As Taught by Prof. Tim Richardson School of Marketing and e-Business, Faculty of Business


3. E-commerce Law and Regulations

Domain Names
we will discuss these topics in IEC 802f.htm these topics are discussed in IEC 719c.htm
Prof. Michael Geist, who teaches at the University of Ottawa Law School has just (August 2000) finished a book on Internet Law. This book has a Canadian focus but also includes many international issues and is very current (ie.includes the Napster decision). Prof. Geist and Prof. Richardson have exchanged several emails through the summer of 2000 on matters related to Internet law. When the text becomes publically available you will be given the opportunity to buy it if you wish, in the meantime, the links to the right might be useful.
"Internet Law in Canada"
The URL for the book on the publisher's site

The URL for the Table of Contents

Prof. Geist's web site containing his writings and articles on Internet law issues

These chapters relevant to IEC 719

Chpt 3 - Jurisdiction on the Internet
Chpt 12 - Canadian Approaches to Online Privacy
Chpt 15 - Domain Names and Trademarks
Chpt 16 - Intellectual Property and the Internet
Chpt 21 - e-cash and Payment Systems
Chpt 22 - Consumer Protection
Chpt 23 - Internet Taxation

These chapters relevant to IEC 702 Section C
Chpt 4 - Internet Service Provider Liability

This book is not specifically a "required" purchase for IEC 719, but,,, it is strongly recommended that every person serious about being a professional in e-commerce have a copy to refer to and, better yet, read several chapters from in order to have some idea of how a few critical legal issues can impact on your business and marketing decisions.

Law and


Law and


Law and

In Hanson's book, under Chapter 14, read the section titled
Potential Legal Problems
  • Online Marketing and the Law
  • Strategic Legal Issues for Marketers
  • Real-time Legal Issues for Marketers

Chpt 10 
in Turban's book
Chpt 10 in Turban's book deals with several aspects of legal issues - in fact the chapter is titled "Public Policy: From Legal Issues toPrivacy"
P. 342 has a good list of all the main legal issues in EC, they are as follows:
  • Privacy
  • Intellectual Property
  • Free Speech
  • Taxation
  • Consumer Protection
  • Legal Issues vs. Ethics issues
    • Other, including
    • validity of contracts
    • jurisdictions
    • encryption policies
    • internet gambling
Chpt 10 is on the Turban web site and has an accompanying powerpoint
Chpt 11
Schneider and Perry's book Electronic Commerce

Chpt 11 is titled Legal, Ethical and tax issues and the legal topics are covered from page348 - 357
What is helpful about this section is their reference to the Cyberspace Law Subject Index sponsored by the John Marshall Law School of Chicago
John Marshall Law School site


Bill C6 .
In many instances of business, U.S. government regulations at the national (federal) and regional (state) level effect the ability, or activity of Canadian companies to do business in / with the United States.

One of the last things President Clinton has done re: e-business is to sign an Act in June 2000
Titled "The Electronic Signatures In Global And National Commerce Act"
principle web page describing the Act

The purpose of the act has to do with helping companies who have felt "... deterred from doing business on-line because of uncertainty about whether their on-line contracts will be legally enforceable."

Secondly, the intentions of the act were also to assist consumers in protecting their rights by forcing companies to disclose more information in circumstances where they require a consumer to consent to some information action in the course of concluding a purchase or exchange.
" Too many  Americans have received emails with attachments that cannot be opened.  This provision will protect consumers from predators who might confuse or coerce them into agreeing to receive electronic notices they have no capacity to access or retain. "

Thirdly, the act deals with the public's concern about too much private information being kept about people and, because this information is in digital form, there is great concern about it being easily abused through file sharing with entities that the original customer did not consent to. " The Act requires that agencies allow most records to be retained electronically, but government may establish appropriate performance standards for the accuracy, integrity, and accessibility of records retained electronically, to ensure that compliance   with laws can be determined"

Other country's 
Acts and Regulations
"Electronic Commerce Act" of the Philippines
from the act "Electronic documents shall have the legal effect, validity or enforceability as any other document or legal writing,"

Most e-commerce acts around the world begin with a statement similar to the above, that being the recognition that internet digitial documents will be considered valid and authentic - which is a necessary part of the preamble in any Act since this is the foundation upon which commerce in a digital form can be legit.

India had an e-commerce act established in 1998




Nov Copyright


 - online article about  copyright reform in Canada by Gordon Gow, University of Calgary
3.1 Copyright is afforded not to ideas themselves but only to the expression of those ideas fixed in some medium of communication. In Canada, the requirements for securing copyright are 'originality' and 'fixation'
problem is fixation means something physically exists - and in cyber word, that is not so

 - the  Copyright website
 - the application of current  copyright law in cyberspace
- read the case study and discuss whether the defendant should be charged with breaching copyright, if, copyright did in fact exist in the first place

 - the  Canadian Association of Photographers and Illustrators in Communications web site

HTML code for ©   = ©
Nov 2nd, Lang Michener's Marketing Manager, Teresa Forrest, sent to IEC a box containing a 100+ page document titled
"E-commerce Law: Legal Compliance in Cyberspace"

This very useful book has been gifted to IEC from Lang Michener and we are very appreciative of this helpful contribution. The document was handed out in IEC 702 class on Thursday, Nov  2nd, students who did not get a copy are urged to obtain one on Monday or Tuesday the 7th so you can go through it in time for Mr. Milrad's address to the class on Wednesday morning Nov 8th.







Like other professional service industries, law firms, like accounting firms and public relations firms, are addressing internet and e-commerce issues by building capability among their staff to deal with client issues that are very contemporary and complex. In Canada we have witnessed a number of large mergers among law firms in the 1990's and the result is some very large sized organizations with the ability to compete on a national and international basis. Quite a few of these firms realize that it is "open territory" to secure a reputation for competence and ability in this new field and they can be quite competitive in their efforts to establish new reputations. One aspect of this competitive is that many of these firms (law, accounting etc.) give away a lot of free information on their web sites about current "e" topics. This is very helpful to persons learning about these issues but at the same time you have to be a bit discriminating and recognize the difference between advetorial content and topic content.

Since the area of Law and the Internet is necessarily a complex issue that requires a tremedous amount of current study as well as much experience and knowledge of existing legislation that can be applied - we do not presume to be able to deliver all of the information you require in this area; therefore we are incorporating in this section a distinguished "guest lecturer" from one of the leading law firms in Canada.

Milrad biography online For our class Wednesday Nov 8th, we will be joined by Mr. Lou Milrad.
Mr. Milrad, who has previously had contacts with Seneca College in other areas, is the
Chair of the Information Technology practice at the firm.
Mr. Milrad's background in legal issues related to the internet is very extensive and he also remains current by being involved in a number of key industry associations such as ITAC (in which is is General Counsel to the association and Member of the Board of Governors)

Guest Speaker for
IEC 719 and IEC 702
November 15th, 2000

Mr. Mark Staveley, BSc, MSc

Mr. Staveley is presently a PhD student at University of Toronto. He is involved in both academic research and business consulting re: mobile and wireless internet activities. While pursuing his PhD, Mark is a Research Member of the prestigious Interactive Media Lab in the Department of Mechanical and Industrial Engineering at UofT.

Additionally, Mark is an expert in search engines and has comprehensive knowledge of how to use them.

He will talk to the class about how to be better at "finding stuff online" using search engines, as well as telling us some interesting things about how search engines work, and what developments lie in store for the future.

Mr. Staveley's address to the class will be in the IEC 719 time slot instead of the IEC 702 time slot due to scheduling requirements.

Law and
Professor Michael Rappa's web page on Intellectual Property

includes links to articles such as
Patent Protection for E-Commerce Business Models
from the law firm of

"Why should an e-business seek patent protection for its software technologies or software implemented business models? Simply answered, patents provide a competitive advantage in a marketplace where unprotected technical innovation and marketing no longer guarantee success. A patent provides a powerful legal right to exclude others from making, using or selling a patented feature of a computer program."

"A consumer today is likely to discover numerous competitive Internet Web sites offering the same or similar information, products or services. To succeed in this competitive e-commerce market, a business must attract as many consumers as possible to its Web site, while building and retaining consumer loyalty. Sometimes, a Web site is more attractive to consumers because it is built with cutting edge technology that provides advanced audio/visual user interfaces, services and security measures. E-commerce proprietors have recognized that a competitive advantage may be gained by securing patent protection for such technological innovations."
(to read more, click here)
Patent Protection for E-Commerce Business Models
"Patents offer at least four critical advantages to businesses engaged in e-commerce:
(1) A patent may serve as an offensive weapon for battling competitors and protecting market share;
(2) A patent may serve as a defensive shield for protecting research and development, business, and marketing investments; 
(3) A patent may create corporate value, resulting in the attraction of capital investment; and
(4) A patent may create licensing opportunities."

Also linked off Prof. Rappa's web site is

BitLaw covers the legal issues of:
  •      copyright concerns; 
  •      domain name concerns; 
  •      trademark concerns; 
  •      defamation; and 
  •      linking and framing. 



One of the biggest challenges in Internet legal issues is the matter of jurisdiction.
If you are speeding in New York City, you can be pulled over by the New York City Police.
If you are speeding on a highway between metro areas, you can be arrested by New York State Troopers.
If you commit a crime that involves travelling between states, you can be arrested by the FBI.
If you commit a crime that is outside the jurisdiction of any particular countries - you will not be arrested since the law can only be enforced when their is an agency that has jurisdiction.

Many companies involved in adult entertainment and gambling on the Internet think they can avoid prosecution of local and regional laws by having their server (the hardware machine that actually contains the .html pages being accessed) in various small countries in the Caribbean and this will allow them to avoid prosecution in USA, Canada of wherever they originated from.

The question of jurisdiction does not just apply to adult and gambling sites but as we can see in the case of Yahoo vs. France, relatively innocent companies can drawn into jurisdictional matters through 3rd party actions.
In August 2000 there was a case involving Yahoo which saw Yahoo being ordered by the French government to block access to sites auctioning Nazi memorabilia. In France, it is against the law for such things to be sold since it comes under the category of their anti-racism and hate crimes legislation. While "" does not carry links to such Nazi sites, it is possible for people to go onther Yahoo sites and find Nazi auctions. Yahoo pleaded that it was technologically impossible to block people accessing such sites but the French government did not agree and took Yahoo to court.
As of August 12, 2000, the French judge hearing the case had not yet called fro Yahoo tobe fines for failing to comply and was delaying his ruling.

The most interesting point coming out of the trial was the judge's
"rejecting Yahoo's argument that French courts did not have the power to impose French law ... when French people tappedinto Yahoo's English language portal"
The next hearing is scheduled for 6 Nov 2000

the story as it appears on Yahoo's English language site



Domenic Crolla, a lawyer in the Ottawa office of Gowlings spoke at COMDEX 2000 in Toronto on the issue of Internet jrisdiction issues. An excellent article by him was also published in Gowlings in house newsletter and a cyber copy was also put on Gowlings web site

Mr. Crolla writes
"When conducting business across national or provincial boundaries, which jurisdiction’s laws apply to your  online transactions, or even merely to you or your employee’s online actions? In what jurisdiction would you enforce  your rights stemming from online activity?...

You should read this article because it mentions a number of precedent setting cases by which subsequent cases are being judged.

Crolla writes "... there are some principles with which any Canadian business with a website should try to become familiar. The leading American case on Internet jurisdiction, decided three years ago, is Zippo Manufacturing Company v. Zippo Dot Com, Inc. (“Zippo”) ... In Zippo, the [American] Court establishes a three-pronged test for determining when an American court is to exercise jurisdiction over a non-resident (including a Canadian business).... What is most interesting about Zippo is the analysis that the Court makes about websites. The Court focusses on the nature and quality of commercial activity of company websites and created a “sliding scale” to determine if any  website in the world could be the subject of a lawsuit in an American jurisdiction. The “sliding scale” has two  extremes. At one end, websites which allow for commercial transactions are considered to be “active”. At the other  end, websites which merely provide information to be accessed by others are considered to be “passive”.... A Canadian business which publishes brochureware (brochures converted into HTML code to be placed on the company website), and does not conduct business with anyone outside of Canada, should not have to worry about American courts exercising jurisdiction over the company website."

"Domenic Crolla is a Partner in the Ottawa office, practises in the area of civil litigation with particular emphasis on professional liability and health law, and has an interest in the application of information technology to professional practice. He can be reached  (613) 786-0173 or by e-mail at" from




from Turban's book, 

chpt 10, p. 365
Legally binding contracts require 3 parts
  1. offer
  2. acceptance
  3. consideration
These three parts are challenging to confirm when parts of the process are done digitally

Prof. Geist's new book
"Internet Law in Canada
has Chapter 10 "Online Contracting" devoted to the topic

Geist introduces the chapter by explaining an important point
"Online contracting is clearly central to the e-commerce transaction, since without the ability to create enforceable contracts online, e-commerce would grind to a halt" p. 474

Geist understands well the problems online and points out that
"in many e-commerce situations the parties do not have an underlying relationship, and the contract is consumated 'on the fly'... the favoured approach for contracting online is a controversial one - the clickwrap contract. The clickwrap contract is merely a contract by which terms are assented to through clicking an "I agree" button ... it is frequently difficult or impossible to ascertain the terms of clickwrap contracts"


Class Copyright


Digital Watermarks
from Turban's book, chpt 10, p. 353
Digital watermarks are "embedded invisible marks that can be represented by bits in digital content. The watermarks are hidden in the source data, becoming inseperable from the data." While watermarks cannot prevent duplication of material, they can identify who is passing around pirated product on the Net. the site of Prof. Neil Johnson in the Center for Secure Information Systems at George Mason University

Johnson, an expert in steganography, provides a well worded definition of steganography
background to understanding how information is embedded
A Calgary based company has a software product that measures useright (not copyright) - that is to say you have a right to use a product for a certain use, and no other uses, or use it for a certain length of time, and not longer
Domain Names







Why is taxation a big issue for governments?
One of the things we have seenin the 1990's is massive social problems in many countries of the world, First World and Thirld World - all based on governments having increasing burdens to pay for more and more social costs in order to deal with the challenges of unemployment, scarce resources, migration and immigration, crime etc. Local governments in particular have found it increasingly difficult to find enough money to pay for all the services the populace require.
Basically, local government gets money from three sources
  • local taxes of the citizens inside their political boundaries
  • fees for services and use of facilities
  • money transfer from provincial/state and national government agencies

Because the provincial/state and national government agencies are suffering taxation strain, local government is are always looking for better ways to tax existing businesses and new ways to tax new business. The point being that individuals in many countries are being taxed at higher and higher rates and it is politically impossible to raise personal tax rates since the particular government that does this will get voted out next election.

Many local and regional governments are looking to the revenue generated from internet business as a way to alleviate the problems. The problem at present (summer of 2000) is local governments find it difficult to determine the process andmethod of collecting tax from cyber oriented businesses and furthermore they find it challenging to ascertain the jurstictional issues - that is to say do they even have the legal authority to collect such new taxes.


Dr. Nathan Newman, University of California, Berkeley 
has an extensive web site discussing
Government, Technology and the Political Economy of Community in the Age of the Internet
on this web site are chapters of his book
One particular chapter, # 6, is titled
How State & Local Government Finances are Becoming Road Kill On The Information Superhighway

The page containing this chapter is at

If you print this chapter it will be about 22 pages, depending on how your browser breaks up the text. The most important section is at the beginning and some of the key points are as follows.

"...the new technology of the Internet and the global economic changes accompanying it promise to deal a final body blow to the financial security of local governments. Local governments could once count on local economic development to produce local jobs where local employees could spend money in local stores, thereby generating local tax revenue for further development. This virtuous cycle has been fatally undermined by the new technology of cyberspace. Even as many states and local areas hope for increased revenue due to high technology-based growth, it becomes harder and harder for local government to capture much of that growth in local tax revenue".

Not only is e-commerce in Canada effected by present and future Canadian regulations, but also by U.S. regulations by virtue of the fact that most Canadian e-commerce sites are trying to develop a U.S. customer base as well as a Canadian base - therefore, in some instances, Canadian online retailers will be effected by U.S. regulations.

  "Federal Forum Tackles E-Commerce  Regulation
By James M. Morrow,  E-Commerce Times,  October 26, 2000 

Morrow writes that "The U.S. Federal Trade Commission (FTC) opened debate Thursday [26Oct2000] on possible new e-commerce  regulations, specifically whether existing laws should apply to  software and other types of  Internet downloads. 

According to an FTC advisory, the  two-day forum will consider how "government, private industry and consumer advocates can work together to ensure that consumers receive adequate  information when shopping for software and other computer  information products and services."  The conference's program will be largely concerned with the  level of consumer protection afforded by "clickwrap" warranty agreements, where a consumer "clicks" to assent to a warranty agreement before downloading a piece of software."

The FTC has this event explained well on its own website. To read a bit more, go to

The subject of "clickwrap" warranty agreements are discussed extensively in Professor Geist's book
Internet Law in Canada

Internet Gambling "Business" on the Internet includes lots of money making areas besides conventional items like CDs, books etc. One of the biggest areas of business on the internet are the "fringe" areas of activity such as adult entertainment and games of risk and chance. Since even the mention of such activities is sensitive and respecting that people can have strong opinions about the morality of such issues, we will not discuss these topics in our IEC 719 class. However it should be understood that some of the technologies, payment methods and other aspects related to laws and legislation for the e-business community as a whole, have been, and will continue to be, effected and affected by gambling and adult web sites. For the interest of some who wish to learn about some of these issues there is some information below about one particular topic related to Internet Gambling: Prohibition v. Legalization

Internet Gambling: Prohibition v. Legalization
Testimony of
Tom W. Bell, Director, Telecommunications & Technology Studies the Cato Institute
before the  National Gambling Impact Study Commission
reading the introductory section allows you to understand some of the key issues
Bell says "All facts indicate, however, that sooner or later Americans will legally gamble over the Internet"
Bell explains that
  1. First, Internet technology renders prohibition futile. The Internet's inherently open architecture already hobbles  law enforcement officials, while relentless technological innovation ensures that they will only fall farther and farther behind. 

  3. Second, as an international network, the Internet offers an instant detour around merely domestic prohibitions. Principles of national sovereignty will prevent the U.S. from forcing other countries to enforce a ban on  Internet gambling. 

  5. Third, consumer demand for Internet gambling and the states' demand for tax revenue will create enormous political pressure for legalization. 

  6. by listing this link, we are not implying endorsement, simply identifying a source of information on gambling and the Internet. Gambling is one of the areas of the Internet that are leading developments in e-commerce due to the ability for them to finance developments in more secure payment systems and create dynamic "product" for consumers.
    list of internet casinos List of internet casinos.