Morris Manning & Martin, LLP

Electronic Commerce & Electronic Data Interchange

I. INTRODUCTION

A. Electronic Commerce -- Defined. 


Electronic commerce ("EC") is used as a broad term to mean a number of technologies and software tools to help facilitate communications and trading by electronic means. (See Attachment 1 for the EC/EDI Diagram and Business White Paper on EC over the Internet.) 

B. The Players in Electronic Commerce. 

There are multiple parties involved in electronic commerce transactions, each of which has separate sets of responsibilities, liabilities and rights. These parties include --

  1. Value Added Network (VAN). The party with an established computer system through which electronic transactions are processed and communicated to trading partners.
  2. Trading Partners. The businesses and individuals involved in electronic communication and trading.
  3. Online Service Provider (OSP). A business providing online services, which may include Internet service, as well as other value-added functions and features (such as America Online, CompuServe, Prodigy, and LEXIS/NEXIS).
  4. Internet Service Provider (ISP). A company providing Internet access to the users subscribing to the service.


II. PRACTICAL POINTERS

Point 1: -- Understand the role of EDI in EC.


A. Electronic Data Interchange.

Electronic Data Interchange ("EDI") is the cornerstone of EC. It involves the computer-to-computer exchange of common business documents or transactions such as purchase orders, invoices, advanced ship notices, electronic funds transfer and so on, between a company and its trading partners, including suppliers, customers, banks and others. EDI links organizations via computer system application-to-application, eliminating paper flow and data re-keying. 

B. EDI -- A Series of Definitions.

There is no one standard definition of EDI, but the following are the most frequently cited.

  1. EDI allows businesses and financial institutions to electronically transmit and receive routine business information and documents in a standard format with their business trading partners. (Source: Prospectus of Harbinger Corporation dated August 1995)
  2. EDI is the method by which business data may be communicated electronically between computers in standardized formats (such as purchase orders, invoices, shipping notices, and remittance advices) in substitution for conventional paper documents. (Source: The Commercial Use of Electronic Data Interchange -- a report and model trading partner agreement, The Business Lawyer; Vol. 45, June 1990; hereinafter the "Report")
  3. Technically stated, EDI is the transmission, in a standard syntax, of unambiguous information between computers of independent organizations. (Source: Accredited Standards Committee X12, Information Manual 2 - 1989)
  4. EDI is an electronic commerce service used to transmit documents using industry-standard formats in major industry sectors in which uniform EDI standards have been adopted.


C. Trading Communities

  1. Definition - Trading communities consist of groups of companies that regulate trade with each other and generate significant repetitive business transactions. These existing trading communities are natural prospects for implementation of EDI.
  2. Trade Organizations - Certain trading communities are defined by trading standards, protocols, rules or procedures adopted through trade organizations, such as the EDI standards adopted by members of the Petroleum Industry Data Exchange. The adoption of EDI as an accepted means of transmitting business documents and data has occurred, in part, because many trade organizations or groups and many large companies within a trading community increasingly recommend or require their member organizations or trading partners to adopt and use EDI as the primary method of communicating business documents.
  3. Hub and Spoke - Large companies within a trading community may be described as "Hubs" and their trading partners as "Spokes." A Hub company and its trading partners communicate through the Internet or electronic networks, generally either third-party networks or a private network owned and operated by the Hub company. Spoke companies often expand the electronic commerce web by also requesting or requiring their other trading partners to communicate through EDI. An ever expanding number of trading partners adopting EDI results in the establishment of distinct trading communities comprising potential software customers and network subscribers for EDI services. (See Attachment 1)


D. EDI Transaction Flow.  

  1. Computer System - In a typical EDI transaction, a trading partner (the "Sending Partner") first creates with its computer, either manually or electronically, the business data used for the completion of a particular set of documents, described by EDI standards as a transaction set.
  2. Transaction Sets - Transaction sets include --
    • Requests for quotations
    • Quotations
    • Purchase Orders
    • Invoices
    • Shipping Notices
  3. Translation Software - A translation software program on the sending partner's computer converts the document or transaction set into a standard EDI format.
  4. Telecommunications Link - This information in standard EDI format is then electronically transmitted through telecommunications links from the Sending Partner's computer to a central computer system that serves as a value-added network shared by many trading partners.
  5. Network Interconnects - The VAN has the capability to interconnect by sending and receiving data through other networks and the Internet, resulting in electronic linkage of the sending and receiving partner through multiple parties in the chain.
  6. EC Analogies
    1. If the Internet is a system of dirt roads with many potholes over which rugged data vehicles can travel, then EDI Value-Added Networks are newly-paved smooth superhighways for data vehicles to travel by cruise control.
    2. There is a role for EDI as a means of transmitting data over both the Internet and through Value Added Networks. EDI over a VAN is like a car traveling a secure toll road with limited access and smooth traveling. EDI over the Internet may provide a more circuitous route, with less security and possible damage to the vehicle (periodic potholes, stolen Hubcaps, broken headlights, etc.).


E. EDI Industry Standards

  1. EDI has been further promoted through the adoption of standards within various industries. These standards describe the content and format of business documents (such as the data required to be included in purchase orders, invoices, shipping notices, and other business documents).
  2. Before these standards were adopted, electronic document transmission was based on proprietary formats agreed to by two trading partners. However, incompatible computer systems and differing proprietary formats limited widespread adoption of EDI.
  3. An organization responsible for coordinating national standards in the United States, formed the Accredited Standards Committee (ASC) X12, Electronic Data Interchange, to develop uniform standards for electronic interchange of business transactions.
  4. In 1983, ANSI published the first five EDI standards proposed by the ASC. The number of business transactions covered by EDI standards has continued to increase, and by 1995, the ASC X12 Committee had approved the development of over 280 domestic and international standards, including standards in the following industries:

 

Aerospace

Air Freight

Automotive

Banking

Chemical

Education

Electronics

Financial

Financial Services

Government

Grocery

Hardware Goods

Health Care

Insurance

Metals

Ocean Freight

Paper and Pulp

Petroleum

Rail Freight

Retail

Textiles

Trucking

Utilities

 

  1. International - The United Nations joint EDI Committee has developed international industry standards known as Electronic Data Interchange for Administration, Commerce, Transport (EDIFACT). Since EDI transactions are not limited by geographic boundaries, harmonization and standardization of EDI standards will be critical to the expansion of electronic commerce.


Point 2: -- Implement EC and Email Policies. Implement electronic commerce and email policies to minimize copyright infringement actions and potential aiding and abetting liability.

Playboy Enterprises v. Frena, 839 F.Supp. 1552 (M.D. Fla. 1993).

Facts: The defendant operated a subscription bulletin board containing copyrighted photographs from Playboy magazine. The digitized images could be browsed on-line or downloaded for subsequent viewing. Playboy’s trademarks were used to identify the files containing the photographs, and some images contained the defendant’s advertisement without Playboy’s trademarks or original text. The defendant contended he did not know the pictures were being uploaded and downloaded from his bulletin board. Playboy sued for copyright infringement, trademark infringement and unfair competition.

Holding: The court granted Playboy summary judgment on all three claims. First, the bulletin board’s transmission of digitized images from Playboy magazine constituted direct infringement of the copyright owner’s public distribution and public display rights. It was irrelevant to the court’s inquiry whether the defendant intended to infringe Playboy’s copyrights or even knew of the infringement.

Furthermore, the defendant infringed on Playboy’s trademarks by using them to identify files containing the copyrighted photographs. The court expressly declined to rely on defendant’s intent when it determined whether there was trademark infringement. As the court stated, "Even though a guilty state of mind is relevant evidence of trademark infringement, an innocent state of mind is irrelevant . . . ."

Finally, the defendant unfairly competed with Playboy by deleting the magazine’s trademarks and text and inserting advertisements for the bulletin board. The court did not mention the issue of defendant’s intent but merely stated the evidence of trademark infringement also supported the unfair competition claim.



Point 3: -- Educate EC and Email Users. Educate electronic commerce and email users as to potential claims for defamation and recent lawsuits in this area.

A. Cubby v. CompuServe, 776 F.Supp. 135 (S.D.N.Y. 1991).

Facts: The plaintiffs claimed that Rumorville, a daily newsletter carried on CompuServe’s Journalism Forum, published defamatory comments about Skuttlebut, the plaintiffs’ computer database designed to compete with Rumorville, and that CompuServe carried these statements as part of Journalism Forum. The plaintiffs sued CompuServe for libel.

CompuServe set up its Journalism Forum through an independent company, Cameron Communications, Inc. ("CCI"). CCI contracted with CompuServe to "manage, review, create, delete, edit and otherwise control the contents" of Journalism Forum "in accordance with editorial and technical standards and conventions of style as established by CompuServe." Don Fitzpatrick Associates ("DFA") contracted with CCI to provide Rumorville to Journalism Forum. CompuServe had no opportunity to review Rumorville’s contents before DFA uploaded it into CompuServe’s computer banks, from which it was immediately available to approved CompuServe subscribers.

Holding: Applying New York law, the court granted summary judgment for CompuServe. The court held CompuServe was not a publisher but a distributor (i.e., the cyberspace equivalent of a library, book store, newsstand or news vendor) of the disputed material. Therefore, CompuServe could only be held liable if it knew or had reason to know of the allegedly defamatory Rumorville statements. The court found CompuServe had no such knowledge. The court also refused to hold CompuServe vicariously liable for the statements. The court found CCI and DFA were not agents of CompuServe, and so CompuServe could not be held liable for their actions.



B. Stratton Oakmont, Inc. v. Prodigy Services Co., 63 U.S.L.W. 2765; 23 Media L. Rep. 1794; 1995 WL 323710 (N.Y. Sup. Ct. May 24, 1995).

Facts: An unidentified user posted allegedly defamatory comments about the plaintiffs on Prodigy’s "Money Talk" bulletin board. The plaintiffs sued Prodigy and sought partial summary judgment as to whether Prodigy was a publisher of the statements and as to whether the "board leader" was Prodigy’s agent.

Holding: The court held that Prodigy was not a distributor but a publisher of the allegedly defamatory statements regarding the plaintiffs. Therefore, if the statements were found to be libelous, Prodigy would have been held liable as if it had originally published them.

The court found that Prodigy exercised sufficient editorial control over its computer bulletin boards to render it a publisher with the same responsibilities as a newspaper. Evidence of such editorial control was apparent in: (1) Prodigy’s advertisements where the company expressly likened itself to a newspaper with editorial control; (2) Prodigy’s promulgation of "content guidelines" which advised users that offensive notes would be removed; (3) Use of a software screening program which automatically prescreened all bulletin board postings for offensive language; (4) The duties of board leaders which included enforcement of the guidelines; and (5) An "emergency delete function" that could be employed by board leaders to remove a note before it was posted.

The court also found that the bulletin board leader acted as Prodigy’s agent in regard to the defamatory statements. Therefore, Prodigy would have been vicariously liable for his actions.

Settlement: In November 1995, after the initial ruling, Stratton Oakmont settled with Prodigy. Prodigy apologized to Stratton Oakmont, and no case settlement was involved. Stratton Oakmont also agreed not to contest Prodigy’s attempts to vacate the original ruling. The court, however, declined to vacate the initial order as part of a settlement package. Stratton Oakmont v. Prodigy, 1995 WL 805178 (N.Y. Sup.Ct. 1995).



C. Religious Technology Center v. Netcom On-Line Communications Services, Inc., 37 U.S.P.Q. 2d 1545 (N.D. Cal. 1995).

Facts: Defendant Dennis Erlich posted the plaintiff’s copyrighted materials on defendant Thomas Klemesrud’s computer bulletin board service. Klemesrud’s computer stored Erlich’s postings for three days. Klemesrud’s bulletin board service was linked to the Usenet via defendant Netcom. Netcom’s server stored Erlich’s messages for eleven days. Netcom’s local server sent its postings to a group of Usenet servers, which did the same for other servers until all Usenet sites worldwide obtained the postings. The process whereby Erlich’s postings became available via the Usenet was an automatic one due to Netcom’s software configuration.

Netcom did not create, control or monitor the content of the information available to its subscribers. Erlich and Netcom, however, were both notified by the plaintiff that Erlich had posted messages that infringed on its copyrights, but both declined to take any action. The plaintiff sued Erlich, Klemesrud and Netcom for copyright infringement. 

Holding: First, the court held that Netcom and Klemesrud were not directly liable under a direct infringement theory because the copies that were made and stored on their computers were only incidental copies that were automatically made during a process initiated by a third party.

The court denied Netcom’s and Klemesrud’s motion for summary judgment on the contributory infringement claim. The court held that where a bulletin board operator cannot reasonably verify a claim of infringement, the operator’s lack of knowledge will be found reasonable, and there will be no liability for contributory infringement for allowing the continued distribution of the works on its system. Here, however, the court found there was a question of fact as to whether Netcom and Klemesrud knew or should have known that Erlich’s activities were infringing but only after they were given notice of the infringement by the plaintiffs.

Finally, the court granted summary judgment to Netcom and Klemesrud on the vicarious infringement claims that were based on Netcom and Klemesrud’s relationship to Erlich. Since Netcom and Klemesrud did not receive a direct financial benefit from Erlich’s infringing activities, they could not be held liable.


Point 4: -- Inform Users Through Disclaimers. Inform users, subscribers, and persons accessing your network or web site of the fact that your company monitors email and other communications and other access to your computer networks.

A. Web Site Disclaimers. 


Disclaimer 1: Unauthorized modification of any information stored on this system may result in criminal prosecution. The Government may monitor and audit the users of this system, and all persons are hereby notified that use of this system constitutes consent to such monitoring and auditing.

Disclaimer 2: This Web page is a public resource of general information which is intended, but not promised or guaranteed, to be correct, complete and up-to-date. However, this Web page is not intended to be a source of advertising, solicitation, or legal advice; thus the reader should not consider this information to be an invitation for any attorney-client relationship, should not rely on information provided herein and should always seek the advice of competent counsel in the reader’s state. The owner does not intend links on the Web page to be referrals or endorsements of the linked entities, and the owner of this Web page will not accept referrals for employment from unregistered referral services. Furthermore, the owner of this Web page does not wish to represent anyone desiring representation based upon viewing this Web page in a state where this Web page fails to comply with all laws and ethical rules of that state. Finally, the use of Internet E-mail for confidential or sensitive information is discouraged.


B. Epson case.

In Shoars v. Epson, Cal. Sup. Ct., L.A. (1989), an employee of Epson America was fired for refusing to participate in the company’s secret monitoring of employee email. The employee sued the company for violating a California law that prohibits electronic surveillance of employees. The court held that the California statute applied only to employer surveillance of voice conversations, not text email. The court noted that it was a responsibility of the state legislature to extend employee anti-surveillance rights to their non-voice communications. 

C. Nissan case. 

In Bourke v. Nissan Motors Corp., Cal. Sup. Ct., L.A. (1991). The company fired an employee based on certain personal messages she transmitted through the in-house system, including some with sexual content. The employee sued for wrongful termination, asserted the company had improperly read the email messages that led to her firing and had invaded her privacy. The court denied the employee’s claim, pointing out that the company made all employees sign an agreement that use of the company’s computer system would be restricted to "company business." The court also noted that the employee had become aware months earlier that the company was monitoring email messages.

Point 5: -- Monitor Developments in the area of Digital Signatures. Understand the recent developments relating to digital signatures and consider the related technical and security issues. (See Attachment 2 for the White House Report on Global Electronic Commerce and Attachment 3 for the UN Report on Electronic Commerce and Digital Signatures.)

A. Utah Model. 

Utah was the first jurisdiction in the U.S. to enact a statute which puts the force of law behind an electronic signature method, namely, digital signatures based upon an asymmetric cryptosystem utilizing private and public key pairs. Legislation, known as the Utah Digital Signature Act, was signed by the governor of Utah on March 9, 1995 and was amended during the 1996 Utah legislative session.

B. California Model.


California passed a digital signature statute in October 1995, and Florida passed an electric signature statute in May 1996. The California and Florida statues are quite short. The California statute sanctions the use of digital signatures in communications with public entities, and then directs the California Secretary of State to promulgate regulations. The Florida statute gives electronic documents the same legal status as tangible documents and sanctions all methods of electronic signature; it also directs the Florida Secretary of State to study the issues relating to digital signatures.

C. Regulations. 

Utah. On November 19, 1997 Utah became the first state to activate an electronic authentication infrastructure based on digital signature technology and licensed certification authorities. Utah's digital signature program was implemented pursuant to the state's digital signature act and regulations promulgated thereunder, which took effect November 1, 1997. The new law gives legal recognition to electronic signatures made with public key cryptography-based digital signature technology.

California. California has finalized draft proposed regulations on the use and recognition of electronic signatures for electronic filings with public entities. The final draft rules, issued November 18, 1997, must be approved by the state's Office of Administrative Law. The California proposal requires that electronic signatures on publicly filed documents be created by ''acceptable'' technologies. The proposed regulations do not mandate the use of digital signature technology that is based on public key cryptography as does the state of Utah. Nor do the California proposed rules require the use of any particular technology. However, they do specifically authorize the use of public key cryptography-based digital signature technology as well as ''signature dynamics'' technology. The regulations define what constitutes an acceptable digital signature under California law, which requires that the digital signature be: unique to the person using it; capable of verification; within the sole control of the person using it; and linked to the message in a manner that if the information is changed, the digital signature is invalidated.

Only those certification authorities that have been state-approved would be authorized to issue certificates for digitally signed communication with California public entities. Auditing requirements would be a condition to approval, unless the certification authority has been accredited by a national or international accreditation body based on similar criteria. New technologies would be added to the list of acceptable technologies if they satisfy the regulatory criteria. 

The final draft of the California Digital Signature Regulations is available at the California Secretary of State's World Wide Web site, http://www.ss.ca.gov/digsig/finalregs.html.


D. Court and Government Filings. 

Utah's court system will be the first state entity to use the new digital signature program. Proponents of digital signature technology foresee its use for other transactions as well, such as motor vehicle registrations, real estate and mortgage transactions, tax returns, government personnel records, and private-sector banking and commercial transactions.

E. International Issues.

Participants in the United Nations' effort to forge a consensus on the legal recognition of electronic signatures are struggling now with issues of cross-border recognition and fears by some countries that national laws could be used as trade barriers. On the international level, differing cultural, economic, and legal backgrounds make it difficult to decide what type of model should be adopted for electronic signatures. 

The UNCITRAL Working Group on Electronic Commerce is the U.N. body responsible for crafting the UNCITRAL Model Law on Electronic Commerce, model legislation that treats digital and other electronic signatures as valid so long as the signature is reliable given the purpose of the underlying document. The working group is attempting to formulate a model law or other instrument on certification authorities--entities within a public key infrastructure that issue certificates for the use of digital signatures. 


Point 6: -- Include License Agreements in EC Communications. Include License Agreements (along with disclaimers) as part of your electronic communication, with customized disclaimers of warranties, limitations of liability, and notification of potential liability considerations.

A. America Online Litigation. 

AOL and Cyber Promotions are currently involved in litigation. AOL is trying to stop the distribution of unsolicited email by Cyber Promotions, an aggressive "bulk mailer" which delivers 700,000 messages or more to AOL subscribers (nearly one-fifth of the service’s daily load) each time it sends out one of its "newsletters." These "newsletters" consist mainly of commercial solicitations. AOL says that its most frequent customer complaint is unwanted email.

In another case, AOL is involved in a legal dispute with the National Basketball Association (in federal courts in Virginia and New York). The litigation involves whether one of the service’s information providers can report professional basketball scores while the games are in progress. AOL is seeking a declaratory judgment that this practice does not violate the NBA’s rights.


B. Pro-CD Incorporated v. Zeidenberg, et al., No. 95-C-0671-C (7th Cir. June 1996). 

In this case the Seventh Circuit Court of Appeals held that an unsigned shrink-wrap license agreement is enforceable. The decision reversed the lower court, which had relied, in part, on Article 2B to conclude that the shrink-wrap agreement in question was unenforceable.

Point 7: -- Study the Model Trading Partner Agreement.

A. The Model Trading Partner Agreement

    1. Single-Page Agreement - The Model Agreement is intended to be simple and printed on a single page. The entire text and commentary are included at Attachment 4.
    2. Conclusions of the Report of the Electronic Messaging Services Task Force

      - The ABA Task Force which created this Model Agreement and the Report of the Electronic Messaging Services Task Force (the "Report") reached two principal conclusions:

      1. Until appropriate statutory revisions are adopted to fully accommodate electronic commercial practices, an important strategy for assuring the validity and predictability of electronic commercial transactions is the implementation of an agreement between EDI participants containing certain uniform provisions (known as The Model Electronic Data Interchange Trading Partner Agreement or "Model Agreement").
      2. In evaluating the commercial practices which result from the use of EDI, existing rules in the UCC and at common law regarding the process of contract formation, the validity of contracts, and the method for determining the terms and conditions of any contract proved inadequate for assuring the legal enforceability of contracts for the sale of goods formed with the use of electronic media.

 

  1. History of the Report
    The history of the Report and the creation of the Model Agreement is set forth in detail in Section II of the Report. The Report was issued in June 1990, and consists of the Report itself, the Model Agreement and its Commentary.
  2. Functions and Purposes of the Report
    1. The Report provides an analysis of existing commercial practices with regard to EDI, as those practices were reflected by agreements reviewed by the Task Force between trading partners.
    2. The Report reviews certain legal concerns arising with regard to EDI commercial practices and discusses the manner in which the Model Agreement attempts to address those concerns.
    3. The Report identifies optional uses and modifications of the Model Agreement, as well as additional topics for further inquiry.
  3. Scope and Purpose of the Model Agreement
    1. The Model Agreement is intended to be used between commercial trading partners -- the Model Agreement is not intended for use in consumer transactions.
    2. The Model Agreement is to be used only in connection with domestic purchase and sales transactions involving goods, as contemplated by Article 2 of the UCC.
    3. The Model Agreement is intended to facilitate the commercial relationship of the parties. It also seeks to preserve freedom of contract and does not generally advocate particular positions.
  4. The Purpose of the Commentary to the Model Agreement
    1. The Commentary is designed to provide background information relating to certain technical aspects of EDI and prevailing general industry practices.
    2. It also explains how the Model Agreement works, the purposes of each section, and the intended effect of certain provisions in the context of existing commercial law.
    3. The Commentary provides specific drafting considerations and the manner in which provisions of the Model Agreement may be utilized or modified in preparing a definitive agreement.
  5. 7. Bilateral Parity of the Model Agreement
    1. The Task Force concluded that the Model Agreement must provide parity between trading partners.
    2. The Model Agreement is structured bilaterally, assuming equality in the bargaining power of the parties and allocating the responsibilities and burdens equally between the parties.


Point 8: -- Monitor the continuing evolution of proposed UCC Article 2B.

  1. The proposed Article deals with the licensing of software, databases, information and other "intangible" products. (See Attachment 5 for a summary of the proposed Article.)
  2. Professor Raymond T. Nimmer, a University of Houston Law Center professor, is the chief reporter for the new Article.
  3. The drafting of Article 2B is being undertaken by the National Conference of Commissioners on Uniform State Laws and is currently in its fifth draft. If the proposed code amendment is eventually ratified by all 50 states (which could take three years) it will provide lawmakers and courts the first consistent set of guidelines covering the licensing of software.
  4. The following is a summary of proposed terms:
    1. Logic Bombs. The proposal would permit software companies to use "logic bombs" in their products, provided they fully disclose them up front. Such logic bombs deactivate a program under certain conditions, such as non-payment. However, the software vendor would be liable for any damages resulting from the software deactivation (a matter which is still under some discussion).
    2. Implied Warranty of Information. An implied warranty would exist that licensors of information guarantee that their products are free of inaccuracies "caused by a failure of the licensor to exercise reasonable care and workmanlike effort."
    3. Scope of Use. Unless otherwise agreed by contract, software and information would be licensed to a single user on a single computer.
    4. Standard-Form Licenses. Shrink-wrap licenses would be legally binding, but licensors could be required to give users an opportunity to reject the license and get a refund; terms of the license must not be legally objectionable.
    5. Perfect Tender Rule. Rather than requiring that the software "seller" exactly meet the terms and conditions of sale, the proposed Article recognizes that software may include certain errors. Therefore, the Article requires only "substantial conformance" between the product and the license.
    6. Statutes of Frauds. Notwithstanding common law principles requiring certain transactions to be in writing, electronic messages would be legally binding if they meet certain conditions.
  5. The National Conference of Commissioners on Uniform State Laws is scheduled to vote on passage of the Article in July 1997.


Point 9: -- Understand the Revenue Recognition Policies of your Client and Application of SOP 97-2.

The new Statement of Position on software recognition, known as SOP 97-2, has direct application to transactions in electronic commerce. The SOP is used by the accountants to determine the appropriate revenue recognition treatment for an agreement relating to software licensing or electronic commerce arrangements. (See Attachment 6 for a detailed description of SOP 97-2 and its application to software and electronic commerce transactions).

Point 10: -- Consider Legal Ethics. Consider the ethics and professionalism issues associated with the use of the Internet and online services. (See Attachment 7 for information on the NetEthics Committee of the Georgia Computer Law Section.)

  1. Georgia Law. A new Georgia law makes it illegal to use an alias or name other than your own in connection with Internet communications. The law was the result of a political squabble between Republicans and Democrats over the use of the Georgia State Seal. A copy of the law and related materials are included at Attachment 6.
  2. Ethical Issues. There are a number of ethical issues which have been raised as a result of the growing use of the Internet and the establishment of web sites.
    1. What ethical rules apply? Under the Model Rules choice-of-law provisions, the Web site will be subject to the rules of the jurisdiction "in which the lawyer principally practices" unless the "particular conduct clearly has its predominant effect in another jurisdiction in which the lawyer is licensed." (Model Rule 8.5(b)(2)(ii)).
    2. Does a Web site violate the solicitation prohibition? Under the Model Rules, the most troubling form of communications are those directed to "prospective clients" which constitute solicitation under Rule 7.3. This rule requires a lawyer not to use "in-person or live telephone contact" to solicit prospective clients for which the lawyer has no prior professional relationship. Web sites are most likely to be viewed as not constituting an "uninvited" prohibited solicitation. A Tennessee Advisory Ethics Opinion has adopted this position, noting that Web site readers must elect to read the posting before it can appear on their screen.
    3. What rules relate to legal referral on the Web? A recent Nebraska State Association Advisory Committee decided that a lawyer may not participate in a for-profit referral service that provides lawyers’ names to Internet users at "on-line shopping malls."
    4. Does communicating over the Web establish an attorney-client relationship? Undesired attorney-client relationships may be unwittingly established over the Internet. Disclaimers should be used to minimize this risk. The most important rule to follow, however, is to provide only information, not any advice.


See Attachment _ for further information on ethical issues in electronic commerce and the Ethics and Professionalism Committee of the Computer Law Association.


WEB SITES OF INTEREST

  1. Towards a European Framework for Digital Signatures and Encryption - European Internet Forum, http://www.ispo.cec.be/eif/policy/
  2. ABA Digital Signature Guidelines -- American Bar Association, Science and Technology Section, Information Security Committee http://www.abanet.org/scitech/ec/isc/home.html
  3. Framework for Global Electronic Commerce -- Department of Commerce http://www.whitehouse.gov/WH/New/Commerce/read.html
  4. Public Forum on Certificate Authorities and Digital Signatures: Enhancing Global Electronic Commerce -- National Institute of Standards and Technology http://csrc.nist.gov/ecforum
  5. The Role of Certification Authorities in Consumer Transactions -- Internet Law and Policy Forum http://www.ilpf.org
  6. European Initiative in Electronic Commerce -- European Commission http://www.cordis.lu
  7. Comments on the Registration and Administration of Internet Domain Names -- National Telecommunications and Information Administration http://www.ntia.doc.gov/ntiahome/domainname/domainname.html
  8. Final Report of the International Ad Hoc Committee: Recommendations for Administration and Management -- Internet International Ad Hoc Committee http://www.iahc.org
  9. Proposed UCC Article 2B, Licenses (Nov. 1, 1997 Draft) -- American Law Institute; National Conference of Commissioners on Uniform State Laws http://www.law.upenn.edu/library/ulc/ulc.html
  10. Proposed Uniform Electronic Transactions Act (Nov. 25, 1997 Draft) -- American Law Institute; National Conference of Commissioners on Uniform State Laws http://www.law.upenn.edu/library/ulc/ulc.html
  11. UNCITRAL Model Law on Electronic Commerce -- United Nations Commission on International Trade Law http://www.un.or.at/uncitral/