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The cyberlaw informer #36

Welcome to the 36th issue of the weekly Mishpat Cyberlaw Informer 

Law on the net newsletter from

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

to receive the Mishpat Update, follow the unsubscribe instructions

at the bottom of this newsletter.


In this issue:

1. Introduction

2. Changes at Mishpat.Net

3. Mediation in the Microsoft case

4. Cyberlaw resource of the week

5. Computer & Internet law news and updates



1. Introduction


I would like to welcome the 30 new subscribers who joined the list

this week. 

As promised last week, many changes were made at the Mishpat.Net site

this week, adding several new features. Some of the new features at

the website are described below. Some of the changes apply to this

newsletter. The name was changed from 'The Mishpat Update' to 'Mishpat

Cyberlaw Informer'. Currently there will be no change in content, the

new name was chosen for marketing reasons. There are also new

subscribe/unsubscribe instructions that appear at the bottom the


This week's main cyberlaw news concerns the appointment of Judge

Posner as a mediator in the Microsoft antitrust trial. A review of 

current events regarding that case can be found in section #4. 

Due to the amount of cyberlaw news this week, which generated a longer

newsletter than usual, there is no feature article this week. The

articles section will be back next week. As usual, the last sections

are the weekly cyberlaw resource and the

past week's technology law news.

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

are always welcome. Send them to

The Mishpat Cyberlaw Informer Archive has been updated this week

(issues 1-35) and has moved to a new location. The archive is

available at:

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

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

Cyberlaw Informer by visiting or by

sending an email to and typing 

subscribe as the subject

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2. Changes at Mishpat.Net


Many new features were added to Mishpat.Net site this week including a

Cyberlaw bulletin board, incorporating the powerful open directory,

tools for webmasters and a new mailing list manager (please note the

new subscribe/unsubscribe instructions at the bottom of this

newsletter). The only thing that hasn't been changed yet is the law

directory, that will hopefully be done sometime during January. In the

next few weeks I will give a short description of  the new features

that you can use.

A new bulletin board (discussion forum) dedicated to cyberlaw was

installed. Currently I set up two boards, one for discussing cyberlaw

issues, and the other for recommending law related online resources. 

The forums are not moderated, all you have to do is sign up and choose

a username and password (the information will only be used for

managing the forums, no personal information is gathered. Read more

details in the new Privacy Policy).

The forum is intended to help turn Mishpat.Net visitors and newsletter

readers into a community of Internet users that are aware of the legal

aspects of the online world, and interact with other users

discussing various issues regarding cyberlaw.

You can reach the discussion forum by going to or by clicking on the

link "Discuss law" that appears on the top and bottom of every page on

the site.

Please join the forum and help make this a lively discussion. 

Some more features will be reviewed next week.


3. Mediation in the Microsoft case


Mediator Is Named to Seek Microsoft Settlement

Judge Thomas Penfield Jackson, the federal judge overseeing the

Microsoft antitrust trial has named Richard Posner, the chief judge

for the 7th Circuit U.S. Court of Appeals in Chicago as mediator, in 

an effort to bring about settlement talks between Microsoft and its

accusers. The initiative was wholly that of the judge, but all sides

said they welcomed the move. 


Judge Jackson said that mediation would be voluntary and non binding,

and that it was up to Posner, "acting in a private capacity," to

schedule any talks. Jackson also said the schedule for the trial was

not being altered, meaning the two sides may have up to 3 months to

reach a settlement. 

Posner comes to the case with no real power beyond the strength of his

reputation and the need of both sides to show Jackson that they are

being responsive to his initiative. He has no authority to force the

parties to reach a settlement, or to impose one. 

President Ronald Reagan appointed Posner to the court in 1981. At the

time, he taught law at the University of Chicago -- and still does,

part time. He is also the author of more than 30 books as well as

numerous articles in the scholarly and popular press. 

Though he has offered no opinions on the Microsoft case, he has

written extensively about antitrust and once offered the opinion, in a

law review article, that the AT&T case in the early 1980s was brought

"to a triumphant conclusion" by the breakup of the company. 

Mediation talks opened yesterday, but although both sides say they are

open to mediation, the plaintiffs are flush with confidence from

Jackson's findings, and they are calling for a strong remedy. While

Microsoft has said it is open to settlement discussions, it has

essentially ruled out most everything the plaintiffs have said they

are likely to propose. 

Since the publication of Jackson's findings, the Justice Department

and the states have agreed that any remedy or settlement must deal in

some way with Microsoft's monopoly in personal computer operating

systems, but no agreement has been reached in how that would be done.

Under the mildest proposals, rules would be enacted that would change

Microsoft's behavior while allowing the company to keep its present

structure. Stronger solutions include forcing Microsoft to publish or

auction the source code for Windows or even breaking up the company.

The states are believed to favor more aggressive remedies than the

Justice Department, though neither group has come to any formal

conclusions. Several state attorneys general, have said they would be

willing to agree only to one of the stronger remedies.

In a private conference in his chambers Judge Jackson told government

lawyers that he "would not like to have to deal with divergent points

of view" on the topic of what sanctions should be imposed on the

company. Jackson said that his decision to appoint a mediator was

"partly motivated by what I think are somewhat disturbing reports in

the press that the plaintiffs are proceedings on 'parallel tracks' or

something like that."

Last week, Bill Gates said he would not agree to any settlement that

deprived Microsoft of the ability to add anything it wants to Windows

or that allowed computer makers to alter Windows without Microsoft's



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4. Cyberlaw resource of the week


This week's resource is The Office of Advocacy within the U.S Small

Business Administration. The administration represents the small

businesses within the U.S. federal government's legislative and rule

making processes.

The Laws and Regulations section at

regulatory and legislative actions that might help small business

owners, such as many of this newsletter readers who manage small

Internet businesses.

I want to thank Nancy J. Ing for submitting this resource.

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

it to

You can also recommend resources at the online bulletin board


5. 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.

* White House releases draft crypto rules *

The Clinton administration released a draft of new U.S. encryption

export regulations, but software industry groups say the proposed

rules fall short of what had been promised. The draft regulations seek

to change current restrictions on the export of encryption products,

which have been bitterly opposed by businesses, software developers

and civil libertarians. The Electronic Privacy Information Center

(EPIC), which lobbies on issues relating to privacy and technology,

said the draft creates "a complex and burdensome regulatory regime.",1151,7836,00.html

The draft is available at:

EPIC's web site:

* Thai ISPs asked to block access to superimposed porn sites *

Thailand's Crime Suppression Division has sought cooperation from the

17 Internet service providers (ISPs) in Thailand to block access to

Websites featuring pornographic pictures of models whose faces have

been superimposed with those of well known Thai actresses. The

division had circulated a formal letter to the ISPs soliciting their

cooperation in blocking the sites after well known model and actress

Ankhana Thimdee filed a complaint with the Thai Police. Ankhana has

sought legal action against the operators of a website, which had

pornographic pictures of a model whose face was superimposed with

hers. Under Thai law, publishing pornographic material on the Internet

by superimposing the faces of individuals without their consent is a

graphic libel. The offense carries a maximum fine of 200,000 baht (US

$5,160) and up to two years of imprisonment.

* Alberta doctors say proposed laws threaten confidentiality 

The president of the Alberta Medical Association (AMA), the

professional body for Alberta's (Canada) 5,000 doctors, is challenging

the proposed Health Information Act, which is planned to pass in this

fall sitting of the legislature. Under the law those who would receive

and control private medical information would be Alberta Health

officials, hospital boards and authorities, pharmacists, nursing homes

and private operators doing medicare work. Those bodies could - with

limitations - release information to a patient's family, prisons,

courts, police and agencies investigating health fraud. The AMA is

examining the bill to make sure it conforms with the Canadian Medical

Association Health Information Privacy Code. The code requires more

patient participation and consent than the Alberta bill.

* Bookseller steals Amazon's email *

Alibris, an online rare bookseller pleaded guilty to intercepting

e-mails between its clients and online retail giant

Alibris agreed to pay $250,000 to settle criminal claims by U.S.

Attorney Donald Stern, that it intercepted e-mail messages to its

clients from . Alibris said it no longer offers clients

e-mail service, but its corporate predecessor, Interloc Inc, did.

Stern's office contends that Interloc intercepted the messages between

its customers and in part to gain commercial advantage by

gathering information on its customers' purchases and obtaining market

data. Alibris admits to the wrongdoing but said it gained no

commercial advantage because it already knew what its customers were


* SEC to scrutinize online brokers *

A report by U.S. federal securities regulator, Securities and Exchange

Commission (SEC), recommends that online brokerages be encouraged in

some cases to ensure that their customers make investments that are

appropriate for them. The principle, under which brokers only

recommend investments to people that are suitable for their financial

circumstances, has long applied to the traditional, full service

brokerage business. The report also urged fuller disclosure by online

brokerage firms regarding their technical performance (such as

computer slowdowns and outages), customer service and technological


Some 10 million Americans estimated to be trading at least

occasionally over the Internet and online customers accounting for

about a quarter of all retail stock trades. The SEC received 504

complaints from investors during the first nine months of this year,

regarding difficulty getting access to their online trading accounts, 

393 complaints of failures or delays in processing trading orders and 

247 of errors in processing orders.

The SEC press release and full report are available at:

* Privacy groups fight U.S. wiretapping regulations *

Leading U.S. privacy groups, including the The American Civil

Liberties Union (ACLU) and the Electronic Privacy Information Center

(EPIC) filed a lawsuit to block new federal wiretapping rules they

said would require the tracking of wireless telephone users and

monitoring of Internet traffic. 

Under the 1994 Communications Assistance for Law Enforcement Act,

telecommunications carriers were supposed to negotiate with law

enforcement officials led by the FBI to create rules that would allow

for court authorized wiretapping on newly installed telephone switches

in order to preserve wiretapping capabilities that existed on older

systems. After years of disputes, industry and privacy groups rejected

nine capabilities that the FBI requested be built into the network.

The law established that the FCC should resolve disputes and in rules

released August 31 1999, the agency decided that the industry should

be required to add most of the disputed capabilities.

* Patent dispute between nanny software manufacturer *

A trademark battle has erupted between the maker of NannyPay and the

maker of NaniPay, two companies that offer solutions for the problem

of how to pay a nanny and comply with the law. Home/Work Solutions

Inc. (HWS) sent a cease-and-desist letter to Essentia saying that it

must stop using the term NannyPay for its software or face a lawsuit

from HWS. But instead of ceasing its use, Essentia decided to win the

race to court. It filed suit seeking a declaratory judgment that its

NannyPay trademark does not infringe on HWS's NaniPay mark.

* Spoofing email addresses *

Visto Corp., a California Internet company filed suit, accusing a Sam

S. Khuri and his company of engaging in "spoofing". The practice of

spoofing is sending out thousands of junk e-mails, bearing the return

address of a company that had nothing to do with the letters. The suit

also accused the defendants of sending unsolicited commercial e-mail

to Visto customers. The two sides have already reached an agreement in

principle to settle their differences, according to Khuri and

Brackbill. Under the proposed deal, Khuri and his company would agree

not to spam Visto's customers or spoof its corporate identity.

* U.S. Senate passes online gambling ban act *

The U.S. Senate unanimously passed sweeping legislation designed to

quash the Internet gambling industry. The bill penalizes "persons

engaged in a gambling business" with up to four years in prison, along

with fines of either the amount bet or $20,000, whichever is larger. A

companion bill proposed is expected to pass the House of

Representatives sometime next year.

* U.S. Senate approves digital signature bill *

The Millennium Digital Commerce Act that passed the Senate by

"unanimous consent" today is the result of a compromise on language.

The bill in its compromise form establishes federal approval for

digital signatures to be considered as legally binding as their paper

counterparts. Unlike a version approved by the House deals only with

electronic signatures and contracts, not electronic records. Consumer

groups warned that the House version would override state and federal

laws that require that any notices and records be provided on paper,

hurting consumers who lack computer access or change email accounts.

The House and Senate digital signatures bills now must be ironed out

in a conference committee session.

* Australia makes electronic signatures equal to paper signatures *

Under a new law that passed last week, Australians will be able to use

the Internet to provide government departments with documents that up

to now had been handed in on paper. The law decreed that paper and

electronic transactions be treated equally. Attorney General Daryl

Williams said the Electronic Transactions Bill resolved the

uncertainty about the legal status of e-commerce, autobanking,

Internet banking and other electronic transactions.

* Challenge to Virginia Internet law rejected on technical grounds *

A U.S. federal judge threw out a constitutional challenge to a new

Virginia law that seeks to ban online commercial material that could

be considered harmful to minors. District Judge Claude M. Hilton found

that the plaintiffs --a coalition of civil rights advocates and

Internet businesses-- had sued the wrong people. Hilton ruled that the

defendants --Virginia Governor James S. Gilmore III and state Attorney

do not have a close enough relationship to the enforcement of the law.

Hilton's ruling did not address the constitutionality of the law.

* Zyklon goes to jail *

Hacker Eric Burns, 19, known on the Internet as 'Zyklon' is facing 15

months in prison and orders to repay his victims $36,240. He also

won't be allowed to touch a computer for three years after his

release. Burns admitted responsibility for attacks on corporate and

government Internet sites including

* Credit card theft at Bloomingdale's *

A sharp eyed tourist from Greece buying sunglasses at Bloomingdale's

foiled an alleged credit card scam. An investigation is continuing to

determine how many credit card numbers are stored on a Palm Pilot that

is believed to belong to Tania Ventura, a cashier at the Manhattan

department store. The tourist noticed his card was swiped twice when

he purchased sunglasses. After swiping a credit card through the

store's credit card device, Ventura allegedly swiped it a second time

through a credit card scanner attached to her Palm Pilot. Ventura was

charged with criminal possession of forgery devices, unlawful

duplication of computer data, criminal possession of computer material

and criminal possession of stolen property.

* Spanish email - telephone fraud *

A British man has been arrested by Spanish police investigating a scam

carried out over the Internet. Thousands of emails were sent to

Spanish Internet users "thanking" them for buying 350 worth of

equipment from a fictional computer company. Their credit card would

be debited the amount in two days, the email continued, but if they

wished to query the purchase they need only call a free phone number,

provided. When the "customers" called what was in fact a high-toll

number charging 1 a minute, they were greeted with a recorded message

telling them to wait until a representative (which never answered) was

available. The man was caught when Spanish policed traced the original

emails to his home in Malaga where they impounded five computers.

* Suspect pleads guilty to setting up sexual encounter with minor *

William Michael Bowles, 50, a Silicon Valley executive accused of

using the Internet to set up a sexual encounter with a 13 year old boy

has pleaded guilty. The boy was actually a detective from the

Sacramento Valley High Technology Crimes Task Force.

* California warns online health care marketers *

46 unlicensed health care providers that use the Internet to market

discount services to Californians have been ordered by the state to

cease operation because they operate outside the reach of industry


* DOD to ban JavaScript on its sites *

The U.S. Department of Defense (DOD) is considering banning all

JavaScript and other mobile code from military Web sites because the

tools could pose a security risk to its computer systems. JavaScript

and Microsoft's ActiveX have been flagged because hackers are

increasingly breaking into DOD systems, and department officials fear

that mobile code is serving as an easy gateway for them to enter

military networks.,4586,2398182,00.html

* FBI shuts down website *

FBI agents called Mike Zieper, an independent artist and "requested"

that he remove his site from the Internet. When he declined, the FBI

worked in tandem with the U.S. Attorney's office to persuade his Web

host and its server to pull Zieper's site. The site showed an amateur

video that purports to be a military briefing. The clip opens with

fuzzy shots of Times Square, over which an unseen male voice describes

a secret army plan to incite a race riot on New Year's Eve.

* OSHA issues ergonomic standard *

The U.S. Occupational Safety and Health Administration (OSHA) has

proposed an ergonomic standard requiring employers to protect

employees by correcting workplace conditions that could cause

repetitive stress injuries. Under the OSHA proposal, about 1.6 million

employers would need to implement a basic ergonomics program,

including assigning someone to be responsible for ergonomics and

providing employees with information on the risk of injuries, and the

signs and symptoms to watch for. While ergonomists applaud OSHA's

standard, some business groups are concerned that regulation will be a

costly intrusion in business affairs. OSHA estimates the rules will

require employers to spend $4.2 billion.

* NASA website hacked *

The Web pages of three U.S. Government agencies, including NASA's

Goddard Flight Center, have been defaced by a cracker who is worried

that U.S. government security systems are vulnerable to cyber attack.

The front pages of the sites were replaced with a page showing a

cartoon of a hooded hacker wearing a peace symbol necklace and a

message warning of web security holes.,1283,32729,00.html

* MP3 pirate gets two year probation *

Jeffrey Gerard Levy, 22, who pleaded guilty for illegally distributing

MP3 files, movie clips, and software, was sentenced to two years of

probation and a limit on access to the Internet. Although Levy's case

is the first MP3 pirating conviction under the U.S. No Electronic

Theft Act, the penalty was far less than the maximum three years in

prison and $250,000 in fines.,1283,32276,00.html

* E-commerce companies fight over employees and trade secrets *

E-commerce software company Burntsand Inc. has denied claims that it

recruited LGS's employees to obtain trade secrets, and says it plans

to fight the allegations in court. In a writ filed in British Columbia

(Canada) Supreme Court, LGS claims that Burntsand and three former LGS

employees now employed by Burntsand conspired to obtain trade secrets

and pass off electronic commerce software developed by LGS as its own.


* ASIC goes after securities software *

The Australian Securities and Investments Commission (ASIC) has

launched a Supreme Court action against a computer programmer and

companies behind an Internet site selling software that purportedly

tells users the right time to buy and sell securities. ASIC has asked

for a court order that the companies had been carrying on an

investment advice business without a securities license and that

contracts by any person to buy the software constituted an agreement

with an unlicensed person.

* Class-action suit against online gaming company *

A lawsuit seeking class-action status was filed against Starnet

Communications International Inc., an Internet gaming and

entertainment company, on behalf of purchasers of Starnet shares

between March 11 and August 20. The suit alleges the company violated

gambling laws, and that the company made false and misleading

statements that inflated its stock price.

* North Carolina targets Internet auctioneers *

North Carolina will soon crack down on auctioneers in the state who

put items up for bid on the Internet without a license. A long

standing state law requires auctioneers to be licensed or face

misdemeanor charges and a $2,000 fine. The license requirement

wouldn't affect eBay and other auction mediators, however. Only the

individuals or companies that are exchanging goods for cash or

offering consignment would need a license. To become licensed,

auctioneers must pass an exam that tests their knowledge of state

auction laws and pay a fee of $250 the first year, and $150 annually.

* EU targets Pentium III *

An advisory group to the European Parliament is asking the government

body to consider banning Intel's Pentium III chip in Europe for

privacy reasons. The Science and Technology Options Assessment Panel

(STOA) asked that parliamentary committee members consider legal

measures that would "prevent these chips from being installed in the

computers of European citizens". Intel's new Pentium III chip contains

a unique Personal Serial Number (PSN) that could allow outside parties

to track a user without the user's knowledge.

* Thumbnail photo not infringing * uses an automated program to crawl through the web

collecting and building a database of images. When a user puts a

specific term into's search engine, thumbnail reproductions

of those images pop up. A California photographer who specializes in

images filed a copyright infringement suit. A Southern California

federal judge handed a preliminary ruling in favor of

* sues anonymous hacker *

A hacker broke into office supply retailer's Internet site,, on October 9 and posted advertisements for one of the

company's major competitors, Office Depot. Officials at Staples Inc.

filed a lawsuit charging that 'John Doe' the unidentified hacker,

illegally accessed the company's Web site and damaged the company by

stealing e-commerce business. The suit contends that the hacker is

believed to live in or near Massachusetts and that the company expects

to identify him shortly.

* Barry Diller gets his name back *

Barry Diller and his media company, USA Networks, won a default

judgment against three men he claimed registered as an

Internet address and offered it to for $10 million.

* after *

eToys, an online toy selling star is after a group of German

pranksters who work under the name etoy. etoy is being sued by eToys,

which charges that etoy creates consumer confusion, injures eToys'

reputation and dilutes its trademark rights. eToys says in a press

statement that "the primary purpose of the lawsuit is to protect

eToys' customers and the children who seek to visit the eToys site."

eToys claims that etoy has posted porn on its site, as well as a

picture and caption that appeared to support the  Oklahoma City

bombing. But eToys faces a problem because etoy has been carrying on

its activities since at least early 1996. That means it predates even

the creation of the online toy store.

* BBC after *

The British Broadcasting Corporation (BBC) wants Big Blue and Cousins,

a small Canadian computer club, to relinquish its domain at

its own expense even though the Canadian club has owned the domain

since 1995. Big Blue and Cousins is a bona fide non-profit

organization that provides information and education to its members

and promotes the use of computers. BBC is threatening to drag the club

through the courts if it doesn't get its way.

* Virtual Networks wins vw domain dispute *

A federal judge has ruled that Volkswagen of America cannot stop

Internet service provider 'Virtual Networks' from using the address U.S. District Judge Claude Hilton concluded that Volkswagen

made "no showing of any irreparable harm" and denied its request for a

preliminary injunction against Virtual Works.

* HealthNet wants *

HealthNet, a huge California HMO (health care provider), and

SatelLife, a tiny nonprofit that links together third world health

care providers, are fighting over the domain name

SatelLife registered the domain name in 1993 three years before

HealthNet registered and " In August

HealthNet sent a letter to SatelLife demanding that it cease using the

term "healthnet" and give up the domain name On

November 17, SatelLife filed for a "declaratory judgment" in a

Massachusetts court.

* Online securities case in Hong Kong

The Hong Kong Securities and Futures Commission (SFC) has reprimanded

a broker for operating a Web site designed to recruit "introducing

agents". The SFC said Li Kwok-keung had tried to recruit people

through a Web site to help him increase his client base and commission

payments. According to the Securities Ordinance, a person must be

registered with the SFC before he can seek profit by inducing other

people to enter into securities transactions.

* 'Internet addiction' witness not allowed *

A federal judge denied a former Infoseek executive's request to call

an expert witness who would testify about Internet addiction and how

the fantasy world of online chatrooms is understood among participants

as a place for adults who assume different identities. As reported in

the past Patrick Naughton, faces 35 years in prison if convicted of

three felony charges that he used the Internet to solicit sex from a

13 year old girl, crossed state lines to meet with her and had child

pornography on his laptop computer when he was arrested. The defense

will argue that Naughton expected to meet an adult and that his online

discussions leading up to the meeting were play acting.

* Australian Intelligence gets hacking powers *

The Australian security intelligence organization (ASIO) has received

increased powers to hack into computers, monitor online

communications, copy files and alter software on computers after the

ASIO Amendment Bill was passed this week. An access warrant permits

ASIO to use computers, phone companies and telecommunications

equipment to to gain access to a remote or networked computer. Once

in, the ASIO hackers will be allowed to copy, add, delete or alter any

data in the target computer that is relevant to the security matter.

* Privacy newsletter makes privacy mistake *

PrivacyPlace, an electronic magazine devoted to privacy on the

Internet, mistakenly exposed its 79 subscriber names and email

addresses. Instead of sending "blind carbon copies" (Bcc) to each of

the recipients, the company listed names and addresses in the "to"


That is all for this week,

Yedidya (Didi) M. Melchior 



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