The Internet & The Market: Reading Assignments

Spring 2003

Part II:  Topics in E-Commerce

1. Gambling (and Jurisdiction)

  1. Reading
    1. You may wish to review your notes on personal jurisdiction from Civ Pro I.
    2. Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D.Pa. 1997). Also located on westlaw.
    3. Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, (9th Cir. 1997).
    4. The Florida Attorney General's Opinion on Internet Gambling (October 18, 1995).
    5. 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.
    6. Michael Geist,  There a There There?: Towards Greater Certainty for Internet Jurisdiction, 16 Berkeley Tech Law Journal 1345 (2001).
    7. Shannon P. Duffy, Web Activity Gives Plaintiff Chance for Jurisdictional Discovery (Jan. 28, 2003) [placeholder for Toys "R" Us v. Step Two SA]
  2. Thinking

2. Contract Formation Online

  1. Reading
    1. FTC, Mail Or Telephone Order Merchandise, 16 C.F.R. §§ 435.1 & 2 (Westlaw: .1 & .2)
    2. People to Machines
      1. AP, United to honor near-free Internet tickets after all (Feb. 19, 2001)
      2. Specht v. Netscape Communications Corp, 150 F.Supp.2d 585 (S.D.N.Y. 2001) (Westlaw)
      3. I.Lan Systems, Inc. v. Netscout Service Level Corp.,   --- F.Supp.2d ----, 2002 WL 15592 (D.Mass. Jan 02, 2002).
      4. AOL Clickwrap Jurisdiction Agreement Unfair, Unenforceable, 17 NO. 6 e-Commerce 12 e-Commerce (October, 2000).
      5. Part I.C  & Part II of Anthony J. Bellia, Jr., Contracting With Electronic Agents, 50 Emory L.J. 1047 (2001)
    3. Machines to Machines
      1. Tom Allen & Robin Widdison, Can Computers Make Contracts?, 9 Harv. JL & Tech 25 (1996). [Edited version in packet]
      2. 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]
  2. Thinking
    1. 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?
    2. When does the FTC Mail or Telephone Order Merchandise rule apply to e-commerce?  When not?
    3. 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?
    4. 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?
    5. When is clickwrap NOT enforceable?  When should it not be enforceable?
    6. 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)
    7. 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?:
        8. § 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.
    8. 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?
    9. Is Kerr's computer/slavery analogy persuasive? Offensive? Premature?
    10. 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?
    11. 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?
    12. 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?
    13. Who is the least-cost-avoider in the three types of transactions?
    14. Supppose in the United Airlines example, the web page sold not air tickets, but an air plane for $24.98.  What result? Why?
    15. Suppose it sold the airline for $24.98.  What result?  Why? Suppose the airline were broke and losing money?
  3. Optional
    1. Michael R. Geroe, Agreements Between an Electronic MarketPlace and its Members, 35 The International Lawyer 1069 (2001).
    2. Robert A. Hillman & Jeffrey J. Rachlinski, Standard-Form Contracting in the Electronic Age, 77 N.Y.U.L. Rev. (2002) (online at SSRN click "download" button).
    3. Curtis E.A. Karnow, Liability For Distributed Artificial Intelligences, 11 Berkeley Tech. L.J. 147 (1996) (Westlaw)
    4. Larry E. Reibstien, Bruce h. Kobayashi, State Regulation of Electronic Commerce, 51 Emory L.J 1 (2002).

3. Digital Signatures & Certificates I

  1. Reading
    1. Background Issues
      1. 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
      2. 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]
    2. UETA
      1. Fla. Stat. Ch. 668 (2001).
  2. Doing
    1. Get hold of a copy of a recent version of either Mozilla (1.2+), 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.
    2. Visit http://www.uetaonline.com and look around
  3. Thinking
    1. In reading Florida's enactment of a digital signature law and of UETA, please pay close attention to:
      1. The definitions
      2. What is excluded from coverage
      3. In light of the "background issues" reading, what you think the problems are that this statute is designed to solve -- and what issues remain.
    2. Who bears liability when things go wrong?
      1. 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)?
      2. 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 Daniella's 's shopping spree?
    3. How is a merchant to know when it is reasonable to rely on a digitial signature?
    4. 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?
  4. Optional
    1. David L. Gripman, Electronic Document Certification: A Primer on the Technology Behind Digital Signatures, 17 J. Marshall L. Rev. 769 (1999).  (Westlaw)
    2. 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)
    3. Roger Clarke, The Re-Invention of Public Key Infrastructure (Dec. 16, 2001)
    4. Uniform Electronic Transactions Act (UETA).
    5. UNCITRAL Model Law on E-Commerce (1996) with additional article 5 bis as adopted in 1998 and Guide to Enactment
    6. Ministry of the Attorney General of Canada, Memo regarding UNCITRAL meeting on Electronic Signatures (Oct. 10, 2000)
    7. Baker & McKenzie, UETA, State-by-State Comparison Table (7/8/01).
    8. Patricia Brumfield, A Preliminary Analysis of Federal & State Electronic Commerce Laws (2000).

4. Digital Signatures & Certificates II

  1. Reading
    1. E-Sign
      1. 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).
      2. 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)
      3. 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 )
      4. U.S. Law Week, States Skirt ESIGN Preemption Threat By Adopting Relatively 'Clean' UETA Versions (May 15, 2001).
      5. Security Space, Secure Server Survey (Jan 1, 2003)
    2. Looking Forward
      1. Jelle van Buuren, Telepolis, Dutch Government Puts Trusted Third Parties Under Pressure (Aug. 5, 2001)
      2. Jane Kaufman Winn, The Emperor's New Clothes: The Shocking Truth About Digital Signatures & Internet Commerce, 37 Idaho L. Rev. 353 (2001) (Westlaw).
  2. Doing
    1. Figure out how many digital signatures are currently stored by your browser.
  3. Thinking
    1. What problems does e-sign solve?  Cause?
    2. Given E-sign, what does UETA add?  Subtract?
    3. How do E-sign and UETA differ in their treatment of consumers on issues such as
      1. notice
      2. fraud
      3. consumer error ("oops - I shouldn't have clicked that")?
      4. In a UETA state, which controls?
    4. How do E-sign and UETA treat commerce by AI's, bots, and other devices?
    5. What if anything are digital signatures good for?
    6. 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?
    7. When if ever should law enforcement be able to require a person or firm to turn over encryption keys?
      1.  ...for "safekeeping"?
      2. ...to "aid an investigation"?
  4. Optional
    1. 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)
    2. Bruce Schneier, Why Digital Signatures are Not Signatures (Nov. 15, 2000)
    3. John Naughton, Observer, The Three Minute Guide to RIP (Mar. 12, 2000).
    4. Anthony Rollo, PLI Consumer Financial Services Litigation 2001, E-Sign: New Opportunities, And Litigation, Ahead,1241 PLI/Corp 85 (April 16, 2001) (Westlaw)
    5. 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).
    6. Patrick A. Randolph Jr., Has E-Sign Murdered The Statute Of Frauds?, 5-AUG Prob. & Prop. 23 (July-August, 2001) (Westlaw)
    7. 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).
    8. Nicholas Bohm, Brian Gladman, Ian Brown, Foundation for Information Policy Research, Electronic Commerce: Who Carries the Risk of Fraud? (July 2000).

5. Online Payment Systems

  1. Reading
    1. A. Michael Froomkin, Flood Control on the Information Ocean, 15 Journal of Law & Commerce 395 (1996), pages 449-479 (westlaw).
    2. Jane Kaufman Winn, Clash of the Titans Regulating the Competition Between Established & Emerging Electronic Payment Systems, (Final Version, 5/6/99).
    3. dru, Getting Paid for Content: From Micropayments to Shareware Models, Kuro5hin: Technology & Culture from the Trenches (July 3, 2001).
    4. The PayPal Phenomenon
      1. Robert X. Cringely, I'll Gladly Pay You Tuesday: How PayPal Has Already Won the Battle of the Internet Payment Systems (Aug. 31, 2000)
      2. Russ Jones, The PayPal Phenomenon: Lessons From the Leading Edge of Online Payments (Nov. 9, 2001), pp. 6-11, 16
      3. Evan I Schwartz, Digital Cash Payoff , Technology Review (Dec. 2001).
      4. Paypalwarning.com, Paypal Warning (ongoing)
    5. e-gold, Top Ten Reasons to Prefer e-gold & What is E-gold?
  2. Doing
    1. 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? Update: Ok, that's gone. Look into Baltic One, the 100% Anonymous Channel Island International Business and Investment Trust Company, and the NetPay Global Payment Center instead.
    2. 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?
  3. Thinking
    1. 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?
    2. Did you read the PayPal terms of service before answering the question above?  §VIII(6)?
    3. 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?
  4. Optional
    1. Simon L. Lelieveldt, How to Regulate Electronic Cash: An Overview of Regulatory Issues and Strategies, 46 Am. U. L. Rev. 1163 (1997).
    2. Paypalwarning.com, Things you should know before doing business with Paypal.com; Alternatives to PayPal; PayPal "Wall of Shame"
    3. National Conference of Commissioners on Uniform State Laws, Uniform Money Services Act (2000).

Last modified: Jan 28, 2003
 

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