or clarified to address concerns of the health care industry. The rules require doctors, hospitals and other health care providers to obtain written consent from patients before using or disclosing medical information even for routine purposes like treatment or the payment of claims. Full text of the rules:


* New Zealand computer crime precedent *

A New Zealand appeals court rejected the appeal of hacker Borislav Misic, setting a precedent for the definition of a computer hacking program. as a "document" for the purposes of the Crimes Act, and ruling that existing laws are sufficient to prosecute hackers committing electronic fraud using hacking software.


* License to spam *

A New York state judge granted bulk e-mailer MonsterHut a temporary restraining order forcing ISP PaeTec Communications to allow the company to send commercial e-mails. Despite claims to legitimacy, MonsterHut's wedge in cappears to have come from a signed addendum to PaeTec's acceptable-use policy. The document acknowledged that MonsterHut would send "targeted" e-mails and that PaeTec could terminate the account only if the number of complaints amounted to more than 2 percent of the volume of emails sent.



Intellectual Property


* $300,000? Oops we meant $3,000,000 *

Jurors who ordered to pay nearly $300,000 to a record label for copyright infringement told the trial judge that they checked the math and discovered they made a mistake: What they really meant was $3 million. The judge said he would issue a ruling in several weeks.


* Court denied Intel's Intergraph rehearing request *

Intergraph has won the lround in its ongoing patent battle with Intel, when the US 9th Circuit Court of Appeals denied Intel's petition for a rehearing of the court's ruling that Intel did not have the right to use the Clipper Technology patented by Intergraph.


* RecordTV not recording any longer *

Major Hollywood movie studios succeeded in beating online VCR startup Under an agreement between the parties, RecordTV is no longer allowed to stream the studios' programs, and the company now must pay the studios $50,000 in legal fees.,1902,23745,00.html


* AOL sued over MP3 player *

Playmedia Systems sued AOL Time Warner claiming AOL uses its MP3 decoder in AOL 6.0 for Windows. Playmedia settled a similar suit against Nullsoft, maker of the popular Winamp MP3 player. Later AOL purchased Nullsoft, and Playmedia contends the Nullsoft license does not cover AOL's current use.


* Online educational broadcasting run into copyright problems *

Faculty at the University of Maryland's College of Education were stunned when they were denied copyright permission to broadcast instructional videos via the Web, even though the same videos were being shown in classrooms. Interesting article at:


* UK pirates sent to jail *

Three UK software pirates were sentenced to a total of ten years in prison for heading up a counterfeit Microsoft software scheme worth millions of pounds.


* China approves integrated circuit IP regulation *

Chinese Premier Zhu Rongji recently signed a decree protecting integrated circuit (IC) layout designs. The regulations include provisions for patent rights to IC layout designs, registration of layout designs, execution of patent rights and legal liabilities, among other things.


* NY Times and NBA settle *

The New York Times Company and the National Basketball Association (NBA) settled a lawsuit over who owns the right to sell newspaper photographs taken at basketball games. The NY Times began selling on its site a collection of photographs from its archives, including five photographs of the 1999 basketball playoffs. The NBA sued, contending that selling the photographs breached a contract on journalists' press passes that prohibits the use of information or pictures from the games except for reporting the news. The parties agreed that the Times would display an NBA. logo on its site and in any advertisements for the photographs. (NY Times report)


* Microsoft and Adobe win Chinese rulings *

Microsoft and Adobe won recent Chinese court battles regarding software copyrights. The No. 1 Intermediate People's Court of Shanghai ruled that Huahai Computer Co. installed Microsoft software on computers it produced and sold without authorization, and ordered the PC vendor to publicly apologize to Microsoft, pay 280,000 yuan (US$33,816.43) in damages and cover all legal expenses. The Shanghai Supreme People's Court recently upheld a prior ruling that Nianhua Computer Imaging Technologies Co. must compensate Adobe 150,000 yuan (US$18,115.94) in damages.


* 20,000 pirated program seized in Oman *

Omani police seized more than 20,000 pirated computer programs and several personal computers from a major reseller.


* IFPI sues Taiwan students for MP3 usage *

The International Federation of the Phonographic Industry filed suit against fourteen students at Taiwan's National Chengkung University, accusing them of illegally copying and trading MP3 music files.


* Korean companies in PDF making dispute *

Korean software maker Haansoft labeled as "groundless" a copyright infringement lawsuit filed by a small startup over PDF creating software.


* Juno injunction lifted *

A US federal judge lifted a temporary restraining order that barred Juno Online Services from displaying advertisements on its free Internet service, pending resolution of a lawsuit filed in December by rival NetZero, in which the ISP stands accused of patent infringement for displaying advertising pop-up windows.


* Philips and Cirrus Logic settle patent dispute *

Philips Electronics settled its patent lawsuit against Cirrus Logic and licensed the disputed integrated circuit technology to the semiconductor maker. The suit will continue against five other chip companies.



Domain names


* WIPO interim domain name report *

WIPO's "Second World Intellectual Property Organization (WIPO) Internet Domain Name Process" contains recommendations that call for increased protection for the names of geographic locations, and of the names of international governmental outfits.


* Lawyer's domain name *

The Arizona State Bar released an opinion that stated a law firm's domain name does not have to be identical to the firm's actual name but it otherwise must comply with the Rules of Professional Conduct including refraining from being false or misleading nor may it imply any special competence or unique affiliations unless factually true. A for-profit law firm domain name should not use the top level domain suffix .org.


* ICANN completes .biz and .info negotiati*

The Internet Corporation for Assigned Names and Numbers (ICANN) announced that it agreed to contractual terms with NeuLevel and Affilias, the companies that will operate the first new generic top-level domains (gTLDs) - .biz and .info. The companies plan to start offering their services during the third quarter of 2001.


* EDUCAUSE to take over .edu *

A university technology consortium will become the new gatekeeper of .edu domain names used for educational institutions. The US Commerce Department selected EDUCAUSE to replace VeriSign as the domains.


* Ford sues 2600 *

Ford Motor Co. sued 2600 Enterprises, alleging 2600 combined an obscene word with General Motors's name in a domain name that links to Ford's Web site. According to the suit, users searfor criticism of GM might type in or stumble upon the questioned domain name, and as a result Ford might be linked to the vulgar, strident criticism of a competitor.


* Celebrities win domain names *

WIPO arbitrators awarded British historian Antony Beevor, British authors Julian Barnes and Louis de Bernieres, and French erotic film star turned singer Laure Sainclair control domain names including their names.



Cyber Crime


* US - China hacking war *

Chinese hacking groups increased the number of US Web sites defaced since early April to more than 80 government and corporate sites, while American hackers defaced at least 100 Chinese sites.


* German police raids Nazi net users *

German police raided the homes of more than 100 users of illegal Nazi and neo-Nazi sites. The users were targeted because they were exchanging Nazi-related music across the Internet.


* Computer dealer sent virus to competitor *

Paul Brogden, 27, a computer dealer was sentenced to 175 hours community service and had his computer equipment confiscated, for sending a virus to his competitor.


* Porn site settles billing charges *

Voice Media Inc, a large online adult provider, settled charges that it illegally billed the credit cards of customers who were told their account information was needed for age verification only.


* NASA hacker caught using stolen credit card numbers *

Jason Allen Diekman, a 20-year-old hacker who pleaded guilty in November to hacking into NASA computers, was arrested on suspicion of trying to transfer money through Western Union using stolen credit card numbers.


* Warner Bros. hacked and spammed *

A hacker broke into Warner Bros. Online computer system and sent spam to the company's newsletter subscribers.,4586,2706236,00.html


* Shopping cart security hole *

Hackers used a bug in PDG Shopping Cart, a popular e-commerce software tool, to break in to several ecommerce sites and steal credit card numbers.


* Who will protect the CyberNanny *

CyberNanny, maker of filtering protection software, was hacked and its site was defaced.



Privacy & Spam


* Judge denies request to reveal anonymous posters *

A US federal judge in Seattle blocked the efforts of, a bankrupt Internet company, to learn the names of people who anonymously derided it in an investor chat room. said it needed the names to defend itself in a shareholder lawsuit alleging the company misled investors.


* Sites fined for children privacy violation *

The US Federal Trade Commission announced that three online companies agreed to pay $100,000 in fines to settle charges that they violated the Children's Online Privacy Protection Act (COPPA) by illegally collecting names, addresses, telephone numbers and other information from children under 13. All three companies also agreed to delete personally identifiable information collected since the regulations took effect.,1902,23824,00.html


* Amazon settles Alexa class action *

Alexa Internet, a subsidiary of that tracks surfing patterns, settled a lawsuit challenging its privacy practices. Alexa agreed to delete certain records that might contain personal information and pay up to $40 to class members whose personally identifiable information is found it its database.


* Court stops Ameritech customer data publication *

A hacker who posted Ameritech customer billing records online, was slapped with a court order to shut down his site said he and the company may settle the matter out of court.


* Animal rights activist publish scientists' addresses *

Animal rights activists are facing legal action from pharmaceutical manufacturer Roche, after publishing the names, addresses and home telephone numbers of the Roche's scientists on the site


* Publishing police officer data online *

The city of Kirkland sued the creators of a site that lists the home addresses, phone numbers, salaries and Social Security numbers of police officers in that city and 15 other jurisdictions. The site's authors say they are trying to hold police officers accountable and will soon update the site with links to police officers' criminal records and bankruptcy reports.


* Fined for selling customer data *

DirectWeb Inc. has been ordered to pay $15,000 for violating New Jersey's Consumer Fraud Act for selling customer lists despite assurances the information would remain confidential.


* FTC sues data miners *

The US Federal Trade Commission (FTC) sued three data mining firms accused of obtaining and selling consumers' financial and bank account information under false pretenses.



Online Speech


* Exewill not be webcasted *

A US federal judge rejected a bid by Entertainment Network Inc. to Webcast the execution of Oklahoma City bomber Timothy McVeigh.


* School can't punish student for online postings *

A US federal judge ruled that a Pittsburgh area school must immediately stop punishing Jack Flaherty, an 18-year-old student, for comments he made on an Internet message board. School officials maintained that because Flaherty used a school computer to send one of the messages they had the authority to punish him for all of the messages he sent.


* Indian schoolboy arrested for creating porn site *

A 16-year-old student of India's Air Force School was arrested by the Delhi police cyber crimes section on charges of launching a porn site that listed the sexual preferences of female classmates and teachers.


* Beijing bans sex and tobacco ads *

The Beijing Municipal Administration for Industry and Commerce banned Internet ads for tobacco and sex-related products.


* Korea fights porn *

The Korean Ministry of Information and Communication announced that it will deal sternly with foreign pornographic sites providing services in Korean.






* Kmart pricing glitch *, a unit of Kmart, said it would not honor thousands of orders it received for an MP3 player that was accidentally advertised at a price almost 90 percent below normal.


* NY settles with CompUSA *

The New York Attorney General reached a settlement with CompUSA, under which the computer seller agreed to fully disclose the terms of any rebate offers it advertises online.





* EU ends Microsoft cable antitrust investigation *

The European Commission closed a competition investigation into Microsoft's minority investments in European cable television groups without taking action. The EC and Microsoft continued to disagree over the legality of the contracts, but Microsoft agreed to make the changes requested by the Commission. The EC is still looking at allegations that Microsoft is attempting to dominate the market for servers by designing its Windows operating system to run best with its own servers.|0|RAPID&lg=EN


* EU investigates Intel *

Intel faces a European antitrust investigation into complaints that its marketing practices discriminate against rivals.


* L-mode gets Japan's ministry approval *

Japan's telecom ministry approved Nippon Telegraph and Telephone Corp's plan to launch its L-mode Internet access service in June. L-mode would allow users to access e-mail and the Web over conventional phone lines without a personal computer.





* drops former employee lawsuits * dropped 20 lawsuits filed against its former president and 18 other former employees who now work at WOWemployers, an online recruiting company founded by the ex-president. will pay $71,000 in legal fees for the accused former employees.



That is all for this time,

Yedidya (Didi) M. Melchior


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