This issue represents my fifth year of publication, third year of online publication, and 18th edition of this newsletter. In this banner edition, especially during this holiday season, and given the "sea change" the ongoing technological revolution has brought upon us all, a focus on technology and law with a "street view" is in order. By "street view" I don't mean an obscure academic discussion, but rather a practical look at where all of this change is taking our culture, and how some of that is rippling through the legal world.
Rather than continue to struggle with "catching up" and producing back to back newsletters, I thought it would be best to simply combine both and cover more "ground". There have been a number of developments from the Microsoft antitrust trial to some really unique tech products to be introduced at the Comdex (computer and technology industries biggest "show" of the year) convention scheduled to commence in Las Vegas. Let me lead you through some developing tech trends, legal trends, and then offer a few concluding comments
the good
|
|
the goodies  Digital
instant replay TV and video recorders.Expansion
of the USB serial port technology. You will see "these"
everywhere. The CEO of Oracle Corporation is predicting that USB (a port
device on computers for attaching other devices or computers) will
eventually make the networking "hardware" industry obsolete.Digital
walkmans able to "record" CD sound quality from the
internet or anywhere."Thin
client servers" or microchips being planted in household,
vehicle and office equipment and mimicking a functioning network.Hand
held "ebooks" with digital script , novels and texts
purchased over the net. Theoretically, this could significantly reduce
the cost of formal education and instruction.America
On Line is scheduled to deliver "internet radio" to
its members.Other
internet service providers will be providing "customized radio"
programming to its members. We
will see some pretty sophisticated cellular phones that become
more like hand held computers.Speech
recognition software and flat panel monitors will be
everywhere.More
online education competing with traditional sources of
education. |
the bad Some
commentators are predicting a global depression occasioned by
the "Year 2000" problem. The need to direct resources
to address the problem will become so great that worldwide demand will
shrink dramatically. In fact, some are theorizing that this explains in
part the "deflationary" trends we tend to be experiencing
presently.Identity
theft. Credit card theft. Some experts are indicating that
traditional sources of "identification" (DMV, Social Security)
will become enveloped in a potential crime wave of corruption as
nefarious elements try to obtain personal information. Other problem
sources include banks, brokerages, the IRS, and electronic gateways for
email. Never, ever send your photocopied signature digitally via email
or attachment!!!Privacy
problems. At what cost progress? Privacy concerns are everywhere.
Financial records. Health records. Communication. Shopping and product
choices. All electronic transactions leave an identifiable "trail".
Most recently, America On Line was involved in having to respond to a
government subpena of records related to a member of the services
involved in a controversy concerning his homosexuality. Private
commitments to your privacy are not sufficient safeguards. They
represent only secondary protections.Technological
competition is leading to ever greater volatility in the law as the law
struggles (but can't) keep up. Copyright, covenants not to compete,
shareholder and civil rights litigation are active areas. What about
traditional commercial law in the face of obsolescence of the "endorsement/signature"
concept which has been the basis of contract and negotiable instrument
law for centuries?More
and more tech firms find themselves using "competitive
litigation" as a part of their arsenal to challenge trademark
and other intellectual property "innovations" fomented (or
claimed) by other firms.The
internet is threatening to decimate local tax bases and
traditional methods of local governments for collecting revenue.(?)Online
porn. |
the baddies Fax
machinesApple
NewtonsOnline
pedophilesEmployment
arbitration agreementsHMO
arbitration agreementsShipping
chargesPostal
chargesBuying
stocks with credit cardsOnline
investor hype, fraud, scams; workplace snooping, drug testing;
commercial and business tort releases or warranty disclaimers. |
the ugly Consumer
Bankruptcy filings have reached an all time high. Nearly a million
and a half individuals filed Petitions in the preceding 12 months. That
represents an increase of nearly 6% over the previously reported period.
Business bankruptcies declined by over 15,000 filings.Item:
The internet is expected to "eclipse" the newspaper within
five years as the primary source of daily news and information.In
response to sagging sales, and reduced ad demand, the Los Angeles
Timesreported on November 4, 1998 that 250 people would be laid off.
(Nearly every major broadcasting organization is reporting less
viewership and nearly every major daily newspaper is experiencing the
same trending as the Los Angeles Times. It is clear that with
cable and the internet, too much is competing for our time and
attention.)Careers
to steer your children away from: stock broker, travel agent, book
store owner, journalist. ("Every one can yell 'EXTRA' from their
street corner with a modem and a computer." [Matt Drudge, The
Drudge Report](banker?, doctor?, divorce lawyer?).Mr.
Costanza. Item:THE 'REAL' COSTANZA SUES SEINFELD A man who
says he was the model for nutty George Costanza on Seinfeld has filed a
$100 million lawsuit alleging that Jerry Seinfeld and the show's
producers stole his identity. Michael Costanza, who has known Seinfeld
since college, claims his "name, likeness and persona" were
used without his permission -- violating his civil rights. In papers
filed in Manhattan's state Supreme Court, Costanza charges that every
episode, from 1989 until May 1998, "portrays (him) in a negative
light" while using many of his physical and personality traits.
Seinfeld publicists have said that George Costanza was based on the
show's co-creator, Larry David. (Associated Press, 11/6/98) |
The MicrosoftThe recent Microsoft antitrust trial has a way of dominating the news about Microsoft. No great defender of Microsoft (as you will note below), it is, however, very important to realize just where we have been and where we are headed as a result of innovations brought forward by this entity, its employees, and founding members. Not a day goes by that the financial pages do not report some development concerning an action taken by the company or its leadership. Item-MS donate: Bill Gates and his wife have donated $100 million toward a worldwide vaccination program aimed at children and administered through private charities.Press Enterprise, Riverside, CA December 2, 1998. Item-MS courts: Ironically, Microsoft is one of the primary partners in a collaborative effort to "wire" the Federal court system within the next five years. Microsoft also has contracts with about 12 different states to do the same for their court systems. Item-MS phone: Microsoft has also introduced a new type of portable wireless phone that works with your computer. The phone is innovative because it can duplicate many of the services phone companies charge for through software management via the personal computer hook up. Item-MS educate: Microsoft is also one of the predominant partners in the recent consortium to connect education centers worldwide. Antitrust does not mean against "Trust" "What's your analysis of the Microsoft antitrust case?" " That's not the simplest question of all. The case against Microsoft really depends on a theory that one may not use a monopoly to engage in predatory tactics to maintain that monopoly. You can get a monopoly lawfully, but you may not keep it by predatory tactics. Here, the predatory tactics include, at least, the bundling of Microsoft's browser with their operating system with the explicit intention of driving Netscape's browser from the market. I say explicit intention -- that is to be seen in the documents they produced for the government, ranging from Bill Gates throughout all the senior executives. It is quite explicit. They intend to keep Netscape from selling to original equipment manufacturers, or getting promotion done by online services and so forth. In addition, they have a series of contracts of various sorts that have exclusionary features designed to prevent other people, particularly Netscape, from competing and making arrangements with their online services and so forth. There's a welter of these things. They pretty much answer the question of whether Microsoft's efforts in doing these things was, as they claim, to create efficiency, or whether it was, as the documents plainly indicate, that the intent was entirely exclusionary, to maintain their monopoly in the operating system. That part of my book, called The Antitrust Paradox, deals with a situation like this. It is a discussion of the Lorain Journal case. In that case, a monopoly newspaper --- was indispensable to local merchants. It announced it would no longer carry the advertising of any merchant which advertised on a small radio station nearby. The Supreme Court had no difficulty in finding that was attempted monopolization, the retention of a monopoly by improper tactics. I think that case reads just about directly on this case. My analysis of it in the book is that the Supreme Court was right in that case. " (Excerpt from interview by Paul Schindler, TechWeb News, with Judge Robert Bork, former Supreme Court nominee, October 16, 1998.) |
The Governmentthe antispamming laws Gov.Wilson recently approved two controversial bills, one of which imposes the first mandate on spammers to label their messages. Rep. Debra Bowen's (D-Torrance) bill requires unsolicited bulk emailers to put the label "ADV:" in the subject line of messages selling goods and services. Adult-oriented spam, meant for people over 18, would have to be labeled "ADV:ADLT." The provision also requires that spammers set up a toll-free telephone number or accurate return email address so that recipients can request to be taken off a spam list. The new law does not apply to spammers who have an existing relationship with the recipient. But for those who don't, prosecutors would be able to seek up to $500 per email message or six months in jail for violations. Wilson also enacted Rep. Gary Miller's (R-Diamond Bar) legislation to allow any email provider to sue spammers that trespass on their computer systems and to recover losses caused by network clogs or crashes. Under the law, providers can sue for $50 per unauthorized message--up to $25,000 per day--or they can sue for actual damages--whichever amount is greater. Miller's bill also makes so-called spoofing a crime. The practice is defined as "knowingly and without permission using the Internet domain name of another individual, corporation, or entity" to send bulk email. Spammers often "spoof" return addresses with the domain names of larger companies, a practice which not only makes those larger companies look bad in the eyes of its customers but also can result in the larger firm's network getting clogged up with returned email. CNET News.com 9/28/98 the DMCA(or is that "DMZ"?)President Clinton has signed landmark legislation to protect
copyrights in the digital age, a key component of the agenda for
fostering electronic commerce but one that also changes one of the
traditional premises of copyright law. The Digital Millennium
Copyright Act makes it illegal to crack through the digital
wrappers, or encryption technologies, that protect intellectual
property on the Internet. It also outlaws the manufacture and sale of
devices used to crack those wrappers. The provisions take effect two
years from now. Violators could be charged up to $2,500 per act of
circumvention. The law represents a fairly tame compromise in striking
a balance in the complex battles to transfer rules from the physical
world into cyberspace. Enactment of the law is being viewed as a
victory by the entertainment and software industries, which want to
begin selling more of their goods online. A remaining question is
whether the "victory" has come at the expense of consumers,
educators, academics and scientists. A fundamental premise in copyright law is the "fair-use" doctrine. Historically, because of that doctrine, it has never been a crime to access or make a copy of a protected work. What has been a crime is the misuse (or abuse), or commercial use of that information--such as illegal copying and redistribution of that work. The Digital Millennium Copyright Act changes that, however, by making it illegal merely to access copyrighted material. Some experts are concerned that as technology develops, the law will
enable copyright holders to impose per-use fees on works that are now
widely available free in libraries. The concerns are shared by
interest groups representing libraries and individual consumers. In an
attempt to address the various fair-use concerns of those who opposed
the legislation, Congress made a number of exceptions to the
anti-circumvention provision. For example, the new law includes
exemptions for security and encryption researchers, who must crack
such devices to make them better, as well as for software developers,
who have to take apart other companies' products to ensure
compatibility. The new law also sets up a process whereby anyone who
finds they no longer have access to materials they did under
traditional fair-use provisions of copyright law can appeal to the
Librarian of Congress for an exemption. Adoption PatentsThe federal government recently announced that all "new" patent data would soon become available to access via the internet. (One of the cumbersome processes associated with the issuance of new patents is the "search" process. In a very small way, making more and more of the records digitally available will certainly positively affect the total cost, which can be quite prohibitive. New patents, including costs and attorney/specialist charges start in a range of $5,000 and more than likely fall between $10,000-$15,000.) Shareholder SuitsPresident Clinton has signed into law revisions to the 1995 Securities Litigation Reform Act. The revisions are intended to plug loopholes in the prior legislation which sought to restrict "shareholder" rights to sue on fraud and misrepresentation claims allegedly related to prohibitions in the nation's securities laws. Critics claim 1995 law simply channeled a flood of frivolous litigation into state courts. The revision is intended to end that practice. |
The CourtsProposition 213: A court has ruled that the Proposition 213 inspired law does not bar a lawsuit for wrongful death. Civil Code § 3333.4 precludes recovery of nonpecuniary damages on account of motor vehicle accidents with respect to which the injured person was an uninsured or intoxicated driver, or the owner of an uninsured vehicle involved in the accident. In Goodson v. Perfect Fit Enterprisesthe trial court ruled that this limitation applied to a wrongful death case brought by a widower whose spouse had been killed in an accident involving their vehicle, for which they did not carry insurance, but which was being driven by their daughter-in-law, who was insured. The Appellate Court concluded the wrongful death plaintiff (surviving family member) is not subject to the restrictions of the statute. (October 27, 1998) Hepatitis/malpractice A Florida appeals court ruled that a man who contracted Hepatitis C from his wife after her doctor mistakenly informed her that she had tested negative for the virus cannot sue the physician. The court held that the man has no case because he had not yet met his wife at the time the doctor tested her, and that the doctor has no duty under the law to protect unidentified, innocent third parties. Florida Daily Business Review11/25/98 HMO malpractice:The family of a man who killed himself after he was discharged from a psychiatric ward has filed what is believed to be the first malpractice lawsuit against an HMO under a new Texas law permitting such suits. The man's family alleges that a doctor working for the health maintenance organization, NYLCare, persuaded the hospital to discharge him "even though he was not yet medically stable." Texas is the only state that has such a law. A federal judge in Houston upheld the law in September. 10/22/98 Morongo Indians:The Morongo Indian Tribe, recently in the media because of the election and referendum concerning video slot machines, has lost a battle with the Federal government. After learning that the Federal Aviation Administration (FAA) would direct air traffic over their reservation, the Morongo Tribe sought a review of the FAA's decision under the National Environmental Policy Act (NEPA). While EPA's (Environmental Protection Agency) regulations require federal agencies to explore reasonable alternatives, the Ninth Circuit has ruled that the Tribe also must offer feasible alternatives in order to challenge the FAA's decision--effectively foreclosing any further litigation. Ski releases:In an unusually favorable opinion for "accident victims", the California Fourth District has held that the doctrine of "primary assumption of risk" would not bar a personal injury action based on a skier's collision with guidepost on ski trail. The claim is, among others, that the guidepost was negligently placed. Termination-Suing fellow employees:Christopher G. Sheppard was fired from his job with Southwest Airlines. He sued both Southwest and coworkers Freeman, Hardiman, Godfrey, Tree, and Jones, individually, for their alleged conduct relating to his termination. The history on the case involves a dispute between Sheppard and the flight attendant girlfriend of one of the co-defendants, and allegations of conspiring in generating negative performance reviews. The original court entered judgment in favor of the coworkers. Sheppard appealed, contending he may sue his coworkers for interference with contract and prospective economic advantage, libel, and infliction of emotional distress, based on their having falsely reported to Southwest that he was incompetent. The 4th District held that except where a statutory exception applies, an employee or former employee cannot sue other employees based on their conduct relating to personnel actions.. Sheppard v. Freeman et al 10/19/98 |
Every so often, one runs across a website that it is just simply a classic. I usually make that judgment based upon usefulness, convenience and stability. Will the website be around for a while? Can I access the information easily? And is the information something I will want to have from time to time? After all, one can't bookmark everything.
One of those classics is The English Server. It is an educational site, and focuses on literature, but there is such a wealth of electronic publications made available spanning a broad range of subjects.
Another site is Acses.
Acses is a "shopping bot" ("bot" are types of search
engines that endeavor to compare pricing information for items) type of
site which will take any book and do a price comparison inventory for you
in a matter of moments. I recently acquired some computer books, and some
other obscure books related to my past uncle's military service in World
War II. I saved quite a bit of money both on purchase and shipping charges
simply by using the site.
Finally, just in terms of overall, general interest How Things Workrepresents one of the reasons why I enjoy the internet so much. This is a site maintained by a physicist who attempts to explain basic machinery, mechanical and scientific principles and events.
"It's not about repaying debts. It's about discharging them."
Last newsletter I included some articles on the pending reform
legislation, which will probably come up again in Congress within the next
few months. The legislation did not get enacted into law. Under threat of
veto, the Senate adjourned before voting on the final compromised
legislation. The legislation seeks by various methods to force more
petitioners who file for Chapter 7 complete discharge of debts into
Chapter 13 repayment plans over super extended periods of time.
The American Bankruptcy Institute is a group of 6,400 attorneys, Judges, bankers and educators. It's stated charter prevents it from taking formal positions on bankruptcy issues. In an elaborate, impartial and independent study , it has concluded that of all the people who file for bankruptcy, perhaps 3 percent could afford to repay their debts.
The study analyzed past filed Petitions and Schedules with a focus on income and assets. Its conclusions directly contradict a major premise of the proponents of the "reform" legislation---which has been pushed rabidly by a $40 million campaign contribution effort of credit card, retail and banking industries. That premise was that at least ten percent of the consumers seeking Chapter 7 discharge had the ability to repay their debts as a result of simple restructuring of the debt.
Clearly, in the least, however, the presentation of the ABI conclusions warrants further discussion about the merits and potential negatives of the proposed reforms.
The internet and its expansion are causing many changes. There are some fundamental areas where these changes and the law are colliding. The primary reason for the impact has to do with the concepts of anonymity and privacy. After all, the internet is essentially an open, public, electronic forum. Its history in defense and educational bureaucracies; its growth which has included even less analyzed developments as the obsolescence of the old "BBS" lines ---all of this has contributed uniquely to the current status. The internet and its content, commerce and continuity are at the same time creatures of computer law, reliant on intellectual property law, in need of basic contract and commercial law not to mention a vigorous and dynamic tort law. How does the law assist (for it cannot eliminate) the balancing of interests that are clashing and clamoring for security in their financial transactions, privacy in their personal information and choices, at the same time seeking an absence of infringement upon individual choice?
For one thing, the law will do this very slowly--as it probably should irrespective of the fact that pain and costs will be incurred along the way as the price for sober delay. One of those areas is the Uniform Commercial Code---the statutory framework for commercial, merchant and consumer transactions adopted in every state in the country. In California, we refer to it as the California Commercial Code. The code is divided into "articles" or sections which deal with sales, secured transactions, negotiable instruments, banking and collections, among other subject areas. New sections address software licensing, security interests in intellectual property, and "electronic contracting".
Let's examine just briefly something with which we are familiar, whether it be a credit card chit, a new car purchase, or a check---our signature--or rather, the "concept" of signature. Doing business at a distance has been a reality for a long time. Smart, debit and credit cards have extended the practice of "faxed signatures" into another realm. But the real focus, if one accepts the premise that ecommerce is the wave of the future, is what will happen to traditional rules and policies surrounding signatures?
In 1997 California adopted a law allowing any technology to be used that satisfies existing signature requirements governing the filing of documents with the state. There is now industry wide technology which gives one the ability to scan, and encrypt a signature for electronic relay. This has been in use in the insurance industry for a long time.
With the internet, the concept of signature is taking on broad significance. And to a certain extent, at least as to one category of electronic "signing"--- (which is an extremely technical category that does not really even belong in the family of "electronic signatures")---the ability to apply traditional legal principles depends for its integrity upon technological and mathematical principles.
We are seeing ever more discussions of the concepts of ecommerce, digital cash, electronic checks, data theft and conversion, cryptography and digital signatures. My intent is not an economics discussion, computer law (and security) seminar, or mathematics primer on these subjects. I am not qualified. Rather, I want to point out some areas where the average person can be impacted by these ideas, changes and technology.
(For an in-depth discussion of this whole venue of digital signatures and encryption, I direct you to one of the most interesting websites I have ever come across. It is maintained by Prof. J. Orlin Grabbe and there you will find a listing of his various articles toward the bottom portions of his website. Just click his highlighted name).
The American Bar Association maintains a website and at that website has posted an article which explores the developing rules with respect to "legal" signatures. It is an excellent introduction for the beginner. Guide to Digital Signatures-A Tutorial analyzes historically and currently in the digital age the legal significance of "signature". Historically, the concept of signature has been fairly broad recognizing the ritualistic making of a "mark" with the intention of verifying the content and/or document being marked. From this history of very few who could read and write, to an era when transactions involving people at one electronic location contract for goods or services to be exchanged/delivered at other locations--where no witnesses exist or could possibly exist--the concept of signature "endures". Why? The reality is that it is enduring for many of the same historical reasons that were used to justify the requirement or physical act of signature.
Fundamentally, the physical act of signing a document/contract/sales-purchase order has nothing to do with the content of the document i. e. the "mutual assent", consideration, contingencies, conditions, covenants, disclaimers, warranties, guaranties, etc. making up traditional modern contract. Historically, therefore, we have been dealing with cultural and legal needs associated with identification, formalities of ritual and finality, evidentiary requirements of the courtroom, and opportunity for witnessed expression of agreement---the physical act of signing was consistent with an intent to agree.Obviously, over time, reduction in needs prompted by cultural and social changes (a more educated population), and technological changes (photocopying, faxing, and telecommunication) have affected the number of formal requirements of signature---so much so that factual situations which include an absent signature potentially pose little or no problem to decisive imposition of liability.
The one societal need and legal policy that has survived, and in fact has taken on added significance in the digital world is the elimination of anonymity in regards to transactions conducted in cyberspace. Thus, we have the advent of internet payment schemes. The probable concept which will become the prevailing standard will be that of the "digital signature, which belongs in a class of its own.
The digital signature is not about the physical task of signing something. It is, however, about the traditional legal concept of authentication of identity (and, interestingly, the "document" itself). It employs mathematical formulas and encryption technology to allow computers to recognize the source of the communication or response. Such a system requires "Keys" of a private (individually owned} and "public" nature which refer to mathematical formulas or cryptographic patterns (an area of mathematics) that will be used to verify the "signature" (and document).
This then introduces the concept of "keys". Some argue that for true security to exist, digital signatures require a certification authority (and not governmental), for issuance, identification of the "owner" of the key(s), and certification of the public key. Such an entity---really a room with computers---would also serve as a central place for storage of such digital information (to the exclusion of other storage locations). In a way, the internet has spawned a whole new industry.
Indeed, such firms already exist, and an incredible number of legal issues are being generated. From trying to determine what is included in an insurable loss, to deciding the liability for unauthorized use of a private key stored on a stolen Palm Pilot handheld computer, the law is being confronted with new complexities. Indeed, the certification authorities have their own industry associations and are lobbying heavily for an almost "religious" status in the clamor for limitations on liability. In the end, who can blame them? And what about consumers? Do these kinds of digital transactions enjoy the same Federal protections enjoyed by credit card transactions ($50 loss limitations)? The consensus seems to be "probably not". Stephen Wu, an attorney at Verisign, states that the company has an "insurance program" to protect consumers and merchants from loss or misuse of a private key. [National Law Journal, 11/17/97, at p. A01](I wonder if that is something they disclose at time of sign-up and registration? Therefore, who can blame the reluctance of consumers to "dally" in internet buying?)
We are reaching a point when the technical experts are going to have to accept and agree to fewer encryption standards, and perhaps even one type of internet payment scheme; when the law is going to have to step up to the plate and make some hard choices--in doling out benefits and protections in the form of legal rights and remedies for the various players in this "new economy"; and when consumers are going to have to become educated and skillful in the mechanics and risks of the new environment for conducting business (perhaps this should be an introductory course in high school---maybe more students will be motivated to pursue math and science courses). Only then will we begin to see and appreciate the fully exploited cost benefits and almost instantaneous innovations that ecommerce promises.
My further updates will follow. I wish everyone the
best of holidays.
Sincerely,
Gerald Spala
December 3, 1998
