Bài giảng E-Business and e-Commerce - Chapter 11: Legal and Ethical Issues; Internet Taxation

Implicit in the First, Fourth, Ninth and Fourteenth Amendments Olmstead vs. United States Telecommunication of alcohol sales during Prohibition era New application of the Fourth Amendment Translation Interpreting the Constitution to protect the greater good

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Chapter 11, Legal and Ethical Issues; Internet TaxationOutline 11.1 Introduction 11.2 Legal Issues: Privacy on the Internet 11.2.1 Right to Privacy 11.2.2 Internet and the Right to Privacy 11.2.3 Network Advertising Initiative 11.2.4 Employer and Employee 11.2.5 Protecting Yourself as a User 11.2.6 Protecting Your Business: Privacy Issues 11.3 Legal Issues: Other Areas of Concern 11.3.1 Defamation 11.3.2 Sexually Explicit Speech 11.3.3 Children and the Internet 11.3.4 Alternative Methods of Regulation 11.3.5 Intellectual Property: Copyrights and Patents 11.3.6 Trademark and Domain Name Registration Chapter 11, Legal and Ethical Issues; Internet TaxationOutline 11.3.7 Unsolicited Commercial E-mail (Spam) 11.3.8 Online Auctions 11.3.9 Online Contracts 11.3.10 Online User Agreements 11.4 Cybercrime 11.5 Internet Taxation 11.1 IntroductionReal spaceOur physical environment consisting of temporal and geographic boundariesCyberspace The realm of digital transmission not limited by geography11.2 Legal Issues: Privacy on the InternetDifficulty of applying traditional law to the InternetTechnology and the issue of privacy11.2.1 Right to PrivacyImplicit in the First, Fourth, Ninth and Fourteenth AmendmentsOlmstead vs. United StatesTelecommunication of alcohol sales during Prohibition eraNew application of the Fourth AmendmentTranslationInterpreting the Constitution to protect the greater good11.2.2 Internet and the Right to PrivacySelf-regulated mediumThe Internet industry governs itselfMany Internet companies collect users’ personal informationPrivacy advocates argue that these efforts violate individuals’ privacy rightsOnline marketers and advertisers suggest that online companies can better serve their users by recording the likes and dislikes of online consumers Financial Services Modernization Act of 1999 Establishes a set of regulations concerning the management of consumer information11.2.3 Network Advertising InitiativeNetwork Advertising Initiative (NAI) Approved by the FTC in July 1999 to support self regulationNAI currently represents 90 percent of Web advertisers Determines the proper protocols for managing a Web user’s personal information on the Internet Prohibits the collection of consumer data from medical and financial sitesAllows the combination of Web-collected data and personal information 11.2.3 DoubleClick: Marketing with Personal Information FeatureRegulation of the Internet could limit a company’s efforts to buy and sell advertisingDoubleClick Advertising network of over 1,500 sites and 11,000 clientsAbacus Direct CorpNames, addresses, telephone numbers, age, gender, income levels and a history of purchases at retail, catalog and online stores Digital redliningSkewing of an individual’s knowledge of available products by basing the advertisements the user sees on past behavior 11.2.4 Employer and EmployeeKeystroke copRegisters each keystroke before it appears on the screen Company time and company equipment vs. the rights of employeesDetermining factorsReasonable expectation of privacyLegitimate business interestsReasons for surveillanceSlower transmission timesHarassment suitsLow productivity 11.2.4 Employer and EmployeeNotice of Electronic Monitoring ActProposed in 2000Would require employers to notify employees of telephone, e-mail and Internet surveillance Annual updates or when policy changes are madeThe frequency of surveillance, the type of information collected and the method of collection would also be disclosed 11.2.4 Michael A. Smyth vs. The Pillsbury Company FeatureDismissed as regional operations managerQuestionable material in e-mailPennsylvania law “An employer may discharge an employee with or without cause, at pleasure, unless restrained by some contract" Public policyReprimanding an employee called for jury dutyDenial of employment as a result of previous convictions Verdict awarded to PillsburyNo reasonable expectation of privacyLegitimate business interests11.2.5 Protecting Yourself as a UserAnonimity and pseudonimityPrivacyX.comPlatform for Privacy Preferences Project (P3P)Browser complies in accordance with users’ privacy preferences by allowing them to interact in specific ways Privacy services and softwareJunkbusters.comPrivacyChoices.orgCenter for Democracy and TechnologyElectronic Frontier FoundationElectronic Privacy Information CenterPrivacyRights. org11.2.6 Protecting Your Business: Privacy IssuesPrivacy policyThe stated policy regarding the collection and use of visitor’s personal informationPrivacy policy services and softwarePrivacyBot.comTRUSTe11.2.6 Protecting Your Business: Privacy IssuesCore Fair Information Practices Consumers should be made aware that personal information will be collectedThe consumer should have a say in how this information will be usedThe consumer should have the ability to check the information collected to ensure that it is complete and accurateThe information collected should be securedThe Web site should be responsible for seeing that these practices are followed 11.2.6 Protecting Your Business: Privacy IssuesPrivacyBot.com. (Courtesy of Invisible Hand Software, LLC.)11.3 Legal Issues: Other Areas of ConcernDefamationSexually explicit speechCopyright and patentsTrademarksUnsolicited e-mailFirst Amendment"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble and to petition the Government for a redress of grievances"11.3.1 DefamationDefamationThe act of injuring another’s reputation, honor or good name through false written or oral communicationLibel Defamatory statements written or spoken in a context in which they have longevity and pervasiveness that exceed slander11.3.1 DefamationSlanderSpoken defamationProving defamationThe statement must have been published, spoken or broadcastThere must be identification of the individual(s) through name or reasonable associationThe statement must be defamatoryThere must be faultThere must be evidence of injury11.3.1 DefamationGood Samaritan provision, Section 230 of the Telecommunications ActProtects ISPs from defamation lawsuits when the ISPs’ attempt to control potentially damaging postings“Obscene, lewd, lascivious, filthy, excessively violent, harassing or otherwise objectionable" 11.3.1 Cubby vs. Compuserve and Stratton Oakmont vs. Prodigy FeatureCubby vs. CompuserveAnonymous individual used a news service hosted by Compuserve to post an allegedly defamatory statement Distributor vs. publisherA distributor cannot be held liable for a defamatory statement unless the distributor has knowledge of the contentCompuserve was a distributor of contentStratton Oakmont vs. ProdigyClaimed responsibility to remove potentially defamatory or otherwise questionable materialProdigy served as a publisher of the content11.3.2 Sexually Explicit SpeechMiller vs. California (1973)The Miller Test identifies the criteria used to distinguish between obscenity and pornographyMust appeal to the prurient interest, according to contemporary community standardsWhen taken as a whole, lacks serious literary, artistic, political or scientific valueChallenge of community standards in cyberspace 11.3.2 United States vs. Thomas FeatureThomasInternet business owner in California, owner of pornographic Web site from which merchandise could be orderedAccessible by passwordAcceptable by California community standardsSold pornographic material to Tennessee resident (opposing community standards)Thomas found guiltyNon-content related meansEffort to control the audience rather than controlling the material 11.3.3 Children and the InternetAccessibility of informationDecency Act of 1996 (CDA) and Children’s Online Protection Act of 1998 (COPA) Designed to restrict pornography on the Internet, particularly in the interest of childrenOverbroad“Patently offensive,” “indecent” and “harmful to minors”Chilling effectLimiting speech to avoid a lawsuitChildren’s Online Privacy Protection Act of 2000 (COPPA)Prohibits Web sites from collecting personal information from children under the age of 1311.3.4 Alternatives Methods of RegulationBlocking and filteringAllows users to select what kinds of information can and cannot be received through their browsers Blocking and filtering software and servicesSurfwatch.comCybersitter.comNetNanny.comInfringement of First Amendment rightsParent’s counselCyberAngels.comGetNetWise.comParentsoup.com11.3.4 Alternatives Methods of RegulationNet Nanny home page. (Courtesy of Net Nanny Software International, Inc.)11.3.5 Intellectual Property: Patents and CopyrightCopyrightThe protection given to the author of an original piece, including “literary, dramatic, musical, artistic and certain other intellectual works”Whether the work has been published or not Protects only the expression or form of an idea and not the idea itselfProvides incentive to the creators of original material Guaranteed for the life of the author plus seventy years 11.3.5 Intellectual Property: Patents and CopyrightsDigital Millennium Copyright Act of 1998 (DMCA) Represents the rights of creative bodies to protect their work as well as the rights of educators and resource providers to receive access to this workMakes it illegal to delete or otherwise alter the identifying information of the copyright ownerPrevents the circumvention of protection mechanisms and/or the sale of such circumvention mechanismsProtects the fair use of copyrighted material 11.3.5 Intellectual Property: Patents and CopyrightFair useThe use of a copyrighted work for education, research, criticismThe purpose of the copyrighted work is examined The nature of the copyrighted work is taken into accountThe amount of the material that has been reproduced is reviewedThe effect is taken into consideration11.3.5 Intellectual Property: Patents and CopyrightPatentGrants the creator sole rights to the use of a new discovery Protection for 20 yearsOpposing the length of a patentDoes not foster the creation of new materialIncludes “methods of doing business” since 1998Idea must be new and not obvious to a skilled person Amazon’s 1-Click patentSeptember, 1999Huge advantage over competitors, as 65% of shopping carts are abandoned before purchase is completeBarnesandnoble.com Express Lane violated patent11.3.5 File Sharing and the Copyright Debate FeaturePresent significant challenges to the traditional treatment of copyright protectionMP3A compression method used to substantially reduce the size of audio files, with no significant reduction in sound quality NapsterOperates as a centralized serviceOffers software that allows users to download MP3 files from the hard drives of other members GnutellaOperates as a decentralized serviceIndividuals with Gnutella software installed on their computers operate as both a client and a server 11.3.5 File Sharing and the Copyright Debate FeatureLegal issuesFreedom of exchange (enabled by technological advancements) vs. copyright infringementAbility to voice one’s opinion and circumvent efforts of censorshipIf copyrighted works are distributed over the system, creators will have less incentive to continue generating original works Sony Betamax (1984) Courts awarded the victory to Sony, suggesting that the Betamax provided other uses (recording for personal viewing) that justified its existence 11.3.5 United States vs. Lamacchia FeatureChanged the face of copyright protection (1994)Posting of copyrighted materialNot guilty under the Copyright Act of 1976The violation must have been conducted "willfully and for purposes of commercial advantage or private financial gain”LaMachhia did not profit from the copyright violationsLaMacchia was not convicted for his actions 11.3.6 Trademark and Domain Name RegistrationParasiteSelects a domain name based on common typos made when entering a popular domain name CybersquatterBuys an assortment of domain names that are obvious representations of a brick-and-mortar company 11.3.6 Trademark and Domain Name RegistrationAnticybersquatting Consumer Protection Act of 1999 (ACPA) Protects traditional trademarking in cyberspaceProtects trademarks belonging to a person or entity other than the person or entity registering or using the domain namePersons registering domain names are protected from prosecution if they have a legitimate claim to the domain name Domain names cannot be registered with the intention of resale to the rightful trademark owner11.3.7 Unsolicited Commercial E-mail (Spam)Cost is primarily incurred by the receiver and the ISPOrganizations distributing spamMaintain anonymity and receivers cannot request to be taken off the organization’s mailing listPresent themselves as a legitimate company and damage the legitimate company’s reputationUnsolicited Electronic Mail Act Mandates that the nature of the e-mail be made clear Would require online marketers to know the policy of every ISP they encounter on the Web11.3.8 Online AuctionsQuestion of government regulationInternational regulation of auctionsCopyright infringement and auction aggregation servicesThe Collections of Information Antipiracy Act (CIAA) Makes it easier to prosecute any group which takes listings from one organization and, in doing so, harms the original businessShill biddingSellers bid for their own items to increase the bid price11.3.9 Online ContractsElectronic Signatures in Global and National Commerce Act of 2000 (E-Sign Bill)Designed to promote online commerce by legitimizing online contractual agreementsDigital agreements will receive the same level of validity as hard-copy counterpartsAllows cooperating parties to establish their own contracts11.3.10 User AgreementsRequires users to agree to certain terms regarding the service or product provided by the site before entering Shrink-wrap agreement An agreement printed on the outside of the package holding the product that becomes binding when the consumer opens the package Click-through agreementA pop-up screen to which users must agree before they can continueDepending on their presentation, these types of agreements can be considered valid by the U. S. courts 11.4 CybercrimeAuctions, chat rooms and bulletin boards are among the most popular forums for illegal activitiesViruses, which often lead to denial of service or a loss of stored information, are among the most common cybercrimesStock scamsCrimes in which individuals purchase stocks, then present false claims about the value of that stock in chat rooms or on bulletin boards to sell them back at a higher priceWeb page hijackingWeb page is used as a gateway (the intermediary between one site and another) to another site 11.4 CybercrimeFTC “dummy” site for NordiCaLite. (Courtesy of Federal Trade Commission.)11.4 CybercrimeFTC warning page. (Courtesy of Federal Trade Commission.)11.5 Internet TaxationThe opposing argumentsPermanent ban on Internet taxationFair taxation of Internet salesTaxation methodsIf both a vendor and a consumer are located in the same state sales tax is appliedIf the vendor and the consumer are not located in the same state, then the sale is subject to a use tax If the vendor has a physical presence, or nexus, then it is required to collect the tax; otherwise the vendor must assess the tax and pay it directly to the state11.5 Internet TaxationProblems with Internet taxationThe definition of physical presence (location of the ISP, the location of the server or the location of the home page)States vary according to what transactions are subject to taxation Sales tax revenues are the largest single source of a state’s revenue and are used to fund government-subsidized programs, including the fire department, the police and the public education systems State and local governments further argue that removing taxation methods from their jurisdiction infringes upon state sovereignty, an element of the checks-and-balances system maintained by the United States Constitution 11.5 Internet TaxationProblems with Internet taxationTo meet the taxation requirements of all parties in online transactions, e-businesses would be required to know and understand all these methodsInternet Tax CommissionReviewed the issue of Internet taxation Revision of state and local taxes to make taxing a feasible process for Internet businessesEstablish clearer definitions on the meaning of “physical presence”Define universal taxation exemptions
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