New Jersey Law Journal Volume 193, No. 5 August 4, 2008

NOVEL INTERNET STATUTES STRATEGIES - GOVERNMENT IS BECOMING MORE PRESSED TO IMPLEMENT REGULATIONS

By Jonathan Bick -- Bick is counsel to WolfBlock of Roseland and is an adjunct professor of Internet law at Pace Law School and Rutgers Law School. He is also the author of '101 Things You Need To Know About Internet Law' (Random House) .

As the Internet increasingly interpenetrates people's lives, governments are progressively more pressed to regulate its use by statute. Effective statutes are directives prepared by an authorized entity and are directed towards those who are obligated to follow and enforce those directives. Consequently, effective statutes regulate behavior within a statute maker's jurisdiction. The Internet has no geographic boundaries, thus writing effective Internet statues requires the implementation of novel statutory strategies.

Three different strategies have been employed to effectuate effective Internet statutes. First, limit the directives to standards which are agreeable to all enforcing nations. Second, regulate Internet users within the jurisdiction propagating the regulations. Third, regulate Internet facilitators within the jurisdiction of the entity propagating the regulations, such as Internet Service Providers (ISP's).

To implement the first strategy, that is to limit the directives to standards which are agreeable to all nations, two options are available. Either, make the Internet statutes so universally acceptable that all countries would willingly enforce them, or would willingly to divide the responsibility for enforcement among all nations. Due to the diversity of legal imperatives and the lack of impetus to enact universal statues, the first option currently appears to be infeasible.

However, the second option is possible. A process to divide the responsibility for Internet statutes among the countries currently exists. First, the Congress could enact a jurisdictional statute affecting the cases that may be heard in federal and state courts. In particular, the statute might provide: the courts of the United States shall have jurisdiction in an action if and only if the action arose as a result of an Internet transaction and no other courts of competent jurisdiction exists. Next, the Executive branch would endeavor to integrate this statute into each of the United States' jurisdictional bilateral treaties and define competent jurisdiction for each treaty. Finally, the court would address any federalism issues due to the Congress' jurisdictional grant.

Consequently, if the dispute arose with respect to the Internet a jurisdiction would be available. While difficulties associated with the second option are anticipated due to the lack of certain bilateral treaties --; it is easy to imagine that the vast majority of Internet disputes would be assigned to a court of competent jurisdiction.

The second strategy, to statutorily regulate Internet transactions is to regulate Internet users within the jurisdiction of the entity propagating the regulations. This strategy would only be feasible if governmental action was taken to allow technological action against sites which were beyond the jurisdiction of the United States. For example, if non-US Internet transactions were channeled through one set of servers, and then technology could be used to block unlawful transactions.

This technological strategy is currently being employed by China, Iran, Cuba and other nations. Due to the lack of due process associated with the technological blocking appears to make this strategy practical but sub-optimal.

The third strategy to statutorily regulate Internet transactions is to regulate Internet facilitators with the jurisdiction of the entity propagating the regulations, such as Internet Service Providers (ISP's). This strategy is currently used for sales tax collections. In particular, vendors are required to be state sales tax collection agents.

No matter which strategy or combination of strategies is used, the statutes produced must be prepared to deal with six specific types of disputes: (1) between goods and/or service provider or a technology provider (such as an ISP) and the state about how a transaction is designed and maintained., (2) between consumers and the state about whether the consumer may participate in certain transactions and what they may do with respect to those transactions, (3) between consumers and goods and/or service provider or a technology provider ( such as an ISP) about what consumers and goods and/or service provider or a technology provider ( such as an ISP) may do (and not do) with respect to transactions; (4) between consumers about whether the Internet activities of one, violated the legal rights of another, (5) between the goods and/or service provider or a technology provider ( such as an ISP) and third parties not using the Internet who complain about activities on the Internet that harm the third party legally protected interests and (6) between consumers and third parties not playing the game who claim that the consumer's Internet activities are harmed the third party legally protected interests.

The first two categories are most likely to raise constitutional issues. Certain aspects of the third category also raise constitutional issues. There are arguments that goods and/or service providers or a technology provider (such as an ISP), like the government, cannot limit the expression of players. In sponse, the owners can be expected to raise their own First Amendment defenses.

Outside the constitutional issues that there may be actions brought based on, inter alia, copyright, defamation and intentional infliction of emotional distress, and that the continuation of a virtual world might be subject to control of a bankruptcy court. This likelihood of legal action is increased by arguments that theories of real world property should apply to assets in virtual worlds, and suggestion that even criminal law may have application to virtual world disputes.

There is also the real possibility of the development of dispute resolution mechanisms within the Internet. The most obvious method of resolving disputes would be through actions of the goods and/or service provider or a technology provider (such as an ISP). A consumer may be provided the opportunity to complain to the goods and/or service provider or a technology provider (such as an ISP) about the actions of another consumer. If the goods and/or service provider or a technology provider (such as an ISP) decides that the other consumer has committed a wrong, and such action taken by the goods and/or service provider or a technology provider (such as an ISP) is consistent with the end user license agreement accepted by the consumers, the goods and/or service provide or a technology provider (such as an ISP) can act to ameliorate the harm done.

There may also be informal sanctions imposed within the Internet. If a consumer does something believed by other consumers to be unacceptable, the other consumers may refuse to interact with the offender. Consumer may interact with goods and/or service providers or a technology provider (such as an ISP) to terminated the offender's access.

Because the Internet may be considered a form of media, it is likely that there will be significant First Amendment questions arising in any regulatory attempts. At least some of these issues are will have been litigation as a result of traditional commerce issues, others, will involve novel e-commerce issues, such as access to virtual world gaming sites. Where the issue has been decided, a precedent will be available; otherwise legal analogies must be employed.

For example, First Amendment issues will arise if there is any attempt by the government to restrict participation in virtual worlds. First Amendment rights apply here not because of any specific events in the virtual world but because of the nature of participation and the effect that participation may have on real people in the real world.

Video game case law authority exists which may be applied to virtual world's controversy which suggest that the games are not protected by the First Amendment. In America's Best Family Showplace Corporation v . New York, 536 F. Supp. 170 (E.D.N.Y. 1982) and Caswell v. Licensing Commission for Brockton 444 N.E.2d 922 (Mass. 1983) businesses were denied the opportunity to install video games because of statutes. They raised a First Amendment claim against the statute arguing that the fantasy presentations on the screen were similar to motion pictures and should be protected on the same grounds. While motion pictures are protected because they may be used to convey ideas and affect public opinion, rather, a video game is pure entertainment with no informational element.

Similarly, as traditional First Amendment issues are raised, so too traditional First Amendment exceptions will be raised such as a defamation action or when obscene materials are involved.

Until recently, it was possible that, because the obscene images were viewed on a real world computer screen, a conviction could be obtained for the inclusion in a virtual world of images of avatars representing children engaging in sexual acts. The Supreme Court recognized a First Amendment exception for non-obscene child pornography in New York v. Ferber, 458 U.S. 747 (1982) where the court saw a need to suppress the market of such material in order both to prevent the sexual abuse of children in the material's production and to suppress the permanent record of abuse that child pornography embodies.

Moreover, in Osborne v. Ohio, 495 U.S. 103 (1990) the court added another justification for the exception. There was a concern over the use of child pornography to recruit and train new victims of sexual abuse. For example, pedophiles could use the materials both to try to convince children that sexual acts with adults are normal and to instruct the children as to how to perform the desired acts. That concern led some courts to conclude that animated or virtual child pornography was unprotected because it too could be used for the same purpose. See United States v. Acheson, 195 F.3d 645, 650 (11th Cir. 1999) (stating that criminalizing possession of images of cyber-minors engaged in sexually explicit conduct is justified); United States v. Hilton, 167 F.3d 61, 76 (1st Cir. 1999) (stating that it is 'well within Congress's power to regulate virtual pornography of all minors of all ages'). Both cases, which applied the Child Pornography Protection Act, 18 U.S.C. §2252A, in which Congress criminalized possession of pornographic images appearing to be of children, have since been effectively overruled. See Ashcroft v. Free Speech Coal. , 535 U.S. 234, 244, 258 (2002) (finding statute to be overbroad and unconstitutional). The Supreme Court has recently concluded, however, that virtual child pornography does not fall outside the protection of the First Amendment. Ashcroft v. Free Speech Coal., 535 U.S. 234, 244, 258 (2002) Thus, the possibility of virtual world child pornography would seem precluded.

Three unique Internet issues need to be regulated. The first are property rights associated with the Internet such as domain name or e-mail access and/or the rights to virtual property acquired interaction with an Internet game such as Sims Online property. The second is virtual crime associated with Internet, such as unlawful file sharing. The third is the rights of avatars.