The Internet & The Market: Reading Assignments
Part II: Topics in E-Commerce
1. Contract Formation Online
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Reading
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FTC, Mail Or Telephone Order Merchandise, 16 C.F.R. §§ 435.1
& 2 (Westlaw: .1
& .2)
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People to Machines
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AP, United
to honor near-free Internet tickets after all (Feb. 19, 2001)
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Specht
v. Netscape Communications Corp, 150 F.Supp.2d 585 (S.D.N.Y. 2001)
(Westlaw)
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I.Lan Systems, Inc. v. Netscout Service Level Corp., --- F.Supp.2d
----, 2002
WL 15592 (D.Mass. Jan 02, 2002).
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AOL
Clickwrap Jurisdiction Agreement Unfair, Unenforceable, 17 NO. 6 e-Commerce
12 e-Commerce (October, 2000).
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Machines to Machines
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Tom Allen & Robin Widdison, Can
Computers Make Contracts?, 9 Harv. JL & Tech 25 (1996). [Edited
version in packet]
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Ian R. Kerr, Spirits in the Material World: Intelligent Agents as Intermediaries
in Electronic Commerce, 22 Dalhousie L.J. 190-220 & 234-249 (1999)
[not online, alas]
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Thinking
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Is there any reason why person-to-person contracting online should be treated
differently than person-to-person contracting via fax? Phone? Videophone?
Snail Mail?
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When does the FTC Mail or Telephone Order Merchandise rule apply to e-commerce?
When not?
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Alice downloads WhizBang 2.1, a trendy, free-for-personal-use internet
browser with enhanced e-commerce features. She clicks through all
the licensing stuff without reading it. One of the license terms
says that in consideration for use of the product, she agrees to have her
spending habits shared with anyone WhizBang Co. chooses. Is this
agreement valid? Does it matter whether or not there is some way
to turn off this 'feature' in the browser's preferences options?
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Bob downloads Operator 3.0, a trendy, free-for-personal-use internet browser
with enhanced e-commerce features, from the popular download site downloadsrus.com.
Unbeknownst to both downloadsrus.com and Bob, the version on the site has
been subtly altered by Mallet, a hacker so that it captures Bob's credit
card information and uses it to secretly contact e-commerce sites and purchase
goods for delivery to Mallet. If Mallet manages to escape with valuable
goods, who should bear the loss?
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When is clickwrap NOT enforceable? When should it not be enforceable?
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Should "shrinkwrap" be treated differently from clickwrap? Why?
Cf. ProCD v. Zeidenberg
, 86 F.3d 1447 (7th Cir. 1996) (Westlaw);
Step-Saver
Data Systems, Inc. v. Wyse Technology, 939 F.2d 91 (3rd Cir. 1991)
(Westlaw)
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Assume that clickwrap is generally enforceable. What if anything
is/ought not to be disclaimable in a clickwrap agreement? Product
defects? Software viruses? Other things? (Hint: there are other
things!) Does the Restatement of Contracts (2d) § 211 help
form your views on this question?:
§ 211. STANDARDIZED AGREEMENTS
(1) Except as stated in Subsection (3), where a party to
an agreement signs or otherwise manifests assent to a writing and has reason
to believe that like writings are regularly used to embody terms of agreements
of the same type, he adopts the writing as an integrated agreement with
respect to the terms included in the writing.
(2) Such a writing is interpreted wherever reasonable as
treating alike all those similarly situated, without regard to their knowledge
or understanding of the standard terms of the writing.
(3) Where the other party has reason to believe that the
party manifesting such assent would not do so if he knew that the writing
contained a particular term, the term is not part of the agreement.
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E-commerce site operators often want to be global. The questions
(but not the readings) above all assume a U.S. context. To what extent,
if any, do your answers to the questions above change if either buyer or
seller are a non-US party? How can an e-commerce site operator control
or otherwise anticipate choice of law issues?
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Is Kerr's computer/slavery analogy persuasive? Offensive? Premature?
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Kerr argues that it would be wrong to attribute every agent's decision
to the person whos initiated unless there were some principle operating
that "would .. set limits on the contractual liability of persons using
electronic agents so that people will not necessarily be signing their
lives away simply by choosing to initiate devices that have the potential
to generate transactions that were unintended, unforseen or unauthorized".
What principles would suffice? Do they already exist?
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If legal consequences were to turn on whether consumers were negotiating
with a person or machine, should firms be required to warn consumers that
they are dealing with an AI rather than a person?
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Banco Internetco accidentally deposited Alice's $900 check into Bob's account.
Bob never looks at his bank statements except to see how much money is
in the account. He spent the $900 without even being aware anything
odd had gone on. Now Banco Internetco wants the money back.
What result? Is your answer different from what you think the result
would be if the United Airlines $24.98-for-a-San-Francisco-to-Paris-ticket
case went to court? Why?
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Who is the least-cost-avoider in the three types of transactions?
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Supppose in the United Airlines example, the web page sold not air tickets,
but an air plane for $24.98. What result? Why?
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Suppose it sold the airline for $24.98. What result?
Why? Suppose the airline were broke and losing money?
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Optional
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Robert A. Hillman & Jeffrey J. Rachlinski, Standard-Form Contracting
in the Electronic Age (77 N.Y.U.L. Rev. 2002 (forthcoming) (online
at SSRN click "download" button).
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Curtis E.A. Karnow, Liability For Distributed Artificial Intelligences,
11 Berkeley Tech. L.J. 147 (1996) (Westlaw)
2. Digital Signatures & Certificates I
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Reading
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Background Issues
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A. Michael Froomkin, The
Essential Role of Trusted Third Parties in Electronic Commerce, 75
Oregon L. Rev. 49 (1996). Parts I, II & III.A,B
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Jane Kaufman Winn, Couriers
Without Luggage: Negotiable Instruments and Digital Signatures (1998)
[if page re-directs to Winn homepage, search for the article] [edited in
packet]
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UETA
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Fla.
Stat. Ch. 668 (2001).
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Doing
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Get hold of a copy of a recent version of either Netscape (4.7 or higher)
or Explorer (5.5 or higher) and read the description in the help section
of how it deals with digital certificates.
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Visit http://www.uetaonline.com
and look around
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Thinking
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In reading Florida's enactment of a digital signature law and of UETA,
please pay close attention to:
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The definitions
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What is excluded from coverage
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In light of the "background issues" reading, what you think the problems
are that this statute is designed to solve -- and what issues remain.
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Who bears liability when things go wrong?
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Alice has a digital signature with a secret passphrase that she uses for
online purchasing. Bob, her nine-year-old computer whiz son, guesses
the passphrase and goes on a shopping spree. Is Alice liable for
the purchases? Should she have a right to rescind the purchases and
return the goods when she learns of them? Even if Bob opened the box, reducing
the return value? Even if they are digital goods (for which the seller
cannot be sure if she kept a copy)?
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Chris has a digitial signature with a secret passphrase that he uses for
online purchasing. He received a Trojan horse program over AOL which
causes his computer to send his private key to Daniella, an evil hacker
in Stanistan, a foreign country. Who should bear the loss for
Donald's shopping spree?
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How is a merchant to know when it is reasonable to rely on a digitial signature?
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Fred is a free speech activist who wants to undermine automated age verification
systems that rely on digital signatures. He runs an outfit called
"CertificatesRUs" that issues digitally signed aged credentials for anyone
who uses his web page. No effort is made to verify the age asserted
by the recipient of the credential and the CertificatesRUs terms of service
and Policy Statement makes this very clear. What liability if any
is Fred exposed to under the Florida law?
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Optional
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David L. Gripman, Electronic Document Certification: A Primer on the Technology
Behind Digital Signatures, 17 J. Marshall L. Rev. 769 (1999). (Westlaw)
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Thomas J. Smedinghoff & Ruth Hill Bro, Moving
with Change: Electronic Signature Legislation As A Vehicle for Advancing
E-Commerce, 17 J. Marshall L. Rev. 723 (1999) (Westlaw)
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Roger Clarke, The
Re-Invention of Public Key Infrastructure (Dec. 16, 2001)
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Uniform
Electronic Transactions Act (UETA).
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UNCITRAL
Model Law on E-Commerce (1996) with additional article 5 bis as adopted
in 1998 and Guide to Enactment
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Ministry of the Attorney General of Canada, Memo regarding UNCITRAL meeting
on Electronic Signatures (Oct. 10, 2000)
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Baker & McKenzie, UETA,
State-by-State Comparison Table (7/8/01).
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Patricia Brumfield, A
Preliminary Analysis of Federal & State Electronic Commerce Laws
(2000).
3. Digital Signatures & Certificates II
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Reading
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E-Sign
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E-SIGN, Pub.
L No. 106-229, 114 Stat. 464 (2000) (codified as 15 U.S.C. §§
7001-7006, 7021, 7031) (enacted as S. 761).
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Jane Kaufman Winn & Robert A. Wittie, Electronic
Records and Signatures under the Federal E-Sign Legislation and the UETA,
54 The Business Lawyer 293 (2000)
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Jean Braucher, Rent-Seeking And Risk-Fixing In The New Statutory Law Of
Electronic Commerce: Difficulties In Moving Consumer Protection Online,
2001 Wis. L. Rev. 527 (2001) (Westlaw
)
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U.S. Law Week, States
Skirt ESIGN Preemption Threat By Adopting Relatively 'Clean' UETA Versions
(May 15, 2001).
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Looking Forward
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Jelle van Buuren, Telepolis, Dutch
Government Puts Trusted Third Parties Under Pressure (Aug. 5, 2001)
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Jane Kaufman Winn, The
Emperor's New Clothes: The Shocking Truth About Digital Signatures &
Internet Commerce, 37 Idaho L. Rev. 353 (2001) (Westlaw).
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[UK RIP reading to come?]
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Doing
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Figure out how many digital signatures are currently stored by your browser.
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Thinking
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What problems does e-sign solve? Cause?
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Given E-sign, what does UETA add? Subtract?
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How do E-sign and UETA differ in their treatment of consumers on issues
such as
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notice
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fraud
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consumer error ("oops - I shouldn't have clicked that")?
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In a UETA state, which controls?
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How do E-sign and UETA treat commerce by AI's, bots, and other devices?
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What if anything are digital signatures good for?
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How would you persuade someone (say, the FBI) that you either never had,
or have forgotten, the passphrase or key to encrypted material on your
hard drive?
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When if ever should law enforcement be able to require a person or firm
to turn over encryption keys?
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...for "safekeeping"?
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...to "aid an investigation"?
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Optional
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Shea C. Meehan & D. Benjamin Beard, What Hath Congress Wrought: E-Sign,
The UETA, And The Question Of Preemption, 37 Idaho L. Rev. 389 (2001) (Westlaw)
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Bruce Schneier, Why
Digital Signatures are Not Signatures (Nov. 15, 2000)
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John Naughton, Observer, The
Three Minute Guide to RIP (Mar. 12, 2000).
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Anthony Rollo, PLI Consumer Financial Services Litigation 2001, E-Sign:
New Opportunities, And Litigation, Ahead,1241 PLI/Corp 85 (April 16, 2001)
(Westlaw)
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Jeremiah S. Buckley and Margo H.K. Tank, The Electronic Signatures In Global
And National Commerce Act - An Overview, 20 Ann. Rev. Banking L. 221 (2001)
(Westlaw).
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Patrick A. Randolph Jr., Has E-Sign Murdered The Statute Of Frauds?, 5-AUG
Prob. & Prop. 23 (July-August, 2001) (Westlaw)
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Tara C. Hogan, Now That the Floodgates Have Been Opened, Why Haven't Banks
Rushed Into the Certification Authority Business?, 4 N.C. Banking Institute
417 (2000) (Westlaw).
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Nicholas Bohm, Brian Gladman, Ian Brown, Foundation for Information Policy
Research, Electronic
Commerce: Who Carries the Risk of Fraud? (July 2000).
4. Online Payment Systems
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Reading
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A. Michael Froomkin, Flood
Control on the Information Ocean, 15 Journal of Law & Commerce
395 (1996), pages 449-479 (westlaw).
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Jane Kaufman Winn, Clash
of the Titans Regulating the Competition Between Established & Emerging
Electronic Payment Systems, (Final Version, 5/6/99).
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dru, Getting
Paid for Content: From Micropayments to Shareware Models, Kuro5hin:
Technology & Culture from the Trenches (July 3, 2001).
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The PayPal Phenomenon
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Robert X. Cringely, I'll
Gladly Pay You Tuesday: How PayPal Has Already Won the Battle of the Internet
Payment Systems (Aug. 31, 2000)
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Russ Jones, The
PayPal Phenomenon: Lessons From the Leading Edge of Online Payments
(Nov. 9, 2001), pp. 6-11, 16
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Evan I Schwartz, Digital
Cash Payoff , Technology Review (Dec. 2001).
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Paypalwarning.com, Paypal Warning
(ongoing)
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e-gold, Top Ten Reasons to Prefer
e-gold & What
is E-gold?
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Doing
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Your client has received an email touting an anonymous banking service,
and asks you for your opinion if it's a good idea. The email points
to something calling itself Swiss
Atlantic Services. How much can you find out about how this works,
and what is your advice?
-
Look at the E-gold system statistics
and E-gold examiner .
Is this information material to deciding whether e-gold is safe and practical?
What else would you need to know? Is that info available from the
e-gold
site?
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Thinking
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Would you advise your clients to use PayPal? Why? If they chose
to, what would you tell them to watch out for? How could they best
protect themselves against those dangers?
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Did you read the PayPal
terms of service before answering the question above? §VIII(6)?
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Consider the FTC's, A
Consumer's Guide to E-Payments (undated, live on FTC web page).
Is this good advice, bad advice, or mostly besides the point?
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Optional
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Simon L. Lelieveldt, How
to Regulate Electronic Cash: An Overview of Regulatory Issues and Strategies,
46 Am. U. L. Rev. 1163 (1997).
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Paypalwarning.com, Things
you should know before doing business with Paypal.com; Alternatives
to PayPal; PayPal
"Wall of Shame"
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National Conference of Commissioners on Uniform State Laws, Uniform
Money Services Act (2000).
5. UCITA
-
Reading
-
Selections from UCITA §§ 102-215, 815-16 (in packet). Please
pay particular attention to §§ 107(d), 111, 112, 201, 206 and
208.
-
Robert W. Gomulkiewicz, The
License Is The Product: Comments On The Promise Of Article 2B For Software
And Information Licensing, 13 Berkeley Tech. L.J. 891-909 (1998)
(Westlaw)
(you don't need to read the appendix)
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Cem Kaner, Why You Should
Oppose UCITA (2000)
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Jean Braucher, UCITA and the Concept of Assent, 673 PLI/Pat 175 (2001)
(Westlaw)
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Amelia H. Boss, Taking UCITA On The Road: What Lessons Have We Learned?,
673 Pli/Pat 121 (2001) (Westlaw)
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UCITA
amendments
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Iowa "bomb shelter" Statute, HB
2205 (Note that Iowa extended
it to 2002). Note especially the provision relating to UCITA
and choice of law in sec. 4, 544D.104 Scope in sub-part (4):
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Thinking
-
Consider the End-User-License in the handout
that is (was?) clicked through for a certain software package. Is
this enforceable under UCITA? Cf. Ed Foster, InfoWorld, Is
it OK for Microsoft and others to forbid disclosure of benchmark results?
(2001) and Ed Foster, InfoWorld, Some
new shrink-wrap license terms seem tailor-made for UCITA (2001).
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Optional
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Full text
of UCITA itself, with comments
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Mary Jo Howard Dively, ABA Advisor to Drafting Committee & Carlyle
C. Ring, Jr., Chair of UCITA Drafting Committee, Overview
of UCITA
-
Carol Kunze's UCITAonline.com
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Cem Kaner's, Badsoftware.com
UCITA section
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AFFECT, Americans for Fair Electronic Commerce Transactions, at 4cite.org
6. Gambling (and Jurisdiction)
-
Reading
-
You may wish to review your notes on personal jurisdiction from Civ Pro
I.
-
Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa. 1997).
Also located
on
westlaw.
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Cybersell, Inc. v. Cybersell,
Inc., 130 F.3d 414, (9th Cir. 1997).
-
The
Florida Attorney General's Opinion on Internet Gambling (October 18,
1995).
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The decision of the Minnesota court of appeal in the Granite
Gate case, 568 N.W.2d 715, affirmed by an equally divided court, 576
N.W.2d 747 (Minn. 1998). Also located on
Westlaw.
-
Michael Geist, There
a There There?: Towards Greater Certainty for Internet Jurisdiction,
16 Berkeley Tech Law Journal 1345 (2001).
-
Thinking
-
What constraints does the Dormant Commerce Clause place on the ability
of states to regulate e-commerce?
-
A key issue in any attempt to apply traditional ideas of jurisdiction to
the Internet is characterizing "where" the Internet event "happened".
In how many different locations is it reasonable to say that the following
events happened:
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Alice sends email to Bob
-
Alice and Bob exchange a series of emails
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Alice and Bob exchange a series of emails, inducing Alice to fly out to
visit Bob
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Alice views Bob's web page
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Alice libels Bob over Usenet
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Alice purchases digital content from Bob's web page, for immediate delivery,
paying by credit card
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Alice orders a package from Bob's web page, which is later delivered from
a warehouse at another location
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To what extent are your answers to the above contingent on the means by
which Alice and Bob access the Internet? Would any of the following
affect your answers?
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Access is by DSL to the home
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Access is over a network in the workplace
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Access is local dialup from the home to a nearby server
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Access is local dialup, but unbeknownst to the customer, the server is
in another state
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Access is via dialup to an 800 number
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Access is via satellite
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Would any of these affect your answers?
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The URL for Bob's email and web page ends in .com, but Bob and Bob's server
are located abroad
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The URL for Bob's email and web page ends in .tm but Bob is located in
Hawaii
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Bob is ten years old and is using his parent's Internet account without
their permission
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Should one require the same degree of contacts for each of the following
types of assertions of state power:
-
Exercise of personal jurisdiction over the defendant in a civil case?
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Exercise of personal jurisdiction over the defendant in a criminal case?
Selection of venue?
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Exercise of prospective legislative or regulatory power over a general
class of activities.
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Exercise of in rem jurisdiction over a thing
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What in fact are the minimum contacts required for each of the above under
US law?
-
Assuming that the Due Process Clause of the Constitution requires some
sort of minimum contacts with a res or its owner in order to assert
jurisdiction over the res, what is the constitutionally required
minimum contacts with the US required in order for the US to assert in
rem jurisdiction over the disposition of a domain name when the registrant
resides abroad?
Last modified: Feb 21, 2002
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