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An Introduction to Cyber Law

A Presentation at the

Asia Pacific Conference on e-commerceEast-West Center, Honolulu Hawaii

October 30, 2000

Rob Frieden, Esq.

Professor, College of Communications

Penn State University

+1 814 863-7996; email: rmf5@psu.edu

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The Bottom Line

The Internet already has triggered challengingquestions about the applicability of case precedent andlegal models for Internet-mediated communicationsand commerce.

At the macro-level, the Internet affects broad, almostmetaphysical concepts like matter, distance, time andspace.

At the micro-level, it directly impacts how wecommunicate, educate, entertain and transactbusiness.

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Technology Trends

The Internet provides a virtual medium forcommunications and commerce that transcendsmany of the limitations in the physical world.

This presents a mixed blessing: the capacity toachieve near parity with competitors located anyplace, offset by 24/7 expectations and thecomplexity in doing business across jurisdictions.

We must ascend new learning curves and makesizeable equipment investments to accrueefficiency and productivity gains.

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Marketplace Trends

The Internet reduces market entry barriers. It provides a new medium, that can reduce transaction

costs and promote frictionless commerce.

It can eliminate intermediaries that do not add sufficient

value (disintermediation), but it also can create newopportunities, e.g., content portals, auctioneers and B2Bbrokers.

It reduces comparative and competitive disadvantages

based on location alone. It offers the promise of faster,better, smarter, cheaper and

more convenient services.

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10 Driving Principles of the New Economy(see www.business2.com)

Matterlaw involves the processing of information and the Internet providesa comparatively superior medium for some applications.

Spacethe Internet transcends distance and provides a major newpromotional medium.

TimeInternet time moves faster than wed like.

Peoplebrain power and people skills matter particularly in an Internet-mediated world.

Growththe Internet can fuel market expansion.

ValueWeb pages offer prospective clients access to helpful generalinformation and for existing clients a portal to a some of a firms assets.

Efficiencyconsider whether and how e-mail enhances productivity. Marketsthe Internet makes markets more porous and more easily

customized.

Transactionswith modification, the Internet can provide a medium forcommerce.

Impulsethe Internet reduces the time between sales pitch and transaction.

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How the Internet Affects the Law

Internet mediation does not necessarily foreclose theapplication of preexisting laws; something unlawful,

regulated or licensed does not become lawful, unregulated

and unlicensed simply through Internet-mediation.

The transborder nature of Internet commerce and

communications challenges national sovereignty and the

jurisdictional reach of laws and regulations.

Technological innovations, coupled with the global reachof the Internet, threaten the viability of laws including ones

protecting intellectual property, privacy and consumers.

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How the Internet Complicatesthe Practice of Law

While Courts will extrapolate from pre-Internet models, not every precedentexactly works, e.g., did Microsoft violate the antitrust laws (does bundling aWeb browser add value or constitute an unlawful tying arrangement?)

The Need for Legislative Remedies, e.g., lawfulness of digital signatures: faxredux; Uniform Electronic Transactions Act; Uniform Computer InformationTransactions Act, Digital Millennium Copyright Act, etc.

Allocating riskthe Internet remains a risk-filled medium compared tocouriers and telephone; packets get lost, hackers invade privacy, infectnetworks, etc.

Mastering technologywe either have to retain Web masters and networkmanagers or become one ourselves.

New concernsprivacy, intellectual property rights protection, Internet-mediated First Amendment expression; choice of law; jurisdiction incyberspace; tax authority.

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Devising a Legal/Regulatory Modelfor the Information Age

Traditional Models

Print--publisher, distributor, newsstand, bookstore;

Broadcaster

Cable Television/Hybrid

Common Carrier/Public Utility (telephony)

Internet Service Provider--law conferredexculpation for serving as a conduit for some, but notall types of content subject to civil and criminalliability.

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Consequences of Technological and MarketplaceConvergence

Technology confounds semantic and regulatoryclassifications.

Markets no longer are mutually exclusive and self-contained.

In various applications the Internet serves as anewspaper, radio or television station, casino, bank,bourse, travel agent, shopping mall, telephone

company, etc. Consider the risks and rewards of one stop shopping

(discounts vs. unhealthy market concentration).

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The Risk to Consumers

No benevolent monopolist has survived. Consumers have greater opportunities to save, but also

greater risks for rip-offs and confusion, e.g., the fine print

in long distance deals; marked up universal service

charges; payphone roulette; slamming, cramming and

more.

Extraordinary merger and acquisition activity may lead to

unhealthy market concentration, but the prevailing view isthat the FCC takes too much time and imposes too many

safeguards unneeded under current conditions.

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Case Simulations

The Penn State Student arrested for e-mail harassment; downloadingpornography; MP3/Napster files; expropriation of University computer

processing time and resources; gambling; commercial use of Web

space; importation of alcohol into the Commonwealth.

First Amendment versus student code of behavior.

What constitutes contemporary community standards in cyberspace?

Fair Use versus copyright violations?

Research versus commercial exploitation of University resources?

Do Web users establish a presence outside Pennsylvania or do outsideventures submit to Pa. jurisdiction by doing business here?

Engaging in interstate commerce versus violating PLCB regulations?

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Conclusions

The Internet (and in particular the World Wide Web)already has begun to change how we communicate andengage in commerce.

However, the we is not inclusive: a Digital Divide

separates people with the finances, computer literacy skillsand interest and those lacking one or more of theseprerequisites.

We need to understand the risks and rewards of Internet

use. Legislators, regulators and judges must recognize how

Internet-mediation parallels older media, but also how itcreates new challenges and questions to existing models.