Keeping Abreast Of Evolving Internet Regulations.

Despite the recent shake-out of companies doing business on the Internet, U.S. Internet backbone traffic continues to experience extraordinary gains. In fact, research shows that the annual growth rate has been 100 percent in each of the past four years. This rapid expansion coupled with the potential dangers of abuse in an unregulated online community has led to the development of new regulatory schemes. These laws are a work-in-progress as additional issues arise in this constantly evolving medium that has changed the way we communicate and conduct business.

Two of the most vulnerable areas - trademark and copyright infringement - have given rise to a number of changes to the Lanharn Act and the Copyright Act. Following is a summary of the more important of these modifications:

In the early days of the Internet, abuses by "cyber-squatters" who registered famous company names as domain names then tried to sell them to the company for exorbitant sums prompted Congress to adopt the Trademark Antidilution Act in 1995 which protects the use of a name that has the effect of diluting a famous trademark. In 2000, the Anticybersquatting Consumer Protection Act was introduced which strengthens the ability of trademark owners to regain their rights without having to pay for them. Both statutes have been incorporated into the Lanham Act and have effectively put an end to the widespread abuses that preceded their adoption.

Disputes concerning domain names also led to the adoption of the Uniform Domain Name Dispute Resolution Policy (UDRP) in 2000. Under UDRP a procedure was established by the Internet Corporation for Assigned Names and Numbers (ICANN) that gives a trademark owner a priority right over a domain name registrant under circumstances where a domain name that is confusingly similar to the owners trademark is used in bad faith.

Transactions Involving Computer Information

In 2000, the National Conference of Commissioners on Uniform State Laws (NCCUSL) approved and published a proposed new uniform act known as "The Uniform Information Transactions Act" (UCITA), intending it as a modification of the Uniform Commercial Code (UCC). Like all Uniform Acts, UCITA only becomes law for a particular state, when it is enacted by that state's legislature. While portions of UCITA are considered controversial and only two states - Maryland and Virginia- have adopted it so far, it also has been introduced to legislatures in other jurisdictions. Although not enacted into law in California, it will affect the rights of parties to a contract where Maryland or Virginia law applies. The latest draft of UCITA may be found at www.law.uypenn.edu/bll.ulc.ulc_frame.htm.

UCITA applies to a contract involving computer information technology: information in electronic form which is obtained from or through the use of a computer or which is in a form capable of being processed by a computer.

For computer information technology transactions requiring payments of $5,000 or more, UCITA replaces the statute of fraud's requirement of a "writing" with the term "record," which is defined as a "record created, generated, sent, communicated, received, or stored by electronic means." While an electronic signature will satisfy the requirement that this record be signed, to be enforceable, it must be authenticated through a "commercially reasonable" verification procedure.

Digital Millennium Copyright Act.

Growing concern over copyright issues arising from new digital technologies prompted congress to pass the Digital Millennium Copyright Act (DMCA) in 1998. Following is a summary of sections of the law that are relevant to the Internet which are found primarily in Titles I, II, and IV of the new Chapter 12 in the Copyright Act

Title I

Title I prohibits anyone from manufacturing or distributing technologies or services designed to circumvent copy protection or access control devices. It also creates an obligation to protect the integrity of "copyright management information" including (subject to certain exceptions) information that:

(a) identifies the copyrighted work, as well as the title, the author and/or the copyright owner

(b) identifies a performer whose performance is fixed in a work; information that identifies the writer, performer, or director of an audiovisual work; terms and conditions of use;

(c) contains identifying numbers or symbols accompanying such information or links to such information; and

(d) the Register of Copyright may prescribe.

Title II

This protects online service providers from liability for copyright infringement if they satisfy the conditions and standards contained in this Title. This is one of the most important provisions in the new law.

Title IV

Portions of this Title address broadcasters' rights for digital broadcasts, webcasting or digital transmission of sound recordings over the Internet using streaming audio technologies, and other advances relating to transmission of sound recordings.

Electronic Signatures and Records

Increasingly, e-mail, fax, and other forms of electronic transmission are used to deliver legal documents, including contracts. Passed in 1999, the "Uniform Electronic Transactions Act" (UETA) deals with the effectiveness of electronic records and electronic signatures in transactions between two or more persons, conducting business, commercial or governmental affairs. Thus, UETA applies to electronic communications in a business setting. It excludes certain categories of transactions, however, such as trusts. A key section of UETA - titled "Legal Recognition of Electronic Records, Electronic Signatures, and Electronic Contracts" - provides that:

(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(c) If a law requires a record to be in writing, an electronic record satisfies the law.

(d) If a law requires a signature, an electronic signature satisfies the law.

By 2001, UETA had been adopted in Arizona, California, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Minnesota, Nebraska, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Utah and Virginia. It has also been introduced for adoption in many other states.

Clearly, as the influence of the Internet continues to expand and global issues increasingly come into play, new concerns will come to light, new court decisions will be made and new laws will be introduced. Businesses must be aware of the changing legal landscape and take steps to stay in compliance with evolving regulations governing domain names, copyright protection, ecommerce, advertising, online privacy, workplace issues and more.

Martin D. Fern is a partner Luce, Forward, Scripps & Hamilton LLP's West Los Angeles office. He maybe contacted at mfem@lucecom.