Cyberlaw and the Global Economy: 2004

Harvard Law School

Fall Term, Thursdays, 4:30 - 6:30 p.m., Hauser 102

John Palfrey

jpalfrey at

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Class 1.0: September 9, 2004

Conceptualizing Online Transactions: Net Governance and the Jurisdiction Problem


**Please note: the room for this course is Hauser 102.**

We start with the questions of how transactions work in cyberspace and how the Net is governed in 2004. Is it possible to reconcile the global reach of the Net with the desire for home rule in local jurisdictions? We will cover a series of cases where competing jurisdictional ideals have collided on the Net. In one case that has sent shudders through the business world, we'll look at the approach an Australian court took to jurisdiction relative to a global media publisher based in New York. How can businesses manage the risk of doing business on the Net, if long-arm statutes extend everywhere the Net reaches?


Required Readings (optional for the first day, but please do read before the end of the term):

Jonathan Zittrain, “Be Careful What You Ask For: Reconciling a Global Internet and Local Law,” (Chapter 2 in Who Rules the Net? Internet Governance and Jurisdiction, Cato Publishing, 2004)

Skim Dow Jones v. Gutnick, [2002] HCA 56 (Austl.). You do not need to know the details of what each judge says, but rather should get a sense of the controversy and the holding.


Optional Background Readings and other Materials:

Slide presentation

Ramesh Johari, Tech Tutorial (audio recording)

Jonathan Zittrain, Domain Names, ICANN and Internet Governance (video recording)

John Perry Barlow, A Declaration of Independence of Cyberspace

Chapters 3 and 7, from Akehurst, Modern Introduction to International Law (Seventh Revised Edition)

Zippo Manufacturing Company v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). For context on Zippo, see Mann, p. 34 - 5.

Young v. New Haven Advocate, *** , (4th Cir. 2002).

Lawrence Lessig, Code and Other Laws of Cyberspace (Basic Books, 1999). Code is the undisputed seminal text of the cyberlaw field. It is worth a read, even if just out of personal interest.

Throwback to Fall 2003: JP's Weblogs Notes after Class

Module: Commercial Transactions & the Net

Traditional retailers, banks and many other businesses transact with consumers and other businesses daily across national borders using the Internet. This electronic commerce poses novel legal and business concerns for both parties to the transaction. The first class will consider e-commerce business models and the regulation of commonplace transactions, such as sales, online payments and other electronic services. The second day will involve setting up a central problem for discussion throughout the semester. The third day will examine issues particular to large transactions, such as mergers and acquisitions in the technology and telecommunications space, with cross-border implications.

Class 2.1: September 16, 2004

Online Transactions


Commerce on the Internet has applied pressure to established commercial law doctrines. The wise persons who make decisions about how the UCC should evolve and what Internet-era uniform rules like UETA and UCITA should say have created an emerging legal regime in the United States to govern online transactions. Basic questions of contract law -- for instance, when exactly have the parties entered into a contract, and is it enforceable? -- can be tricky in electronic commerce transactions. We'll start with straightforward contracting on the Net and get into issues that involve a cross-border dynamic thereafter. We will also look at the failure of the movement to enact UCITA and consider what it means for contracting on the Net.

Required Readings:

The only textbook used in this course is Ronald J. Mann and Jane K. Winn, Electronic Commerce (Aspen, 2002). All readings below that say "Mann, p. X" are from this textbook.

Sales of Goods (Shrinkwrap, Clickwrap, Browsewrap): Mann, 197 - 214. (Please N.B. problem 13.5 on p. 214).

Comb v. PayPal, 218 F.Supp. 2d 1165 (2002).

Electronic Contracting: Mann, 215 - 223.

Cross-Border Sale Transactions: Mann, 290 - 302.


Optional Background Reading:

Taxing the Internet: Mann, 303 - 312. (Please N.B. problem 20.5 on p. 312).

Laura Darden and Charles Thorpe, Forming Contracts on the Internet

Alan Charles Raul and Eric Shumsky, The Enforcability of "Clickwrap" Licenses

The National Conference of Commissioners on Uniform State Laws site: background and updates on uniform laws.

Online transactions in ideas: RedPaper.

Hale and Dorr LLP internet alert of October 9, 2003, on online contracting, particularly terms and conditions agreements. This alert contextualizes the Specht v. Netscape case that we cover in the Mann book.

John Adams, Digital Age Standard Form Contracts Under Australian Law: "Wrap" Agreements, Exclusive Jurisdiction, and Binding Arbitration Clauses, 13 Pac. Rim L. & Pol'y 503 (June 2004). (Not freely available online as far as I can tell.)

Notes from a presentation at the Berkman Center on November 14, 2003 by Prof. Fryderyk Zoll on standard terms in the EU context. He talked particularly about the Germanic tradition and the EU Directive on this topic from 1993.

Throwback from 2003: JP's Weblog Notes after Class

Class 2.2: September 23, 2004

The Spam Problem


E-mail has proven to be the ultimate killer app. It is light, fast, and efficient. It has driven productivity in societies and economies around the world to new heights. Or so we thought.

Today, those who rely on e-mail are plagued by the spam problem. By various estimates, 60 - 80% of the world's e-mail is spam. The largest providers of e-mail services -- such as Microsoft's Hotmail and Yahoo!'s mail division -- report even higher percentages of spam coming through their system. The spam problem costs ISPs, companies, governments, and ordinary people billions of dollars each year. There are few signs of the problem abating. And the problems that spam brings with it, like phishing and viruses, are constantly getting nastier.

We'll look at whether spam matters to businesses of all types; what it means for those businesses that seek to channel large numbers of transactions through digital pathways; and explore why the solutions proposed and implemented to date have proven ineffective. This session will involve a heavy dose of policy analysis.


Required Readings:

Claudia Sarrocco et al., Spam in the Information Society: Building Frameworks for International Cooperation

The CAN-SPAM Act of 2003

Microsoft, Sender ID for E-mail

Yahoo, Domain Keys

US, Australia, UK, MoU on Fighting Spam (July, 2004)

Controlling Access to a Web Site: Mann, 91 - 109 (the spam section on pp. 105 - 107 is very short but worth taking a look at)


Optional Background Reading:

Michael Geist, Untouchable? A Canadian Perspective on the Anti-Spam Battle

Mainstream Marketing v. FTC, * * *, (10th Circuit, 2004) (the federal Do Not Call list case)

Browse the World Summit on the Information Society background materials on combatting spam

David Johnson, Susan Crawford, and John Palfrey, The Accountable Net: Peer Production of Internet Governance

Tricia Bishop, Baltimore Sun, Tech Firms, Lawmakers Target Spam (reg. req'd.)

Throwback to 2003: JP's Weblog Notes after Class


Class 2.3: September 30, 2004

The Mergers & Acquisitions Context

Lawyers commonly run up against Internet law issues in the context of large transactions, like mergers and acquistions. The lead deal lawyers build a team that includes experts in core concerns, including a range of intellectual property and antitrust issues prompted by Internet technologies at the heart of the companies' business models. This class will examine the problems that these large transactions raise, both in the domestic and cross-border contexts. We will discuss primarily the intellectual property issues involved but may reach the issues of antitrust and competition law and policy.

We will be joined by special guests R. Newcomb Stillwell and Edward G. Black, Esqs., of Ropes & Gray LLP. Messrs Stillwell and Black have extensive experience in large transactions, including mergers and acquisitions, involving tricky issues related to information and communications technologies and the economic implications of the global nature of the Net.

Required Readings:

Intellectual Property Licensing: Mann, 313 - 338.

Skim European Union policies & legislation on Cross-Border Mergers and Competition. Please note the reforms adopted in December, 2002.


Optional Background Readings:

For more information on the basics of M&A transactions, see Martin D. Ginsburg and Jack S. Levin, "Mergers, Acquisitions and Buyouts," Volume I, Chapter 1, pp. 1-1 to 1-41.

Throwback to 2003: JP's Weblog Notes after Class

Module: Intellectual Property

The next three classes will address those Intellectual Property topics that dominate today's discussions of cyberlaw. The first class in the IP module will discuss trademark rights and disputes over domain names in the Internet context, including coverage of ICANN's Uniform Dispute Resolution Policy and its interaction with traditional domestic trademark law and civil procedure. The second class will focus on the development, distribution and control of digital media. The third class will cover the development of software and intellectual property protections that cover it, including patent, copyright, and software licensing.

Class 3.1: October 7, 2004

Image is Everything: Protecting Your Brands on the Net


The Net has created enormous potential to build international brands online. Likewise, the Net provides ample opporunity for new ways to damage or otherwise to affect adversely brands quickly and in ways that reach markets through the world. How potential customers find you online, whether by search engine or domain names, has changed markedly from in the offline context. The law has sought to keep up, but the technology keeps changing, keeping the issue in flux.

Required Readings:

Framing the problem: Playboy Enterprises Inc. v. Universal Tel-a-Talk, Inc., 1998 WL 767440 (E.D.Pa.)

Domain names: Sallen v. Corinthians, 273 F.3d 14 (1st Cir. 2001). Discussion will cover, in part, the Uniform Domain Name Dispute Resolution Policy and the Anticybersquatting Consumer Protection Act.

Metatags: Niton Corp. v. Radiation Monitoring Devices, Inc., 27 F.Supp. 2d 102 (D.Mass. 1998).

Tools to Protect Brands Online: Cyveillance.


Optional Background Readings:

Explore the Readings section of Prof. Fisher's iLaw module on Interconnectivity.

Domain names, trademarks and related concepts: Mann, 17 - 51.

Rosemary J. Coombe & Andrew Herman, Culture Wars on the Net: Trademarks, Consumer Politics, and Corporate Accountability on the World Wide Web, The South Atlantic Quarterly 98:1, Winter 2001.

Throwback to 2003: JP's Weblog Notes after Class

Analytical framework for Sallen (courtesy of Berkman fellow Urs Gasser).

Class 3.2: October 14, 2004

Copyright, Digital Media and the Long Arm of the Law


The advent of digital media has thrown the music distribution business into near chaos. Napster started a revolution. Grokster, KaZaA, Morpheus -- possibly even Apple, with its iTunes service -- lead the charge today.

The retaliation against the P2P movement by some of the content owners and distributors has combined law with code in an attempt to lock down digital content more than ever before. A potent combination of the Digital Millennium Copyright Act and its siblings plus powerful trusted systems threaten to shift the pendulum yet further in the opposite direction -- but try telling that to the hundreds of millions of subscribers to the P2P networks. Meanwhile, new business models to distribute online content to the mass market seem to be eluding even the deep-pocketed players in the media business, though one technologist, Apple, seems to have a model with promise. Some of the players have changed since the Napster days -- now it's KaZaA and Grokster and Morpheus rather than Napster -- but the stakes are just as high and the issues maybe even more complex. KaZaA's globe-trotting, jurisdiction-avoiding past place the story squarely in the trajectory of the seminar.

This session will examine the spectrum of technologies and the elusive question as to what constitutes acceptable behavior in the online music debate. We will consider how businesses think about their risk in assessing whether to introduce new technologies for digital distribution. Finally, we'll think about whether a new model -- a tax and royalty scheme -- could break the impasse, and how the international dimension might affect this model. This discussion from this day will almost certainly spill into the next session.


Required Readings:

MGM Studios v. Grokster, -- F.Supp.2d --, 2004 WL 1989129 (9th Cir. 2004)

A&M Records v. Napster, 239 F. 3d 1004 (9th Cir. 2001)

William W. Fisher, III, Promises to Keep, Chapter 6 (Stanford University Press, 2004).


Optional Background Readings:

Jonathan Zittrain, Internet Points of Control (from the SSRN site; published in Boston College Law Review)

Ropes & Gray, Investors Face Potential Liability for Napster's Copyright Infringement

The jurisdictional trump card: Hollywood and KaZaA

Jack Ewing & Heather Green, BusinessWeek Online, "Global Downloading, Local Lawsuits"

Frontiers: TiVo and Replay: Chris Taylor, Time, "You Can Hack it"

More Frontiers: Amsterdam Appellate Court judgment in KaZaa matter

Sony v. Universal City Studios, 464 U.S. 417 (1984)

Fred Von Lohmann, Peer-to-Peer File Sharing After Napster

Amy Harmon, New York Times, Recording Industry Goes After Students over File Sharing

Message from Harvard College Dean Harry Lewis to Students Regarding File Sharing; compare to:

Message from the Provost of Penn State University to Students

Kelly v. Arriba Soft, 280 F.3d 934 (9th Cir. 2002)

John Perry Barlow, The Economy of Ideas

Evan Burnstein's weblog posting on the MIT "Library Access to Music Project" (student in Fall '03 class)

John Palfrey, Boston Globe Op-ed, The Digital Copyright Crisis

Throwback to 2003: JP's Weblog Notes after Class

Class 3.3: October 21, 2004

Copyright Plus or Minus: Going Global, Going Alternative

The intellectual property regime is an important driver in decision-making about how to develop, distribute and use software. Successful software development projects have adopted a broad range of approaches to intellectual property, from the most locked-down, proprietary model to the most determinedly open "free software" models. This class will examine the law of copyright, patent and licensing as they relate to the software development and sales process.


Required Readings:

Bolstering Global IP Protections: Through Laws and Technologies

CSS, DeCSS and the DVDCCA and Sklyarov

Digital Millennium Copyright Act, Section 1201

Copyright in its international context: WIPO Treaty, implemenation of the EU Directive, the UK Implementation, the EFF on Germany's version

The US Export of the DMCA: US-Chile bilateral treaty (see also US-Singapore)

Lexmark v. Static Control Components (US District Court opinion of February 27, 2003)

Updated after the class: Lexmark v. Static Control Components (US Court of Appeals opinion of October 26, 2004)


Optional Background Readings:

Tim Armstrong's blog entries (here and here) on the October, 2004 Court of Appeals Lexmark holding

IP Protections as a Problem for Businesses, Not a Solution

Eric Raymond, The Cathedral and the Bazaar

Findlaw's Summary of SCO Group v. IBM

DVDCCA v. Bunner (entire case, decided on appeal; redacted version of earlier case in the required readings)

Yochai Benkler, Coase's Penguin

MySQL v. NuSphere and GNU License

C|Net, Proprietary Software -- Banned in Boston?, September 30, 2003.

Wired, Garage Doors Raise DMCA Questions, September 17, 2003.

Throwback to 2003: JP's Weblog Notes after Class

Module: Data Protection, Security and Privacy

The first class will focus on the international legal issues associated with the protection of data and the challenges that a complex web of data privacy rules and norms present. The EU Data Privacy Directives of 1995 and 2002 (95/46/EC and 2002/58/EC) will play a prominent role in the discussion. The second class will involve a case study on lawful intercept, in which we will consider the impact of the legal regime of surveillance on business decision-making.

Class 4.1: November 4, 2004

Data Security and Privacy: Comparative Law


The Internet is overturning traditional market structures by providing a common, international network for the delivery of a wide range of electronic communications services. For e-commerce, this infrastructure promises both efficient data transfer and new challenges regarding data security. Firms must adhere to data protection laws to conduct business across borders, as well as implementing new policies to protect information capital in a digital environment.

Special Guest: Prof. Viktor Mayer-Schoenberger, Kennedy School of Government, Harvard University


Required Readings:

Standards Governing Transborder Data Flows

Viktor Mayer-Schoenberger, "Generational Development of Data Protection in Europe." (Available in hard-copy or else find it in the book, "Technology and Privacy: The New Landscape," edited by Philip E. Agre and Marc Rotenberg).

Skim the Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 (the so-called "EU Data Directive") and UK implementation (Data Protection Act 1998).

Privacy Commissioner of Canada’s summary of Privacy Legislation

Read Mann, 184 - 194

Corporate Computer Security

Contract and Tort Theories for Unauthorized Access Online:

EF Cultural Travel v. Zefer

eBay v. Bidder's Edge


Optional Background Readings:

Mann, 65 - 90, 91 - 105

Charles Nesson & Anita Ramasastry, Cybercrime

Privacy and Human Rights 2003: An International Survey

FTC, Online Profiling: Report to Congress, June, 2000.

Protections against Hacking/Cracking: Mark Milone, Hacktivism: Securing the National Infrastructure, 58 Bus.Law 383 (2002).

Anita Ramasastry, Third Party Data Monitoring and Collection on the Internet: Is it Illegal Wiretapping?

CERT Coordination Center, Trends in Denial of Service Attack Technology (2001).

Mann, 127 - 184

EDRi on EU Privacy Laws vs. US law enforcement interests

Throwback to 2003: JP's Weblog Notes after Class

Class 4.2: November 11, 2004

Lawful Intercept: A Global Case Study


This class will involve a case study from the perspective of an in-house attorney for a large IP networking equipment manufacturer seeking to develop a legal strategy for lawfully authorized electronic surveillance. We will emphasize the types of business decisions driven by the emerging global framework of laws covering surveillance in a post 9/11 world.

Special Guest: Tim Ehrlich, Esq., Latham & Watkins; former Corporate Counsel, Cisco Systems, Inc.


Required Reading:

Case Study

Slide Presentation


Module: ICT in Development

Though commonly referred to as the "World Wide Web," the Internet today reaches roughly only 10% of the world's population. The provision of Internet access and content to developing nations presents a series of thorny policy and legal challenges as well as the prospect of business opportunities for entrepreneurs in developing countries and the big technology companies alike. One class will focus on special concerns related to the development of technology infrastructure, such as the convergence of telecommunications and Internet regulation and the licensing schemes for Internet Service Providers. The second class will focus on the development of Internet law, policy and pedagogies that may help to foster technological innovation and entrepreneurial growth in developing countries.

Class 5.1: November 18, 2004

Entrepreneurship and the Legal Environment


In some ways, the final analysis could look like this: if you focused exclusively on the problem of how best to enable entrepreneurs to use information and communications technologies to develop local economies in a globalizing world, how would you do it? The search for a solution has involved a basic shift in ICT for development from opportunistic projects to a more strategic approach. At the same time, the work of such international development scholars as Hernando de Soto has identified that the success of any effective development projects resides in its ability to unleash and capitalize on the work of local entrepreneurs.

Special Guest: Dr. Urs Gasser, Fellow, Berkman Center for Internet & Society (blog)

Required Readings:

James F. Moore, John Palfrey, and Urs Gasser, "ICT and Entrepreneurship," BOLD series on ICT and Development, 2003. Please follow the links to "Required Readings" within this module.

(This reading includes links to Boston Consulting Group, "Options on the Future: The Role of Business in Closing the Digital Divide" and C.K. Prahalad and Allen Hammond, "What Works: Serving the Poor, Profitably" -- which you should please follow and read.)

Optional Background Readings:

Skim Chapter 5 of the UNDP's Arab Human Development Report 2002.

New York Times, "Developing Nations Begin to Embrace Internet Commerce," (Nov. 24, 2003)


Class 5.2: December 2, 2004

An All-IP Future?

Technology Infrastructure in the Developing Country Context

The advent of the internet along with development in information and communication technologies has revolutionized global business. Some optimistic assessments have concluded that adopting new ICT may allow developing nations to revolutionize their economies and even skip ahead in generations of technology development. In practice, effective deployment has had less to do with technical issues associated with fine-tuning a new technology and more to do with implementation through coordination and collaboration.

Many ICT-related development projects have been less successful and more difficult than practictioners initially had hoped. Some problems stem from a lack of government support or, in fact, government policies to block competition in fields like telecommunications.

Some nations that have adopted liberal attitude towards ISP licensing and ICT development have experienced success. Over the last 10 years, Sri Lanka has set up over 800,000 phone lines. Mauritius has convinced Microsoft, Hewlett Packard, and IBM to make the tiny nation their regional headquarters. Mauritius hopes to serve as a conduit between the South Asian IT sector and the developing economies of Africa and transition from an economy based on sugar cane and tourism to a service sector. Well-balanced policies could deliver the basic promise of ICT: effective two-way communication services that bridge distances and lower costs, available 24 hours a day.

Such policies might lead, likewise, to a future where all telecommunications flow over an IP (Internet Protocol)-based network. We will explore whether such an "All-IP" future is achievable and desirable.


Required Readings:

Andrew McLaughlin, "Internet Exchange Points."

Andrew McLaughlin and Ethan Zuckerman, "Architecture," BOLD Series on ICT and Development, 2003. Please follow the links to "Required Readings" within this module.

Asian Development Bank, Does Connectivity Mean Productivity? The Grameen Phone Project – An ICT Success Story, Toward E-Development in Asia and the Pacific: A Strategic Approach for Information and Communication Technology (2003).


Optional Background Readings:

Vonage v. Minnesota Public Utilities Commission (2003)

FCC News Release: Vonage Not Subject to State Public Utilities Rules (2004)

Chairman Michael Powell, Statement on VoIP (2004)

Saltzer, Reed, and Clark, End-to-End Arguments in Systems Design (1981)

The Economist, Paradise Lost: a survey of the IT industry (2003)

Global Internet Policy Initiative, Voice-over-IP: The Future of Communications (2002)

Learning Information Networking Knowledge Centre, Strengthening Participation by Developing Countries in International Decision-making: Case Study of South Africa

Check out Skype

Class 6.0: December 9, 2004

Conclusion: Tying it All Together

In this final class, we will revisit the core themes of the class.

Required Reading:

Complaint in Perfect 10 v. Skype (2004)