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The cyberlaw informer #32

Welcome to the 32nd issue of the weekly Mishpat Update, 
Law on the net newsletter from http://mishpat.net

This newsletter is sent only to subscribers. If you no longer wish
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at the bottom of this newsletter.

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

In this issue:

1. Introduction
2. New Children Privacy Rule
3. Cyberlaw resource of the week
4. Computer & Internet law news and updates

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

################
1. Introduction
################

I would like to welcome the 57 new subscribers who joined the list this
week. 

This weeks' issue focuses on the new rule adopted by the U.S. Federal
Trade Commission, that set a new standard for collecting personal
information from children. As explained in the feature article below,
the new rule will effect almost all web publishers, since it applies to
common practices such as requesting names and email addresses or
setting cookies. The article takes an in depth look at the new
requirements.

As usual the last section of this issue is packed with cyberlaw news. I
hope you enjoy reading this newsletter. If you do, don't forget to
forward it to a friend and ask them to subscribe. Comments,
recommendations, contributions and articles are always welcome. Send
them to mailto:editor@mishpat.net


Mishpat Update reader Michael Dahan points out the call for papers for
the 15th Annual International BILETA Conference (British & Irish Legal
Education Technology Association) to be held on April 17th  18th,
2000. The conference organizers are looking for papers about
Globalization of Legal Practice, World Wide Learning and Globalization
of Technology Law. Further details, including submission instructions
can be obtained at http://www.law.warwick.ac.uk/bileta/
If you write an article, don't forget to send me a copy, so it can
published on the Mishpat Update.


The Mishpat Update archive (issues 1-29) is available at:
http://mishpat.net/mailing-lists/update

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 by sending
a blank email to mailto:join-update@mishpat.net



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#############################
2. New Children Privacy Rule
#############################

The U.S. Federal Trade Commission (FTC) issued the rule to implement
the Children's Online Privacy Protection Act of 1998 (COPPA). The main
goal of the rule is to protect the privacy of children using the
Internet. Under the new rules certain commercial web sites must obtain
parental consent before collecting, using, or disclosing personal
information from children under 13. 

The COPPA was enacted following a three year effort by the FTC to
identify and educate industry and the public about the issues raised by
the online collection of personal information from children and adult
consumers. A survey conducted in March 1998, found that while 89
percent of the sites collected personal information from children, only
24 percent posted privacy policies and only one percent required
parental consent to the collection or disclosure of children's
information. On October 21, 1998, the COPPA was signed into law. The
statute gave the FTC one year to issue rules to implement its privacy
protections. This week the FTC issued the final rules.

The rule might have great significance for online operators all around
the world. While the rules only apply directly in the U.S., knowingly
collecting personal information from American kids under 13, might make
U.S. courts assert jurisdiction over non-U.S. web sites. Violators of
the rule face a fine of up to 11,000 USD per violation. The rules are
also important in setting an official standard for privacy disclosures.
This standard may be adopted by other countries, and might, at some
point, also be applied to adults. 

Following is a summary of the requirements under the new rule:
The statute and rules apply to commercial web sites and online services
directed to, or that knowingly collect information from, children under
13. These sites will be required to provide notice on the site and to
parents about their policies with respect to the collection, use and
disclosure of children's personal information. Sites will also have to
obtain "verifiable parental consent" before collecting, using or
disclosing personal information from children. 


* What is personal information *
According to the definition of "personal information" in the new rule,
personal information includes:
A first and last name; a home or other physical address including
street name and name of a city or town; an e-mail address or other
online contact information, such as an instant messaging user
identifier; a telephone number; a Social Security number; a persistent
identifier, such as a customer number held in a cookie or a processor
serial number, where such identifier is associated with individually
identifiable information; a combination of a last name or photograph of
the individual with other information such that the combination permits
physical or online contacting; or information concerning the child or
the parents of that child that the operator collects online from the
child and combines with an identifier.



* Privacy Notice on the Web Site *
Under the new rule, a web site operator must post a clear and prominent
link to a notice of its information practices. The link should be
posted on the home page and at each area where personal information is
collected from children. 
The information practices notice (commonly referred to as "privacy
policy") must state the name and contact information of the site
operators, the types of personal information collected from children,
how such personal information is used, and whether personal information
is disclosed to third parties. 
The notice must state that the parents can review and have deleted the
child's personal information, and refuse to permit further collection
or use of the child's information. 


* Parental Consent *
The rule adopts a "sliding scale" approach that allows Web sites to
vary their consent methods based on the intended uses of the child's
information. 
For a two year period, use of the more reliable methods of consent
(such as print and send via postal mail, use of a credit card,
toll free telephone number or digital signatures) will be required only
for those activities that pose the greatest risks to the safety and
privacy of children (activities such as disclosing personal information
to third parties or making it publicly available through chatrooms). 
For internal uses of information, (such as an operator's marketing back
to a child based on the child's personal information), operators will 
be permitted to use e-mail, as long as additional steps are taken to
ensure that the parent is providing consent (for example sending a
confirmatory e-mail to the parent following receipt of consent).
The "sliding scale" will end two years after the effective date of the
rule (April 2002), at which time the more reliable methods would be
required for all uses of information. 

Operators will be required to give the parent the option to consent to
the collection and use of the child's personal information without
consenting to disclosure of his or her personal information to third
parties.
Schools can act as parents' agents or as intermediaries between web
sites and parents in the notice and consent process. 

             
* Online Activities with no Parental Consent *
There are several exceptions to the requirement of prior parental
consent. For example, no consent is required to respond to a one-time
request by a child for "homework help". In addition, an operator may 
send a child an online newsletter as long as the parent is given notice 
of these practices and an opportunity to prevent further use of the
child's information. 


The rule will become effective on April 21, 2000, giving Web sites six
months to come into compliance with the rule's requirements.



* Consumers and Companies pleased *
For the most part, consumer advocates seemed pleased with the FTC's
action. Some want the FTC to expand the protections for all Net users.
Jason Catlett, founder of Junkbusters, a clearinghouse for privacy
protection measures said "I wish that they had the same position on
teenagers and adults ... Americans should not lose all privacy rights
online the day they turn 13".


Several companies that run youth oriented Web sites, including Yahoo
Inc. and Walt Disney Co. expressed support of the new federal
guidelines. Some companies have been preparing for  the rule for some
time now. Catherine Davis, producer of Yahoo's site for kids,
Yahooligans, said the company stopped collecting personal information
about its child visitors 18 month ago. For example, children don't have
to register or reveal data about themselves to play Yahooligan games.
Instead, they choose from a list of preselected screen names, Davis
said. 


The full text of the new rule, including comments and explanations, is
available (in Adobe PDF format) at:
http://www.ftc.gov/os/1999/9910/childrensprivacy.pdf


More comments are available at:
http://www.computerworld.com/home/news.nsf/CWFlash/9910225ftcrule2




                    
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#################################
3. Cyberlaw resource of the week
#################################

This weeks resource is The Virtual Chase (TVC) at
http://www.virtualchase.com

TVC assists legal professionals conducting research on the Internet. 
It offers more than 400 pages of information about Internet resources
and research strategies. The site includes research guides, references
to many online research web sites, online courses that teach Internet
information location and retrieval, email updates and much more.

TVC is maintained by Genie Tyburski, the Research Librarian for the law
firm Ballard Spahr Andrews & Ingersoll. The site features many of
online tutorials he has written. These tutorials will definitely
improve your Internet research skills.

Highly recommended
http://www.virtualchase.com


If you would like to recommend an Internet legal resource, please send
it to mailto:editor@mishpat.net



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#############################
4. Cyberlaw news and updates
#############################

Each week Mishpat-Update brings you the latest news about
online and computer law, with links to the full reports available
on the web.



* Is Microsoft getting ready for breakup? *
Microsoft's lawyers have inserted in the company's recent business
contracts an unusual legal clause, preparing for the most draconian of
antitrust measures: corporate breakup. The clause states that should a
federal court order Microsoft to split, the company could pass the
business arrangement on to any of its offspring. The clause refers to
the lawsuit 19 states and the Department of Justice brought against the
company in May 1998. The suit charges Microsoft with using its Windows
monopoly to stifle competition. Judge Jackson is expected to release
his findings of fact ruling in the case within a few weeks.
http://dowjones.wsj.com/i/law/SB940511975299515484-d-industry-c1-law.html


* Amazon.com sues Barnes & Noble *
The giant online retailer, Amazon.com, is suing rival retailer
Barnesandnoble.com for allegedly copying Amazon.com's 1-Click shopping
technology. The 1-Click shopping feature allows customers to purchase
items without re-entering their shipping and billing information every
time they buy. 
The suit strikes at a core functionality that online retailers
increasingly need to provide: ease of use. A simpler purchasing process
can be the difference for landing or turning away a potential customer.
Last year, a U.S. Federal court decision in State Street Bank & Trust
Co. vs. Signature Financial Group Inc., paved the way for companies to
patent business processes, not simply their concrete products. Amazon 
won its patent on its business method on September 28 1999. 
http://cnnfn.com/1999/10/22/bizbuzz/amazon/
A discussion about this lawsuit at Slashdot:
http://slashdot.org/article.pl?sid=99/10/22/0959240
Disclaimer: The Mishpat.Net cyberlaw bookstore at
http://mishpat.net/books/cyberlaw.html is in association with
Amazon.com


* Virtual fashion patent suit *
Andrea Rose, inventor and owner of a patent for the StyleFitter
computer system for personalized fashion shopping, filed a patent
infringement suit against a variety of companies including J.C. Penney
Co., Mattel Inc. and owner of Cosmopolitan Magazine. Rose's StyleFitter
system helps consumers select appropriate clothing for their body type
by allowing them to try on apparel via virtual modeling. The
StyleFitter system selects garments from participating retailers,
manufacturers, designers and catalogs, then analyzes what size will fit
properly once a consumer has entered personal body type information. 
http://www.internetnews.com/ec-news/article/0,1087,4_222011,00.html


* Pentagon sets up cyberwarfare center *
The Pentagon established a new center to defend the U.S. from hackers
and to plot ways to attack an enemy's computer network. The
cyberwarfare center will take over what is now a scattered series of
operations. In future wars, U.S. cyberwarriors will try to disable air
defense systems, upset logistics and infect software. 
Saying the United States must be prepared to fight the full range of
modern warfare, Defense Secretary William Cohen said the joint task
force to coordinate military actions would be ready to respond in the
event of an attack on American soil, but under the direction of a
civilian agency. 
http://www.nytimes.com/library/tech/99/10/biztech/articles/08military.html
(Free registration with the NY Times required)


* Marine Corps hit by computer virus *
It seems the new military computer center has a lot of work to do
securing its own computers. The Marine Corps headquarters at the
Pentagon was hit by a "worm virus. The attack infiltrated only
"unclassified" computer systems and affected Microsoft programs only.
The attack left Marines around the Pentagon looking at blank pages
where documents had once resided.
http://www.cnn.com/TECH/computing/9910/22/marines.worm.01/


* Trojan horse gathers data on web sites *
The Systems Administration Networking & Security (SANS) Institute is
reporting a widespread attempt to gather information on proxy servers
and send that information to a Russian Web site. On October 7, SANS
Institute members started to try to piece together what was happening.
They found what appears to be a Trojan horse which systematically
searches out and probes proxy servers from an infected machine and
sends that information to a central Web server. It is unclear at this
point what the actual source of the Trojan horse infection is. 
http://www.cnn.com/TECH/computing/9910/22/russian.trojan.horse.idg/index.html


* Professor sues over web review *
Daniel Curzon Brown, a California college professor, filed suit seeking
to block a student run review web site at teacherreview.com. The site
features student reports on teachers and classes at City College of San
Francisco (CCSF) and San Francisco State University (SFSU). Brown
claims the site has turned into an open forum for personal attack and
vicious slander. While many of the comments deal with actual academic
content, many others involve personal attacks on professors. Brown, an
English teacher, was called a "homomaniac," a "racist," "emotionally
unbalanced" and "mentally ill". Other teachers were called "reportedly 
homicidal" and "drugged out." The lawsuit, which is seeking class 
action status, demands monetary damages for the professors and action 
on the part of university administrators to remove any hint of official 
backing for its contents. 
http://news.cnet.com/news/0-1005-200-921992.html


* Who is holding Morgan Stanley's domain? *
Morgan Stanley Dean Witter & Company set up a new online stock trading
service, but somebody got their intended domain name. Depending on who
is telling the story, that somebody is either a 17 year old schoolboy
who created a Web site to share his passion for mountain bike racing,
or his father, an opportunistic "cybersquatter" who registered dozens
of Internet addresses in a scheme to exact ransoms from big
corporations. 
Ivan Wong, a high school senior, said he created the site at
www.msdwonline.com and named it after Mud Sweat & Gears, the shop that
sold him his mountain bikes. He said it was coincidental that the site
had a name so similar to Morgan Stanley's main site, www.msdw.com. 
It turns out that a company set up by Wong's father, Sau Wong, has
registered dozens of domain names, many derived from the names of
investment banks such as goldmansachsdirect.com. Sau Wong's company
registered www.msdwonline.com in May, several weeks before Morgan
Stanley officials settled on a new name for their online
brokerage. Therefore the securities firm had to introduce its
electronic brokerage, Morgan Stanley Dean Witter Online, with a the
address www.online.msdw.com. 
Morgan Stanley quickly offered 10,000 USD to Ivan Wong for the domain
name. The reply was written by Sau Wong, and his message said: "By the
way, you are not dealing with a kid. I am the father of Ben and Ivan. I
am an entrepreneur myself". Sau Wong asked for 75,00 USD and later
offered to throw in another domain name his company had registered,
morganstanleydirect.com. Morgan Stanley filed suit contending that
Wong's Web site infringes on the firm's trademarks, and that the biking
theme did not appear there until 10 days after the suit was filed, in
an attempt to conceal Wong's ransom scheme.
http://www.nytimes.com/library/tech/99/10/biztech/articles/22web.html
(Free registration with the NY Times required)


* AOL accused of violating Gays' rights *
The American Civil Liberties Union (ACLU) and NationalGayLobby.org 
said that America Online (AOL), the largest online service provider,
recently required a gay member to remove language from his "member
profile" although the company routinely ignores racist and anti gay
comments. 
Member profiles are written by AOL subscribers to describe their
interests and are aimed at helping others get to know them.  AOL's
terms of service prohibits strong language, hate speech, and crude
sexual references. Violations can lead to a warning or a termination of
an AOL user's account. 
Some critics say the company doesn't go far enough in policing many
violations and overreacts to others. Last week, AOL deleted the profile
of a gay man because he described himself as a "submissive bottom". AOL
informed the member that he should create a new profile free of
"objectionable content" and "sexually oriented language".  At the same
time a survey by Wired Strategies, an Internet consulting firm, turned
up numerous unenforced violations of the hate speech ban on AOL,
including one member profile with the statement "all fags must die".
An AOL spokesman, denied that the service enforces its speech policies
unevenly.
http://www.newsbytes.com/pubNews/99/138168.html


* U.S. committee approves digital signature bill *
The U.S. House Judiciary Committee has approved a bill designed to
encourage electronic commerce by recognizing digital signatures as
having the same legally binding status as a handwritten signature.
Under the bill, if two parties agree to use digital signatures to seal
a transaction, the signature cannot be ruled invalid by a state
legislature or other lawmaking body. 
http://www.computerworld.com/home/news.nsf/CWFlash/9910155digsigbill


* Cable companies win in Dade county *
County commissioners in Miami Dade County voted against requiring cable
companies that provide broadband (high speed) Internet connections to
share their lines with competitors. The decision is a boost for AT&T
and other cable companies who argue that they should not be forced to
make their equipment available to rivals.
http://www.mercurycenter.com/svtech/news/breaking/merc/docs/011718.htm


* Will the U.S. ban online gambling? *
A group of U.S. House members has reintroduced a version of the
Internet Gambling Prohibition Act to outlaw most forms of online
wagering, and slap Net casino operators with penalties of up to four
years in prison. The federal Wire Act already allows states to
prosecute those who "knowingly use a wire communication facility for
the transmission in interstate or foreign commerce of bets, wagers, or
information assisting in the placing of bets or wagers." It is unclear
whether the Wire Act applies to the Internet. But groups, such as the
National Association for Attorneys General, are pushing for Congress to
pass the bill, which would update the act to include computer networks.
Opponents of the bill, such as the Interactive Gaming Council, want the
United States to follow parts of Australia and regulate Net gambling
instead of banning it.
http://news.cnet.com/news/0-1005-200-921267.html


* Illinois sues online pharmacies
Illinois has filed suit against four online pharmacy firms, saying they
aren't licensed to practice in the state and therefore can't send drugs
there. The American Medical Association and two state doctor and
pharmacist groups are supporting the suit. 

http://www.boston.com/dailynews/295/economy/Illinois_attorney_general_sues:.shtml


* Israeli cybercrime *
Two Israeli Arab blind brothers, Munther and Muzhir Badir allegedly
managed to tap into an Israeli Defense Force radio station switchboard
last year and sold cheap international phone calls in a kiosk in Gaza.
The brothers are also alleged to have secured two unused phone lines
operated by Israel's telephone company and used them from home at the
company's expense. Police estimate Munther alone earned 10,000 USD a
day selling phone service on the phone networks he allegedly tapped
into. According to the indictments, Munther also jammed the telephone
lines of a neighborhood brothel to curry favor with its rival, which he
patronized. The trial of the blind Badir brothers, which is believed to
be the first computer case under the Israeli computer law from 1995,
started last week in Tel Aviv.
http://www.msnbc.com/news/325973.asp
The full text of the indictment (in Hebrew), that includes 42 separate
charges, can be downloaded from:
http://www.ilcops.org.il/forcop/meida/hachlatot/badir.htm
Thanks to Mishpat Update reader Boaz Guttman for pointing out these
resources.


* ACLU defends library against parent Seeking net Censorship *
In a friend of the court brief filed before a California appeals court,
the American Civil Liberties Union (ACLU) is joining a unique legal
battle over whether a parent can force a public library to censor
Internet access of all its patrons in order to control her own child's
use of the Internet. In a complaint filed last year, the parent argued
that the library has a constitutional obligation to protect minors from
pornographic images by blocking Internet access for all library
patrons. According to the ACLU brief, "It is no more legal for a parent
to compel a library to censor the Internet than it is for the
government to do so". 
The ACLU brief on this case can be found at:
http://www.aclu.org/court/CtAppBrief.html

If you know of any cyberlaw updates, please send them to
mailto:editor@mishpat.net

That's all for this time,
see you next week

Yedidya M. Melchior 
Editor 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 
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