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The Mishpat-Update #20

Welcome to the twentieth issue of the weekly Mishpat Update, Law 
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In this issue:

1. Introduction
2. Canadian Child Porn Law held unconstitutional
3. Microsoft wins Bristol case
4. Cyberlaw new and updates


1. Introduction

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

There are two major cyberlaw stories in this weeks issue. 
First, as promised last week, we take a look at the decision by the
British Columbia Court of striking down the Canadian Criminal Code
provision that creates an indictable offense for the simple possession
of child pornography.
The second story is Microsoft's victory in an antitrust case brought
against it by a small software manufacturer. The case isn't directly
connected to the U.S. government's case against Microsoft, but the
findings might have some impact on the trial's outcome.
The rest of the computer and internet law news, can be found in the
cyberlaw updates section.

The Mishpat Update archive has been updated this week, issues 1-19 are
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
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2. Canadian Child Porn Law held unconstitutional

The Canadian Criminal Code provision that creates an indictable offense
for the simple possession of child pornography has been struck down on
constitutional grounds by the British Columbia Court of Appeal in a
lengthy (70 pages) 2-1 decision. Since many countries have similar laws
and provisions, we bring a summary of the case and the different
opinions made by the three judge panel.

* The law *

John Robin Sharpe was charged, in the Province of British Columbia
(Canada), with 4 counts of possessing child pornography for the purpose
of distribution or sale. Some of the material was on computer discs.
The possession of child pornography is a violation of section 163(1) of
the Canadian criminal code that states:

"163.1 (1) In this section, "child pornography" means
(a) a photographic, film, video or other visual representation, whether
or not it was made by electronic or mechanical means,
(i) that shows a person who is or is depicted as being under the age of
eighteen years and is engaged in or is depicted as engaged in explicit
sexual activity
(b) any written material or visual representation that advocates or
counsels sexual activity with a person under the age of eighteen
(2) Every person who makes, prints, publishes or possesses for the
purpose of publication any child pornography is guilty of
(a) an indictable offence and liable to imprisonment for a term not
exceeding ten years
(4) Every person who possesses any child pornography is guilty of 
(a) an indictable offence and liable to imprisonment for a term not
exceeding five years

* The Internet's role *

The Internet connection in this case lies in a testimony by Detective
Waters who described how the Internet became the chief means of

"Through investigations that I've been involved in and search warrants
that have been executed. I have observed that ... the biggest or the
largest volume of material is being distributed through the use of the
Internet ... We've seen the older child pornography publications that
were produced in Europe and Asia that are now showing up on computer
and being distributed on the computers through the Internet. The
pictures are scanned, which means that they are changed into an
electronic format and placed on disk -- computer disk. It's been an
electronic format on disk and then can be distributed through the
computer ... through e-mail or chat rooms or ICQ ... Also, the material
can be placed onto CD-ROMs which are another method of storing the
material on a type of disk..."

* The Canadian Charter *

The first sections of the Canadian Charter of Rights and Freedoms
(which states the constitutional rights of Canadians):

"1. The Canadian Charter of Rights and Freedoms guarantees the rights
and freedoms set out in it subject only to such reasonable limits
prescribed by law as can be demonstrably justified in a free and
democratic society.

2. Everyone has the following fundamental freedoms:
(b) freedom of thought, belief, opinion and expression, including
freedom of the press and other media of communication..."

* The Ruling *

Madam Justice Southin delivered the majority opinion. Following is a
summary of her reasoning:

"... It is not a crime to possess expressive material which advocates
genocide, it is not a crime to possess expressive material which is
seditious, and it is not a crime to possess that which is obscene. ...
There is good reason for such freedom from intrusion being a profound
constitutional value. This has been the century of the Gestapo and the
KGB - of a state encouraging betrayal by children of their parents to
the authorities, of smashing down doors and burning books, all in the
name of some concept of the greater good. Even if the possession of
material which advocates or counsels crime may lead to the inference
that the possessor has bad thoughts and thence to the conclusion that
he might or even will commit the crime thus advocated, it is not within
our political ethic to make the possession itself a crime. ... I
conclude, therefore, that legislation which makes simple possession of
expressive materials a crime can never be a reasonable limit in a free
and democratic society. Such legislation bears the hallmark of
In so concluding, I am not rejecting the concession of counsel that the
protection of children from sexual exploitation is a pressing and
substantial concern of our society. I am saying that some other way
than making simple possession of this sort of material a crime ought to
be found to attack it."

Madam Justice Rowles used different reasoning for holding the
provisions unconstitutional, giving greater importance to fighting
child pornography:

"The assertion that s. 163.1 of the Criminal Code, taken as a whole,
including its prohibition on simple possession, is directed at concerns
that are pressing and substantial in Canadian society is not in
contention ... Moreover, the need to protect children from all forms of
sexual exploitation and child abuse is reinforced by the terms of the
United Nations Convention on the Rights of the Child ("UNCRC")."

But Justice Rowles comparing the provisions to similar law in other
common law countries (the U.S., England, New Zealand and Australia)
concluded that the definitions in the criminal code were too broad:
"Rather than the extent of criminalization being limited to
dissemination of child pornography, the impugned law makes private
possession of expressive material a criminal offence. Making it an
offence to possess expressive material when that material may have been
created without abusing children and may never be published,
distributed or sold, constitutes an extreme invasion of the values of
liberty, autonomy, and privacy protected by the rights and freedoms
enshrined in the Charter ... That seems to me to be particularly so
considering the profound violation of freedom of expression and privacy
which results from making the private possession of works of a person's
own imagination a criminal offence."

Chief Justice McEachern disagreed and held that:
"Possession for purely innocent purposes cannot be assured by any
legislation and it is impossible to know how much harm will be done to
children by allegedly innocent possession. Future harm to children
cannot be predicted with any degree of accuracy. Any real risk of harm
to children is enough to tip the scales in favour of the legislation in
the context of this case ... Thus, it seems to me, Parliament, without
creating any additional "sexual" offences, has considered it necessary,
in order to carry out its legislative purpose, to require that anyone
who imagines or muses about sex with children, refrain from recording
or possessing such material lest it get into the wrong hands and cause
harm to children ...
Thus, on balance, I find that the beneficial effects of s. 163.1(4),
prohibiting the possession of pornographic material as defined for the
protection of children, outweigh the importance of a right likely to be
enjoyed by those extremely few persons who may wish to possess such
material for private innocent reasons. I believe the section satisfies
the proportionality test.

The ruling will now probably be appealed to the supreme court of
The full text of the decision in R. v. Sharpe can be found at:

3. Microsoft wins Bristol case

A federal jury in Connecticut, decided that Microsoft did not commit
federal antitrust violations in its dealing with Bristol Technologies
of Danbury, Connecticut.

Bristol had asked the jury for up to 263 million U.S. dollars in
damages, accusing Microsoft of denying access to computer code it says
it needs to design products. The suit said Microsoft initially
supported Bristol's Wind/U product, which lets users run Windows
applications on computers using the Unix operating systems. Bristol
alleged that once Microsoft's Windows NT software had become
established in the server and workstation business, Microsoft raised
licensing fees to Bristol and refused to provide adequate technical
support for Wind/U. 

Microsoft denied the allegations and said Bristol chose to sue, hoping
for big damages, rather than negotiate to reach a new licensing
agreement for the source code. Microsoft lawyers argued that Bristol
adopted a "sue Microsoft for money business plan". That was Microsoft's
explanation as to why a company that sold 7.8 million USD of software
last year, was asking for 263 million from Microsoft.

The jury sided with Bristol on only one count in its complaint. The
jury decided that Microsoft violated a Connecticut state law regarding
unfair trade practices, and awarded the company a nominal  in
The Bristol case is only one of Microsoft's antitrust fronts (that have
been reported in previous issues of the Mishpat Update). The Bristol
decision is unrelated to a suit pending in federal court in Washington
in which the U.S. government alleges that Microsoft used its monopoly
power in Windows to compete unfairly. But Judge Thomas Penfield
Jackson, the trial judge in the government case, is certain to take
notice of the Bristol case. In addition, Utah based Caldera Inc.
accuses Microsoft of using unfair tactics to destroy a competitor to
Microsoft's MS-DOS operating system. 

A detailed report of the bristol case can be found at:

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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.

* Playboy loses trademark suit against Netscape & Excite *
U.S. District Judge Alice Marie Stotler rejected Playboy's request for
preliminary injunction that would have barred Excite and Netscape from
selling ads linked to Playboy trademarks. The ruling states that
internet search engines and directories aren't in violation of
trademark laws when they sell advertisements linked to such trademarked
search terms as Playboy and Playmate. More details about this case, and
an explanation on keyword advertising, will appear in next week's
Mishpat Update.

* 37,000 dollar fraud on Ebay *
Robert Guest, 31, from California, pleaded guilty to mail fraud
involving a number of auctions he posted on the popular auction site (EBAY). Guest put up various consumer electronics items for
sale on the site, but failed to deliver the items after collecting
payments. Prosecutors say Guest collected about ,000 from bidders
between March and May of last year. Since these events occurred, eBay
has added a number of security measures, including an insurance option
for buyers and an escrow service in which the payment is held by a
third party until the item is delivered.

* ICANN's financial trouble *
The Internet Corporation for Assigned Names and Numbers (ICANN), the
nonprofit organization that oversees Internet domain name registration,
is out of cash and has racked up  million in unpaid bills. 
Until recently, Network Solutions Inc. (NSI) assigned most Internet
domain names under a contract with the U.S. government. The Clinton
administration targeted NSI's monopoly position in 1997, when it
announced plans to privatize the management of Internet domain name
allocation. Last November, the Department of Commerce selected ICANN to
oversee the privatization process. To get started, ICANN raised more
than ,000 from networking companies. Those funds were intended to
maintain ICANN's activities until a regular source of income, such as
registration fees, could be established. For the past few months, ICANN
has been experiencing a severe cash crunch because of delays in the
development of a competitive domain name registration market and higher
than expected operating costs. ICANN is seeking funds from its original
donors, the Commerce Department, trade groups and government agencies
outside the U.S. 
ICANN planned to raise money by initiating a ,000 annual fee for
registrars and a  annual fee for domain name registrations. However,
NSI has refused to pay the fee. And because registration by other
companies is just beginning, ICANN has yet to receive any revenue from
fees. Bowing to protests against the controversial move, ICANN has
deferred its proposed  per year, per domain registrar fee program.
Instead, ICANN will form a task force of the DNS infrastructure
entities which will recommend a "fair and workable" cost recovery plan
for the organization.,1087,3_164621,00.html

* 'Lara Croft' wins over Playboy *
UK High Court Judge Humphrey Lloyd granted an injunction brought by
Core Design Ltd. owners of the popular 'Tomb Raider' computer game
(featuring sexy heroine Lara Croft) and ordered that stickers be placed
over the Lara Croft and 'Tomb Raider' names on the cover of 20,000
copies of the August edition circulated in Britain. Playboy connected
the names to a nude layout of a model said by the magazine to be real
life incarnation of the Lara Croft character.

* Nurses suspended because of porn web site *
George and Tracy Miller have been unable to work as critical care
nurses at Scottsdale Healthcare since July 1, when a supervisor told
them they were being sent home because they have an adult Web site.
George Miller said the couple created the site, to put aside college
money for their 11 year old son and 5 year old daughter. The Web site
features nine photos of the bare breasted Tracy Miller and promises
more -- "sex live on the Internet" -- to those who pay .95 a month.
Predictably, the number of members climbed sharply after their story
was publicized, leaping from 2,200 to about 4,000. 
The case is believed to be the first in which workers have been
sanctioned for creating a Web site on their own time that makes no
mention of their employer. The Arizona chapter of the American Civil
Liberties Union has found the Millers' case intriguing enough to
research the legal questions it raises as it considers whether to go to
bat for the couple. One area being explored is whether since the
hospital receives federal funding from Medicare and Medicaid programs,
it can be held to the stricter termination standards that apply to the

* Clinton signed the Y2K bill *
U.S. President Bill Clinton signed into law a bill designed to limit
lawsuits related to the year 2000 computer problem. Under the law, a
business will have 90 days after its officers learn of a computer
related year 2000 problem to repair the problem before suits can be
filed. The law is aimed at limiting frivolous suits by setting a
ceiling on punitive damages that small businesses face; and ensuring
that most defendants will be held liable only for the share of any
damages that they cause.

It was the first time in history, that Congress e-mailed the president
a bill to sign into law. Since Clinton can't enact a law in cyberspace
yet, A traditional signed parchment copy of the Y2K legal reform bill
was hand delivered afterwards, the old fashioned way.

* Rehearing brief in crypto case *
The Bernstein litigation team filed its Response to the Government's
Petition for Rehearing and Rehearing of the case in the 9th Circuit
Court of Appeals. The Bernstein ruling declared U.S. encryption
regulations unconstitutional, based on the right to the freedom of
speech. The brief argues that the panel majority's decision was correct
and needs no rehearing. The full text of the brief can be found at:

* CDnow sues Lycos over web advertising *
CDnow Inc., an online music seller, claims that the popular search
engine Lycos, and it subsidiary free web host Tripod Inc., broke their
promise to run CDnow's ads and reject all ads from CDnow's competitors. 
According to a law suit filed by CDnow, the three companies entered a
three year linking agreement in March 1998, in which CDnow promised to
pay several million dollar for the exclusive right to have a direct
link to its Web site on the Lycos and Tripod home pages. Lycos and
Tripod, in turn, promised not to accept any link ads from CDnow's
But according to the suit, Lycos and Tripod have repeatedly breached
the exclusivity clause, running ads that directly link to other music
retailers. CDnow also claims it was promised that its links would be
prominently displayed on the Lycos and Tripod sites, but that when the
two were redesigned in April 1999, the CDnow links were either
significantly "buried" or were removed entirely. 
Lycos claims that it had always tried to work with CDnow, even when its
concerns were "far afield" of what was required under the contract.
Lycos officials said that not only met all of its duties under the
contract, but surpassed them.

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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