This article by Stuart Adams appeared in the Louisville Courier Journal
as part of the Louisville Bar Association Business Q & A series, on November 3, 1996
Q: I want to start a small business marketing products and services on the Internet. I think the exposure my business would get on the Internet would result in great success. Ive heard that may be legal issues I should watch out for. What sorts of legal problems could I run into with this type of business marketing.
A: Many people around the world are jumping on the Internet bandwagon for their businesses, in order to reach the vast number of people capable of accessing this global shopping and business arena. Although the Internet has been around for years, its sudden explosion in the last few years has caused a dramatic transformation and expansion of this "cyberspace." What started as a military and academic forum, has now rapidly evolved into a global cyber-bazaar for commercial activities.
Many large and start-up businesses are now rushing to prospect in what they perceive as a new gold rush. The Internet existed and expanded partially because it was largely unregulated and use by those who communicated with a sense of noncommercial "honor." Commercial use was frowned upon and largely nonexistent a few years ago.
The rapid change in commercialization of the "Net," along with the continuing implausibility of regulation on a systemic basis, makes the Internet both a potentially fruitful and possibly dangerous place to do business. Recent improvements in security for monetary transactions, as well as the creation of "virtual" banking outlets, has facilitated the actual consummation of contracts over the Net. Although security issues are far from being resolved, there are a number of legal issues you should also consider before your business ventures onto the Internet.
Many businesses are attracted to the Internet by virtue of its transcendence of geographic and political boundaries. By posting a home page from your local address, your marketing material can be accessed around the world in seconds. The ease of global access to commerce was previously unheard of. The very fact of this unfettered communication gives rise to conflicting legal theories which might seriously impact your business.
A major and emerging debate is occurring around the country and around the world on the issue of whether a business in one location submits itself to the jurisdiction and laws of another and possibly remote political system, simply by virtue of its message being viewed or downloaded in the second location. While it is likely this issue will be clarified eventually in this country, local state and various federal courts are starting to issue diverging opinions on this matter. Currently there is no clear legal precedent in this country on whether you might find yourself subject to court process in another state or country by virtue of your marketing "success." The situation is even less clear internationally. The may alter our traditional US sense of due process. It may also increase legal costs unexpectedly.
Another major area of concern in cyberspace transactions involves conflicting and now often recently antiquated concepts of intellectual property rights. Our intellectual property rights system has worked pretty well over the years, but never contemplated how the mechanics of computer storage of data and Internet "browsing" would fit in. The manner in which computers and popular "browser" software programs "copy" and store material which comes across your screen as you "surf" the Internet, stretches the conceptual basis of our copyright infringement laws to the breaking point. When your eye reads a page of a copyrighted book, it does not copy the protected page in an unlawful manner. When your computer "reads" a page, however, the same may not be true and this may violate certain laws designed to protect such works from copying. This, plus the ease with which the images and other data, such as corporate trademarks and service marks, can be captured, edited and republished, is giving rise to a surge of litigation around our country and others. While the courts and legislative bodies try to sort all this out, and not necessarily as a team effort, this will continue for quite some time as another area of legal limbo. Meanwhile copyright and trademark issues continue to arise in ever unforeseen ways.
Another erupting area of concern is the issue of contractual formality. With virtual signatures we are entering an age of electronic, and sometimes computer automated, shopping and contracting. Computers can now search the Web on a continuing basis and offer to contract when they find goods or services electronically responding to their search instructions. Without further human thought, does this constitute a valid contract? These and other questions remain for the future, along with issues of criminal enforcement of laws, such as the Communications Decency Act, and the refusal of some commercial services to allow "Spam" or unwanted mass electronic e-mail to be posted to large numbers of their customers.