The Independent Counsel

Internet Law

A New Arena for Legal Conflict


Many varieties of legal conflict long familiar to the marketplace are now being imported into cyberspace as the Internet and its commercialization proceed apace. This process is an uncertain one, however, as the legal principles developed for face to face transactions between real actors may not always be easily adapted to electronic dealings among remote parties.

The following instances illustrate this problem:

Software Piracy

A software pirate can now copy commercially available programs over the Internet without the necessity of ever meeting their owners or licensees, or loading a disk, thus making the pursuit of software pirates somewhat elusive. Two recent cases illustrate this fact:

In United States vs. Lamacchia, a criminal prosecution failed against an MIT undergraduate who operated a computer bulletin board out of his dorm room offering, to anyone who cared to log in, the opportunity to copy, at no charge, various commercially available software programs. The federal government’s criminal complaint against Mr. Lamacchia was dismissed because he derived no profit from the activity.

In Macromedia Inc. v. VRHacker, et al. Macromedia Inc., a software company producing large, multimedia development tools obtained injunctions and damages through a civil suit in the U.S. district Court for the Northern District of California in April 1995 against participants in various America OnLine “chat rooms” who had unlawfully copied the plaintiff’s software from each other. Most of the defendants named in the case agreed to cease such copying, and some paid damages. However, the parties named in the complaint represented only relatively small sampling of the participants to this conduct.

OnLine Pornography

The enactment and enforcement of reasonable legal controls on the global dissemination of pornography on the Internet continues to bedevil lawmakers and law enforcement officials alike.

The Congress recently passed Senator Exon’s bill against the posting or downloading on-line of “obscene, lewd, lascivious, filthy or indecent material.” The First Amendment implications of such a broad content restriction have yet to be tested in court.

In United States v. Thomas, the federal government obtained the pornography convictions in Tennessee of a Milpitas, CA couple who ran a California based on-line bulletin board. Since the pornography laws apply local, “community standards” to what constitutes pornography, a chief issue in the case was the ability of the prosecutor to apply the community standards of Tennessee to California perpetrators.

Trademarks and Trade Names

The choice of an Internet domain name is only now becoming recognized as the use of a trademark. Thus, until recently for example, if someone other than the famous soft drink manufacturer registered as a domain name with Internic, the body that allocates and tracks such names, the owner of the Coca Cola trademark had no remedy other than a lawsuit. Internic’s policy was: “First come, first served”.

Recently, however, Internic announced a procedure whereby the owner of a registered trademark that is being used by a third party as a domain name in a conflicting manner can contact Internic with proof of the registration, Internic will put a hold on that third party’s use of the owner’s trademark. The full implications of this policy under trademark and contract law remain to be thrashed out in the courts.

On-line Libel.

It is still unclear what remedies and penalties exist for one party’s malicious and knowingly untruthful “flaming” of another on the Internet.

Last summer, in Stratton Oakmont, Inc. v. Prodigy OnLine Services , the New York Supreme Court, (Ain, J., Mineola, L.I.) found the Prodigy on line service might be held legally liable for allowing one of its users to libel another user on its service. The judge based his ruling on the fact that Prodigy advertised itself as family oriented bulletin service that screened its postings.

The judge in the Stratton Oakmont case denied a motion several weeks ago by Prodigy for reargument and rehearing on the grounds that the new issues raised in the motion would better be heard by a court of appeal than at the trial court level. The judge found: “This is a developing area of the law, so that there is a real need for precedent.” Vacating the decision, he wrote, “would remove the only existing New York precedent in this area, leaving the law even further behind the technology.”

In a related area, the state of Connecticut recently enacted a statute under which someone who subjects an on line correspondent to repeated, unwanted contacts can be prosecuted for harassment.

The above items merely highlight the many legal developments that are now taking place on the Internet. The full scope of these should continue to be both litigated and legislated for years to come.

Comment: The commercial excitement generated by the Internet’s growth is spreading to the legal arena, where growth is creating opportunities as well as problems. Watch this space for further developments.

© ASSOCIATION OF INDEPENDENT GENERAL COUNSEL 1996; (all rights reserved). This article is not intended as legal advice. Consult a qualified attorney for assistance concerning a specific issue or problem.