Chapter Sixteen: Regulatory, Ethical, and Compliance Issues in EC 16-1

ONLINE FILE W16.1Application Case

LINKING TO A WEB SITE: THE TICKETMASTER CASEOn April 28, 1998, Ticketmaster Corporation filed suit againstMicrosoft, charging that Microsoft’s link to Ticketmaster’s Website infringed on Ticketmaster’s name and trademark by its merepresence on the Microsoft site. Meanwhile, Ticketmaster, claim-ing losses due to the linking, used a special computer code toblock users from linking to its site from certain other sites.

Had Ticketmaster won its case, it might have created amajor problem for companies attempting to get permissionto link to other sites (some Web sites have thousands oflinks). The parties settled before the court could render adecision, with Microsoft apparently agreeing not to deeplink into the Ticketmaster site but to link only to theTicketmaster homepage. As a result, users will be exposed toTicketmaster advertising—the result Ticketmaster wanted.

The issue is whether a company should ask permissionto put a link to another’s site (99.99% do not request such

permission). If the courts were to decide that permission isnecessary, thousands of sites would be in trouble, includingthis book’s! Can you imagine getting permission for all theURLs we have put on this book’s Web site, or worse, on a CD-ROM of the book? Furthermore, what if someone sues youfor placing a link on your Web page? This is why it wouldhave been disastrous for everyone had Ticketmaster wonthe case.

Questions1. Find new information on the issue of linking to others’

sites. Can this be monitored? Can it be controlled?

2. Should a company (or individual, for that matter) getpermission to link to a site?

REFERENCES FOR ONLINE FILE W16.1Tedeshi, R. “Ticketmaster and Microsoft Settle Linking

Dispute.” The New York Times, February 15, 1999.nytimes.com/library/tech/99/02/cyber/articles/15tick.html (accessed June 2009).

Several TV networks (including CNN and ABC) andvarious newspaper articles in April and May 1998,including the New York Times, the Los Angeles Times, andThe Wall Street Journal.

Online File W16.2 Controversial Issues Regarding Political Spam

Is political e-mail protected speech or unwelcome spam?

◗ Is political spam legal, given that communication over the Internet (including e-mail) is a form of speech protected bythe Constitution?

◗ What distinguishes political spam from other forms of speech, from regulated political speech, and from advertisingspam?

◗ Does political spam diminish candidates’ dependence on wealthy special interest groups (SIGs)?◗ If political spam does diminish candidates’ dependence on wealthy SIGs, can it actually improve the integrity of elected

officials? To what extent?

16-2 Part 6: EC Strategy and Implementation

Online File W16.3 Intellectual Property Web Sites—International Sites

Online File W16.4 Representative EC Patents

The most well-known patents in e-commerce include the following:

◗ Amazon.com’s 1-Click. This patent for expedited online ordering, which was granted in 1999, was criticized as a minorinnovation. Reexamination in 2007 invalidated all but 5 of its 26 claims.

◗ eBay’s Buy It Now. In 2003, a jury found that eBay’s expedited auction purchase capability infringed on Merc-Exchange’spatent. As part of the case, the Supreme Court ruled that patent holders aren’t necessarily entitled to an injunction shut-ting down an infringer’s operations.

◗ Priceline’s “Name your price” (C2B). This patent was assigned to Priceline in 1999. Shortly thereafter, Priceline suedMicrosoft and Expedia for copying its patented business. Expedia settled and agreed to pay a royalty in 2001.

◗ Google Search technology. The Google PageRank patent was granted in 2001. Google holds dozens of patents.◗ IBM holds hundreds of patents related to EC and IT.

Example: Electronic Commerce with Shopping List Builder (US Patent 6249773). This patent governs a method forengaging in e-commerce over a network from an e-commerce site and comprises the steps of storing data representing aninventory of items for sale at the e-commerce site; storing historic and active shopping lists of respective shoppers at thee-commerce site; providing logged-on shoppers with a shopping list builder tool for constructing entirely new shoppinglists and for constructing new shopping lists from said stored shopping lists; accepting completed active shopping listsfrom the logged-on shoppers; consummating purchases of products on the accepted lists; and delivering the purchasedproducts to the shoppers. The method can further comprise the step of storing authorization data, enabling shoppers topurchase the items at the e-commerce site on credit. Shoppers can use the shopping list builder to create, modify, delete,and merge named lists. A permanent cumulative shopping list can be compiled for each shopper.

◗ Akamai. Akamai’s Internet content delivery Global Hosting System is a broad patent, granted in 2000 and covering tech-niques for expediting the flow of information over the Internet. Akamai sued Digital Island (subsequently acquired byCable & Wireless) for violating the patent and, in 2001, a jury found in its favor. In 2004, Akamai settled the suit.

◗ BEA Systems Inc. Pricing Engine for Electronic Commerce (US Patent 7496543). This pricing engine for electronic com-merce allows the owner of an electronic marketplace to dynamically change the pricing available at the electronic marketplaceon several factors, including, but not limited to, manufacturer preferences, e-marketplace preferences, the location of a buyer,identity of a buyer, order volume, and so on. A buyer can access the e-marketplace through the Internet, input a request forquote, and then receive a price schedule based on the previously mentioned factors.

◗ Peter Kasan: E-Commerce Shopping Cart (US Patent 7225148), Granted, 2007. A system and method are provided formonitoring the keystroke and mouse-click actions of a visitor to an e-commerce Web site. After receiving a signal that repre-sents an attempt to terminate the online session between a visitor and the e-commerce Web site, and an e-commerce shop-ping cart contains at least one good or service, or if the shopping cart has items removed from it, or even if the shopping cartis empty, the visitor is prompted to respond to one or more prompts in a display screen.

For a list of patents, see FreePatentsOnline ( freepatentsonline.com).

Berkman Center for Internet & Society cyber.law.harvard.edu/home

Oxford Intellectual Property Research Centre oiprc.ox.ac.uk

Institute for Intellectual Property, Tokyo iip.or.jp/e/index.html

Stanford University’s Copyright & Fair Use Center fairuse.stanford.edu

Chapter Sixteen: Regulatory, Ethical, and Compliance Issues in EC 16-3

Privacy Accuracy

• What information about oneself should an individ-ual be required to reveal to others?

• Who is responsible for the authenticity, fidelity, andaccuracy of information collected?

• What kind of surveillance can an employer use onits employees?

• How can we ensure that information will be processedproperly and presented accurately to users?

• What things can people keep to themselves andnot be forced to reveal to others?

• How can we ensure that errors in databases, data transmis-sions, and data processing are accidental and not intentional?

• What information about individuals should be kept indatabases, and how secure is the information there?

• Who is to be held accountable for errors in information,and how should the injured party be compensated?

Property Accessibility

• Who owns the information? • Who is allowed to access the information?• What are the just and fair prices for its exchange? • How much should be charged for permitting

accessibility to information?• Who owns the channels of information? • How can accessibility to computers be provided for

employees with disabilities?• How should one handle software piracy (copying

copyrighted software)?• Who will be provided with equipment for accessing

information?• Under what circumstances can one use proprietary

databases?• What information does a person (or an organization)

have a right or a privilege to obtain—under whatconditions and with what safeguards?

• Can corporate computers be used for privatepurposes?

• How should experts who contribute their knowl-edge to create knowledge bases be compensated?

• How should access to information channels beallocated?

REFERENCES FOR ONLINE FILE W16.5Mason, R. O. “Four Ethical Issues in the Information

Age.” MIS Quarterly (March 1986).Mason, R. O. et al. Ethics of Information Management.

Thousand Oaks, CA: Sage Publications, 1995.

Online File W16.5 Framework for Ethical Issues

16-4 Part 6: EC Strategy and Implementation

REFERENCES FOR ONLINE FILE W16.6Google. “Webmaster Guidelines.” 2007. google.com/

support/webmasters/bin/answer.py?answer=35769(accessed June 2009).

Google. “Report a Spam Result.” 2007. google.com/ contact/spamreport.html (accessed June 2009).

Yahoo! “Search Basics.” 2007. help.yahoo.com/help/us/ysearch/basics/basics-18.html (accessed June 2009).

Online File W16.6 Web Site Quality Guidelines

◗ Present original and unique content of genuine value to visitors.◗ Use metadata, including title and description, that accurately describes the contents of a Web page.◗ Do not make pages for the search engine, but for users and customers.◗ Don’t deceive your users by displaying different content for them than you display to search engines.◗ Don’t use tricks to improve search engine rankings.◗ Don’t participate in deceitful link schemes that are designed to increase your Web site’s ranking or PageRank.◗ Avoid links to Web spammers, offensive content, or bad online neighborhoods.◗ Don’t use unauthorized computer programs to submit pages or check rankings.

Chapter Sixteen: Regulatory, Ethical, and Compliance Issues in EC 16-5

ONLINE FILE W16.7Application Case

PROTECTION PITTED AGAINST PRIVACYIn February 2007, Republican Congressman Lamar Smithintroduced a bill called the Stopping Adults Facilitating theExploitation of Today’s Youth Act (SAFETY). As the nameimplies, the purpose of the law is to combat the exploitationof children (child pornography). SAFETY would require ISPs tomonitor and retain information about users’ identities andtheir online activities. At a minimum, SAFETY would requireretention of the name and address of the subscriber or regis-tered user to whom an IP address, user identification, ortelephone number was assigned. The law would also requireWeb labeling by owners of sexually explicit Web sites, whichwould have to post warning labels on their pages or faceimprisonment. This bill never became law. The StoppingAdults Facilitating the Exploitation of Today’s Youth Act(SAFETY) of 2009 (introduced February 13, 2009) will keepInternet content hosting providers or e-mail service providersfrom facilitating access to, or the possession of, childpornography and require providers of electronic communica-tion or remote computing services to retain certain userrecords for at least two years.

Because there is no limit on how broad the rules can be(recall the discussion of interpretation of laws), the U.S.Attorney General would have been able to force ISPs to keeplogs of Web browsing, instant message exchanges, and e-mailconversations indefinitely. SAFETY’s broad wording alsowould permit private litigants to obtain records in civilcases, such as divorces and employment disputes. That raisesadditional privacy concerns, civil libertarians say.

Privacy advocates and Internet industry groups opposethe law. They cite numerous data breaches, concerns aboutgovernment surveillance, and monitoring of employees in theworkplace as reasons against the law. Employees of any ISPwho failed to store that information would face fines andprison terms of up to 1 year, the bill says. The U.S. JusticeDepartment could order the companies to store those recordsforever.

Supporters of the proposal focus on protection. Theystate that it is necessary to help track criminals because ifpolice cannot respond immediately to reports of illegalactivity, Internet providers could delete relevant logs. Theycite cases of child molestation. To rebut, industry repre-sentatives said there was no evidence that ISPs had

dragged their feet when responding to subpoenas from lawenforcement.

Typically, ISPs discard log files that are no longerrequired for business reasons, such as network monitoring,fraud prevention, or customer billing disputes. But whencontacted by law enforcement, ISPs preserve the data.Currently, the Electronic Communication TransactionalRecords Act of 1996 regulates data preservation. It requiresISPs to retain any record in their possession for 90 days“upon the request of a governmental entity.” ISPs must com-ply with a federal law to report child pornography sightingsto the National Center for Missing and Exploited Children,which forwards that report to the appropriate police agency.

When adopting its data retention rules, the EuropeanParliament approved the requirement that communicationsproviders in its 25 member countries, even those that hadalready enacted their own data retention laws, retain customerdata for a minimum of 6 months and a maximum of 2 years.This Europe-wide requirement, which should have taken effectin 2008, applied to a broad range of traffic and location data,including the identities of the customers’ correspondents; thedate, time, and duration of phone calls, VoIP calls, or e-mailmessages; and the location of the device used for the commu-nications. The content of these communications is not sup-posed to be retained. In February 2009, a court ruled that thedirective was adopted on an appropriate legal basis (Court ofJustice 2009). A 2009 directive is now in the works that willdo away with a time constraint for retaining data. Human andprivacy rights regarding the directive are still being debated(Working Group on Data Retention 2009).

Two obstacles to these laws requiring massive dataretention practices are identity theft and the cost ofimplementing and securing such systems.

Questions1. What are some of the ways in which the SAFETY Act

might infringe on an individual’s privacy rights?

2. What are some of the key elements in SAFETY?

3. Use a search engine to find recent issues relating tothe status of SAFETY.

16-6 Part 6: EC Strategy and Implementation

Online File W16.8 Representative U.S. Federal Privacy Legislation

REFERENCES FOR ONLINE FILE W16.7Court of Justice. “Judgment of the Court of Justice in Case

C-301/06.” Press release, February 10, 2009. Availablefor download at statewatch.org/eu-data-retention.htm (accessed June 2009).

Legal Information Institute. U.S. Code Collection. CornellLaw School. law.cornell.edu/uscode (accessed June2009).

Lemos, R. “Bill Would Require ISPs to Track Users.”SecurityFocus, February 19, 2007. securityfocus.com/brief/439 (accessed June 2009).

Library of Congress. “Internet Stopping Adults Facilitatingthe Exploitation of Today’s Youth Act (SAFETY) of

2007.” February 6, 2007. thomas.loc.gov/cgi-bin/query/z?c110:H.R.837: (accessed June 2009).

McCullagh, D. “GOP Revives ISP-Tracking Legislation.”CNET News.com. February 6, 2007. news.com.com/GOP+revives+ISP-tracking+legislation/2100-1028_3-6156948.html (accessed June 2009).

Working Group on Data Retention. “After Ruling on DataRetention: Activists Remain Confident.” Statewatch.org,February 20, 2009. statewatch.org/news/2009/feb/ 04eu-datret-ecj-german-wgdr.htm (accessed June 2009).

Legislation Content

Privacy Act of 1974 Prohibits the government from collecting information secretly.Information collected must be used only for a specific purpose.

Privacy Protection Act of 1980 Provides privacy protection in computerized and other documents.Electronic Communications Privacy Act

of 1986Prohibits private citizens from intercepting data communication with-

out authorization.Computer Security Act of 1987 Requires security of information regarding individuals.Computer Matching and Privacy Act of 1988 Regulates the matching of computer files by state and federal agencies.Video Privacy Protection Act of 1988 Protects privacy in transmission of pictures.Fair Health Information Practices Act of

1997Provides a code of fair information.

Consumer Internet Privacy Protection Actof 1997

Requires prior written consent before a computer service can disclosesubscribers’ information.

Federal Internet Privacy Protection Act of1997 (H.R. 1367)

Prohibits federal agencies from disclosing personal records over theInternet.

Communications Privacy and ConsumerEmpowerment Act of 1997 (H.R. 1964)

Protects privacy rights in online commerce.

Data Privacy Act of 1997 (H.R. 2368) Limits the use of personally identifiable information and regulatesspamming.

Computer Security Enhancement Act of2000

Policy on digital signature.

Financial Services Modernization Act of1999

Bans dissemination of consumer information without consumer consent.

E-Government Act of 2002 Regulates personal collection by federal agencies.

Health Insurance Portability andAccountability Act of 1996 (#1 PPA)

Regulates data collection, storage, and use in the health care system.

Chapter Sixteen: Regulatory, Ethical, and Compliance Issues in EC 16-7

Online File W16.9 How To Go Green in a Data Center and the Related Supply Chain

The following are steps organizations can take to have a greener data center:

◗ Identify those desktops to virtualize. Virtualization is a trend in enterprise data centers in which servers are consolidated(integrated) so they can be shared. Most stand-alone servers (in a physical environment) are highly under-utilized.Virtualization technology optimizes the capacity and processing power of servers so fewer servers are needed to providethe necessary processing power. The result is savings in energy, space, and recycling. For a video on virtualization, visitnews.zdnet.com/2422-13569_22-155248.html.

◗ Identify and turn off unused computers, which is typically 8 to 10 percent of computers.◗ Enable power management features, if available.◗ Replace old servers with new energy-efficient servers.◗ Replace disk technology (replace disks drives with less than 70GB capacity with those with more than 500GB capacity).◗ Move old data to tape because tape provides 20 to 200 times more terabytes per kilowatt hour (TB/KW).

The result of Sun Microsystems consolidating and moving to more efficient data centers was a hardware reduction thatprovided a more than 450-percent increase in computing power using about one-half of the servers, and a more than 240-percent increase in storage capacity using about one-third of the storage devices.

Green computing is a mindset that asks how we can satisfy the growing demand for network computing withoutputting undo stress on the environment. There is an alternative way to design a processor and a system such that they donot increase demands on the environment, but still provide an increased amount of processing capability to customers tosatisfy their business needs.

Going green can start with simple adjustments. A common-sense approach to reducing household expenses is to turnoff the lights whenever you leave a room. This “power-management” approach can be applied to servers, workstations, anddata centers, which are often left fully functional and operating 24/7/365 even though that may not be necessary. Onebasic solution is to introduce energy management processes that adjust to changes in the demand for computing power.For example, some companies have implemented working-hours power management and the less-consuming after-hourspower management.

There are also complex changes. One such emerging trend is the greening of the supply chain. A green supply chainincludes procurement, manufacturing, warehousing, distribution, service, and recycling in an environmentally friendly man-ner. Here are two examples:

◗ In 2008, a 147,000-square-foot warehouse was built in Tampa Bay, Florida, according to the environmentally sustainablebuilding standards of the U.S. Green Building Council (USGBC). See usgbc.org. The USGBC is a non-profit community of leadershelping companies design and build green buildings.

◗ Far from a fad or feel-good initiative, green sourcing is fast emerging as a strategic business imperative. An electronics man-ufacturer’s relationship with its suppliers (sources) is a major issue for executives, customers, and shareholders. And they arerelying on procurement to proactively manage it. Sourcing and procurement have always been about more than just price.Factoring green priorities into existing processes is a natural extension of the non-price process, and an effective way todrive green goals. Companies are including green criteria in their requests for proposals (RFPs) and creating clear metrics formeasuring them as part of supplier performance management.

There is a growing level of commitment among both small and midsize firms toward the adoption of applications thatwould support more environmentally friendly supply chain initiatives. For example, the market intelligence firm IDC questioned250 decision makers at small and midsize enterprises involved in the manufacturing, wholesale, and distribution industries andfound that even among the smallest of the supply chain companies, support for green initiatives is emerging. According to thesurvey, small and midsize companies will seek to use manufacturing applications that support a renewable way of producingproducts, mobile-enabled applications that help conserve energy, and human resource applications that will help train work-forces in the areas of green manufacturing (reported by Van der Pool 2008).

16-8 Part 6: EC Strategy and Implementation

REFERENCES FOR ONLINE FILE W16.9Van der Pool, L. “IDC: Small, Midsize Businesses Move

Toward Green Supply Chain.” Boston Business Journal,July 16, 2008.

bizjournals.com/boston/stories/2008/07/14/daily33.html (accessed July 2009).