A Brief Look at E-Commerce and Cyber Law

By D.Manggala (Summer 2003 - a paper of Law for Executive course)

Information Technology and the Internet have changed the world significantly by the presence of technology that connecting people around the globe in a real time frame. Those technologies have created a new place that is called cyberspace which is a virtual place that has no geographical, political and cultural boundaries. People have been using the cyberspace to communicate, share ideas and do business in cyberspace and this trend has been growing exponentially in the last decade.

The growth in e-communication and e-commerce has some significant impacts on business law because there are some challenges to the existing regulation due to the uniqueness of e-commerce and cyberspace. It means that the cyberspace needs legislation as a rule to protect all users (companies, sellers, buyers or visitors) and make the internet as a good channel to do business.

The focus in the legislation of e-commerce and cyberspace is security. This is because the internet enables communications or transactions among people or organizations without knowing the “real person” and physical location of other party so without security the cyberspace is a dangerous place. The cyberspace and e-commerce are all about information flows, so that the protection of the information passed in this channel is very critical. The main point is how to protect and verify the identity or authorization of a person or an organization in this virtual place. The security here includes all the security from identification of a person, identification of any account (bank account, checking or mail account), security of a website and also related to the verification of an electronic document as a legal document.

There are some issues in this area. The first issue is surely related to security and privacy. The cyberspace can allow a person to access easily other person’s data or identity. This includes fraudulent (using others checking account illegally) and unauthorized billing. Accessing and changing a website is very possible from any computer that has access to the internet and can create great damage also. Imagine a hacker may access Pentagon website and he deliberately modify some data that related to nuclear weapons. Included in this security and privacy issue is the issue about consumer protection. There are a lot of issues related to consumer data usage by companies in this database marketing era.

The second issue is related to the freedom of speech based on the first amendment of the Constitution. The internet can reach unlimited audience almost without any restriction to any age, culture, political view, religion or nationality. There are some debates related to filtering or prohibiting any kind of website that contains pornography or certain political or cultural views. On the one hand, free speech on internet can provide a bad effect to community (for example: pornography for children); on the other hand, any restriction on internet against the spirit of democracy.  However, the standard is very different from one place to other place and from one country to other country.   Some issues related to cyber hate speech or defamation on the internet can be a big issue because it can be accessed from many countries with different standards and laws. This issue is strongly related to the jurisdiction issue.

The third important issue in e-commerce is the jurisdiction in cyberspace. Since the cyberspace is a virtual place where geographic, cultural and political boundaries are immaterial, it is very hard to determine the jurisdiction in this case. Government control will be very difficult because cyberspace crosses every border; moreover, who or what organization to control the cyberspace is another question. The current unclear jurisdiction can raise a lawsuit to a website that accessible in a foreign country where the content of this website is illegal according to that particular country.  The Yahoo! case is an example of this case. As we know, Yahoo! sued in France because it offered Nazi memorabilia in its auction. Such displays are illegal in France although it’s legal in the United States. Although the France court has dismissed the lawsuit, this does not mean there will be no other lawsuit in other country with different cases related to the vague jurisdiction in cyberspace.

The fourth issue is related to intellectual property. The internet and current technology make it is very easy to copy and reproduce any type of file, music, picture or movie without permission of the authorized person or organization. The Napster case several years ago is the example of this issue, and yet it is still far away from any solution (especially for recording companies or artists). It is very easy to set up a website where the domain names can be the same with other domain name. There are always possibilities disputes about domain names on the internet. However, the registration of domain names has been standardized by the Internet Corporation of Assigned Name and Number (ICANN) and the Network Information Center (NIC).

          Any expert and lawyers in e-commerce and cyber law field in the United States must understand the current and upcoming legislation as well as the conventional legislation because some of the cyber law is still based on the conventional law. They have to really understand the development and the controversy of the proposed Uniform Computer Information Transaction Act (UCITA). What is in the proposed act that made American Librarian Association (ALA) and Institute of Electrical and Electronics Engineer (IEEE) United States opposed the proposed act. In addition there are some legislation that related to e-commerce and cyber law i.e.:

-          The Electronic Signature in Global and National Commerce Act

-          The Uniform Electronic Transaction Act (UETA)

-          The Digital Millennium Copyright Act of 1998

They also need to understand the international e-commerce guidelines or laws that provided by the United Nations Commission for International Trade Law (UNCITRAL) and foreign laws (Europe Union, Asians, South American and other countries). Furthermore, the development in information technology is very fast so they have to watch this development very close.

          There are some sub topics in e-commerce law and cyber law. The first sub topic is Digital Signature/Electronic signature. Electronic Signature is “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record” (as cited in Cross & Miller, 2001, p. 329). Digital or Electronic Signature is an important topic because this is the only way (in current technology) to provide security in e-commerce and cyber law. The current electronic signature using cryptography technology; for example, is provided by a third party company such as VeriSign.

          The second important sub-topic is electronic contract (e-contract). In today’s e-commerce implementation there are a lot of sales contracts during the purchases of airline tickets, book or apparels. There are some license agreements or term of conditions which many customers do not aware because they usually just click the “I Agree” box. There are some requirements for the companies/sellers to design their website so its license agreements are clear to their customers/buyers. In addition, the highly and easily updated of website has raised some questions which are when is the contract formed, who is bound by the contract, etc. This is mainly parallel with the other concern of how to recognize the legal recognition of electronic contract and using the e-contract as evidence in the court.

          The third sub topic is cyber crime. There are a lot of potential cyber crimes that are potentially done by hackers, cyber terrorists, spammers, companies/sellers or common users. Checking account fraudulent and unauthorized billings are one the most crimes in e-commerce. Other types of crimes are hacking, spamming, cyber terrorist and illegal usage of consumer data. This topic is very important because the current law and infrastructure (cyber police) are still behind the crimes. It needs some experts that are very good in law and information technology.

Based on the issues and sub-topics discussed before, the legal challenges anticipated in the future are related to them. The combination of security, privacy, customer protection and jurisdiction will be big challenges to the current legislation. The UCITA and Patriot Act may have some impact on costumer protection that in the future could bring some legal issues. Moreover, the growth of wireless technology will add some challenges to security issue because the internet becomes mobile and easier to intrude to any network. Finally, with the growth of e-commerce and e-marketing, there will be a lot of issues that crosses borders of many nations that may restrict the e-commerce growth if the laws are not there.

In conclusion, e-commerce and cyber law are still growing where the regulations are a little late behind. The unique characteristic of the internet or cyberspace requires some new law to accommodate it. Security, freedom of speech, jurisdiction, and intellectual property are some issues in this area. People need to understand law very well and also know information technology and its development to be an expert in e-commerce and cyber law.

Bibliography

“Advertising and Marketing on the Internet.” Federal Trade Commission Bureau of Consumer Protection September 2000. Accessed 19 June 2003 from <http://www.ftc.org>.

Cross, Frank B and Roger LeRoy Miller.  West’s Legal Environment of Business. West Thomson Learning, 2001.

“French Court Rules in Favor of Yahoo in Internet Free Speech Case.” The Center for Democracy and Technology. February 11, 2003. Accessed 18 June 2003 from <http://www.cdt.org/jurisdiction.>.

Johnson, David R and David G. Post. “Law and Borders—The Rise of Law in Cyberspace.” Cyberspace Law Institute 1996. Accessed 18 June 2003 <http://www.cli.org/X0025_LBFIN.html>.

Keefe, Christopher P. “ A Law Student Guide to the Future of Transactions Over the Internet: A Review of the Digital Signature Guidelines.” Virginia Journal of Law and Technology Spring 1997. Accessed 18 June 2003 from <http://scs.student.virginia.edu/~vjolt /graphics/vo11/vo11_art6.html>.