The Mishpat-Update #15


Welcome to the fifteenth issue of the weekly Mishpat-Update, Law 
on the net from http://mishpat.net

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In this issue:

1. Introduction
2. Contradicting jurisdiction decisions?
3. Cyberlaw News
4. News from the Microsoft Antitrust trial

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

I would like to welcome the 22 new subscribers who joined the list this
week. 

After last weeks' main article brought an Australian jurisdiction case,
two interesting rulings from the U.S. were issued lately, that use a
different kind of reasoning while trying to resolve online personal
jurisdiction issues. A review of the two cases appears in the next
section of this newsletter.

Many new readers have joined the list in the past two weeks. I promise
to update the archives this week. The Mishpat Update archives (issues
1-10) is available at http://mishpat.net/mailing-lists/update



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#########################################
2. Contradicting jurisdiction decisions?
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Last week I presented you with a ruling issued in New South Wales,
Australia. The Australian court decided not to Exercise jurisdiction
over an Australian citizen residing in the US, who posted allegedly
defamatory messages on the web (even though the information is
accessible from Australia as in any other jurisdiction). This week we
bring two American rulings from different states with different
outcomes.

A federal district court in Virginia ruled that AOL members can be
hauled into a Virginia court to answer for lawsuits, no matter where
they live. In Bochan v. La Fontaine, Judge T.S. Ellis said because the
Texas defendant used his AOL account to post an allegedly libelous
message to a Usenet group, the e-mail must have been stored temporarily
in AOL's Usenet server before it was distributed to other Usenet
servers. 

The Bochan case began as a war of words among conspiracy theorists
speculating about the death of President John F. Kennedy at the online
newsgroup, alt.conspiracy.jfk. Steve N. Bochan, purchased a copy of a
book about the JFK assassination, "Oswald Talked: The New Evidence in
the JFK Assassination". Bochan disagreed with the book's authors and
aired his views by posting comments to the newsgroup. The Texas based
journalists who authored the book, Ray and Mary La Fontaine, responded
to Bochan in a heated discussion over a series of Usenet posts. Bochan
alleged that in some of their messages, the La Fontaines accused him of
being a pedophile. Bochan filed lawsuit for defamation and intentional
infliction of emotional distress. 

The La Fontaines asserted that the Virginia court did not have personal
jurisdiction over them. The La Fontaines had no business or personal
ties with Virginia. Under state law, the court would only have
jurisdiction over them if they caused injury by an act in Virginia.
Because the La Fontaines posted their comments to the newsgroup using a
Texas based ISP and their AOL account, the judge determined that the
defamatory messages were transmitted first to AOL's Usenet server in
Loudoun County, Virginia. There the message was both stored temporarily
and transmitted to other Usenet servers around the world. 
Judge Ellis ruled that because publication is a required element of
defamation, and evidence showed that the use of a Usenet server in
Virginia was integral to that publication, there was sufficient
activity in the state of Virginia to allow for jurisdiction over the La
Fontaines.


In contrast, a panel from the California Court of Appeal for the Second
District ruled that hosting a Web site with a company whose servers are
located in California is insufficient grounds for courts in the Golden
State to have jurisdiction over the site. 

The decision stems from a defamation lawsuit filed against the Jewish
Defense Organization (JDO), which in 1997 claimed on its Web site that
the plaintiff, Steven Rambam, "secretly admires the Nazis and hates
Jews" and "is a dangerous psychopath who tried to kill his mother." 

Rambam sued the New York City based organization and its founder,
Mordechai Levy, in state court in Los Angeles. He argued that their
contracts with free web hosting companies GeoCities and Xoom.com
located in California gave courts in the state jurisdiction over the
matter. 
The three judge appellate panel unanimously disagreed, saying the use
of the California companies did not satisfy the conditions required to
give California courts specific jurisdiction over the nonresident
defendants. 

The courts reasoning was that: "Defendants were mere customers of
Internet service providers who happen to maintain offices or databases
in California; such providers were engaged by JDO from its computer in
New York ... we conclude that defendants’ conduct of contracting, via
computer, with Internet service providers, which may be California
corporations or which may maintain offices or databases in California,
is insufficient to constitute 'purposeful availment' and does not
satisfy the first prong of the three-part test for specific
jurisdiction. In light of our conclusion, we need not address the other
prongs of the test for specific jurisdiction, or the motion to stay or
dismiss on grounds of inconvenient forum."


The Virginia decision means that any of AOL's 17 million subscribers
who write potentially objectionable messages are at risk of being
forced to appear in Virginia courts. While the California ruling means
that the millions hosting a website on Xoom or Geocities can not be
forced to appear in California although their potentially objectionable
messages are permanently stored in California (the Virginia ruling only
requires temporarily storing the posting on a server in Virginia).

There are different explanations to the different conclusions in the
two cases. 
Firstly, different jurisdictions have different long arm statutes and
therefore courts applying the different statutes end up with different
results.

Secondly, the problem of jurisdiction over internet postings isn't yet
fully resolved. While the California ruling follows the mainstream of
jurisdictional rulings (and in my personal opinion the correct one)
requiring more than just posting information on a passive web site in
order to assert jurisdiction, there are different opinions in case law
(especially American) that, as the Virginia ruling shows, are still
acceptable in some jurisdictions.


The full text of the California ruling can be found at:
http://www.courtinfo.ca.gov/opinions/documents/B129319.PDF
(Requires the Free Adobe acrobat reader in order to read files in PDF
format).


More details about the Virginia ruling can be found in the following NY
times story:
http://www.nytimes.com/library/tech/99/06/cyber/cyberlaw/11law.html
(Free subscription to the NY Times required).


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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.


* Porsche losses domain name case *
Porsche Cars North America Inc. was hit with a legal setback when a
federal court threw out Porsche's lawsuit against the holder of the
porsche.net and porsche.org Internet domains (the lawsuit was described
in last weeks issue). The Court ruled that the sports car maker can
only sue the persons or entities individually who registered the
Internet domain names ("In personam" lawsuit), but cannot sue just the
domain names ("In rem" lawsuit). In an in rem suit, the plaintiff sues
property or things instead of people or organizations. Porsche's "in
rem" legal tactic was simultaneously suing all the 138 registrants,
some of whom are located outside the United States or whose identities
can't easily be gleaned from Internic records. Internet free speech
advocates had criticized the Porsche legal strategy for casting too
wide a net and snaring fan and car club sites and not only those
registered by speculators. Porsche said it intends to appeal
the ruling.
http://www.internetnews.com/bus-news/article/0,1087,3_135971,00.html


* Furby domain dispute *
Leah Wesolowski started Furbyinfo.com, a Web site dedicated to
providing news and information about "Furby" the interactive fuzz bull.
Tiger Electronics, a division of toy giant Hasbro filed a lawsuit
against the Alabama mother of four. The company claims that
Wesolowski's use of the name Furby in her site's title violates their
trademark and has insisted that she turn over the domain name as well
as another similar site name she registered last year. Wesolowski says
she tried to end the dispute telling Hasbro's lawyer that she would
turn over the domain names if the company would reimburse her
registration costs, but Hasbro refused. "It would have been about
," Wesolowski told Newsweek.com. "Less than he makes in an hour I'm
sure." 
http://www.newsweek.com/nw-srv/tnw/today/cs/cs01tu_1.htm


* Government encryption control
A study by the Electronic Privacy Information Center (EPIC) found that
international export restrictions are still a major obstacle to the use
of encryption. According to the report, countries are backing away from
using key escrow and key recovery (tools which enable governments to
access private messages during investigations), methods the U.S. has
encouraged. France is the latest government to back off its proposal
for key escrow encryption. In addition, few countries are currently
imposing domestic controls on encryption. Clinton administration
officials say some controls are needed to ensure encryption isn't used
by international criminals. The U.S. policy is impacting the
competitive position of American companies, not allowing them to sell
products with strong encryption.
http://www.computerworld.com/home/news.nsf/CWFlash/9906104epic

Meanwhile, the German government came out strongly in favor of placing
no restrictions on encryption. The move appears to confirm that the
German government plans to put the interests of user privacy ahead of
the desire to control criminal activities. 
http://www.computerworld.com/home/news.nsf/CWFlash/9906071gerpriv


* Who holds eBay reputation? *
eBay's (the largest online auction site) "feedback ratings" are logged
in as buyers and sellers rate their experience when doing a transaction
on eBay. Transactions are ranked as positive, negative, or neutral, and
those votes are turned into numerical ratings, which eBay uses to
measure user satisfaction. eBay claims these ratings are proprietary
and cannot be cited on other person to person auction sites. Tiny,
Toronto based auction site eDeal is rebelling against the rule and
continues to let users cite their eBay ratings on its site. Meanwhile,
Yahoo Auctions quickly complied with eBay's demand earlier. 
Earlier this year eBay added a new clause on feedback ratings to its
user agreement that states: "Because feedback ratings are not designed
for any purpose other than for facilitating trading for eBay users, we
may suspend or terminate your account if you choose to market or
promote your eBay feedback rating on any venue other than eBay". But
it's the user's time, the user's data, and the users reputation, so why
should eBay own that data?
eDeal, is trying to get support from major auction sites to create a
public database that includes feedback ratings from all auction sites.
The company says such a database would help auctioneers compete with
eBay, which has a huge lead over smaller sites. 
http://www.wired.com/news/news/business/story/20148.html


* Another episode of the "Nuremburg Files" *
The "Nuremburg Files" anti-abortion web site gained notoriety earlier
this year when it became the subject of a lawsuit in Oregon. A federal
jury ordered several anti-abortion groups that contribute to the site
to pay  million in damages because the tactics amounted to illegal
threats. The "Nuremburg Files” site contains Wild West style wanted
posters of abortion doctors. It also lists the names and addresses of
abortion doctors, with those who have been killed crossed out and those
injured listed in gray. 
A few days after the verdict, MindSpring Enterprises, which provided
the Internet space for the site, closed it for violating the company's
“appropriate use policies”. Neal Horsley, the operator of the
"Nuremburg Files” said the move was a form of censorship and is suing
MindSpring for  million for allegedly destroying hundreds of
e-mails when it sent the site offline (The site invites readers to send
in abortion doctors’ addresses, license plate numbers and the names of
their children).
http://www.lawnewsnet.com/stories/A2165-1999Jun9.html


* Demon won't appeal UK libel ruling *
Demon, a major UK Internet service provider will not appeal a high
court ruling that last March found the firm responsible for postings on
its newsgroup servers (full details were reported in Mishpat Update #4
and #5). The case sets a strong precedent that ISPs in the United
Kingdom could be held liable for the content of potentially gigabytes
worth of materials that pass through their servers daily. 
http://www.wired.com/news/news/politics/story/20107.html


* Contempt for sending an Email? *
On Feb. 10, the entire US D.C. judiciary received an e-mail filled with
vulgarities and aimed at Superior Court Judge John Bayly Jr. The
message revealed that the author was Jonathan Rees. At the time, Judge
Bayly was presiding over Rees' divorce case, which had been going on
for eight years. Bayly ordered that Rees show cause why he should not
be held in contempt for violating a previous judge's 1992 order
prohibiting him additional filings in the divorce matter without
judicial approval.
But in a hearing before Superior Court Judge Michael Rankin, Rankin
decided against prosecuting Rees for the contempt charge because Rees
did not receive sufficient warning that his actions violated the 1992
order. At the hearing, Rankin said any order will put Rees on notice
that any further e-mails to D.C. judges would be grounds for contempt.
But Rees' attorney says that prohibiting his client from communicating
with the judiciary would infringe on Rees' right to free speech.
http://www.lawnewsnet.com/stories/practice/techlaw/news/A2066-1999Jun7.html


* Intel's antitrust problems *
Microsoft isn't the only computer giant facing antitrust problems.
After settling with the US Federal Trade Commission in March, Intel
(the giant chip maker) faces two private antitrust lawsuits. A federal
judge hearing Intergraph's patent infringement lawsuit against Intel
has rejected a key defense raised by Intel, holding that it did not
have rights to the disputed technology at the core of the case.
http://www.news.com/News/Item/0%2C4%2C37465%2C00.html

In a federal lawsuit, Multivideo Labs alleges that Intel crushed a new
device for universal serial bus technology, because it would harm
Intel's dominance in the chip market. A universal serial bus (known as
USB) allows peripheral devices such keyboards or Zip drives to plug
into personal computers without having to be configured first. The
Multivideo Labs suit alleges Intel assumed a dominating role at the USB
Implementers Forum which sets standards for USB technology (Intel's
Steven Whalley is chairman of the forum), and put the dampers on a
technology known as AEC, which allows peripherals to connect to PCs
more easily. Multivideo, which makes AEC, is seeking at least 
million in damages. 
http://www.lawnewsnet.com/stories/A2092-1999Jun7.html


* Ex UK spy flees from British Officials *  
Former English spy Richard Tomlinson, wanted in London for posting a
list of British intelligence officers on the Internet, has fled 
Switzerland and is on the run and out in the cold in Europe (the case
itself was reported in Mishpat Update #11).
http://www.news.com/News/Item/0%2C4%2C37573%2C00.html


* Open access to cable network *
In a blow to the telecommunications giant AT&T, U.S. District Judge
Owen Panner said cable regulators in Portland had the right to make
open access a condition for their approval of AT&T's  billion
purchase of cable-TV giant Tele-Communications Inc. From an Internet
perspective, the Portland ruling is very good news for independent ISPs
like MindSpring and EarthLink because it guarantees they won't be
locked out of providing cable modem access.
http://www.zdnet.com/zdnn/stories/news/0,4586,2270297,00.html



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4. News from The Microsoft Antitrust trial
###########################################

The Microsoft antitrust trial resumed last week after a three month
break and is now in it's rebuttal phase.


* IBM v. Microsoft *
Garry Norris of the International Business Machines Corporation (IBM)
testified that despite the absence of a clear cut requirement that IBM
drop its OS/2 operating system, the steps called for in Microsoft's
contract proposals would have had the "effect of killing OS/2 in the
marketplace." Microsoft also wanted IBM to delay the shipping of "Lotus
Smart Suite" (an office suite programs competing with "MS Office")
which IBM acquired when it bought Lotus Development Corp. Norris, the
first representative of a PC maker to appear as a Government witness,
has contended that Microsoft repeatedly tried to put pressure on IBM to
favor Microsoft software and exclude rival offerings which is a central
theme in the sweeping antitrust suit against Microsoft. 
During cross examination, Microsoft's lawyers introduced evidence,
including internal IBM E-mail, that sought to portray the company's
relations with IBM as the capitalist arm wrestling of two powerful
companies, not as Microsoft playing a bullying monopolist. 
Microsoft attempted to discredit Norris by showing that the companies'
relations in 1995 were strained because of a "smear campaign" IBM waged
against Windows 95 as well as millions of dollars in royalties IBM owed
Microsoft. But judge Jackson appears to have lost his patience with the
approach and at one point snapped at Microsoft attorney Rick Pepperman. 
http://www.lawnewsnet.com/stories/A2091-1999Jun7.html
http://www.computerworld.com/home/news.nsf/CWFlash/9906071mstrial


* Does Microsoft's browser integration create security risks? *
Judge Jackson may have given the government some powerful help by
questioning whether a Web browser on a PC creates a security risk.
Jackson raised the security issue during testimony of Princeton
University computer scientist and government expert witness Edward
Felten, the government's third and final rebuttal witness. 
Jackson asked Felten if including a browser with an operating system
creates security vulnerabilities, such as potential virus infections.
The question was aimed at Microsoft's decision to make Internet
Explorer an inseparable part of Windows 98. 
Felten answered that "If you're a corporate system administrator
concerned that inexperienced users might accidentally download a virus,
you might well choose not to have a browser in order to prevent that
means of spreading a virus." By raising the issue of security, Jackson
was in effect suggesting another reason why including the browser as
part of the Windows 98 has harmed users. 
http://www.news.com/News/Item/0,4,37649,00.html

Judge Jackson's question became extremely relevant as another "worm"
virus attacked computers around the world this weekend. The
"Worm.ExploreZip" virus attacks Microsoft office files and spreads
through Microsoft's Outlook email client (like the former "Melissa"
virus).
For more information about the new virus, visit:
http://www.zdnet.com/zdnn/stories/news/0,4586,2273505,00.html


* Gates testifies in Bristol antitrust case *
Microsoft Chairman Bill Gates denied in a deposition that his company
had tried to freeze out Bristol Technology Inc., a software company,
after initially giving it access to Windows programming code. 
But lawyers for Bristol Technology Inc. grilled Gates about an e-mail
message in which he wrote that Microsoft was choosing Bristol's main
competitor, Mainsoft Inc., as its partner, and "revving up their
activities." 
Bristol makes a product called Wind/U, which allows programs that were
written for Windows to run on computers with different operating
systems, such as Unix. 
In 1994, Microsoft signed a three year contract with Bristol giving the
company access to programming code for Windows NT 3.0. When the
contract expired in 1997, the two companies could not come to an
agreement. Bristol claims Microsoft promised to make the code available
into the future. Microsoft says Bristol is trying to get more favorable
licensing terms for a new contract. 

http://www.nytimes.com/library/tech/99/06/biztech/articles/08microsoft-connecticut.html
(Free subscription with the NY Times required)

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

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

Yedidya M. Melchior 
Editor 

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