Fall 2009

Fall 2009

E-Commerce - Law Seminar Course Outline - Fall 2009

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Monday 6 pm - 8 pm

Contact Information Jonathan Bick - Brach Eichler, LLP

101 Eisenhower Parkway Roseland, NJ 07068

Office phone 973-403-3155               Jbick@Bracheichler.com       www.bicklaw.com


E-Commerce Schedule

Class 1  Internet and E-commerce Introduction - August 24

Class 2  Internet Consumer Protection - August 31

Class 3  Restricting E- Competition - September 14

Class 4 E-Contracts - September 21

Class 5  Internet Service Providers - September 28

Class 6 Internet Commerce Bad Acts - October 5

Class 7  Internet web sites - October 12

Class 8 Internet Commercial Communications - October 19

Class 9  Domain Names - October 26

Class 10  E-payments - November 2

Class 11  Internet Taxation - November 9

Class 12  Telecommunication - November 16

Class 13  Special Topics and Student Presentations - November 23

Class 14  Special Topics and Student Presentations - November 30

FALL 2009 SESSION - General Information

      First Day of Classes Monday, August 24 

      Labor Day Holiday Monday, September 7 

      Follow Thursday Class Schedule Tuesday, November 24

      Follow Friday Class Schedule Wednesday, November 25

      Thanksgiving Recess Begins Thursday, November 26

      Thanksgiving Recess Ends  Sunday, November 29

      Last Day of Classes Wednesday, December 2


Detailed Class Descriptions

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Class 1 Internet and E-commerce Introduction  - August 24

Introduction

            (See "Why Should the Internet Be Any Different" Pace Law Review (Fall 1998) Please    note this and other articles which were written by Jonathan Bick may be found on    BickLaw.com at http://www.bicklaw.com/Publications/index.html. )

            (See The Americanization of E-commerce law --       http://www.bicklaw.com/Publications/AmericanizatonE-Commerce.htm )

A. How Internet works (Course Materials 1)

            (See Internet Laws Can Protect All Types of Businesses             http://www.bicklaw.com/Publications/BusinessProtection.htm )

B. Elements of e-commerce

            Advertisement  

            (See Lawful Use of Internet Keywords

            http://www.bicklaw.com/Publications/LawfulUseofInternetKeywords.htm )

            Delivery system for digital goods

            Delivery system for services

            Billing system

            (See Merchant Service Agreements

            http://www.bicklaw.com/Publications/Merchant_Service_Agreements.htm )

            Revenue collection system

            (See E-Credit Card Contract http://www.bicklaw.com/Publications/e-credit.htm )

C.        State E-commerce laws --- UNIFORM ELECTRONIC TRANSACTIONS ACT, - National Conference of Commissioners of Uniform State Laws, Uniform Electronic Transactions Act Sec. Summary ---

The Uniform Electronic Transactions Act (UETA) has been adopted by 46 States, the District of Columbia, and the U.S. Virgin Islands. For e-commerce purposes UETA's purpose is to bring into line the differing State laws over the validity of electronic signatures, thereby supporting the validity of electronic contracts.

Definitions are given in Section 2 for e-commerce purposes see Section (8) Electronic signature - means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. Another important aspect of this definition lies in the necessity that the electronic signature be linked or logically associated with the record.

The Scope of this Act is inherently limited by the fact that it only applies to transactions related to business, commercial (including consumer) and governmental matters. Consequently, transactions with no relation to business, commercial or governmental transactions would not be subject to this Act. Unilaterally generated electronic records and signatures which are not part of a transaction also are not covered by this Act. Section 4 states that the Act "...applies to any electronic record or electronic signature created, generated, sent, communicated, received, or stored"

Section 5(a) states that transactions are not required to be in electronic form and 5(b) states (b) This [Act] applies only to transactions between parties each of which has agreed to conduct transactions by electronic means. Whether the parties agree to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties' conduct.

Section 6 - The application and intended purpose of the Act is listed. Namely "to facilitate and promote commerce and governmental transactions by validating and authorizing the use of electronic records and electronic signatures"

Section 7 gives legal recognition to electronic signatures, records and contracts

(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(c) If a law requires a record to be in writing, an electronic record satisfies the law.

(d) If a law requires a signature, an electronic signature satisfies the law.

Section 8 provides that the information be available to all parties.

(a) ...An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record.

(c) If a sender inhibits the ability of a recipient to store or print an electronic record, the electronic record is not enforceable against the recipient.

Section 9 discusses the attribution and effect of electronic record and electronic signatures

(a) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.

(b) The effect of an electronic record or electronic signature attributed to a person under subsection (a) is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties' agreement, if any, and otherwise as provided by law.

Section 10 defines the conditions if a change or error in an electronic record occurs in a transmission between parties to a transaction.

Section 11 This Section permits a notary public and other authorized officers to act electronically, effectively removing the stamp/seal requirements.

Section 12 states that the requirement of "retention of records" is satisfied by retaining an electronic record

(a) If a law requires that a record be retained, the requirement is satisfied by retaining an electronic record of the information in the record which:

(1) accurately reflects the information set forth in the record after it was first generated in its final form as an electronic record or otherwise; and

(2) remains accessible for later reference.

(c) A person may satisfy subsection (a) by using the services of another person if the requirements of that subsection are satisfied.

Section 13 "In a proceeding, evidence of a record or signature may not be excluded solely because it is in electronic form."

Section 14 discusses automated transactions.

(1) discussed situations where "...contract may be formed by the interaction of electronic agents of the parties, even if no individual was aware of or reviewed the electronic agents' actions or the resulting terms and agreements."

(2) applies to a contract that "may be formed by the interaction of an electronic agent and an individual".

Section 15 defines the "Time and Place" aspects of electronic transmissions.

This section provides default rules regarding when and from where an electronic record is sent and when and where an electronic record is received. This section does not address the efficacy of the record that is sent or received. That is, whether a record is unintelligible or unusable by a recipient is a separate issue from whether that record was sent or received. The effectiveness of an illegible record, whether it binds any party, are questions left to other law.

Section 16 outlines transferable records

A system satisfies subsection (b), and a person is deemed to have control of a transferable record, if the transferable record is created, stored, and assigned in such a manner that:

(1) a single authoritative copy of the transferable record exists which is unique, identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;

D. Self-help

            (See E-Self Help http://www.bicklaw.com/Publications/e-self_help.htm )

            (Also see Clayton X-Ray Co. v. Professional Systems Corp.                                                                         http://www.badsoftware.com/clayton.htm )

            (See Curbing Internet Defamation                                                                                                                 http://www.bicklaw.com/Publications/NovelE-speechtatics.htm

E. Insurance

            (E-Commerce Insurance http://www.bicklaw.com/Publications/e-commerce_insurance.htm )

Note : Errors and omissions coverage (''E & O'') provides insurance for damages resulting from negligence, omissions, mistakes, and errors made by the policyholder in the course of providing professional services. Internet firms deals in computers, computer equipment and software can have considerable E & O exposure. For example, Internet businesses that design and program web sites for others can be held accountable for mistakes that cause problems to their customers' computer networks. Other exposures include service outages and interruptions; faulty technical support; faulty security measures; release of confidential information without authorization; designing, constructing or maintaining an Internet site; maintenance of chat rooms or bulletin boards; and faulty software. In the context of the Internet and e-commerce, standard E & O policies could potentially generate dispute over the scope of coverage.

F. E-commerce Property

            (See Different kind of Property Rights http://www.bicklaw.com/Publications/InternetAssets.htm )


Please note that the numbers which follow refer to chapters in 101 Things You Need To Know About Internet Law by Jonathan Bick (Random House 2000)

1. A parent is almost never liable for a child's bad acts on the Internet

2. To make Internet contracts enforceable, simply have proof of written signed terms

3. To avoid out-of-state liability when using web ads, avoid out-of-state contacts

4. Web site advertisement publishers are almost never liable for customers' advertisements

5. What can legally be done if a person impersonates another on the Internet

6. Buying and selling medicine on the Internet is legal

7. Spamming is generally not illegal, but one California court ruled spam e-mail to be illegal trespass

8. Sweepstakes and other Internet games of chance are legal

9. An Internet site's activities can result in an out-of-state suit....

10. Internet credit card transactions will be afforded the same standard of protection as all other credit card transactions


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Class 2  Internet Consumer Protection - August 31

A. Trademark Enforcement

"Internet Expands Trademark Infringement" http://www.bicklaw.com/InternetTrademarkRights_000.htm

B. Internet Consumer Protection by the Federal Trade Commission

            Generally, FTC consumer protection is associated with four areas, including :

                        Entertainment -- social networks, gambling, adult content

                        Online Shopping & E-Payments -- three-business-day right to cancel purchases of                                                  $25, auctions

                        Privacy & Security -- identity theft, 1998 Children's Online Privacy Protection                                                              Act

                        Spam Email -- deceptive commercial email and spammers' responsibilities under                                         the CAN-SPAM law.

            Specific FTC actions:

                        (1) hijacking computer modems for use in placing unauthorized telephone calls;

                        (2) hijacking web pages or “copy cat” website domain names to trap consumers                              and subject them to a barrage of pop-up ads; and

                        (3) using information obtained from consumers who purchased an anti-spam                                  product to send them spam.

                                                                                                                                                            Sample matter and resolution

                        (See In Re Beylen Telecom 125 F.T.C. 276 (1998) -- for background -- . http://www.ftc.gov/os/1997/11/Bylnadmfcmp.htm -- Operators of Web site that advertised Internet connection software that, when downloaded, disconnected consumers from their service providers and reconnected them by means of expensive long distance connection through country of Moldova entered into consent order, agreeing to pay $2.7 million to more than 38,000 harmed consumers and to refrain from such deceptive activity in future.

Material 2 --- Complaint

Material 3 --- Decision and Order

C. Internet Consumer Protection by other Federal Agencies

The Department of Justice (DOJ) has statutory authority to prosecute distributors of software products, such as spy-ware, in cases where consumers’ privacy or security is compromised. The Computer Fraud and Abuse Act of 1984, for example, prohibits the unauthorized acquisition of data from a protected computer that results in damage.

D. Generally

(See UNCONSCIONABLE TERMS PREVENT ENFORCEABILITY OF E-COMMERCE CONTRACT CLAUSES --FAIRNESS COMES WITH A FAIR PRESENTATION OF THE TERMS -- http://www.bicklaw.com/Publications/UnconscionableTermsandE-contracts.htm )

11. Trademark names and e-linking are subject to legal scrutiny

12. Internet banking is legal

13. Unencrypted Internet communication is not usually protected by attorney-client privilege

14. Internet business methods can be patented

15. License don't sell-Internet domain names

16. Internet privacy rights are scarce

17. E-commerce data collection is subject to legal limitations

18. The Constitution limits a court's ability to make an Internet site owner subject to an out-of-     state suit

19. Internet repossessions are legal

20. Internet service providers (ISPs) are protected from legal liability for certain actions of their    clients


Class 3  Restricting E- Competition - September 14

A. Alcoholic beverages and wine sales

            (See "Legality of Internet Wine Sales in Flux"                               http://www.bicklaw.com/Publications/Legality_internet_sales.htm )

State v. Amoroso; Appellant, the State of Utah, appeals an order dismissing a criminal prosecution against Louis A. Amoroso and Beer Across America (BAA) involving several violations of Utah liquor laws. Materials 4

Granholm v. Heald, 544 U.S. 161 L. Ed. 2d 796, 125 S. Ct. 1885 (2005). -- State laws allowed in-state wineries to make direct sales to customers. They force out-of-state wineries to make sales only through wholesalers and retailers at greater expense. The wineries contended that the regulatory schemes discriminated against interstate commerce. States argued that the schemes were necessary to prevent underage persons from purchasing wine and to promote the collection of taxes. The Court held that the state laws discriminated against interstate commerce. It also found that the discrimination was not authorized by U.S. Const. amend XXI, § 2.

B. Gambling

People of New York v. World Interactive Gaming Corp., 185 Misc. 2d 852, 714 N.Y.S.2d 844, 1999 N.Y. Misc. LEXIS 425, 1999 WL 591995,  (N.Y. County Sup. Ct. 1999) (finding that state and federal law prohibit offer of Internet gambling to New York residents)

C. Prescription drugs

            (See "State E-pharmacy Regulation" http://www.bicklaw.com/Publications/E-pharmacy.htm )

                (See "Purchase of Medications Online is Lawful"                                                                                         http://www.bicklaw.com/Publications/medications_purchase_online.htm  )

                Nelson v. United States, , SUPREME COURT OF THE UNITED STATES, 125 S. Ct.                                         935; 2005 U.S. LEXIS 244; 73 U.S.L.W. 3399, January 10, 2005, Decided

D. Practice of law

Unauthorized Practice of Law Comm. v. Parsons Tech., Inc., No. 99-10388, UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT, 179 F.3d 956; 1999 U.S. App. LEXIS 14234, June 29, 1999, Decided

E. Cigarettes

F. Sales of Guns

G. Pornography

H. Price control

            ( See "Coordinating Traditional and Internet Sales" http://www.bicklaw.com/coordinating.htm )

21. Protect domain names by securing trademark rights first

22. An Internet service agreement has some standard elements. .

23. Legal notices that are properly placed on a web site will minimize or eliminate legal liability

24. Changes in trademark laws have resulted in changes in domain name dispute outcomes

25. Internet telemedicine patients have fewer rights than traditional patients

26. Applying suitability legal concept to e-stock brokers

27. Current laws do not fully protect the privacy of information in the possession of an Internet service provider

28. Workplace privacy is nearly nonexistent

29. The Internet may soon be deemed a public accommodation for the visually impaired

30. Personal jurisdiction are in flux with respect to the Internet


Class 4  E-Contracts - September 21

A. Application of traditional law to Internet agreements

B. Authentication of signatures

C. Electronic signature statutes

            Electronic Signatures in Global and National Commerce Act

            Uniform Electronic Transaction Act

            Viable E-signature Options  http://www.bicklaw.com/Publications/Viable_e-signature.htm

D. Elements of an electronic agreement

F. Clickwrap

            Vault Corp. v. Quaid Software Ltd. 655 F. Supp. 750 (E.D. La. 1987), aff'd, 847 F.2d 255                      (5th Cir. 1988) See  http://cyber.law.harvard.edu/ilaw/Contract/vault.htm.

            Step-Saver Data Systems, Inc. v. Wyse Technology 939 F.2d 91 (3d Cir. 1991) See                                   summary  -- http://www.4lawschool.com/contracts/step.shtml.

            Arizona Retail Systems, Inc. v. Software Link, Inc. 831 F. Supp. 759 (D. Ariz. 1993) See                                     http://cyber.law.harvard.edu/property00/alternatives/arizona.html.

            ProCD v. Zeidenberg 86 F.3d 1447 (7th Cir. 1996) See summary                                                                            http://en.wikipedia.org/wiki/ProCD_v._Zeidenberg.

            Hill v. Gateway 2000, Inc 105 F.3d 1147 (7th Cir. 1997), cert. denied, 522 U.S. 808                                 (1997) See http://www.law.emory.edu/7circuit/jan97/96-3294.html.

            M.A. Mortenson Co. v. Timberline Software Corp. 970 P.2d 803 (Wash. Ct. App. 1999)                           aff'd, 140 Wash.2d 568, 998 P.2d 305 (Wash. 2000)

                        See http://legal.web.aol.com/decisions/dlother/mortensonopinion.html

31. The Internet can provide legal notice

32. Consider European comparative advertising legal limitations when preparing Internet advertisements

33. Commercial Internet web site content is protected by the First Amendment

34. Internet auctions result in legal contracts

35. Internet transactions can result in "choice-of-law" difficulties.

36. U.S. legal limitations apply to international Internet services

37. International law limits use of Internet digital signatures

38. State laws limit physicians' use of the Internet

39. European Internet signature legal limitations differ among countries

40. International laws extend Internet service providers' content liability


Class 5 Internet Service Providers - September 28

A. Identifying Internet Service Providers

B. Limiting liability for Internet Service Providers

C. Internet Service Providers' agreements

            Southwestern Bell Tel. Co. v. Delaney, 809 S.W.2d 493 (Tex. 1991)

                       

            Hagen v. America Online, Inc., No. 971047 (Cal. App. Dep't. Super. Ct., settled June 20,                                     1996) http://legal.web.aol.com/decisions/dlpriv/howard9th.html

In addition to standard terms of service, online service providers often include other agreements associated with computer software and services provided to their subscribers. Among these agreements are: Software License Agreements, Service Agreements and Web Site Agreements.

License Agreements -- generally relate to computer software communications programs provided by the online service provider for use by the subscriber. These documents usually limit the hardware configuration on which the software may be operated. Many of these agreements provide that copies of the software may be used at a ''site,'' defined as all personal computers, (including networked systems) with the same operating system platform at a single location or at different locations that are connected by a single networked system.

Service Agreements -- set forth the rules and regulations for users accessing the online system. Often a subscriber may authorize more persons to access the network, as long as these persons reside with the member. The terms of service should state whether its online service is only for personal use by members and may not be resold.

Web Site Agreements -- Service providers should inform users, subscribers, and persons accessing your network or web site of the fact that your company monitors email and other communications and other access to your computer networks

41. Most proposed Internet legislation is not likely to be implemented

42. Digital certificates do not usually provide significant legal rights

43. Internet loans are lawful

44. Internet insurance addresses new risk

45. Internet wagering is generally illegal

46. Some Internet content is legally free to use

47. Internet nondisclosure agreements have unique features

48. Internet investment advisers require special legal precautions

49. Taxation of European e-commerce differs among countries

50. Using Internet materials may increase legal risk


Class 6  Internet Commerce Bad Acts - October 5

Feedback given on guided research paper draft (not mandatory)

A. Economic Espionage Act 1996

B. Identity theft

            Stern v. Delphi the Internet Services Corp. 165 Misc. 2d 21, 626 N.Y.S.2d 694 (N.Y.                                           Sup. Ct. 1995) http://www.loundy.com/CASES/Stern_v_Delphi.html

                Molina v. Phoenix Sound Molina 297 A.D.2d 595 (N.Y. Sup. Ct. 2002) -- the Appellate                                     Division of the New York Supreme Court, in Molina v. Phoenix Sound                                                       Inc.,specifically held that New York’s right of publicity law was not preempted              because the “statute           contains the additional element of use of one’s image for advertising or trade purposes without written    consent . . . .”.

C. Phishing

D. Denial of service attacks

E. Commercial viruses

F. Trespass to Chattel

            eBay, Inc. v. Bidder's Edge 100 F. Supp. 2d 1058 (N.D. Cal. 2000) -- See                                                                                               http://pub.bna.com/lw/21200.htm

                Register.com v. Verio, Inc. 126 F. Supp. 2d 238 (S.D.N.Y. 2000) -- See summary                                                                                 http://www.internetlibrary.com/cases/lib_case23.cfm

G. Unauthorized Entry

H. Copyright Infringement

            Federal Court Dents RIAA Strategy Against File-Sharers See                                                                                                                    http://www.bicklaw.com/Publications/RIAASetBadk.htm

                "Download Enforcers May Be Singing New Tune"  See                                                                                                                              http://www.bicklaw.com/Publications/RIAAEnforcement.htm

I. Pyramid Schemes

J Self help exceptions -- review from Class 1

            (See Curbing Internet Defamation                                                                                                                                                                   http://www.bicklaw.com/Publications/NovelE-speechtatics.htm )

                (See E-Self Help http://www.bicklaw.com/Publications/e-self_help.htm )

51. E-business is particularly susceptible to nine legal perils

52. International program license agreements are important for e-commerce outside of the U.S

53. The responsibility for content control by Internet service providers varies in Europe

54. Some countries legally protect personal data stored on the Internet

55. Worldwide Internet e-data legal protection varies

56. Internet signatures can be legally acceptable

57. Internet patents are subject to legal testing

58. Internet proxies are lawful

59. Internet intellectual property transfers must apply state law ...

60. Internet message encryption laws diverge


Class 7 Internet web sites - October 12

A. Web site development agreements

            (See Insured Warranty http://www.bicklaw.com/Publications/Insured_Warranty.htm )

B. Web site maintenance agreements

            (See e-Outsourcing http://www.bicklaw.com/Publications/e-outsourcing.htm )

C. Intellectual property ownership

            third parties

            contracting parties

D. Digital Millennium Copyright Act

            (See DMCA Guide http://www.bicklaw.com/Publications/DMCA_Guide.htm )

            (See Performance Standards                                                                                                                           http://www.bicklaw.com/Publications/performance_standards.htm )

            RealNetworks, Inc. v. Streambox, Inc. No. C99-2070P, 2000 U.S. Dist. LEXIS 1889                               (W.D. Wash. Jan. 18, 2000) ( See                                                                                                       http://www.law.uh.edu/faculty/cjoyce/copyright/release10/Real.html ).

            Kelly v. Arriba 77 F. Supp. 2d 1116 (S.D. Cal. 1999), aff'd in part and rev'd in part, 280                           F.3d 934 (9th Cir. 2002)(See http://docs.law.gwu.edu/facweb/claw/ArribaSo.htm  )

            A & M Records, Inc. v. Napster, Inc. 54 U.S.P.Q.2D (BNA) 1746 (N.D. Cal. May 5,                                2000) http://www.law.cornell.edu/copyright/cases/239_F3d_1004.htm ).

61. Internet chemical purchases are subject to recipients' jurisdictional rules

62. International e-privacy laws are primarily voluntary

63. International e-copyright laws are in flux

64. Clicking "I agree" has different meanings around the world ...

65. Global e-buyers beware

66. International e-broadcasting legal rules are country specific..

67. Special legal liability is associated with e-promotions

68. Typical domain name cease-and-desist letter and an appropriate reply

69. Reply to domain name cease-and-desist letter

70. FCC has begun to regulate the Internet

77. Internet legal evidence results in new legal difficulties

78. Promotion agency agreements for Internet services are advisable

79. e-mail is legally discoverable

80. Internet crimes and violations are emerging


Class 8 Internet Commercial Communications - October 19

A. SPAM

Cyber Promotions, Inc. v America Online, Inc. 948 F. Supp. 436 (E.D. Pa. 1996).

Hotmail Corp. v. Van$ Money Pie, Inc. 1998 U.S. Dist. LEXIS 10729, (N.D. Cal. Apr. 16, 1998).

Intel Corp. v. Hamidi 30 Cal. 4th 1342 (2003).

1. "Dual Use Spam" New Jersey Law Journal May 8, 2006;              http://www.bicklaw.com/Publications/DualUseSpam.htm

2. Spammers Should Know Their Source New Jersey Law Journal April 11, 2005

http://www.bicklaw.com/SpamTargetSource.htm

3. Is your Client a Spammer? New Jersey Law Journal October 18, 2004

            http://www.bicklaw.com/Publications/client_a_spammer.htm

B. Pop-Ups

1-800 Contacts, Inc. v. WhenU.com, Inc. and Vision Direct, Inc. 309 F. Supp. 2d 467 (S.D.N.Y. 2003)

U-Haul Int'l, Inc. v. WhenU.com, Inc. 279 F. Supp. 2d 723 (E.D. Va. 2003)

C. Broadcast advertisements

Playboy Enterprises, Inc. v. Netscape Communications Corp. 354 F.3d 1020 (9th Cir. 2004).

D. E-publications

E. E-mail

Bick "E-Pink Slip" (See http://www.bicklaw.com/Publications/E-PinkSlip.htm )

71. Selling wine via the Internet is lawful

72. E-commerce infrastructure builder contracts require special elements

73. Forty-three state laws recognize digital signatures

74. The Federal Trade Commission has begun to regulate the Internet

75. The Internet is a litigation tool

76. The Internet is an evidentiary source

77. Internet legal evidence results in new legal difficulties

78. Promotion agency agreements for Internet services are advisable

79. e-mail is legally discoverable

80. Internet crimes and violations are emerging


Class 9 Domain Names - October 26

A. Registration of Domain Names

B. Anti-cyber Squatting Act

C. Element of a domain name litigation

D. Microsoft Corporation v. J. Holiday Co. Case No. D2000-1493 WIPO Arbitration and

Mediation Center --- Materials 4

E. Digital Equipment Corp. v. Altavista Technology, Inc. 960 F. Supp. 456 (D. Mass. 1997)

F. TicketMaster Corp. v. Microsoft Corp.

G. Nissan Motor Corp v. Nissan Computer Co. 89 F. Supp. 2d 1154 (C.D. Cal. 2000), aff'd, 246 F.3d 675 (9th Cir. 2000)

H. Typo piracy

I. TCPIP Holding Co. v. Haar Communs. Inc., 2004 U.S. Dist. LEXIS 13543 (D.N.Y. 2004)

81. Reducing e-law risks is possible

82. Dot.com liability insurance contracts address legal risk

83. Copying, printing, and redistributing e-data are generally lawful

84. How can I protect my name on the Internet? Register it with many variations

85. Additional legal activity may be required to protect certain e-names

86. What can be done if someone links to a web site without permission?

87. Using the Internet to find Internet law is easy but may be inaccurate

88. Legally assigning Internet content usually requires a customized contract

89. Internet hijacking is unlawful without consent

90. Unauthorized framing is usually unlawful


Class 10  E-payments - November 2

A. Credit card law

Credit cards primarily accommodate low-value retail transactions, bill payments, cash withdrawals, and inter-account transfers.

A credit card does not result in a direct transfer of funds from the payor to the payee; however, credit cards displace payment transactions by aggregating them into single daily or weekly payments to payee-merchants and monthly payments to consumers. In any event, inasmuch as the credit card payment does not facilitate access to the cardholder's funds on the basis of electronic communication, it is not an electronic initiator of a funds transfer.

B. Pay Pal

7 N.C. Banking Inst. 375, University of North Carolina School of Law Banking Institute

April, 2003 7 N.C. Banking Inst. 375 NOTES & COMMENTS: VI. PayPal: Online Peer-to-Peer Payments: PayPal Primes the Pump, Will Banks Follow?

C. Electronic fund transfers

D. Wire Transfers -- The wire transfer is a credit-driven mechanism, handling the transmission of each payment order individually, to accommodate particularly large-value payments. Wire transfer systems are electronic.

There are two wire transfer systems in the United States. Fedwire, a nationwide wire system operated by Federal Reserve Banks, is a gross-settlement system providing ''immediate funds'' at each receiving institution's Federal Reserve Bank. CHIPS, a New York-based wire system operated by the New York Clearing House Association, is a net net settlement system providing ''same-day funds'' at the Federal Reserve Bank of New York.

In addition to CHIPS and Fedwire, depository institutions may transmit to each other payment orders relating to wire transfers by means of telex or SWIFT messages, in which case they settle bilaterally through correspondent accounts.

91. Image (IMG) links normally increase legal liability

92. Offering securities through the Internet has legal limitations

93. E-notices help protect copyrights

94. Internet publicity releases help to limit legal liability

95. E-content writer's contract may be a work-for-hire agreement

96. Internet employment services agreements usually protects one party

97. Securities brokers' obligations apply to clients' Internet trading

98. WebTrust seal providers are liable to the public

99. Obscenity and indecency e-content regulation on the Internet is in flux

100. Some public access to the Internet is legally limited


Class 11 Internet Taxation - November 9

A. State and local taxes

Quill Corporation v. North Dakota

Tax moratorium

Materials 5

B. Federal taxes

C. Foreign taxes

101.Taxes apply to Internet transactions

Federal Tax Issues

Electronic Commerce Tax objectives :

1. Neutrality -- Ideally the tax rules applicable to electronic commerce should not place it at a disadvantage to other forms of trade;

2. Administrative Complexity -- The decentralization of the Internet makes it difficult to track, monitor and collect tax with respect to Internet transactions;

3. Disintermediation -- The loss of traditional third party intermediation (for example, the banking system) results in an increased difficulty in tracking and enforcing tax liability. The loss of withholding agents is a central issue; and

4. Auditability -- The ability to monitor the Internet challenges tax administrators at all levels.

Substantive Tax Concerns

Frame work -- For federal tax purposes, all domestic U.S. entities and businesses are taxed on all income regardless of situs, subject only to credit or treaty limitations on income derived from foreign sources.

Foreign entities, however, are taxed only on their U.S. source income, i.e., to the extent that the income is sourced in this country.

The source-of-income concept plays an essential role in international taxation because the country of source generally has a right to tax income whereas the country of residence generally avoids double taxation through a credit system or an exemption system. Generally, the source-of-income rules are applied similarly throughout the world. In general, the source of income is located where the economic activities creating the income occur. For example, income derived from the use of intellectual property has its source in the location where the intellectual property is utilized. Similarly, compensation for labor or personal services has its source in the location where the labor or personal services are performed. Certain residence-based source rules have been adopted for certain types of income such as capital gains because the country of residence represents the location where the economic activity occurred.

In the past, courts have considered whether or not a company or business located outside of the United States is subject to U.S. tax, based on the fact that transmissions from outside the United States reach U.S. citizens and produce business and profits for that company outside of the United States. Consider radio station as analogy for Internet

Courts have decided that even though a radio station had listeners and advertisers in the United States it was not subject to U.S. tax, because the capital and labor employed and the services performed were outside the United States, as was the transmitter. This case seems applicable to a situation in which a non-U.S. corporation transmits information through the Internet using servers located in another country and those transmissions over the Web result in customers and business income from U.S. residents. A foreign corporation that has no office or place of business in the United States, that broadcasts radio programs designed for and directed to listeners in the United States, and that receives compensation from citizens of the United States in accordance with contracts that were executed outside of the United States, was held not to receive compensation or income from sources within the United States and was not subject to income tax. The court found that the fact that income came from United States residents did not determine that the income was subject to United States income tax, where all of the work done to earn the money was done outside of the United States. The court points out that the source of the income was not the place, but the activity.

Tax Treaties --- United States tax treaties generally give the resident's country an unlimited right to tax income while limiting or eliminating the source country's right to tax unless the non-resident is somehow ''present'' for tax purposes in the source country. In the tax treaties, this concept of presence takes the form of ''permanent establishment.'' A permanent establishment is a more-or-less fixed place of business or abode that permits the source-base country to exert taxation rights over income attributable to that business.

Sourcing of Electronic Commerce --- Electronic commerce complicates the issue because the nature of electronic commerce transactions makes it difficult to identify the source or where the activity occurred. For example, does telecommunications or computer equipment owned or used by a foreign person engaged in electronic commerce create a fixed place of business of the foreign person in the United States or other tax jurisdiction? Does the fact that a foreign enterprise is using a U.S.-based Internet provider create a physical presence for tax purposes?

Shifting Income via the Internet -- One danger to the U.S. revenue system is the potential ability of controlled foreign corporations (CFCs) to use the Internet to shift offshore substantial income and other activities without being subject to U.S. tax jurisdiction.

Another profound problem is the allocation of income among a number of jurisdictions. The problem arises when a single activity is conducted in multiple jurisdictions (e.g., an Internet-based worldwide research and design process, engineering or consulting contract).


Class 12  Telecommunication - November 16

A. Introduction

Internet Communication Privacy Rights  -- Existing Statutes and Case Law Reduce Constitutional Protection (See http://www.bicklaw.com/INTERNETCOMMUNICATIONPRIVACYRIGHTS.htm )

"Telecommunications - the term 'telecommunications' means the transmission, between and among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received."  

            ( See 47 U.S.C. § 153(43) (1999) --    Material 5 )

B. VOIP Voice Over Internet Protocol

            Vonage Holding Corporation v. Minnesota Public Utility ( See                                                                    http://www.nysd.uscourts.gov/courtweb/pdf/D08MNXC/03-08475.PDF )

C. Regulation of Internet Service Providers

            FCC 214 license

            Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., Nos. 04-277 and 04-281 ,                              SUPREME COURT OF THE UNITED STATES, 125 S. Ct. 2688; 162 L. Ed. 2d                                    820; 2005 U.S. LEXIS 5018; 18 Fla. L. Weekly Fed. S 482, March 29, 2005

                        (See http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=04-277 )

D. Internet or not

            Level 3 Communs., LLC v. Public Utilities Comm'n of Colo., Civil Action No. 01-N-                               2455 (CBS) , UNITED STATES DISTRICT COURT FOR THE DISTRICT OF                          COLORADO , 300 F. Supp. 2d 1069; 2003 U.S. Dist. LEXIS 25041, December                          8, 2003

Concentric Network Corp. v. Commonwealth, No. 290 F.R. 2003 , COMMONWEALTH COURT OF PENNSYLVANIA , 877 A.2d 542; 2005 Pa. Commw. LEXIS 322, April 4, 2005,


Class 13 Special Topics and Student Presentations - November 23

Class Presentations of Guided Research (10 minutes each) … peer critique

International E-commerce

"International Internet Law" New Jersey Law Journal January 1, 2007

http://www.bicklaw.com/InternationalInternetLaw.htm

"Overseas Courts Limit American Internet Speech" New Jersey Law Journal July 3, 2006

http://www.bicklaw.com/Publications/OverseasCourtsLimitAmericanE-Speech.htm

Class 14 Special Topics and Student Presentations - November 30

Class Presentations of Guided Research (10 minutes each) … peer critique


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Materials 1 -- on reserve in Library


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Materials 2

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

In the Matter of

BEYLEN TELECOM, LTD. and NITELINE MEDIA, INC., corporations, and RON TAN, individually and as an officer of NITELINE MEDIA, INC.

DOCKET NO. C-3782

COMPLAINT

The Federal Trade Commission, having reason to believe that Beylen Telecom, Ltd. and NiteLine Media, Inc., corporations, and Ron Tan, individually and as an officer of NiteLine Media, Inc. ("the Respondents"), have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

Beylen Telecom, Ltd., ("BTL") is a corporation organized, existing and doing business under and by virtue of the laws of the Cayman Islands with its principal office or place of business at Genesis Building, PS Box 2097, Grand Cayman, Cayman Islands, British West Indies.

NiteLine Media, Inc. ("NiteLine") is a corporation doing business under and by virtue of the laws of the State of New York with its principal office or place of business at 7302 19th Avenue, Brooklyn, New York 11204.

Ron Tan a/k/a Roeun Tan ("Tan") is an officer and shareholder of corporate respondent NiteLine Media, Inc. Individually or in concert with others, he has formulated, directed, controlled or participated in the acts or practices of the corporation, including the acts or practices alleged in this complaint. His principal office or place of business is the same as that of NiteLine Media, Inc.

At all times relevant to this complaint, the Respondents have maintained a substantial course of trade, advertising, offering for sale and selling computer-stored images via both the Internet and international and interstate telephone lines, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

Course of Business

5. From at least December 1996 through January 1997, the Respondents Tan and NiteLine posted messages to newsgroups and operated and promoted one or more World Wide Web sites, including the web sites located at “www.erotic2000.com” and “www.erotica2000.com.” Through newsgroup messages and these web sites, Respondents Tan and NiteLine represented, expressly or by implication, that consumers could view “adult” images for free at sites on the Internet. A newsgroup is a collection of electronic messages, purportedly about a given topic, that consumers may read on the Internet. The World Wide Web or Web is a system used on the Internet for cross-referencing and retrieving information. A web site is a set of electronic documents, usually a home page and subordinate pages, readily viewable on computer by anyone with access to the Web, standard software, and knowledge of the web site’s location or address.

6. At one or more of the web sites operated by Respondents Tan and NiteLine and in one or more of their newsgroup messages, Respondents Tan and NiteLine stated that they offered "FREE XXX Images" for viewing at "FREE ADULT SITES." In addition, at one or more of their web sites, the Respondents Tan and NiteLine stated that the international sites they offered entailed:

NO MEMBERSHIP FEES!

NO CREDIT CARDS NEEDED!

NO 900# CHARGES!

7. Web sites operated by Respondents Tan and NiteLine instructed consumers that to view the “adult” images offered, the consumer had to first “download a special image viewer.” This “image viewer” was a software program, which was identified as “david.exe,” or “david7.exe,” or other similar names.

8. Contrary to the clear implication of the term “image viewer” that Respondents Tan and NiteLine used on their web sites to describe this software program, the “david.exe” (or similarly named software) was not merely a means for reading computer data and converting such data into visual images. Instead, this software, if downloaded, installed, and activated, would, without any explanations or adequate disclosures: (a) automatically terminate the consumer’s computer modem connection to the consumer’s local Internet service provider while maintaining the appearance that the computer modem remained connected to such local Internet service provider; (b) automatically direct the consumer’s computer modem to dial an international telephone number to re-connect to the Internet; (c) maintain the international long distance telephone connection thus established unless and until the consumer turned off the power switch to his computer or modem, or took other unusual action to terminate the telephone connection; and (d) caused the consumer to incur international long distance telephone charges on his telephone bill at rates in excess of $2.00 per minute for as long as the international long distance telephone connection was maintained. One of the techniques that this software employed to maintain the appearance that the computer modem remained connected to the consumer’s local Internet service provider was to automatically turn off the speaker on the consumer’s modem before dialing, thus preventing the consumer from hearing the sound of the international number being automatically dialed.

9. Prior to about January 23, 1997, Respondents Tan and NiteLine, at one or more of their web sites and in newsgroup messages, failed to disclose any of the events, described above in Paragraph 8, that automatically followed if one downloaded, installed and activated the purported "viewer" software.

10. Respondents Tan and NiteLine changed one or more of their web sites on or about January 23, 1997. Nevertheless, after that date, their web sites and newsgroup messages continued to fail to disclose that once a consumer downloaded, installed and activated the "viewer" software, it caused consumers to incur international long distance telephone charges at rates in excess of $2.00 per minute. In addition, web sites and news group messages posted by Respondents Tan and NiteLine continued to fail to disclose that the consumer’s computer modem would maintain the international long distance telephone connection unless and until the consumer turned off the power switch to his computer or modem or took other unusual action to terminate the telephone connection.

11. After about January 10, 1997, one or more of Respondents’ web sites stated if consumers downloaded their “viewer” software, the consumers’ computer modems would be connected to a site in Moldova, a former constituent state of the now-defunct Soviet Union. However, the computer modems of consumers who downloaded the software were not connected to a site located in Moldova, but rather were connected to a site located in Canada. Thus, even though the automatic telephone call generated by the “viewer” software went to Canada, the consumer was charged at the comparatively much higher per-minute rates for a call to Moldova.

12. Once a consumer had downloaded, installed and activated the purported “viewer” software offered by Respondents Tan and NiteLine, the consumer continued to incur international long distance telephone charges for as long as his computer modem was connected to the international long distance number and even after the consumer had exited Respondents Tan and NiteLine’s “adult” sites.

13. Respondents Tan and NiteLine’s promises of "free" Internet viewing of computer- stored images lured consumers from the U.S. and foreign countries into incurring hundreds of thousands of dollars in international long distance telephone charges.

14. Respondent BTL is a service bureau that provides telecommunications and other services to entities that promote international pay-per-call programs. In that capacity, Respondent BTL assigned Moldovan telephone numbers to Respondent NiteLine, as well as to Internet Girls, Inc. -- a defendant in the federal court action, FTC v. Audiotex Connection, Inc. CV-97 0726 (DRH) (E.D.N.Y. filed Feb. 13, 1997). Directly or indirectly, Respondent BTL also provided NiteLine and Internet Girls with the following services: a) daily telephone traffic and billing reports; b) the "david.exe" (or similarly named software) program and technical support for this "viewer" software program described above; c) text or graphics to use in soliciting consumers on the Internet, including information that Tan or NiteLine incorporated into newsgroup messages or that Tan, NiteLine, or Audiotex defendants William Gannon or Internet Girls incorporated into the web sites "www.erotic2000.com," "www.erotica2000.com," "www.sexygirls.com," "www.1adult.com," or "www.beavisbutthead.com"; and d) a termination point for audiotext calls, namely a site in Canada containing computer images for viewing.

15. A foreign telephone carrier contracted to pay Respondent BTL a portion of the revenues received from consumers for calls placed to specific international telephone numbers. Respondent BTL, in turn, contracted to pay Respondent NiteLine a per-minute rate for calls they generated to those specific international telephone numbers. (Respondent BTL contracted to pay defendant Internet Girls on a similar basis). Thus, Respondents BTL, Tan, and NiteLine were to receive a portion of the amount of international telephone charges incurred by consumers.

Viewing Cost

16. In numerous instances, in the course of advertising, offering, offering for sale, or selling certain computer-stored images located at Internet sites, Respondents Tan and NiteLine represented to consumers, expressly or by implication, that consumers could view the images without cost by downloading, installing and activating purported "viewer" software.

17. In truth and in fact, once a consumer downloaded, installed and activated the purported "viewer" software to view computer-stored images located at Internet sites, the consumer incurred costs for an international long distance telephone call.

18. Therefore, the representations of Respondents Tan and NiteLine, as set forth in Paragraph 16, above, were false and deceptive, in violation of Section 5 of the FTC Act, 15 U.S.C. § 45.

Software for Downloading

19. In numerous instances, in the course of advertising, offering, offering for sale, or selling certain computer-stored images located at Internet sites, Respondents Tan and NiteLine represented to consumers, expressly or by implication, that consumers could view the images by downloading, installing and activating purported "viewer" software.

20. In numerous instances, Respondents Tan and NiteLine failed to disclose or disclose adequately to consumers the material facts that, by downloading, installing, and activating the purported "viewer" software, the following would result:

a. The consumer’s computer would terminate its modem connection to the consumer’s usual local Internet service provider;

b. The consumer’s modem would dial an international long distance telephone number and establish a long-distance telephone connection with an Internet service provider at some remote location outside the United States;

c. The consumer would likely incur international long distance telephone charges at rates in excess of $2.00 per minute for as long as the long- distance telephone connection with the remote Internet service provider was maintained; and

d. The consumer’s computer modem would not terminate the international long distance telephone connection to the remote Internet service provider unless and until the consumer turned off the power switch to his computer or modem or took other unusual action to terminate the telephone connection.

21. In view of representations by Respondents Tan and NiteLine that consumers could view certain images located at Internet sites by downloading, installing and activating purported "viewer" software, as set forth in Paragraph 19, above, Respondents Tan and NiteLine’s failure to disclose or disclose adequately the material information set forth in Paragraph 20, above, was deceptive, in violation of Section 5 of the FTC Act, 15 U.S.C. § 45.

22. By providing Respondent NiteLine (and defendant Internet Girls) with telephone numbers, and by directly or indirectly providing the "viewer" software, text or graphics, or other goods or services described in Paragraphs 14 and 15, above, for the purpose of inducing consumers to call international telephone numbers, Respondent BTL provided the means and instrumentalities to others, and thereby acted in concert with others or knowingly and substantially assisted others, to engage in the deceptive acts and practices alleged in Paragraphs 16 through 21, above, in violation of Section 5 of the FTC Act, 15 U.S.C. § 45.

Telephone Billing

23. In numerous instances, in the course of advertising, offering, offering for sale, or selling certain computer-stored images located at Internet sites, Respondents directly or through an intermediary caused charges for long distance calls to Moldova to appear on the telephone billing statements of consumers who downloaded, installed and activated Respondents’ purported "viewer" software.

24. In truth and in fact, the call that a consumer’s computer modem dialed when the consumer downloaded, installed and activated Respondents’ purported "viewer" software did not go to Moldova, which has high per-minute long distance telephone rates for calls from the United States, but instead went to Canada, which has comparatively much lower long distance rates for calls from the United States.

25. Therefore, Respondents’ practice of causing charges for long distance calls to Moldova to appear on the telephone billing statements of consumers who had downloaded, installed and activated Respondents’ purported "viewer" software, as set forth in Paragraph 23, above, was deceptive, in violation of Section 5 of the FTC Act, 15 U.S.C. § 45.

26. The acts and practices of Respondents as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this twenty-third day of January, 1998, has issued this complaint against Respondents.

By the Commission, Commissioner Thompson and Commissioner Swindle not participating.

Donald S. Clark,

Secretary


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Materials 3

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

In the Matter of

BEYLEN TELECOM, LTD. and NITELINE MEDIA, INC., corporations, and RON TAN, individually and as an officer of NITELINE MEDIA, INC.

DECISION AND ORDER

The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and

The respondents, their attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents for purposes of the order of all the jurisdictional facts set forth in the aforesaid draft complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and

The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in § 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1a. Respondent Beylen Telecom, Ltd., is a corporation organized, existing and doing business under and by virtue of the laws of the Cayman Islands with its principal office or place of business at Genesis Building, PS Box 2097, Grand Cayman, Cayman Islands, British West Indies.

1b. Respondent NiteLine Media, Inc. is a New York corporation with its principal office or place of business at 7302 19th Avenue, Brooklyn, New York 11204.

1c. Respondent Ron Tan is an individual residing within the State of New York and is an officer and shareholder of NiteLine Media, Inc. Individually or in concert with others he formulates, direct, or controls the policies, acts, or practices of NiteLine Media. His principal office or place of business is the same as that of NiteLine Media, Inc.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER

For purposes of this Order, the following definitions shall apply:

1. "Beylen" means Beylen Telecom, Ltd. and its successors, assigns, shareholders, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting through any corporation, subsidiary, division, or other device.

2. "NiteLine" means NiteLine Media, Inc. and its successors, assigns, shareholders, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting through any corporation, subsidiary, division, or other device.

3. "Ron Tan" means Ron Tan a/k/a Roeun Tan, individually, and in his capacity as an officer and shareholder of NiteLine Media, Inc., and his successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting through any corporation, subsidiary, division, or other device.

4. Unless otherwise specified, “respondents” shall mean Beylen and NiteLine, corporations, their successors and their officers; Ron Tan, individually and as an officer of NiteLine; and each of the above’s agents, representatives and employees. Unless otherwise specified, “respondent” shall mean NiteLine, Ron Tan or Beylen.

5. "Commerce" shall mean "commerce" as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44.

6. "Clearly and Conspicuously" shall mean as follows:

In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media such as the Internet and online services), the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement. Provided, however, that in any advertisement presented solely through video or audio means, the disclosure may be made through the same means in which the ad is presented. The audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. The video disclosure shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media the disclosure shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation. The disclosure shall be in understandable language and syntax. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement.

7. “Document” is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained. A draft or non-identical copy is a separate document within the meaning of the term.

8. “David.exe” means a software program that, as alleged in the Commission’s draft complaint, a respondent has promoted, offered, distributed, or provided on web sites as a “viewer,” which consumers may download, install, and execute, and which dials an international long-distance telephone number for which a fee is charged.

9. “Eligible Consumer” means a telephone subscriber that was billed for international long distance calls to Moldova from December, 1996 through February, 1997 to one of the telephone numbers listed in Schedule A, annexed hereto.

10. “Relevant Charges” means the dollar amount billed by AT&T, MCI, Sprint or another long distance carrier to an Eligible Consumer for international long distance calls to Moldova from December 1996 through February 1997, to one of the telephone numbers listed in Schedule A, annexed hereto.

I. IT IS THEREFORE ORDERED that, in connection with using the Internet to place international long distance telephone calls, each respondent shall not violate Section 5(a) of the FTC Act, 15 U.S.C. §45(a) by:

A. Representing, either directly or by implication, that consumers may download, install, activate or use a computer software program to view computer-stored images without cost, unless there are no costs to consumers arising from such activity.

B. Representing, either directly or by implication, that a consumer may view computer- stored images by downloading, installing and activating a software program known as “David.exe” or any other substantially similar software, unless such respondent clearly and conspicuously discloses, in close proximity to the representation, any material facts concerning costs and consequences to a consumer that result from downloading, installing, and activating such software, including, but not limited to, the following:

1. That the consumer’s computer will terminate its modem connection to the consumer’s usual Internet service provider;

2. That the consumer’s modem will dial an international long-distance telephone number and establish a long-distance telephone connection with some remote location outside the United States;

3. (a) A statement that “International long distance telephone charges to [insert country of call termination] apply”; and

(b) Either: (i) a statement that “This call may cost you as much as [insert the maximum estimate of possible per-minute tariffed charge available through one of the three largest U.S. long-distance carriers (e.g. MCI, Sprint or AT&T; hereafter "a major U.S. carrier”)] per minute”; or (ii) a stated range of possible costs per-minute for the call, where the maximum possible per-minute charge available through a major U.S. carrier is disclosed at least as prominently as any lower estimate of possible charges, and the lower estimate is based on a non-promotional standard tariffed charge available through a major carrier, and there is a clear and conspicuous disclosure of the following statement: “To determine your exact per-minute charges, contact your long distance carrier.”; and,

4. That, once connected, the consumer’s computer modem will not terminate the international long-distance telephone connection to the remote service provider unless and until: (a) the consumer terminates the connection by using a “disconnect” feature that is displayed on the screen throughout the connection; OR (b) the call is terminated automatically after some specific, stated period of time (e.g. after 5 minutes); OR (c) the consumer turns off the power switch to his computer or modem, or takes other drastic and unusual action to terminate the telephone connection, if neither (a) nor (b) above are applicable.

II. IT IS FURTHER ORDERED that:

A. Each respondent shall not violate Section 5(a) of the FTC Act, 15 U.S.C. §45(a) by directly causing international long-distance charges to appear on the telephone billing statement of any consumer when such call does not, in fact, go to the international destination for which charges are assessed; and

B. Each respondent, when contracting with any entity for international call charges to appear on any consumer’s telephone bill, shall include written terms in such contract requiring calls to go to the destination for which charges are assessed on a consumer’s telephone bill. If, at the time of the entry of this Order, a respondent has an existing contract with another entity that arranges call charges to appear on any consumer’s telephone bill, the respondent may satisfy the requirements of this Section by obtaining from that entity a letter or other written assurance that calls go to the destination for which charges are assessed on a consumer’s telephone bill.

III. IT IS FURTHER ORDERED that:

A. Pursuant to the Consent Decree and Order proposed in FTC v. Audiotex Connection, Inc., CV-97 0726 (DRH) (EDNY) (“the Consent Decree”), and after the entry of such Consent Decree, Eligible Consumers charged by AT&T or MCI for telephone calls involving David.exe shall, to the extent possible, receive a credit on their monthly telephone bill equal to the amount of the Relevant Charges. To the extent an Eligible Consumer has already been credited such an amount in full, no additional credit shall be extended. To the extent an Eligible Consumer has received a partial credit, only the remaining balance of the original Relevant Charge shall be credited. The process for issuing the credits to Eligible Consumers will be administered by AT&T and MCI, respectively, and monitored and/or audited by the FTC. The reasonable costs of the two carriers arising from the issuance of credits for the Relevant Charges and from such administration of credits shall be reimbursed by the escrow agent by deducting and paying to AT&T and MCI, respectively, the amounts stated below.

B. Pursuant to the Consent Decree and Order proposed in FTC v. Audiotex Connection, Inc., CV-97 0726 (DRH) (EDNY), and after the entry of such Consent Decree, a Redress Escrow Account shall be established at a bank with a branch located in the State of New York, and Joel Dichter, Esq., shall be designated as the sole escrow agent and signatory to this Redress Escrow Account. In addition to the funds deposited by the defendants in FTC v. Audiotex Connection, Inc., the respondents shall deposit sufficient funds into the Redress Escrow Account as are necessary to enable the escrow agent to distribute the funds, consisting of a total deposit of all sums provided by Section IIIB(1) and (2), below, contemporaneously with a deposit of the $60,000 provided by Section IIIB(3), in the following manner:

AT&T shall be distributed the sum of $660,000 toward the cost of administering the credit to consumers provided by Section IIIA, above, and toward reimbursement of out-of-pocket expenses associated with calls to the Moldova telephone numbers;

MCI shall be distributed the sum of $99,302.57 toward the cost of administering the credit to consumers provided by Section IIIA above and toward reimbursement of out-of-pocket expenses associated with calls to the Moldova telephone numbers;

Forty Thousand Dollars ($40,000) shall be distributed to the Federal Trade Commission and shall be used, where practicable, to provide redress to Eligible Consumers charged by an international long-distance carrier other than AT&T or MCI (hereinafter referred to as “Eligible Non-AT&T/MCI Consumers”). The Commission, in its sole discretion, may use a designated agent to administer redress for Eligible Non-AT&T/MCI Consumers. If the Commission, in its sole discretion, determines that redress to consumers is wholly or partially impractical, any funds up to Forty Thousand Dollars ($40,000.00) not so used shall be paid to the United States Treasury. The respondents shall be notified as to how such funds are disbursed, but shall have no right to contest the manner of distribution. Eligible Non-AT&T/MCI Consumers shall have 90 days from the Court’s entry of the Consent Decree to request a refund. If the Commission or its designated agent determine within 120 days from the entry of the Consent Decree that the cost of issuing and administering refunds to Eligible Non-AT&T/MCI Consumers exceeds Forty Thousand Dollars ($40,000.00), the Commission or its designated agent shall so notify the escrow agent, and an additional sum of money not to exceed Twenty Thousand Dollars ($20,000.00) shall be distributed by the escrow agent to the Commission for redress to Eligible Non-AT&T/MCI Consumers. To the extent that the escrow agent is not notified in writing by the Commission within such 120 day period that all or a portion of the additional Twenty Thousand Dollars ($20,000.00) is required by the Commission for redress purposes, the $20,000.00 or remaining portion thereof not required by the Commission for redress purposes shall be released from the Redress Escrow Account and distributed promptly by the escrow agent to any contributing defendant in FTC v. Audiotex Connection, Inc. and/or any contributing respondent.

C. If, during the 60-day comment period before the issuance of this Order, the respondents distributed funds to the Redress Escrow Account in amounts sufficient to commence the redress program under the Consent Decree in FTC v. Audiotex Connection, Inc., such payment fulfills the respondents’ redress obligations under Section IIIB above.

IV. IT IS FURTHER ORDERED that for a period of three years after the date of entry of this Order, each respondent shall maintain, and make available to the FTC upon reasonable notice, documents that, in reasonable detail, accurately, fairly, and completely reflect such respondent’s activities related to using the Internet to place international long distance telephone calls including:

A. 1. Representative written and, if distributed in audio format, audiotaped copies of all solicitations, advertisements, or other marketing materials actually used;

2. The number, frequency, and average duration of calls to any international, tolled telephone numbers advertised or promoted directly or indirectly by such respondent, as well as the payments received and payments made for such calls;

3. The portion of the contract or the other written assurance referenced in Section IIB of this Order; and,

B. Records that reflect, for every consumer complaint or refund request received from any consumer to whom such respondent has sold, billed or sent any goods or services, or from whom such respondent accepted money for such goods or services, whether received directly or indirectly or through any third party:

the consumer’s name, address, telephone number and the dollar amount paid by the consumer;

the written complaint or refund request, if any, and the date of the complaint or refund request;

the basis of the complaint and the nature and result of any investigation conducted concerning the validity of the complaint;

each response from the respondent(s) and the date of the response;

any final resolution and the date of the resolution; and

in the event of a denial of a refund request, the reason for such denial.

V. IT IS FURTHER ORDERED that, to enable the Commission to monitor compliance with the provisions of this Order, for a period of three years after the date of entry of this Order:

A. Each corporate respondent shall notify the FTC in writing, within thirty (30) days of: (1) any reorganization, name change, dissolution, change in majority ownership, or any corporate change that may affect compliance obligations arising under this Order; and (2) any affiliation with any new business entity (including but not limited to, any partnership, limited partnership, joint venture, sole proprietorship or corporation) in connection with using the Internet to place international long distance telephone calls, such notification to include: (a) the name of the business entity; (b) the address and telephone number of the business entity; (c) the names of the business entity’s officers, directors, principals and managers; and (d) a summary description of the business entity’s intended activities; and

B. Each individual respondent shall notify the FTC in writing, within thirty (30) days of the discontinuance of his current business affiliation or employment with a corporate respondent, or of his affiliation or employment with any new business entity (including but not limited to, any partnership, limited partnership, joint venture, sole proprietorship or corporation) in connection with using the Internet to place international long distance telephone calls, in the latter case such notification to include: (a) the name of the business entity; (b) the address and telephone number of the business entity; (c) the names of the business entity’s officers, directors, principals and managers; and (d) a summary description of the business entity’s intended activities; and

C. Each respondent shall designate its counsel as authorized to accept service of all documents related to this Order.

VI. IT IS FURTHER ORDERED that each respondent shall not provide or distribute to any person, except for a court, counsel for the respondents, counsel’s consultants, agents of the Commission or other law enforcement authorities, or others as ordered by a court of competent jurisdiction, copies of “David.exe” or “david7.exe” or any substantially similar software.

VII. IT IS FURTHER ORDERED that for a period of three years after the date of entry of this Order, each respondent shall in connection with any business using the Internet to place international long distance telephone calls:

A. Provide a copy of this Order once to, and obtain a signed and dated acknowledgment of receipt of the same from, each affiliate, subsidiary, division, sales entity, successor, officer, director, shareholder, employee, agent or representative of such respondent; and

B. Maintain, and upon reasonable notice make available to representatives of the Commission, the original and dated acknowledgments of the receipts of copies of this Order required by Section VIIA above.

VIII. IT IS FURTHER ORDERED that where required by this Order, written notice to:

A. The Commission shall be effected by serving papers, by personal delivery or certified mail, addressed to: Associate Director, Federal Trade Commission, Division of Marketing Practices, Sixth Street and Pennsylvania Avenue, N.W., Room 238, Washington, DC 20580; and

B. The respondents shall be effected by serving papers, by personal delivery or certified mail, addressed to: Joel R. Dichter, Klein, Zelman, Rothermel & Dichter, L.L.P., 485 Madison Avenue, New York, NY 10022.

IX. IT IS FURTHER ORDERED that each respondent shall, within 180 days after the date of entry to this Order, file with the Commission a report, in writing, setting forth the manner and form of compliance with this Order.

X. IT IS FURTHER ORDERED that, to the extent that this Order may conflict with any federal law or regulation which is later enacted or amended, such law and not this Order shall apply where such a conflict exists. For the purposes of this Order, a conflict exists if the conduct prohibited by this Order is required by such federal law or if conduct required by this Order is prohibited by such federal law.

By the Commission, Commissioner Thompson and Commissioner Swindle not participating.

Donald S. Clark Secretary

ISSUED: January 23, 1998


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Material 4

State of Utah, Plaintiff and Appellant, v. Louis A. Amoroso; and Beer Across America, an Illinois corporation, Defendants and Appellees.  1999 UT App 060

FACTS

BAA is a national marketer of several products, including "heavy" beer, which qualifies as "liquor" under Utah liquor laws. BAA is located in Illinois. It has no property in Utah, maintains no representatives here, nor does it directly solicit sales in Utah. However, BAA advertises nationally, including in Utah, via the Internet and newsletters.

BAA's customers purchase BAA products by mail, telephone 800 number, or the Internet. All orders must be prepaid by the purchaser, including freight and handling charges, before any purchases are delivered to the shipper. The purchases are then delivered to a shipper in Illinois "freight paid" for delivery to the customer in accordance with the customer's instructions. BAA collects and pays sales tax to Illinois on all purchases. Since 1992, BAA has shipped alcoholic beverages to several hundred Utah customers.

BAA was charged with the following criminal violations: Count I: Unlawful importation of alcoholic product, a class B misdemeanor, in violation of Utah Code Ann. § 32A-12-503 (1994); Count II: Unlawful sale or supply of alcoholic beverage or product, a class B misdemeanor, in violation of Utah Code Ann. § 32A-12-201 (1994); Count III: Unlawful warehousing, distribution, and transportation of liquor, a class B misdemeanor, in violation of Utah Code Ann. § 32A-9-101(2) (1994); Count IV: Unlawful sale or supply of alcoholic beverage to minors, a class A misdemeanor, in violation of Utah Code Ann. § 32A-12-203 (Supp. 1996); Count V: Pattern of unlawful activity, a second degree felony, in violation of Utah Code Ann. § 76-10-1601 and § 76-10-1603.5 (1995) et seq.

On June 11, 1997, BAA filed Motions to Dismiss the charges. The trial court dismissed counts I, II, III, and V for lack of jurisdiction. Additionally, the court concluded that prosecuting BAA would violate the Commerce Clause of the United States Constitution. See U.S. Const. art. I, § 8, cl. 3. Although the trial court did not dismiss count IV, the State voluntarily dismissed this count without prejudice. This appeal followed.

ANALYSIS

"[T]he propriety of a trial court's decision to grant or deny a motion to dismiss is a question of law that we review for correctness." Tiede v. State, 915 P.2d 500, 502 (Utah 1996). Further, both parties agree this case presents solely legal issues.(2) Thus, we accept the facts as alleged in the informations and the affidavits in support thereof, and view these facts in a light favorable to the State, reviewing the trial court's determinations for correctness. See Hebertson v. Willowcreek Plaza, 923 P.2d 1389, 1390 (Utah 1996) (citation omitted).

I. Preservation of Issues

¶7 As a threshold matter, BAA asserts the State makes several arguments on appeal that it failed to raise below. As a general rule, appellate courts will not consider an issue raised for the first time on appeal. See Ong Int'l (U.S.A.), Inc. v. 11th Ave. Corp., 850 P.2d 447, 455 (Utah 1993). Further, as in the case before us, when legal issues and theories are in dispute, proper preservation requires that the parties "bring the issue to the attention of the trial court, thus providing the court an opportunity to rule on the issue's merits." Ohline Corp. v. Granite Mill, 849 P.2d 602, 604 n.1 (Utah Ct. App. 1993) (citations omitted). Finally, issues raised for the first time on appeal will be addressed only if the trial court proceedings demonstrated "plain error." State v. Olsen, 860 P.2d 332, 333 (Utah 1993). To establish plain error, the State must show "(i)[a]n error exists; (ii) the error should have been obvious to the trial court; and (iii) the error is harmful, i.e., absent the error, there is a reasonable likelihood of a more favorable outcome for the appellant." State v. Dunn, 850 P.2d 1201, 1208-09 (Utah 1993).

¶8 With these principles in mind, and after carefully reviewing the record, we conclude that all the issues considered in this appeal are properly preserved as they were raised below, or constitute plain error. See Dunn, 850 P.2d at 1208-09.(3)

¶9 Underlying our decision to reach the merits of this appeal is the fact that the identical legal issues posed in this appeal will most likely appear before us again. Below, the magistrate dismissed the prosecution's case without prejudice. Accordingly, under the Utah Rules of Criminal Procedure, the State may refile charges against BAA. See Utah R. Crim. P. 25(d). Thus, if we affirm, the State will refile, BAA will once again claim lack of jurisdiction, and the State will re-advance the arguments BAA now argues were waived. Where, as here, dispositive issues are likely to arise later in the course of a judicial proceeding, we are more inclined to reach the merits "in the interest of judicial economy and providing guidance to the parties and the trial court . . . ." State v. Fisk, 966 P.2d 860, 861 (Utah Ct. App. 1998). Having concluded the issues presented in this appeal are properly before us, we turn to the merits.

II. Jurisdiction

A. Personal Jurisdiction

¶10 The State argues the court erred in applying principles of civil personal jurisdiction in a criminal case. In opposition, BAA argues that "principles of fundamental fairness" dictate that a "minimum contacts" analysis is appropriate where, as here, Utah is seeking to assert criminal jurisdiction over a foreign corporate defendant, even if that defendant is present in a Utah court.(4) We agree with the State.

¶11 The rule is well-settled that civil "minimum contacts" analysis has no place in determining whether a state may assert criminal personal jurisdiction over a foreign defendant. See, e.g., Boyd v. Meachum, 77 F.3d 60, 66 (2d Cir. 1996) (federal constitutional requirements of civil personal jurisdiction do not apply in a criminal case); State v. McCormick, 273 N.W.2d 624, 628 (Minn. 1978) (criminal cases "not subject to the same flexibility enjoyed by the more elastic rules governing extraterritorial jurisdiction in civil cases"); State v. Taylor, 838 S.W.2d 895, 897 (Tex. App. 1992) (citing Ex parte Boetscher, 812 S.W.2d 600, 602 (Tex. Crim. App. 1991) ("A 'minimum contacts' analysis is not applicable to establish jurisdiction in criminal prosecutions.")); Rios v. State, 733 P.2d 242, 244 (Wyo. 1987) ("the concept of minimum contacts . . . has no application to criminal cases").

¶12 We conclude the trial court erred in applying a civil minimum contacts analysis in this criminal prosecution. BAA, by way of Louis Amoroso, was physically present at the proceedings below.(5) Thus, the trial court erred when it failed to assert criminal personal jurisdiction over BAA.

B. Subject Matter Jurisdiction

The State argues BAA is subject to prosecution in Utah because its "conduct [in Illinois] caused an unlawful result within this state," and thus BAA committed the charged offenses partly within Utah. In opposition, BAA, by way of a tortured reading of section 76-1-201, argues the State improperly relies solely on a "result" test.

Utah's Criminal Jurisdiction Statute provides (1) A person is subject to prosecution in this state for an offense which he commits, while either within or outside the state, by his own conduct or that of another for which he is legally accountable, if: (a) the offense is committed either wholly or partly within the state; (2) An offense is committed partly within this state if either the conduct which is any element of the offense, or the result which is such an element, occurs within this state. Utah Code Ann. § 76-1-201 (1)-(2) (Supp. 1998).

As early as 1911, the United States Supreme Court implicitly endorsed the State's interpretation of the statute. Strassheim v. Daily, 221 U.S. 280, 31 S. Ct. 558 (1911), supports the proposition that Utah may apply its criminal statute to conduct occurring entirely outside its borders. In Strassheim, the Supreme Court held that Michigan could prosecute a defendant charged with defrauding the Michigan state government even though the defendant committed the fraudulent acts entirely outside of Michigan and never entered Michigan until the fraud was complete. See id. at 281-83, 31 S. Ct. at 559.

This principle of extraterritoriality is codified in Utah Code Ann. § 76-1-201 (Supp. 1998). Under this statute, if conduct or a result of conduct constituting any element of the offense occurs within the state, the State has jurisdiction to prosecute the offense. See State v. Sorenson, 758 P.2d 466, 470 (Utah Ct. App. 1988). In Sorenson, an issue raised was whether Utah had jurisdiction arising from a charge of possession of alcohol pursuant to Utah Code Ann. § 32A-12-13(1) (1986), which prohibited the purchase, possession, or consumption of alcohol by a person under the age of 21. Id. at 467. Sorenson was stopped for speeding in St. George, Utah, but a search of his car revealed he was not in possession of any alcohol. Id. We noted that "Sorenson's conviction of the offense of consumption necessarily requires proof of the jurisdictional factor that at least some alcohol was consumed in Utah." Id. at 470 (citing Utah Code Ann. § 76-1-201 (1978)). See also State v. Coando, 784 P.2d 1228 (Utah Ct. App. 1989), cert. granted 795 P.2d 1138 (Utah 1990), aff'd on other grounds, 858 P.2d 926 (Utah 1992).

BAA is subject to prosecution in Utah for conduct committed in Illinois because its conduct caused an unlawful result in Utah. In sum, the information alleges conduct that resulted in unlawful importation of alcohol into Utah; unlawful sale or supply of alcohol in Utah;(6) unlawful warehousing, distribution, or transportation of alcohol to Utah; unlawful supplying of alcohol to persons within Utah; and unlawful distribution or transportation for sale or resale to retail customers within Utah without a license.

Accordingly, the trial court erred when it concluded that Utah could not assert subject matter jurisdiction over BAA.

III. Commerce Clause

The trial court concluded, and BAA asserts on appeal, that even if Utah has jurisdiction over BAA, this prosecution runs afoul of the Commerce Clause, and is therefore unconstitutional. The State argues that under the Twenty-First Amendment, this prosecution is proper and is not barred by the Commerce Clause.(7)

"Constitutional interpretation is a question of law which we review for correctness, giving no deference to the trial court's conclusion." State v. Davis, 903 P.2d 940, 943 (Utah Ct. App. 1995) (citing State v. Contrel, 886 P.2d 107, 111 (Utah Ct. App. 1994)).

The State relies on Section Two of the Twenty-First Amendment: "The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." U.S. Const. amend. XXI § 2, (emphasis added). Historically, the Twenty-First Amendment "subordinat[ed Congress'] rights under the Commerce Clause to the power of a State to control, and to control effectively, the traffic in liquor within its borders." United States v. Frankfort Distilleries, Inc., 324 U.S. 293, 300, 65 S. Ct. 661, 665 (1945) (Frankfurter, J., concurring). Thus, States were "freed from the restrictions upon state power which the Commerce Clause implies as to ordinary articles of commerce." Id.

A review of more recent Supreme Court case law dealing with the interaction between the Twenty-First Amendment and the Commerce Clause is helpful. In Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 84 S. Ct. 1293 (1964), the New York State Liquor Authority claimed authority to prohibit an arrangement whereby defendant sold liquor to international airline travelers in a New York airport. Id. at 325, 84 S. Ct. at 1294. The customers collected the purchased liquor only after their flights (on which the liquor purchases also traveled) touched down in a foreign city. The issue before the Court was "whether the Twenty-First Amendment so far obliterates the Commerce Clause as to empower New York to prohibit absolutely the passage of liquor through its territory, under the supervision of the United States Bureau of Customs acting under federal law, for delivery to consumers in foreign countries." Id. at 329, 84 S. Ct. at 1296.

The Court held New York exceeded its authority, writing "[h]ere, ultimate delivery and use is not in New York, but in a foreign country. . . . [T]his case does not involve measures aimed at preventing unlawful diversion or use of alcoholic beverages within New York." Id. at 333-34, 84 S. Ct. at 1299 (emphasis added) (internal quotations omitted). Thus, since New York was attempting to regulate delivery and use of liquor transported outside of New York, the Commerce Clause trumped the Twenty-First Amendment, and the state law had to give way. See id. However, the Court made clear that "a State is totally unconfined by traditional Commerce Clause limitations when it restricts the importation of intoxicants destined for use, distribution, or consumption within its borders." Id. at 330, 84 S. Ct. at 1297 (emphasis added).

In Brown-Forman Distillers v. New York State, 476 U.S. 573, 106 S. Ct. 2080 (1986), the Court struck down, again under the Commerce Clause, New York's "affirmation law" that required distillers to affirm that they were selling to New York wholesalers at a price "no higher than the lowest price the distiller charges wholesalers anywhere else in the United States." Id. at 476 U.S. 575, 106 S. Ct. 2082. The Court noted the Twenty-First Amendment "speaks only to state regulation of the 'transportation or importation into any State . . . for delivery or use therein' of alcoholic beverages." Id. at 585, 106 S. Ct. at 2087. The Court concluded "that [the fact that] New York has attempted to regulate sales in other States of liquor that will be consumed in other States therefore disposes of the Twenty-First Amendment issue." Id.

Unlike Hostetter and Brown-Forman, the liquor at issue in this case was shipped to be consumed by Utah residents in Utah. Utah is not attempting to regulate the sale of alcohol that will be consumed in another state. Instead, Utah seeks to regulate the "transportation or importation into" Utah "for delivery or use therein of intoxicating liquors, in violation of the laws thereof." These goals are at the core of the Twenty-First Amendment.

BAA also relies on Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 104 S. Ct. 2694 (1984). In that case, an Oklahoma statute prohibited the advertising of alcoholic beverages, except by means of strictly regulated on-premises signs. The Oklahoma Attorney General determined that this ban prohibited cable television systems operating in Oklahoma from retransmitting out-of-state signals containing alcoholic beverage commercials. Petitioners, operators of cable television systems in Oklahoma--who, with other such operators, had been warned by the Director of the Oklahoma Alcoholic Beverage Control Board that they would be criminally prosecuted if they carried out-of-state wine advertisements--filed suit, alleging that Oklahoma's policy violated various provisions of the Federal Constitution, including the Supremacy Clause and the First Amendment. See id. at 695-96, 104 S. Ct. at 2698-99.

The Supreme Court struck down the law and held: In rejecting the claim that the Twenty-First Amendment ousted the Federal Government of all jurisdiction over interstate traffic in liquor, we have held that when a State has not attempted directly to regulate the sale or use of liquor within its borders--the core § 2 power--a conflicting exercise of federal authority may prevail. Id. at 713, 104 S. Ct. at 2707.

The Court further stated: [W]e hold that when, as here, a state regulation squarely conflicts with the accomplishment and execution of the full purposes of federal law, and the State's central power under the Twenty-First Amendment of regulating the times, places, and manner under which liquor may be imported and sold is not directly implicated, the balance between state and federal power tips decisively in favor of the federal law, and enforcement of the state statute is barred by the Supremacy Clause. Id. at 716, 104 S. Ct. at 2709.

Further, in 1980, the Court found unconstitutional California's minimum wine-pricing mechanism, which prohibited liquor manufacturers from selling at below the price prescribed in a minimum price schedule. See California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S. Ct. 937 (1980). In that case, the Court conceded that as to core Twenty-First Amendment powers (i.e., liquor importation and distribution), California's authority was virtually unlimited, but stated that when states attempt to exercise their "substantial discretion" over other areas of liquor control, "those controls may be subject to the federal commerce power in appropriate situations." Id. at 110, 100 S. Ct. at 946. The Court held that the federal interest in preventing restraints on trade via the Sherman Act prevailed and struck the law. See id. at 113-14, 100 S. Ct. t 947.

We note that in Capital Cities Cable, Inc. and California Retail Liquor Dealers Ass'n, the attempted state regulation of alcohol under the Twenty-First Amendment was in direct violation of other federal statutory or constitutional law, unlike the case before us. These cases are further distinguishable in that they did not involve core powers under the Twenty-First Amendment (i.e., the power to ban importation of liquor that will be consumed by state residents).

We conclude that Utah's prosecution is valid under the Twenty-First Amendment, and does not run afoul of the Commerce Clause. We note that Utah's attempt to enforce its liquor laws does not conflict with any federal statute or constitutional provision other than the alleged violation of the Commerce Clause. Even if we assume for purposes of argument that another federal law was implicated in this case (and BAA has directed our attention to none), we note that "the interests implicated by [Utah's ABCA] are so closely related to the powers reserved by the Twenty-First Amendment that the regulation may prevail, notwithstanding that its requirements directly conflict with express federal policies." Capital Cities Cable, Inc., 467 U.S. at 714, 104 S. Ct. at 2708. In sum, we conclude that Utah's ABCA derives from a core Twenty-First Amendment power.(8) Namely, the statute seeks to regulate the consumption, importation, manufacture, and transportation of liquor in or to Utah, and is therefore constitutional.

CONCLUSION First, we hold that the State's arguments were properly preserved. Next, we hold that Utah has personal and subject matter jurisdiction over BAA. Finally, we conclude that Utah's prosecution of these ABCA offenses are proper under the Twenty-First Amendment and do not run afoul of the Commerce Clause. We therefore reverse and remand for proceedings consistent with this opinion.


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Material 5

47 U.S.C. § 153(43) (1999).

Telecommunications - "Telecommunications - the term 'telecommunications' means the transmission, between and among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received."

The Act defines "telecommunications" as "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received." Under this definition, an entity provides telecommunications only when it both provides a transparent transmission path and it does not change the form or content of the information. ...

Internet = Telecommunications?

"With respect to the provision of pure transmission capacity to Internet service providers or Internet backbone providers, we have concluded that such provision is telecommunications" In re Federal-State Joint Board on Universal Service, Report to Congress, FCC 98-67 ¶ 101 (April 10, 1998)

'Internet access, like all information services, is provided "via telecommunications."' -- In re Federal-State Joint Board on Universal Service, Report to Congress, FCC 98-67 ¶ 68 (April 10, 1998).

"With respect to the provision of pure transmission capacity to Internet service providers or Internet backbone providers, we have concluded that such provision is telecommunications" In re Federal-State Joint Board on Universal Service, Report to Congress, FCC 98-67 ¶ 101 (April 10, 1998)

To the contrary, in the context of open network architecture (ONA) elements, for example, the Commission stated that "an otherwise interstate basic service . . . does not lose its character as such simply because it is being used as a component in the provision of a[n enhanced] service that is not subject to Title II."] The 1996 Act is consistent with this approach. For example, as amended by the 1996 Act, Section 3(20) of the Communications Act defines "information services" as "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications." This definition recognizes the inseparability, for purposes of jurisdictional analysis, of the information service and the underlying telecommunications. Although it concluded in the Universal Service Report to Congress that ISPs do not provide "telecommunications" as defined in the 1996 Act, the Commission reiterated the traditional analysis that ESPs enhance the underlying telecommunications service. Thus, we analyze ISP traffic for jurisdictional purposes as a continuous transmission from the end user to a distant Internet site.

The Commission previously has distinguished between the "telecommunications services component" and the "information services component" of end-to-end Internet access for purposes of determining which entities are required to contribute to universal service.] Although the Commission concluded that ISPs do not appear to offer "telecommunications service," and thus are not "telecommunications carriers" that must contribute to the Universal Service Fund,  it has never found that "telecommunications" ends where "enhanced" information service begins. To the contrary, in the context of open network architecture (ONA) elements, the Commission stated that "an otherwise interstate basic service . . . does not lose its character as such simply because it is being used as a component in the provision of a[n enhanced] service that is not subject to Title II."[74] Under the definition of information service added by the 1996 Act, an information service, while not a telecommunications service itself, is provided via telecommunications.[75] As explained in the Universal Service Report to Congress, because information services are offered via telecommunications, they necessarily require a transmission component in order for users to access information.[76] We, therefore, analyze ISP traffic as a continuous transmission from the end user to a distant Internet site.

Universal Service Order, 12 FCC Rcd at 9180, 9181.

 See Filing and Review of Open Network Architecture Plans, 4 FCC Rcd 1, 141 (1988) ("when an enhanced service is interstate (that is, when it involves communications or transmissions between points in different states on an end-to-end basis), the underlying basic services are subject to Title II regulation.") See, e.g., Amendment of Section 64.702 of the Commission's Rules and Regulations, 2 FCC Rcd 3072, 3080 (1987)("carriers must provide efficient nondiscriminatory access to the basic service facilities necessary to support their competitors's enhanced services. . ." ) See also BellSouth MemoryCall, 7 FCC Rcd at 1621 (rejecting "two call" argument as applied to interstate call to voicemail apparatus, even though voicemail is an enhanced service).

 47 U.S.C. ' 153(20) ("Information service" means "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications . . .") (emphasis added); see also 47 C.F.R. ' 64.702(a) (enhanced services are provided "over common carrier transmission facilities used in interstate communications.") Universal Service Report to Congress, 13 FCC Rcd at 11529.

-- In Re GTE Telephone Operators GTOC Tariff No. 1 GTE Transmittal No. 1148, Memorandum Opinion And Order, CC Docket No. 98-79 ¶ 20 (October 30, 1998), recon. denied (February 26, 1999).

We are persuaded that the definition of "interLATA service," which is "telecommunications between a point located in a [LATA] and a point located outside such area," [FN115] does not limit the scope of the term to telecommunications services because, as MFS and BellSouth point out, information services are also provided via telecommunications. Elsewhere in this Report and Order, we conclude that "interLATA information services" must include a bundled, interLATA transmission component. [FN116] Thus, interLATA information services are provided via interLATA telecommunications transmissions and, accordingly, fall within the definition of "interLATA service." -- In the Matter of the Implementation of the Non-Accounting Safeguards of Sections 271 and 272 of the Communications Act of 1934, as Amended, Order on Reconsideration, Docket 96-149, 1997 WL 71143 (FCC), 12 FCCR. 2297, 12 FCC Rcd. 2297, 6 Communications Reg. (P&F) 972, ¶ 56 (Feb 19, 1997)

Interstate

Traffic is deemed interstate "when the communication or transmission originates in any state, territory, possession of the United States, or the District of Columbia and terminates in another state, territory, possession, or the District of Columbia." In a conventional circuit-switched network, a call that originates and terminates in a single state is jurisdictionally intrastate, and a call that originates in one state and terminates in a different state (or country) is jurisdictionally interstate. --In Re Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, Inter-Carrier Compensation for ISP-Bound Traffic, CC Docket No. 96-98, CC Docket No. 99-68, Declaratory Ruling ¶ 18 (February 26, 1999)