Dozier Internet Law, by John W. Dozier

Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:36 pm

Criminal Spam Prosecutions Begin, by John W. Dozier

May 31, 2007

I guess it was just a matter of time. I have been wondering, ever since a Virginia jury sentenced a spammer to seven years in prison, when and where the next wave of criminal prosecutions would come. The "spam king", according to news reports, was indicted in Washington state and arrested yesterday.

I don't like these criminal prosecutions for sending commercial e-mail, even when rather nefarious methodologies are used. Is it any wonder that the prosecution comes in Microsoft's backyard? Microsoft spends a lot of money each year on attacking spam from a technical standpoint, but isn't that the cost of doing business? These major ISPs (you know who you are) act like they are doing the public a favor in combating spam, but they forget that e-mail was the "killer application" that gave them life in the first place. Sometimes I think that all they are really doing is creating a demand for charging commercial e-mailers to let "spam" make it through their systems. So, if that is the case, why is government protecting these private commercial interests with aggressive and expensive prosecutions? One thing is for sure. All of our commercial e-mail clients will have to be even more aware of the criminal risks with this apparent change in strategy to combat spam. I wonder if the impact of this will simply be to move more mailers towards buying the ISPs' spam mailing services? What a great marketing department...the US Attorney's office!

I find it interesting, by the way, that this guy is supposed to be living the high life yet Microsoft has a $7 Million unpaid civil judgment against him. If he has funds, has the ritzy condo, sports car etc., then I don't understand why Microsoft hasn't been willing or able to seize those assets in execution on its judgment? We handle a lot of defense litigation against Microsoft, and their spam business people, in-house counsel, and outside law firms are very thorough, very smart, and very effective. Is this guy really as big as they say? I guess we'll find out, buy I can tell you that sending a million e-mails a day is a relatively lightweight load for commercial e-mailers, although it sounds like a huge amount to someone outside the industry.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:37 pm

Cybersquatting and Trademark Infringement, by John W. Dozier

June 03, 2007

A lot has been written lately about the Cameroon govt. deal for domain names. If you aren't up on things, one individual has locked up a contract having all domain names not purchased (.cm names) point to a fairly typical PPC parking page. So, when someone accidentally misspells a domain name they are directed to a page with advertising for competitor ads. It is reported that such use gets around the domain name rules since the owner of the page does not take ownership of the domain name and there is not much that can be done. I dare say, however, that if an online retailer licensed the use of a competitor's domain name, a trademark infringement action would be coming. And I can envision other claims that could be asserted under various state unfair trade practice statutes.

It brings home one important point. You can't beat the experience of litigators and trial lawyers to maneuver through some of the complex legal issues of today. There are not cases to look up on the point, you cannot go to a treatise or a law review article to "get the answer", and the only solution is often resorting to good old brain power coupled with experience and high quality analysis.

Here is what I would do if a client's name was being used in this situation. I would contact the owner, explain that we intend to bring a trademark infringement and unfair competition lawsuit, and in the alternative propose a confidential settlement agreement in which he would turn the name over to our client. I bet you we would get it. Maybe because the owner would go to our website and realize that we are trial lawyers, have no problem pulling the trigger, and envision a tidal wave of litigation that would ensue when we issue our press release. No telling how many cases we have settled because the other side knows we are serious. I recall one extremely large domain name owner telling us, through legal counsel, that instead of filing a UDRP complaint just call them next time and they would transfer the domain name to us.

So, next time you read or hear about an analysis of a legal issue, keep in mind that there are often approaches that are available that will get the intended results, even when it looks like the law may be against you.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:38 pm

The Changing Legal Geography of Your Online Business, by John W. Dozier

June 05, 2007

I am often asked to give my opinion on the issues facing a new online business today. I think the biggest change is a loss of the protections arising from your traditional neighborhood and community. Let's travel back in time and see what I mean.

It's 1990, and you want to start a business. Everyone needs a good accountant and lawyer, you are told. So, you go visit an attorney down the street and he sets you up with a corporation, explains business license and employment rules, and reviews your standard contract. Now, all you need to do is lease that retail space! Your family accountant puts you in touch with a leasing agent. You are ready for your retail store lease to require a hefty deposit and a three year commitment with your personal guarantee for monthly payments. For the budding entrepreneur in days past the legal needs did not require a great financial commitment, but the lease did. And if you ever got sued, your local lawyer could easily handle the matter for you at little expense.

It's 2007, and starting a business has never been easier. Just go and start up an online store for next to nothing and start selling. But something has indeed changed. The days of going to your local lawyer for legal guidance and advice are over. Now, you must consider complying with the laws of every state in which you have customers and/or are advertising online. You are faced with issues that are complex and require specialists. The worst thing that can happen is for you to be sued individually in a far off venue! (You are not going to be sued in your hometown anymore.) And the cost of the defense of federal lawsuits dealing with Internet and intellectual property issues can go into the six figures pretty easily.

Today a business can be launched on a very small budget, but the risks have never been higher. Smart entrepreneurs know that quality legal work up front is worth the price even though everything about launching a web business seems to focus on low cost. Things have changed dramatically, and the days of having comfort that your reputation, honesty, ethics, and offline community will protect you from attack by outsiders is, unfortunately, a thing of the past.

So, when I am asked by the next small business person whether it is easy and cheap to launch an online business, my response is that it depends on what you have to lose, and whether you feel lucky.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:39 pm

Traverse Internet Law on Hacking, by John W. Dozier

June 06, 2007

Traverse Internet Law pursues hackers. And things are a bit murky out there right now as to who is, and is not, a hacker, or cracker. There are criminal laws against hacking, and there is both statutory and common law (trespass to chattels) authority for bringing a civil action against a hacker, but the real problem I have is the failure to distinguish between a serious hacker attempting to do damage and a passive unauthorized access by wandering eyes. So, for instance, the guy who breaks into a hospital's records by finding a hole in its system, and then runs a password program once he is past the initial line of protection, all so he can get in, take confidential medical information about his enemies and publish it on the web, and while he is in the system he intentionally corrupts the database...well, that guy is a real problem, a real criminal, and he deserves what is coming.

On the other hand, someone who visits his competitor's website weekly to check on information available to members, on which there is a user agreement provision prohibiting competitors from visiting, is likely just as guilty, criminally and civilly, under many state laws. Traverse Internet Law tried a hacking case last year in which my client, a CTO of a Fortune 500 company, was indicted on felony charges because he got his estranged wife's email address from one of his kids and went into his wife's password protected online email account. Luckily the prosecutor made a misstep in the middle of trial and my motion to dismiss was granted. But, it was a ridiculous waste of time, and considering my client's job as Chief Technology Officer, any hacking conviction would have ended his career. That result would obviously have been punishment disproportionate to the misconduct.

There is unauthorized access (similar to trespass) and then there is hacking (similar to assault and battery!). We need to get the legislators to understand the difference between the two, and pass some laws that are reflective of reality. Those that access a competing website by borrowing a roommate's password (like just about all college kids do) to see information thousands of others can see is likely trespassing, but he is not a hacker. Not by a long shot.

It is not difficult to see the line, and when the intent of the trespasser is to damage or steal and he actually causes damages above an appropriate threshold, I can appreciate that criminal prosecution is justifiable. Otherwise, let the parties deal with it in civil court.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:39 pm

ISPs Find A New Revenue Model in Commercial E-Mail, by John W. Dozier

June 07, 2007

Less than a week ago I criticized the US Attorney for helping major ISPs create a new revenue source (charging commercial e-mailers for the right to send e-mails) by bringing criminal charges against a purported major spammer. Today the new business model I was anticipating was announced. Comcast, Cox, Road Runner, Verizon and others are reportedly joining together to, in effect, create a toll booth in which they charge e-mailers for each e-mail the ISPs let through their systems. This is a first major step towards all commercial e-mail being assessed a postage fee and, given the huge volume, this simply adds a huge revenue line to the ISP financial statements and results at the cost of other businesses.

Commercial e-mailers are worried about civil suits from AOL, Microsoft and others, and the recent criminal indictment is going to scare them into these programs. The US Attorneys and Attorney General need to stop being so naive as to think that all of the "free" help they are getting from ISPs is purely to protect the public. Hogwash. It is to build a powerful new revenue model in which they can immediately monetize the size of their installed e-mail base. Expect now to see the ISPs make it easier to get on their "black lists" and more difficult, or altogether impossible, to get on their "white lists". This will really drive demand for their pay per e-mail services, and in conjunction with civil lawsuits and, most importantly, criminal indictments at taxpayer expense, the demand for this "get out of jail free card" pre-paid e-mail program will skyrocket.

The Department of Justice and local prosecutors should understand that while some of the criminal indictments may be about fraud and phishing, they and others always couch the prosecution in terms of the defendant being a spammer! That reinforces the need for commercial e-mailers, even if they are 100% compliant with CAN-SPAM, to seek shelter.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:40 pm

Real Internet Lawyers Find Solutions, by John W. Dozier

June 10, 2007

We are litigators. We are also trial lawyers. The two are not the same. Most firms have "litigators" who appear to be trial lawyers, but in the end most of the attorneys don't try cases. They litigate...which is the process of filing motions and making arguments, filing and responding to discovery, and all of the other aspects of taking a legal case through the process leading up to trial. We like nothing better, if the case is destined for trial, than to try a case against such a firm. Sure, they have lawyers that try cases, but the odds of getting a truly seasoned technology law trial attorney are slim. That is why you see so many settlements on the courthouse steps right before a trial begins. These are settlements that could have occurred long ago, even at the beginning of the case.

Sometimes the settlement is because the lawyers needed the time, at your expense, to figure the case out. Other times it is a fear of picking a jury and actually trying a case that motivates the firm to recommend settlement to a client. Lawyers know that senior partners often discourage settlement until the file is "mature" for settlement. Many lawyers take this to mean exactly what it often means: litigate it through discovery and motions and once appropriate revenue has been generated then look at settlement options.

If you are fortunate enough to actually have a trial lawyer representing you, then the issue becomes one of habit. Litigation lawyers are trained on the process of moving a case through the court process, and trial lawyers have highly developed skills in the art of trying a case to a jury. Note that neither has necessarily developed the skill of finding a win/win solution for the parties early on in the litigation process. Couple that void with what is often a superficial knowledge of the business and technology of the web and you begin to understand why many cases go on far too long and are settled on terms that could have been achieved without huge lawyer fees.

That is why in today's world, the best lawyers are often the few trial lawyers, seasoned at taking cases to jury trials and winning, with a strong business and technology knowledge base, who can take a complex set of facts, analyze those facts in the context of existing law, and implement a "push strategy"...pushing the dispute towards a win/win settlement. This isn't appropriate for every case; just most. And this approach isn't going to work in every case. Just most.

Clients have a tendency to think their case is one of the unique ones that will have to see the light of a courtroom and the eyes of a jury to prevail. This is rarely true. But the other side needs to think you are ready to go the distance, and that a trial and adverse jury decision is a real possibility. The lawyer on the other side needs to feel that he/she is at a knowledge and expertise disadvantage. After all, no one, particularly a lawyer, likes to be embarrassed.

Remember, it's about solutions! Don't let the time, effort and expense of litigation get in the way of growing your business. Every hour you spend on litigation matters is an hour you cannot be using constructively to develop, sell and grow your business. Every hour invested in legal issues is an hour away from driving your business towards success. When I was the CEO of an e-commerce company, I hated legal disputes and issues, and tried my best to stay out of them with pretty good success. Even for me it was a distraction. Every case will be a distraction for you also.

Keep focused and strive to find solutions to problems. You won't develop new business models, drive your growth, or recruit employees and executives while sitting in depositions. Am I saying that every case should be settled? Absolutely not. Some are destined for trial. The ability to envision the destiny of a case, see how it may play out and what the ultimate result may be, is job ONE for your attorney. Sir Francis Bacon said that "knowledge is power", and whether it is the knowledge of the technology of the Internet, the business of the web, or jury trials, it certainly applies today when selecting a trusted adviser as a lawyer.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:41 pm

Defamation Immunity Isn't Clear, by John W. Dozier

June 17, 2007

Dozier Internet Law is often engaged to evaluate legal risk relating to a website. We also handle a lot of defamation matters in which businesses or professionals are being defamed by a third party posting on a site. The first question is whether there is Section 230 immunity under the Communications Decency Act for the site hosting the content. It is not a simple analysis typically. Keeping the apparent legislative intent in mind, it appears the intent of Congress was commendable when the bill was passed and signed into law. Basically, the argument went, no one should be liable for everything published by third parties on its website since traditional publisher liability implies oversight and editorial control over the content. That does not exist in the online world for the most part.

But, I believe the unintended consequences of such far ranging protection are changing the way the Courts interpret the immunity statute. And for good reason. Dozier Internet Law has seen rampant misconduct occuring among bloggers, including "blog rings" formed to effectuate a "mobosphere" attack for financial gain. Remember that the higher the traffic to a blog, the more a blogger can realize from selling advertising, and the blog site itself can be sold. It's a sleazy world out there. Just follow the money, and the motivation for attacking legitimate businesses is often clear.

Any meaningful editing of the content, manipulation of the information, or even re-characterization of the information, should result in a loss of Section 230 immunity. It's as simple as that. And Dozier Internet Law is starting to see Courts agreeing with this approach. Congress should tighten up Section 230 to make it clear that immunity is not available to those sites materially modifying or editing the content, those practicing selective optimization of posts, or those relying on the information by changing the character of the published defamation. There is a line to be drawn that needs some work, though. For instance, merely adding up results and presenting those without further material enhancement or manipulation should be fine, like Ebay's rating system seems to do. But when a site takes information, feeds it into a mathematical equation, blends it with other information, and materially changes the method, manner and nature of the information presented, then there should be no immunity. No one should be able to act like a traditional publisher, editing and controlling the message, but avoid liability.

Either the courts will take care of this problem, or Congress will step in. Expect that on one side of the debate in Washington will be the liberal free speech advocates opposing any changes except those that would extend the immunity protections, and on the other side of the debate will be the conservative, small business lobbies trying to get rid of the immunity altogether. I'd be surprised to see any movement on this with the present Democratic leadership in place, but you may see something happen if the Courts continue to contradict each other and struggle with the issue. Congress doesn't like the Courts "legislating from the bench". We'll see how this all develops in the coming months as this issue gets more and more attention.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:41 pm

When Are You Responsible For Your Affiliate's Misconduct?, by John W. Dozier

June 23, 2007

This is not, of course, a simple issue. Your affiliate marketer goes off and infringes on someone's trademark, steals copyrighted content, spams, or does any assortment of actions that are illegal. Under the CAN-SPAM Act, you may very well be liable for the affiliate's "creative" commercial email program, and will usually be sued as the beneficiary of the misconduct. Typically if you did not conduct due diligence, and had no meaningful monitoring or auditing program in place, you'll have liability. Some states have passed laws that make you absolutely 100% liable.

Other misconduct is more difficult to evaluate in this context. We go back to the old principle of the nature of the relationship: is the affiliate an agent or an independent contractor? This analysis centers upon your control over the vendor. Control, when we consider it in the context of third party misconduct, is defined for the most part as having the ability to direct and control the conduct. Think of the difference as being an employee working for you as opposed to a contractor doing its own thing in an office far away. The former is an agent, the latter is not. However, if you knew, or reasonably should have known, of contractor misconduct, and you did not take reasonable steps to stop it, you will likely have responsibility for the conduct either due to an agency relationship or through theories of conspiracy. The odds are high that if your affiliate is sued then you will be sued, and the cost of defending and winning such a suit should cause you to take steps, in a public way, to only let those with good reputations join your affiliate marketing program, and then to implement performance standards and actively monitor compliance of your vendors. When misconduct occurs, you should consider terminating the relationship, although this is not always an easy decision to make.

If the affiliate is generating significant revenue for you and you value the relationship, there are ways to maintain it. But first determine what effect the improper conduct had on the revenue. If the revenue is in great part a result of the misconduct, discount that revenue from the value equation, and then decide if it is worth investing the time, effort, and resources to maintain the relationship. You'll be wise to seek legal counsel at this point to assist you. You need to be very confident that the affiliate can, and will, change its ways, that a reasonable person will believe that given all of the publicly available facts, and that you are willing to undertake a program of monitoring that will show ongoing vigilance. There are a lot of factors to take into consideration in handing out "second chances".

So, you need to have a due diligence program in place before accepting an affiliate marketer, you need to have performance standards established, you need to have an audit program in place to assure compliance with the standards, and you need to act swiftly when problems arise. Otherwise, you may very well end up on the receiving end of a federal lawsuit, and that is never a pretty picture.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:42 pm

Google and E-Bay Fight It Out, by John W. Dozier

June 25, 2007

In an effort at full disclosure, I own Google stock. I don't own E-Bay stock.

Is it my imagination, or are two leaders of the online world acting a bit childish? First, Google pulls an immature move by running a competing event for its check-out service at the venue of the annual E-Bay convention, which of course competes with Paypal. E-Bay, in retaliation, pulls its PPC ads from Google, and then reinstates them but claims to have "tested" the alternative search engines and the results will mean less spend at Google. Come on, that is ridiculous. If you, E-Bay, weren't already doing this testing, shame on you. We even do it at our small law firm. This window of opportunity for E-Bay to conduct testing was no window at all. They could do it at any time, even while the Google ads were still running.

Of course, both of these companies may be acting a bit aggressively, and some even see it as a matter of immaturity, but this is typical technology company mischief. The only take I get out of it is that E-Bay shoud be embarassed because they apparently have not been running campaigns on all the search engines and evaluating performance on an ongoing basis. Oh, E-Bay, by the way, the demographics are different on each search engine so you WILL get better results on non-Google PPC advertising for some products and services. And even better results when you start up a new campaign reaching fresh prospects. There. The secret is out of the bag!

Maybe E-Bay just needs to hire some quality SEOs. Or, just maybe, they are still a bit upset at Google and they are trying something cute. This is what happens when "strategic partners" start competing. It's not a pretty picture.
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Re: Dozier Internet Law, by John W. Dozier

Postby admin » Fri Oct 25, 2013 5:43 pm

Music Industry Record Labels Are In Trouble, by John W. Dozier

July 21, 2007

We've seen it for years. Disruptive technology disrupts business models. Disruptive applications of technology force innovative change. Some companies react and transition well when faced with innovation that threatens their businesses. Others (most) don't.

The music industry record labels were slow in reacting to the fundamental shift from CD to online distribution. Think about it. Artists used to dream of signing with a label. The label could be very selective in picking artists and controlling support for, and distribution of, the artist's work. And rightfully so, since their revenue was generally based on a percentage of CD sales. So, what happens when CD sales are replaced by online distribution? Merely changing the method of distribution shouldn't make much difference, you would think. Well, how would you feel if you owned a professional baseball team, and you only controlled the ticket prices? The parking, the concessions, the TV and radio rights, and all of the other related revenue streams were controlled, and revenue realized, by third parties? For a change, you, as the owner, would be calling for renegotiation of the player contracts. And, so, we find the same thing happening today.

Labels want to renegotiate their deals. They want a percentage of ALL revenue from CD sales, online sales, appearances, tours, product sales...they want to own a cut of the entire revenue stream. Quite smart. Too bad they didn't figure this out years ago and start transitioning to this new model in a more manageable way by educating the industry as to the coming challenges. Are labels going the way of stock brokers? Has the music industry finally succumbed to "disintermediation", another fancy term for taking out the middle guy? We'll have to wait and see. One thing is for sure, though. If the labels can't figure out how to add value commensurate with their compensation, they are in for a rough road ahead.

And here's the hard part. The online revenue streams today are complex, and negotiation on a case by case basis with artists will likewise by complex. Both sides need to understand all of the sources of revenue that exist today and are likely to exist in years to come. Relationships are less employer/employee-like, and more partner-like. For instance, if you are a label, and you agree to a revenue split for online record sales, I can easily imagine a business model that generates signficant non-sales revenue you don't get a cut of. And how about sharing online advertising revenue from streaming free video? There the parties need to decide who will take the lead on cutting deals. Are artists going to understand the online music world, and related revenue streams today and in the future, to make good decisions? How, as an artist, do you make sure revenue is accounted for fairly when your song is packaged with other artist's songs on a membership site? Your revenue share might be a percentage of membership dues, but is the percentage of dues fair, and what formulas can be put into play that will adjust compensation fairly? How do you make sure you are being paid fairly?

It is going to be an interesting process to be involved in over the coming months and years. Today, the artists are in a commanding position. They can opt to go it alone and distribute product directly online. Labels have to come to the table with a great value proposition. They don't seem to have any real options. My guess is that labels will try to treat the online music sites the same way they treated the brick and mortar music stores. We'll see if they can pull it off and control the distribution point. If they can, they'll be in control once again. It will take some remarkable strategic and tactical thought leaders working outside of the box to pull this off. Is it possible? I think so. Is it likely? Doubtful.
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