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The Mishpat-Update #14

Welcome to the fourteenth issue of the weekly Mishpat-Update, Law 
on the net from

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In this issue:

1. Introduction
2. Australian Jurisdiction decision
3. Cyberlaw News
4. The Microsoft Antitrust trial is back


1. Introduction

I would like to welcome the 10 new subscribers who joined the list this

Last week I asked for feedback and gratefully received a few comments
in response. Further (constructive) criticism, suggestions and comments
are always welcome. Please send your input to:

This week the Microsoft antitrust trial resumed, and therefore I added
a special section covering the latest news from the different

The Mishpat Update archives (issues 1-10) is available at

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2. Australian Jurisdiction decision

There are not many non U.S. judgments dealing with jurisdiction, that
is the main question of Internet law from an international perspective.
For that reason I decided to devote a big part of this newsletter to
an opinion from an Australian court. The NSW (New South Wales) Supreme
Court dismissed an application for an injunction to restrain
publication of allegedly defamatory material on the internet. 

Macquarie Bank Limited (MBL) & Andrew James Downe v. Charles Joseph

Some time before December 1997 MBL engaged the defendant to work in its
business. The relationship was terminated in circumstances that gave
rise to litigation in other courts. From at least January 1999,
material relating to the relationship and litigation has appeared on
the Internet, on a website the address of which is The
defendant's name appears prominently in the material which includes a
document headed "Letter From Charles Berg". No complaint has been made
about this publication. However, since at least 24 May 1999, material
has been appearing on another website the address of which is This material, like the other, is transmitted to
and can be received in NSW (like any Internet document). It is the
publication of this material that the plaintiffs seek to restrain. 
Judge Simpson agreed that the material on the second site conveys
imputations defamatory of each plaintiff. 

The problem was that the defendant is not present in NSW, and that any
acts done by him that result in publication of the material in NSW
(meaning available in NSW through the Internet) are done from outside
the state. The evidence as to his whereabouts suggests that he is in
the United States of America. 

Following is part of Judge Simpson's reasoning for not exercising

"A question of jurisdiction is therefore raised. There is authority
that a court is empowered to restrain conduct occurring or expected to
occur outside the territorial boundaries of the jurisdiction ...
Whether that power should be exercised is a question of discretion.
Factors relevant to the exercise of the discretion include the
potential enforceability of any orders made, and whether another court
is a more appropriate forum.

Any order made by this court would be enforceable only if the defendant
were voluntarily to return to NSW. He cannot be compelled to do so for
the purpose of enforcement .... It seems to me unsatisfactory to make
orders the effectiveness of which is solely dependent upon the
voluntary presence, at a time of his selection, of the person against
whom the orders are made. The uncertainty of unenforceability is a
factor adverse to the exercise of discretion in the plaintiff's favour.
It is unnecessary further to consider this. There are other, more
compelling, factors that militate against the making of the order

The first and most significant of these, concerns the nature of the
Internet itself. No evidence was adduced to explain the mechanics of
the operation of the Internet. It is reasonably plain, I think, that
once published on the Internet, material is transmitted anywhere in the
world that has an Internet connection. It may be received by anybody,
anywhere, having the appropriate facilities. Senior counsel conceded
that, to make the order as initially sought, would have the effect of
restraining publication of all the material presently contained on the
website to any place in the world. Recognizing the difficulties
associated with orders of such breadth, he sought to narrow the claim
by limiting the order sought to publication or dissemination "within
NSW". The limitation, however, is ineffective. Senior counsel
acknowledged that he was aware of no means by which material, once
published on the Internet, could be excluded from transmission to or
receipt in any geographical area. Once published on the Internet
material can be received anywhere, and it does not lie within the
competence of the publisher to restrict the reach of the publication. 

The consequence is that, if I were to make the order sought (and the
defendant were to obey it) he would be restrained from publishing
anywhere in the world via the medium of the Internet. 

The difficulties are obvious. An injunction to restrain defamation in
NSW is designed to ensure compliance with the laws of NSW, and to
protect the rights of plaintiffs, as those rights are defined by the
law of NSW. Such an injunction is not designed to superimpose the law
of NSW relating to defamation on every other state, territory and
country of the world. Yet that would be the effect of an order
restraining publication on the Internet. It is not to be assumed that
the law of defamation in other countries is coextensive with that of
NSW, and indeed, one knows that it is not. It may very well be that,
according to the law of the Bahamas, Tadzhikistan, or Mongolia, the
defendant has an unfettered right to publish the material. To make an
order interfering with such a right would exceed the proper limits of
the use of the injunctive power of this court. 

For this reason alone, I would refuse the order sought. "

The full judgment is available at:

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3. Cyberlaw 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.

* `John Doe' files motion for privacy *
Officials from Xircom, a maker of modems for mobile computers,
discovered two Internet message board postings criticizing the quality
of a key Xircom product, poking fun at executives and alleging a bad
work environment. Xircom filed a lawsuit against the person,
identifying him only as John Doe since the company didn't know his true
identity. Xircom alleges that the writer's messages were damaging to
the company and subpoenaed Yahoo! to get the identity of the anonymous
poster known only as `A View From Within'. In a unique legal action,
John Doe filed a motion asking the court to prevent Yahoo! from
divulging his identity.

* Porsche domain goes to court *
The U.S. arm of German sports car maker Porsche filed a lawsuit against
the holder of the and Internet domains. Porsche
filed lawsuit against 135 Internet domain names that incorporate
variations of the Porsche name. Only one holder of the domain names
plans to contest the suit in court.

* Amazon and NY Times meet in court *
On May 17, said it would sell books on the NY Times paper's
list of best sellers at half price. About a week later it received a
letter from The NY Times, flagship of New York Times Company, that
alleged was infringing on the newspaper's copyright and
trademark by using the list. The newspaper demanded that
stop using the list and promoting its 50 percent discount offer for the
books on the list. The NY Times has a book selling business arrangement
with book selling giant (and Amazon's competitor) Barnes & Noble. has asked a federal court to OK the Internet bookseller's
advertising of the New York Times bestseller list. contends
the New York Times bestseller list is widely used in the book selling
industry as an indicator of the most popular books being bought
nationwide and buyers can easily use the list to make price comparisons
on best selling books.

* Is the FBI after the wrong hackers? *
Several computer security watchers claim that the FBI is distracted
from investigating serious digital crimes by its massive manhunt for
the hackers responsible for the attacks on US official web sites. The
security watchers, however, consider the manhunt a distraction, and say
that the biggest threats to online security are the hackers who aren't
making headlines.,4586,2269398,00.html
Meanwhile, in a precautionary move against possible hack attacks, the
U.S. Department of Defense (DOD) expects to take down its official Web
site for a short period of time in order to install new Internet access
with more firewalls.
This happened after the US Department of Interior was the latest
government target of computer hackers, who defaced a Web page last

* Israeli music industry sues over MP3 files *
The biggest Israeli record companies have filed a lawsuit in Tel-Aviv
district court, that the site (that is now down) published
hundreds of illegal MP3 files (a popular music format) on the site. The
site operators (some of which are teenagers) claim that the site has
only 25 MB of storage space on it's servers and therefore could not
host all the claimed files. The defense claims that the site was only
linking to the infringing files and was not hosting them on it's
servers. (In Hebrew)

* US faces problems with EU data protection directive *
For more than 18 months, senior U.S. and European officials have been
seeking an agreement by which US companies respecting safe harbor
principles of data privacy standards comply with the EU directive on
data privacy. Failure to comply with the legislation could prompt EU
member states to block transmission of data originating in the EU to
the US. One of the major obstacles to an agreement concerns consumer
access to personal information. US companies argue that the directive's
provisions represent an enormous burden. But apparently a solution has
been found based on what is being called "proportional access," which
would give consumers access to their personal data in the US unless the
access represented a disproportionate burden on the complying company.

* U.S. Supreme court lets copyright decision stand *
The U.S. Supreme Court will not decide whether published court
decisions are entitled to copyright protection. This decision, given
without comment, means legal research giant West Publishing cannot bar
online publisher Matthew Bender and other competitors from copying
decisions published in West's legal reference books. The Supreme Court
let stand a lower court ruling that said court decisions, along with
West's popular method for citing them, lacked the necessary elements to
qualify for copyright protection.,4,0-37354,00.html

* MP3 companies settle *
PlayMedia Systems Inc. announced it had settled its copyright
infringement lawsuit against Nullsoft Inc. and The settlement
includes a license that allows Nullsoft to use the technology that was
the focus of the lawsuit.,1087,9_130131,00.html

* Shanghai cracks down on Internet cafes *
Chinese town Shanghai has punished 278 unregistered Internet cafes. The
move was aimed at standardizing the city's public Internet cafes where
customers can sip coffee and surf the Net. Late last month, Shanghai
ordered local paging stations and computer information vendors to stop
disseminating political news temporarily, including news downloaded
from the Internet.

* Fortune 500 company sued for spam *
Connect Northwest, a Washington state ISP, has filed what is believed
to be the first suit under the state's anti-spam laws to involve a
Fortune 500 company. Connect is asking for  million from a subsidiary
of Texas based Centex Corp. Connect Northwest charges Centex mortgage
banking subsidiary CTX Mortgage with flooding Connect's mail system
with nearly 6,000 unsolicited e-mail messages advertising home
mortgages. An attorney for Connect said that CTX appears to have used a
computer program to generate probable e-mail addresses by combining
company common names with an ISP's domain name. The resulting "failed
message" overload ultimately brought down Connect's mail server.

* Church of Scientology subpoenas AT&T 
The Church of Scientology is invoking the Digital Millennium Copyright
Act (DMCA) that passed last year to force AT&T to disclose the identity
of an Internet service subscriber who allegedly infringed the church's
copyrights online. The Church of Scientology claims the anonymous
author made two unauthorized postings of the church's copyrighted works
on the alt.religion.scientology Usenet group.

4. The Microsoft Antitrust trial is back

The Microsoft antitrust trial resumed this week after a three month

* Conflicting interests? *
A lawyer for Microsoft accused Franklin Fisher of MIT, the U.S.
government's lead economist of having a conflict of interest in the
outcome of the antitrust trial because of his role in a business
consulting firm, after he testified today that other economists at the
company might end up representing companies that intend to sue
Microsoft privately for damages if it is found to have a monopoly in
the PC operating system market. 
U.S. Department of Justice attorney David Boies pointed out that
Microsoft's lead economist, Richard Schmalensee, dean of the Sloan
School of Management at MIT, has been paid by Microsoft for several
years for his analysis. He also said he never questioned Microsoft
witnesses, some of whom own hundreds of millions of dollars worth of
company stock, as to whether they had conflicts.

* Did Netscape CEO exaggerate? *
Microsoft promised it would question the credibility of Netscape
Communications chief executive James Barksdale, who asserted that
Microsoft, through predatory conduct, had so pushed Netscape into a
corner that his company could no longer get computer makers to provide
its browser with their products. It turned out, however, that just as
Barksdale was testifying, America Online was midway through a review
process to determine whether to buy Netscape. One figure Netscape gave
showed that the company's browser was being bundled on 24 percent of
the personal computers being sold by the 20 largest manufacturers last
fall. The governments lead lawyer David Boies called the problem a
minor inconsistency and noted that while Netscape may have been on 24
percent of the new computers, Microsoft's Web browser was on all of
them, since it came included with Windows.
(Free registration to the NY Times required)

* Symantec former executive testified in Microsoft's defense *
Gordon Eubanks, former head of Symantec Corp., gave a deposition in
defense of Microsoft. In a statement issued in advance of his
testimony, Eubanks made the following points: 
The rapid pace of change in the software business means noone,
including Microsoft, could have predicted how the computer and
communications technology industry would evolve in the last 10 years.
Developers building mass market software products need a stable and
consistent development platform, and that standard operating systems
like Microsoft's are important to the evolution of the personal
computer industry, providing benefits of high volumes and low costs.

* The Bristol and Caldera antitrust lawsuits *
Microsoft went on trial in a private antitrust suit, accused by Bristol
Technology of illegally denying access to the source codes for the
Windows operating system it needed to create new products.,4586,2269524,00.html

Microsoft's lawyers argued that the company's former practice of
charging computer makers based on the number of machines they sold
whether or not they came shipped with Microsoft's MS-DOS was perfectly
legal because it did not "substantially foreclose" marketing channels
for Caldera's DR-DOS, an operating system that competed head on with
MS-DOS in the late 1980s and early 1990s. Caldera is seeking damages of
.6 billion in the lawsuit. Caldera attorney Stephen Susman said
Microsoft's own documents, as well as testimony from computer sellers
contradicted those claims.

If you know of any cyberlaw updates, please send them to

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

Yedidya M. Melchior 

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