Businesses operating on the web face additional factors: (1) the web extends a company’s reach beyond traditional boundaries; (2) the web increases the speed and efficiency of business communications.
Borders and Jurisdiction
The relationship between geographic boundaries and legal boundaries in based on: power, effects, legitimacy, and notice.
Power: control over physical space and the people and objects that reside in that space. For laws to be effective a government must be able to enforce them. The ability of a government to exert control-jurisdiction.
Effects: relationship between physical proximity and the effects or impact of a person’s behaviour.
Legitimacy: the legitimate right to create and enforce laws derives from the mandate of those who are subject to those laws. Legitimacy is the idea that those subject to laws should have some role in formulating them.
Notice: People receive constructive notice that they have become subject to new laws and cultural norms when they cross an international border.
Jurisdiction on the internet
Defining, establishing, and asserting jurisdiction is more difficult on the internet-because geographic boundaries do not exist.
Subject-matter jurisdiction: a court’s authority to decide a particular type of dispute.
Personal jurisdiction: determined by the residence of the parties. A court has personal jurisdiction over a case if the defendant is a resident of the state in which the court is located. An out of state person or corporation can also voluntarily submit to the jurisdiction of a particular state court by agreeing to do so in writing or by taking certain actions in the state. Forum selection clause- contract will be enforced according to the laws of a particular state. Long arm statutes create personal jurisdiction over nonresidents who transact business or commit tortuous acts in the state.
Jurisdiction in international commerce: jurisdiction across international borders is governed by treaties between the countries. Non-US corporations and individuals can be sued in US courts if they conduct business or commit tortuous acts in the US. Foreign courts can enforce decisions against US corporations or individuals through the US court system if those courts can establish jurisdiction over the matter. Courts asked to enforce the laws of other nations sometimes follow a principle called judicial comity.
Contracting and Contract Enforcement in e-commerce
Any contract includes three essential elements: an offer, an acceptance, and consideration. On the internet – offers and acceptances can occur when parties exchange e-mail messages, engage in electronic data interchange (EDI), or fill out forms on web pages. When a seller advertises goods for sale on a web site, that seller is not marking an offer, but is inviting offers from potential buyers. When a buyer submits an order, which is an offer, the seller can accept that offer and create a contract. Written contracts on the web: certain categories of contracts aren’t enforceable unless the terms are put into writing and signed by both parties. Contracts for the sale of goods worth more than $500 and contracts that require actions that cannot be completed within one year must be created by a signed writing. A writing exists when the terms of a contract have been reduced to some tangible form.
Warranties on the web: any contract for the sale of goods includes implied warranties. A seller implicitly warrants that the goods it offers for sale are fit for the purposes for which they are normally used. Sellers can avoid some implied warranty liability by making a warranty disclaimer. A warranty disclaimer is a statement declaring that the seller will not honor some or all implied warranties.
Authority to Form Contracts: In general, courts will not hold a person or corporation whose identity has been forged to the terms of the contract; however, if negligence on the part of the person or corporation contributed to the forgery, a court may hold the negligent party to the terms of the contract.
Terms of service agreements: a site visitor is held to the terms of service even if that visitor has not read the text or clicked a button to indicate agreement with the terms.
Use and protection of intellectual property in lone business
Intellectual property –all products of the human mind.
Copyright infringement: a copyright is a right granted by a government to the author or creator of a literary or artistic work. Gives the author or creator the sole and exclusive right to print, publish, or sell the work-include virtually all forms of artistic or intellectual expression. In the US, works created after 1977 are protected for the life of the author plus 70 years. Many countries required the creator of a work to register that work to obtain copyright protection. US law still allows registration, but registration is no longer required. Most US web pages are protected by the automatic copyright provision of the law because they arrange the elements of words, graphics, and HTML tags in a way that creates an original work. The fair use of a copyrighted work includes copying it for use in criticism, comment, news reporting, teaching, scholarship, or research-provide a citation to the original work. An entity becomes liable for vicarious copyright infringement if it is capable of supervising the infringing activity and obtains a financial benefit from the infringing activity.
Patent Infringement: a patent is an exclusive right granted by the government to an individual to make, use, and sell an invention. In the US, patents on inventions protect the inventor’s rights for 20 years. A patent on the design for an invention provides protection for 14 years. To be patentable, an invention must be genuine, novel, useful, and not obvious given the current state of technology.
Trademark Infringement: a trademark is a distinctive mark, device, motto, or implement that a company affixes to the goods it produces for identification purposes. A service mark is similar to a trademark, but it is used to identify services provided.
Cybersquatting is the practice of registering a domain name that is the trademark of another person or company in the hopes that the owner will pay huge amounts of money to acquire the URL. A related problem, called name changing, occurs when someone registers purposely misspelled variations of well known domain names. Name stealing occurs when someone posing as a site’s administrator changes the ownership of the site’s assigned domain name to another site and owner. Disputes that arise when one person has registered a domain name that is an existing trademark or company name are settled by the World Intellectual Property Association. A domain name ownership change occurs when owner info maintained by a public domain registrar is changed in the registrar’s database to reflect a new owner’s name and business address.
Protecting Intellectual Property Online
Several industry trade groups have proposed solutions to the current problems in digital copyright protection, including host name blocking, packet filtering, and proxy servers. One promising technique employs steganography to create a digital watermark. The watermark is a digital code or stream embedded undetectably in a digital image or audio file. It can be encrypted to protect its contents, or simply hidden among the bits-digital info-comprising the image or recording. Copy control is an electronic mechanism for limiting the number of copies that one can make of a digital work.
Defamation
A defamatory statement is a statement that is false and that injures the reputation of another person or company. If the statement injures the reputation of a product or service instead of a person, it is called product disparagement. A person must establish that the defamatory statement caused injury. Per se defamation-a court deems some types of statements to be so negative that injury is assumed. An important exception in US law exists for statements that are defamatory-but that are about a public figure. Statements of personal opinion are true statements and thus neither defamatory nor disparaging.
Deceptive trade practices
If the objects being manipulated are trademarked, however, these manipulations can violate the trademark holder’s rights. Web sites that include links to other sites must be careful not to imply a relationship with the companies sponsoring the other sites unless a relationship exists. Trademark dilution is the reduction of the distinctive quality of a trademark by alternative uses.
Advertising Regulation
Advertising is regulated primarily by the federal trade commission – publishes regulations and investigates claims of false advertising. Bait advertising, consumer lending and leasing, endorsement and testimonials, energy consumption statements for home appliances, guarantees and warranties, prices
Online crimes
-includes online versions of crimes that have been undertaken for years in the physical world, including theft, stalking, distribution of porn, and gambling. Other crimes, such as commandeering one computer to launch attacks on other computers, are new. Law enforcement agencies - obstacle they face is the issue of jurisdiction. Another problem facing law enforcement officers is the difficulty of applying law that were written before the internet.
Ethical Issues
The Electronic Communications Privacy Act of 1986 is the main law governing privacy on the Internet today. This law was enacted before the general public began its wide use of the internet. The law was written to update existing law that prevented interception of audio signal transmissions so that any type of electronic transmissions would be given the same protections. One of the major privacy controversies in the US today is the opt in versus opt out issue. The most common policy used in US companies today is an opt out approach. In an opt out approach, the company collecting the info assumes that the customer doesn’t object to the company’s use of the info unless the customer specifically chooses to deny permission. In the less common opt in approach the company collecting the info doesn’t use the info for any other purpose unless the customer specifically chooses to allow that use.
Taxation and Electronic Commerce
Firms that engage in e-commerce must comply with these multiple tax laws from their first day of existence. Income taxes are levied by national, state, and local governments on the net income generated by business activities. Transaction taxes which include sales taxes, use taxes, excise taxes, and customer duties, are levied on the products or services that the company sells or uses. Property taxes are levied by states and local governments on the personal property and real estates used in the business. Web businesses are income taxes and sales taxes.
Nexus
A government acquires the power to tax a business when that business establishes a connection with the area controlled by the government.
US Income Taxes
A basic principle of the US tax system is that any verifiable increase in a company’s wealth is subject to federal taxation. Any company whose US based web site generates income is subject to US federal income tax. A web site maintained by a company in the US must pay federal income tax on income generated by a company in the US must pay federal income tax on income generated outside of the US.
US State Sales Taxes
Businesses that establish nexus with a state must file sales tax returns and remit the sales tax they collect from their customers. If a business ships goods to customers in other states, it is not required to collect sales tax from those customers unless the business has established nexus with the customer’s state. A use tax is a tax levied by a state on property used in that state that was not purchased in that state. Larger businesses use complex software to manage their sales tax obligation. Some purchasers are exempt from sales tax, such as certain charitable organizations and businesses buying items for resale.
EU Value Added Taxes
The Value Added Tax is assessed on the amount of value added at each stage of production-is collected by the seller at each stage of the transaction. Companies based in EU countries must collect VAT on digital goods no matter where in the EU the products are sold. Non EU companies that sell into the EU must now register with EU tax authorities and levy, collect, and remit VAT if their sales include digital goods delivered into the EU.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment