LAW OF COMPUTER TECHNOLOGY                                FALL 2018
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LAW OF COMPUTER TECHNOLOGY FALL 2018

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LAW OF COMPUTER TECHNOLOGY FALL 2018




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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Internet Jurisdiction

Michael I. Shamos, Ph.D., J.D.Institute for Software ResearchSchool of Computer ScienceCarnegie Mellon University

9/9/12

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Internet Personal Jurisdiction

Personal jurisdiction is largely based on geography, physical locationActs, parties, physical presence in a stateActs causing damage or injury in the stateBUT: the Internet does not respect geographyOften can’t tell where someone isCan’t tell routing, cable location, optical fiber, servers, etc.Does it matter?

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

General vs. Special Jurisdiction

Personal jurisdiction requires “minimum contacts” with the forum stateIf the case arose from those contacts, there may be special jurisdiction, that is, the power to hear that particular case.If the defendant has many contacts with the forum, there may be general jurisdiction, that is, the power to hear ANY case against the defendant, even if that case did NOT arise from the contacts.International Shoe is a special jurisdiction case. It had to pay tax to Washington because of its 12 employees in Washington.

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Internet Jurisdiction Issues

Where does an Internet company “reside”?Where any of its servers is located?Where the domain is registered?Along the path where messages are routed to it?Where more than 3 employees work?Where its ISP is located? Where computers are located?Where orders are “taken”? Where orders are “filled”?Where goods are stored? What about information goods?Do any of these distinctions make sense?Do we need Internet courts?

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Zippo: Internet Jurisdiction

Courts recognize three types of eCommerce activityDoing business over the Internet“the knowing and repeated transmission of computer files over the Internet” (Is that really “doing business”?)Personal jurisdiction properPassively informational websites“little more than an electronic billboard for the posting of information” (Do any companies have these now?)No personal jurisdictionGray area:defendant has a website that allows a user to exchange information with a host computerjurisdiction depends on nature of the information transmitted and degree of interaction.

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Zippo Case

Zippo Manufacturing v. Zippo Dot Com Inc., 952 F.Supp. 1119 (W.D. Pa. 1997). Full text.Zippo Manufacturing is in Bradford, Pa. Makes Zippo lighters.PENNSYLVANIANEW YORK

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Zippo Case

Zippo.com is in Sunnyvale, California (Silicon Valley). Operated an Internet news service. Had 140,000 subscribers. About 3000 (2%) were in Pa.Subscribers only have password access to a bulletin boardZippo.com had contracts with 7 ISPs in Pa.Zippo Manufacturing sued Zippo.com for trademark infringementHELD, jurisdiction proper because of Pa. contacts“The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.”

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Zippo’s Future

Zippo has been cited in more than 6000 court decisions.But the principles behind Zippo are now obsolete.Many courts follow Zippo, but now more and more don’t.

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Sioux Transportation, Inc. v. XPO

Logistics, Inc. (W.D. Ark., Dec. 22, 2015)The “Bad Chicken Case”Sioux is a freight broker incorporated in Arkansas.It makes deals between manufacturers and shippersXPO Logistics is a trucking company incorporated in Delaware corporation with a principal place of business in ConnecticutXPO paid Sioux to arrange shipment of frozen chickens from Alabama to MichiganSioux hired Original Mamaz Boys as truckersWhen the chickens arrived in Michigan, their temperature was too high and the shipment was rejected.

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The “Bad Chicken Case”

SIOUX (INC. IN

ARKANSAS)

U.S. DISTRICT COURT

W.D. ARKANSAS

FAYETTEVILLE

XPO (INC. IN

DELAWARE)

XPO PRINCIPAL

PLACE OF

BUSINESS

(CONNECTICUT)

ROUTE OF

THE CHICKENS

LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

The “Bad Chicken Case”

XPOs insurance company, Travelers, paid for the chickensTravelers then tried to recover its money from SiouxDuring the dispute, an XPO employee posted defamatory material about Sioux on two websites, carrier411.com and tiawatchdog.com (“TIA” is the Transportation Intermediaries Association”)The posts accused Sioux of negligenceSioux filed a case in Arkansas state court for defamation and violating the Arkansas Deceptive Trade Practices ActXPO removed the case to Federal court

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

The “Bad Chicken Case”

XPO says Arkansas has no personal jurisdiction. It is a Delaware corporation with a place of business in ConnecticutThe Arkansas long-arm statute says that personal jurisdiction extends “to the maximum extent permitted by the due process clause of the 14th amendment”Sioux asserted jurisdiction based on Zippo, that the websites posting the material were interactiveXPO said Zippo determines jurisdiction over the operator of the website, not the people who post on itThe Court would not apply the Zippo test

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

The “Bad Chicken Case”

The Court had “difficulty in considering the Zippo test in the context of the modern internet. The internet has undergone tremendous change since Zippo was decided in 1997 … Cloud computing has eliminated the need for downloading files in many situations, location-based technology has made online interactions that formerly existed only in cyberspace more closely tied to specific geographic locations, and the level of user interaction with websites has exploded with social media. All of this calls into question the modern usefulness of the Zippo test's simplistic tri-parte framework: The transmission of computer files over the internet is perhaps no longer an accurate measurement of a website's contact to a forum state.The Court dismissed the case for lack of personal jurisdiction over XPOIf Sioux wanted, it could sue XPO in Delaware or ConnecticutIt didn’t

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Best Odds v. iBus Media (D. Nev. 2014)

Best Odds is a Nevada corporation that provides gambling news and information over the InternetiBus Media is an Isle of Man corporationthat does the same thingBoth use the trademark MacPokerBest Odds owns a U.S. trademark registration for “MacPoker”When no federal statute governs personal jurisdiction, a federal court applies the law of the forum state.

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Best Odds v. iBus Media (D. Nev. 2014)

The iBus website can be viewed from NevadaThe Ninth Circuit test for special jurisdiction:(1) Defendant must purposefully direct his activities to the forum; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum; AND(2) the claim must arise out of defendant’s forum-related activities; AND(3) jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.“Nothing in the interactive features depicted in Plaintiff’s exhibits indicates that Defendants expressly targeted citizens of the United States, let alone Nevadans. In fact, one of the five screenshots shows only links to poker rooms that are ‘Not Accepting US Players’.”No purposeful direction, therefore no jurisdiction. Dismissed.

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Intercon Case

Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc., 205 F.3d 1244 (10th Cir., March 9, 2000). Full text.Intercon is an Oklahoma ISP (icon.net)Bell Atlantic Internet Solutions is a Delaware corp. offering dialup ISP service in the northeast US. No presence in OklahomaBell Atlantic mistakenly routed its email traffic to icon.net instead of to its subcontractor iconnet.neticon.net was choked with email, severely affecting its ISP service. Took 7 months for Bell Atlantic to correct the problemIntercon sued Bell Atlantic in OklahomaHELD, jurisdiction proper because “defendant purposefully availed itself of the Oklahoma server for … months after being notified of the erroneous address”(District Court dismissed the case; Court of Appeals reversed.)

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Effect of Forum Selection Clauses

Williams v. America OnLine, Inc., (2001 Mass. Super. No. 00-0962)Software downloaded by AOL damaged Williams’ computerWilliams consented to an online “Terms of Service” contract containing the clause: “You expressly agree that exclusive jurisdiction for any claim or dispute with AOL or relating in any way to your membership or your use of AOL resides in the court of Virginia and you further agree and expressly consent to the exercise of personal jurisdiction in the courts of Virginia in connection with any such dispute .…”Williams was already an AOL member; previously agreed to a Virginia forum selection clauseDamage to computer occurred before Williams agreed to new contract. New contract governs, but forum selection clause is unenforceable!

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Wilson v. RIU Hotels (E.D. Pa., 2012)Rita Wilson lives in PennsylvaniaRIU has headquarters in Mallorca, SpainRIU owns the RIU Palace Hotel in Cabo San Lucas, MexicoWilson booked a room at the hotel on the Internet through the website of Apple Vacations, a Pennsylvania companyWilson was injured at the hotel and sued in Pennsylvania

WILSON

RIU

HOTEL

APPLE

VACATIONS

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Wilson v. RIU Hotels (E.D. Pa., 2012)The Court found it had subject matter jurisdiction.Amount in dispute > $75KBetween citizen of a state and a citizen of a foreign statePersonal jurisdictionRIU distributed brochures to a travel agency in PARIU gave marketing materials to Apple Vacations, which operates in PABoth Apple Vacations and RIU websites can be accessed from PAWilson claims RIU maintained “systematic and continuous contact” with PA

LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

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Wilson v. RIU Hotels (E.D. Pa., 2012)The Court found:Wilson’s claim did not arise out of any PA contactInjury was in Mexico, unrelated to place of booking)RIU advertising was not specifically directed to PA (advertising nationally is not sufficient – otherwise a company would be subject to jurisdiction everywhere)Apple Vacations website is available everywhere, not just in PAHELD, no personal jurisdiction over RIU in Pennsylvania

LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

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Burdick v. Superior Court of Orange County(Cal. App., Feb. 14, 2015)Burdick, a resident of Illinois, made a defamatory comment about John Sanderson on Burdick’s Facebook page(The actual comment is not relevant to jurisdiction.)Sanderson brought suit for libel in California

CALIFORNIA

ILLINOIS

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Burdick v. Superior Court of Orange CountyBurdick had no contacts with CaliforniaNo residence, no office, no propertyNo bank account, no licenses, no employeesBurdick asserted lack of personal jurisdictionHe asked the Court to quash the subpoena commanding him to appearSanderson argued that Burdick’s posting had an “effect” against him in CaliforniaThe Superior Court (the lowest level of court in California) refused to dismiss the caseCalifornia Supreme Court granted review and transferred the review to the Court of Appeals

LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

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Burdick v. Superior Court of Orange CountySanderson sought specific (not general) jurisdictionThe case arose from Burdick’s actions in CaliforniaAppeals Court held:A foreign act with foreseeable effects in the forum state does not always confer specific jurisdictionThe forum must be the “focal point” of the conductThere must be “express aiming” or “purposeful targeting”Burdick did not aim his comments at or target CaliforniaThe Superior Court was ordered to dismiss the case

LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Bases of International Jurisdiction

Territoriality principleregulate conduct within its territoryNationality principleregulate conduct of nationals, wherever they areEffects principleregulate conduct having effect in the stateUniversality principlejurisdiction over crimes that are universally condemnedProtective principlejurisdiction over defendants who threaten security of a state

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

The iCraveTV Case

TORONTO

UNITED STATES

CANADA

PITTSBURGH

NY

PA

BUFFALO

US TV stations broadcast from Buffalo

iCraveTV set up receivers in

Toronto, Canada

iCraveTV registered the iCraveTV.com

domain name in Pittsburgh

iCraveTV.com

No iCraveTV servers in the US

iCraveTV was sued in Federal Court in

Pittsburgh by TV networks, movie

studios and sports leagues for copyright

infringement

Do US courts have jurisdiction?

iCraveTV wrapped its own advertising

around the images and served them

to anyone visiting its website

Received US TV signals, stored them

on a streaming RealServer in Canada

RealServer

iCraveTV is a Canadian company owned

Pennsylvania residents

iCraveTV

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Yahoo! Nazi Memorabilia Case

The Penal Code of France, Sec. R645-1, makes it an offense“other than for the needs of a film; a show or an exhibit enjoying historical context,to wear or exhibit in public a uniform, an insignia or an emblem which evokes the uniforms, insignia or the emblems which were worn or exhibited [by Nazis]”Penalty:fines; higher for subsequent offensesconfiscation of the object used to commit the infractionperform public service; prohibition against carrying firearms for 3 yearsYahoo! auctions routinely offered Nazi itemsYahoo! Inc. is a California corporationYahoo! France is a joint venture between Yahoo! Inc. and Softbank, a UK corporation

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Yahoo! Nazi Memorabilia Case

Yahoo! Inc. and Yahoo France were sued in France by LICRA (League Against Racism and Antisemitism) and UEJF (Union of French Jewish Students) to enforce R6456Yahoo argued:Court had no jurisdiction over itYahoo’s content is directed to US “internauts”Yahoo servers are in the USAny order against Yahoo could not be enforced in the US because of freedom of speechHELD, France has jurisdiction over Yahoo becauseviolation of the Code was disruptive to public ordervisualization of Nazi objects causes grief in FranceYahoo (US) offers French content to users in France

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Yahoo! Nazi Memorabilia Case

Yahoo! initially obeyed the French orderDec. 2000 Yahoo filed a declaratory judgment action in California against LICRA and UEJFasserts jurisdiction on grounds that:LICRA, UEJF sent cease-and-desist letters into CaliforniaLICRA, UEJF agreed to Yahoo’s “terms of service”LICRA, UEJF used the U.S. Marshal to serve processalleges:Yahoo cannot comply on technological groundsFrench order chills freedom of expression in the U.S.Online service providers are immunized by DMCAFeb. 2001 Yahoo announced it would no longer comply

THESE

ARGUMENTS

SUCCEEDED

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Yahoo! Nazi Memorabilia Case

Nov. 2001 California court decided that “the First Amendment precludes enforcement within the United States of a French order intended to regulate the content of its speech over the Internet.” 169 F. Supp. 2d 1181 (N.D. Cal. 2001)“What is at issue here is whether it is consistent with the Constitution and laws of the United States for another nation to regulate speech by a United States resident within the United States on the basis that such speech can be accessed by Internet users in that nation.”Appeal to the Ninth Circuit, which held that California had no jurisdiction over LICRA (no purposeful availment) so it reversed the District Court. The French decision stands but is not enforceable in the United States.

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Significance of Yahoo!

Goes way beyond Nazi memorabiliaBasic question:When acts performed in country A are legal in A but violate the laws of country B because of transmission over the Internet:Whose laws apply?Does B have jurisdiction?Should A act in aid of any judgment against its own citizen?

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Major Ideas

Jurisdiction is largely territorialTerritories make little sense on the InternetThe Zippo test is still used, but is on the way outInternational jurisdiction is complicated by the interaction of different legal systemsAn Internet treaty may be required

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Q

A

&

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Butler v. Beer Across America

Beer Across America (BAA): Illinois company selling beer over the Internet; no offices, assets or personnel in Alabama; never visited AlabamaButler and her son, a minor, live in Alabama. Son bought 12 bottles of beer for $24.95 from BAA by ordering over the InternetThe Alabama Civil Damages Act provides for a civil action by the parent or guardian of a minor against “any person who unlawfully sells or furnishes spiritous liquors to such minor and may recover such damages as the jury may assess.”Butler brought suit against BAA in Alabama. (Why?)

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Butler v. Beer Across America

FACT: BAA had sold beer to other Alabama residentsFACT: BAA had bought beer from Alabama brewers.FACT: BAA had advertised nationally, but not specifically in AlabamaHELD: no personal jurisdiction over BAA in Alabama. The website was an “electronic version of a postal reply card”Butler is not without remedy. Case was transferred to court in Illinois.Butler v. Beer Across America, 83 F.Supp. 2d 1261 (N.D. Ala. 2000)

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Soma v. Standard Chartered Bank

Soma Medical International v. Standard Chartered Bank, 196 F.3d 1292 (10th Cir. 1999). Full text.Soma is a Delaware corporation doing business in UtahStandard Chartered Bank (SCB) is a UK bank with an office in Hong Kong (no presence in Utah)Soma had an account with SCB’s Hong Kong officeSCB maintained a website accessible from UtahDefendant Fong submitted a forged signature card to SCB; then withdrew $250,000 from Soma’s accountSoma sued SCB in UtahHELD, no jurisdiction in Utah since SCB had a “passive Web site that does little more than make information available to those who are interested”

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LAW OF COMPUTER TECHNOLOGY FALL 2018 © 2018 MICHAEL I. SHAMOS

Recent Internet Cases

Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008). Boschetto in California bought a car on eBay from Hansing in WisconsinThe car did not conform to Hansing’s description. Boschetto sued in CaliforniaHELD, NO JURISDICTION in CaliforniaOne sale not a sufficient contact

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Attaway v. Omega (Ind. App. 2009)Llexcyiss Omega in Indiana sold a car on eBay to Attaway in IdahoAttaway paid through MasterCardAttaway hired CarHop USA, based in Washington, to pick up the car in Indiana and deliver it to IdahoAttaway claimed the car was not as described and recovered $5900 in damages from MasterCardBy submitting a bid, the Attaways agreed to appear, in person or by representative, in Indiana to pick up the vehicleBy sending an agent into Indiana, the Attaways “purposely availed” themselves of the privilege of conducting activities within Indiana. Jurisdiction was PROPER