[IP] Net Jurisdiction Study Finds New Digital Divide
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Mon, 05 Apr 2004 09:00:49 -0500
From: Michael Geist <mgeist@xxxxxxxxx>
Dave,
Of possible interest -- my regular Toronto Star Law Bytes column highlights
the results of an ABA/ICC global Internet jurisdiction study released over
the weekend (full disclose - I served as co-chair of the project). The
survey of nearly 300 companies in 45 different countries found that U.S.
companies were far more concerned and pessimistic about Internet
jurisdiction risk than European and Asian companies. It also found that an
"Internet jurisdiction risk toolkit" is emerging where companies target low
risk jurisdictions and take steps to avoid doing business in perceived high
risk jurisdictions.
No surprise with who was most affected by Internet jurisdictional issues --
in light of cases such as Yahoo! France and Gutnick -- it was media
companies that were most likely to have responded to jurisdictional
issues. It was also quite troubling that respondents in developing
countries, particularly in Latin America, experienced significant
difficulty in completing the survey as many organizational representatives
candidly admitted that they were unfamiliar with Internet jurisdiction
risks and with their organization's approach to the issues.
Study at
<http://shorl.com/hosaladrifrite>
Column at
<http://shorl.com/jagredipupryhy> [Toronto Star]
MG
World resists one-size-fits-all Web laws
MICHAEL GEIST
LAW BYTES
Last week's dramatic Federal Court file-sharing decision brought into sharp
focus not only the complexity created by the intersection of copyright and
privacy law, but also the continuing evolution of Canadian approaches to
Internet law issues.
In fact, where once business and Internet users expected that Canadian law
would mirror the rules found elsewhere, today we find that there are
Canadian-specific approaches to a wide range of Internet law issues
including copyright, privacy, Internet service provider liability, and free
speech.
While critics suggest that this places Canada at odds with the rest of the
world, a closer examination reveals legal differences are cropping up
everywhere as countries become more assertive in ensuring their Internet
legal framework is consistent with national policy priorities.
For businesses operating online, the resulting melting pot of legal rules
presents some tough challenges. Internet jurisdiction - the question of
whose law applies online - has always been identified as one of the
Internet's most challenging issues and in recent years that challenge has
intensified by virtue of competing and potentially conflicting regulations.
A study released over the weekend reveals that businesses, particularly
those located in Canada and the U.S., are increasingly responding to
Internet "jurisdiction risk." These are perceived risks associated with
being hauled into foreign courts or facing foreign (and potentially
conflicting) legal frameworks.
In 2003, the American Bar Association's Business Law Section, Cyberspace
Law Committee joined forces to consider the matter with the International
Chamber of Commerce, a global leader on Internet jurisdiction policy, and
the Internet Law and Policy Forum, a global consortium of technology
companies. They did a detailed survey to examine the practical effects of
Internet jurisdiction risks on companies worldwide. (Disclosure: I served
as the co-chair of the survey project.)
The survey was translated into seven languages and distributed in 45
countries to hundreds of companies. The survey distribution was designed to
encompass small, medium, and multinational companies and cut across all
business sectors including media companies, IT and financial service
companies, and retailers.
The 277 responses suggested that there is considerable concern over the
challenges presented by Internet jurisdiction, though a divide is emerging
on the issue between North America on one side and Europe and Asia on the
other. By a ratio of six to one, North American companies said that the
Internet jurisdiction issue has become worse over the past two years and
four of every five companies said they feel that matters will worsen by
2005. In contrast, responding Asian and European companies thought that the
risk associated with the issue has improved since 2001 and will improve
further by 2005.
Survey respondents left little doubt that the Internet was responsible for
the problem as a majority of companies who thought that jurisdictional
issues are an increasing problem attribute their concern to the emergence
of the Internet and e-commerce.
While compliance challenges such as competing copyright or privacy laws
capture much of the attention, when companies were asked which
jurisdictional issues posed the greatest concern, first on the list was
actually litigation risk. This suggests that the risk of being pulled into
court is the biggest fear of companies operating online, exceeding concerns
associated with conflicting legal frameworks. Other notable concerns
included industrial and consumer regulations, e-commerce regulation,
taxation, and privacy.
Consistent with leading cases such as the Yahoo! France case, in which the
Internet portal was sued in France for content available on its site, and
the Australian Gutnick case, in which Dow Jones was sued in Australia for
one of its articles that appeared in Barron's magazine, it is the media
sector that was clearly the most affected by Internet jurisdiction. For
example, more than half of media company respondents indicated that they
have adjusted their business operations in response to Internet
jurisdiction risk.
The survey also revealed that some companies, particularly those situated
in North America, now seek to influence jurisdictional outcomes by using
both technological and legal approaches to mitigate risk.
The most common methods to achieve this include the insertion of legal
terms on Web sites, the use of a local server, the use of a national
(country-code) top domain name, or the posting of local content.
North American companies are also more likely to attempt to identify the
geographic location of their users or refrain from interacting with people
in certain jurisdictions. Sixty-nine per cent of North American respondents
indicated that they employed techniques to identify user location, compared
with 41 per cent of Asian companies and 29 per cent of European companies.
Companies are increasingly refraining from interacting with certain "higher
risk" jurisdictions citing fears of liability in the target jurisdiction,
liability in the home jurisdiction, and user fraud as the primary reasons
for doing so. They attempt to achieve this by employing technical measures
to block access to their site or by establishing registration requirements.
The use of geo-locational technologies, which purport to identify the
location of Internet users, is still relatively rare.
Although the survey provides a good snapshot of evolving Internet
jurisdictional practice in the developed world, it is noteworthy that
attempts to obtain information from companies in the developing world were
largely unsuccessful. Respondents in developing countries, particularly in
Latin America, experienced significant difficulty in completing the survey
as many organizational representatives candidly admitted that they were
unfamiliar with Internet jurisdiction risks and with their organization's
approach to the issues.
As the roller coaster ride of Internet law rules continues, it is becoming
increasingly apparent that business approaches to the Internet are also
changing. This new survey suggests that businesses are starting to
proactively respond to Internet jurisdiction risk by adapting their
approach to e-commerce. If the dust ever settles, the online businesses of
tomorrow may be quite different from what exists today.
**********************************************************************
Professor Michael A. Geist
Canada Research Chair in Internet and E-commerce Law
University of Ottawa Law School, Common Law Section
Technology Counsel, Osler, Hoskin & Harcourt LLP
57 Louis Pasteur St., P.O. Box 450, Stn. A, Ottawa, Ontario, K1N 6N5
Tel: 613-562-5800, x3319 Fax: 613-562-5124
mgeist@xxxxxxxxx http://www.michaelgeist.ca
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