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The Mishpat-Update #19

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

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In this issue:

1. Introduction
2. Netiquette and law
3. The UN and Internet Taxation
4. Cyberlaw new and updates


1. Introduction

I would like to welcome the 26 new subscribers who joined the list this

In previous weeks we took an in depth look at rulings from Australia,
Holland and the USA. This week we examine a Canadian decision regarding
possible connections between Netiquette and the law - details in the
next section.

In another important Canadian decision, the British Columbia Court of
Appeal in a lengthy (70 page) 2-1 decision, struck down the Canadian
Criminal Code provision that creates an indictable offense for the
simple possession of child pornography. The court ruled that the
provision violates the freedom of expression provisions of the Canadian
Charter of Rights & Freedoms. In the next issue I'll bring an outline
of the case, which I think is globally important since many
countries have similar criminal provisions.

A lot of hype was generated around the net about a United Nations (UN)
proposal for Internet taxation. In section 3 I'll try to clear things
out, and show that while it is an interesting idea (others say, a
frightening idea) it isn't yet close to becoming a recommendation by
the UN.

I'm sorry that this issue is a couple of days late. The next issue will
be sent next Tuesday. By then I will also update the Mishpat Update
archive (currently including issues 1-15) which 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 by sending
a blank email to

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2. Netiquette and law

A ruling by Judge Wilson, from the Ontario Superior Court of Justice in
Canada, appears to be the first time a court has ruled that spam
violates Netiquette.

The decision concerned Toronto ISP Nexx Online's 
decision to terminate the service to a client (BeaverHome.Com) that
allegedly was sending almost 200,000 unsolicited commercial emails each
day through a third party. The client sued, claiming that Nexx had
breached its contract. Nexx argued that it was justified in terminating
the service because the client had violated a provision of the service
agreement promising to follow Netiquette.

The contract between the parties included a provision stating that "The
Account Holder agrees to follow generally accepted "Netiquette" when
sending e-mail messages or posting newsgroup messages"

Therefore Judge Wilson tried defining Netiquette in order to answer the
question: "Does Unsolicited Bulk E-Mail Offend the Rules of
"This contract is governed by the rules of "Netiquette", which is
defined as the growing body of acceptable, though as yet largely
unwritten, etiquette with respect to conduct by users of the internet."

Judge wilson quoted the paper of John Levine, author of The Internet
for Dummies, entitled "Why is Spam Bad?" at, in which he summarizes six
important problems with spam advertising and why it is considered
1) the recipient pays far more, in time and trouble as well as money,
than the sender does, unlike advertising through the postal service; 
2) the recipient must take the time to request removal from the mailing
list, and most spammers claim to remove names on request but rarely do
3) many spammers use intermediate systems without authorization to
avoid blocks set up to prevent spam; 
4) many spam messages are deceptive, and partially or entirely
5) spammers often use false return addresses to avoid the cost of
receiving responses; 
6) some forms of spam are illegal in various jurisdictions in the
United States. 

In denying the client's motion for an order requiring Nexx to restore
service, Judge Wilson wrote:
"I conclude after reviewing the principles that emerge in the American
caselaw, the excerpts from the literature provided, and the reaction of
individual internet users that unless a service provider specifically
allows in the contract for unsolicited commercial bulk e-mail to be
distributed, it appears clear that sending out unsolicited bulk e-mail
for commercial advertising purposes is contrary to the emerging
principles of "Netiquette". 

The full decision is available at:

3. The UN and Internet Taxation

Mark Malloch Brown, the administrator of the United Nations Development
Program (UNDP) said that the United Nations doesn't endorse any kind of
global tax on Internet use to finance development aid. The statement
from Brown was in response to a proposal for such a tax in the annual
Human Development Report, published earlier this week by the UNDP.
Brown said the report is an independent publication that doesn't
necessarily reflect UNDP policy. 

Authors of the report said a tax of 1 cent on every 100 lengthy emails
(over 10 KB) would have generated more than  billion in 1996, and
could help provide technological aid to poor countries. The information
revolution risks further dividing rich and poor countries, the report
said. The proposal suggests that part of the revenue might be used to
develop lower income areas within nations, while the remaining revenue
might address global development.
Kate Raworth, economist and co-author of the Report, said that the UN
would be in no position to enforce the tax, and that the proposal was
merely a suggestion. Individual member nations will decide whether or
not to adopt the idea. 

Page 108 of the very interesting report states that:
"* Governance of global communications  especially the Internet - must
be broadened to include the very strong interests of developing
countries in decisions on Internet protocols, taxation, domain name
allocation and telephony costs.
* Public investment is needed in technologies to meet the needs of poor
people and countries, from drought resistant, robust seeds to humidity
resistant, solar powered computers.
* New funding mechanisms should be created to ensure that the
information revolution leads to human development, not human
polarization. Two proposals  a bit tax and a patent tax  would raise
funds from those who already have access to technology and use them to
help extend the benefits more widely."

The report also suggest changing international patent agreements:
"In an era of sweeping technological advance, it is inexcusable that
human poverty should persist  and that the technological gaps are
widening. Poor people and countries need a better deal from
technology's breakthroughs.
Global governance of intellectual property rights under the agreement
on Trade Related Aspects of Intellectual Property Rights, or TRIPS,
must be broadly and fully reviewed to create a system that does not
block developing countries from knowledge or threaten food security,
indigenous knowledge, biosafety and access to health care."

Currently these are only vague ideas, and not a full proposal for any
internet tax, but these ideas do raise questions such as: what is the
meaning of "global networking"? and what is the responsibility of
developed countries in a global community?

As I said, this is a very interesting (and lengthy) report. I will
probably discuss some of the facts and suggestion in one of the future
issues of Mishpat Update.

You can read more comments about this story at:

The full Human Development Report 1999 is available at:

4. 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.

* Patent search filed against Ask Jeeves *
IPLearn filed a suit against the search service "Ask Jeeves" for
allegedly infringing on IPLearn's patent on natural language
technology. Natural language queries let search engine users ask
questions in ordinary terms such as "Where can I find a map of Paris?"
or "Where can I buy tickets to the theater in London?". IPLearn's
suit alleges that Ask Jeeves is using a natural language search method
protected by its patent.

* Settlement in California gambling case *
Cynthia Haines from California used about 12 credit cards to rack up
,000 in online gambling debts and was sued by San Francisco based
Providian for not paying her bills. She countersued Providian,
MasterCard, Visa and about 50 Internet casinos. Haines sought to bar
the credit card companies and their issuing banks from collecting
gambling debts owed by California consumers, because gambling is
illegal in the state and online wagering is illegal in the U.S.
A settlement was reached last week between Haines and MasterCard. As
part of the settlement, MasterCard International issued new rules for
using its cards at Internet casinos. MasterCard will now require
Internet casinos that use its cards to ask gamblers where they live and
keep a record of the information. The company will also require the
sites to post notices stating that Internet gambling is illegal in
California and some other states.
As for the more than ,000 Haines owed MasterCard and its issuing
banks, an undisclosed settlement has been reached. A case is still
pending for the money owed to Providian and Visa. A trial date for
those debts is set for October.

* Third Voice raises security concerns *
The Web annotation utility Third Voice, previously raised question
concerning copyright versus the freedom of speech. The software works
as a browser companion. When installed on a personal computer, the user
can publicly annotate the face of any Web page. Comments and ensuing
responses are posted in the form of electronic sticky notes. Other
visitors to the site use their own Third Voice software to read the
comments attached to a site. 
Now it seems that copyright isn't Third Voice's only problem. The
software allows users to post not just text but programming code in
Third Voice notes. Once executed on other Third Voice users' computers,
the code, if maliciously designed, could perform a variety of tasks
such as causing faked versions of a Web page to appear to Third Voice
users. While the actual page wasn't changed, a page generated by the
JavaScript made it appear as if it had been. A Third Voice user
interacting with a fake page could unwittingly transmit sensitive user
data such as an ID and passwords for a the web site. 
Third voice actually suffers from some known security flaws with
Javascript, that make mixing pages that ask for passwords and
javascripts hackers' targets.

* EMC wins first round against HP *
A U.S. District Court judge issued a preliminary injunction ordering
Hewlett-Packard Co. (HP) to immediately discontinue infringing on EMC
Corp. trademarks in naming and marketing HP storage products.
Specifically, the court's order prohibits HP from using the letters 'E'
and 'MC' in any of HP's enterprise storage products.

* www-shopping domain name dispute *
Lawrence Tolliver had hopes of getting in on the e-commerce boom by
building a web portal site for online shopping. He spent hours at
domain registration sites trying to find the perfect address for his
online business, ultimately settling last July for Tolliver didn't know that he would have to face a
California company founded in 1996 as, which would later
be acquired by AltaVista Co. This past May, Tolliver's site came onto
the radar of Compaq's trademark attorneys (At that time Compaq owned
Altavista). The company sent him a letter saying he was infringing on
Compaq's trademark and demanded that Tolliver give up the site by June
10th. Although he says he can't afford to consult an attorney, Tolliver
said he's certain that Compaq is in the wrong, because "shopping" is a
generic term. To combat Compaq, Tolliver recently enlisted the help of
a group called the Domain Defense Advocate (DDA), which organizes
e-mail campaigns from Internet users on behalf of domain holders who
are the victims of "reverse hijacking.",1087,3_156711,00.html
The DDA's web site is located at:

* Microsoft sues software developer Timeline *
Microsoft said it filed a lawsuit for breach of contract against
Timeline, a business software developer it has worked with since 1995.
The software giant claims Timeline refused to acknowledge an agreement
giving Microsoft rights to a patent related to database analysis

* Hawaii state government site hacked *
The Hawaii state government Web site went offline after an episode of
hacker vandalism. The break-in occurred at the tail end of the long
holiday weekend, while most technical staff was off duty.

* "Dirty" domain names allowed *
For the first time web site owners are being allowed to register vulgar
addresses ending with ".com'. CORE (Internet Council of Registrars)
became the third organization to test a shared registration system
designed to end Network Solutions' (NSI) monopoly on registering '.com'
domain names. NSI has long forbidden the registration of obscene names
with several exceptions.

* Will Austria ban spam? *
With support from all five Austrian political parties, Austria's
Justice Commission last week recommended that the Austrian Parliament
amend the country's Telecommunications Law to forbid unsolicited e-mail
(spam). The changes would make it illegal to send e-mail without the
specific consent of users and would impose fines on those who disobey
the law. The move came after intense lobbying efforts from groups
representing both users and Internet service providers in Austria.

* Counterfeit CPU seized in Hong Kong *
Customs officers in Hong Kong arrested 17 men and women and seized 6
million Hong Kong dollar (773,000 USD) worth of re-marked CPUs in raids
on workshops in Kowloon Bay and Cheung Sha Wan. Re-markers take older,
slower chips and change the external identifying features, packaging,
and some of the circuitry so they can be sold as faster, more expensive
processors. According to initial inquiries by customs officials, the
goods were intended for export to European countries.

* GM web site not approved by Texas authorities *
The Texas Department of Transportation turned down General Motors Corp.
(GM) application to launch a web site to sell cars directly to
consumers in the Houston area. The application was rejected because of
a state law that prohibits a manufacturer to operate and control a
dealership in Texas.

* Singapore cashless sale system crash *
Consumers in Singapore saw a total of 400,000 Singapore dollars
(235,807 USD) wrongly debited from their bank accounts through a crash
in the country's cashless point of sale system. Many customers of the
Development Bank of Singapore Ltd. were told at retail outlets that
their purchase transactions through the nationwide Network for
Electronic Transfers (NETS) had failed. However, the magnetic stripe
card based system continued to debit the transaction amount from their
bank accounts. The NETS system is fitted with a time-out check, whereby
any transaction not completed within 45 seconds is rejected. A surge in
NETS use overloaded the ability of the bank's clearance system to
respond on time, causing transactions to be rejected, but the bank's
internal system had already debited customer accounts. The bank said it
reimbursed all affected customers within three days and credited them
with an extra dollar for interest lost.

* will have to change their slogan *
Challenging's claim that 'If we don't have your
book nobody does', a division of the Council of Better Business
Bureaus (ABA) has called for the online bookseller to discontinue or
modify the slogan. The American Booksellers Association, which filed a
complaint last December, compiled a list of 100 out of print titles and
found 24 that were available only through competitors of agreed to comply with the
decision, and will remove or modify the slogan over the next several

* Second Broad band victory for open access *
Broward County, Florida, became the second county (after Portland,
Oregon) in the U.S. to force AT&T Corp. to open its cable networks. The
Broward Board of County Commissioners voted in favor of mandated cable
access for independent Internet service providers. Cable companies
contend that their systems have been built with private capital and
shouldn't be opened to any company requesting access. 
As part of its recent acquisitions of Tele-Communications Inc. and
MediaOne, AT&T must ask city and county officials to transfer local
cable franchises. In the process, local regulators can require AT&T to
open its network to competitors. The result is that dozens of cities
will be facing similar decisions, as AT&T applies for franchise
transfers in the coming months.,1087,8_161641,00.html

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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