THE WEB AND THE COURTS:  A LEGAL UPDATE 

by Shelley M. Liberto
From the February 1998 issue of WWWiz Magazine 
Copyright © 1998 Shelley M. Liberto. All rights reserved. 
 

InterNic Sued for Anti-Trust Violations. 

  Network Solutions, Inc. (InterNic) has been named as a defendant along with the National Science Foundation (NSF), a U.S. government agency, for anti-trust violations in a federal court in Arlington, Virginia.  The complaint alleges that the NSF lacks authority to allow InterNic to charge for Internet registration services, and to collect fees to "preserve and enhance the intellectual infrastructure of the Internet."  The suit also alleges that the NSF created an illegal monopoly in Internet registration services by precluding competition for registration of the domain suffixes ".com, .org., .edu., .gov, and .net."  They allegedly did so by entering into an exclusive agreement with InterNic to register those domains, and to allocate Internet protocol addresses for the Americas, the Caribbean, and sub-Saharan Africa. 

  The NSF was created by Congress under the National Science Foundation Act of 1950 for the purpose of promoting science and engineering through programs in research and education projects.  The NSF is composed of the National Science Board of 24 members and a Director, all of whom are appointed by the President of the United States.  In 1990, the Department of Defense phased out its administration of the Internet, at that time referred to as the Advanced Research Projects Agency Net or "ARAPANET," by transferring its responsibilities to the NSF.  In 1995, the NSF entered into an exclusive agreement with InterNic conferring the power to assign domains on the Internet.  In September of 1995, the NSF gave InterNic the power to charge $100 for each name registration, thereby arousing discontent among Internet domain name holders. 

  The lawsuit challenges InterNic's anti-competitive practices pertaining to Internet address registration, which became the subject of a U.S. Department of Justice investigation in July of 1997.  The lawsuit, lodged by P.G. Media, Inc., also claims that InterNic has restricted access to the Internet by refusing to add top-level-domain names (TLDs) in violation of the Sherman Anti-Trust Act.  The NSF has stated that it will not renew its exclusive agreement with InterNic when its contract expires in March of 1998.  InterNic was acquired by Science Applications International Corporation (SAIC) in March 1995 and operates as a wholly-owned subsidiary.  InterNic recently made a public stock offering valued at approximately $35 million. 
 

Juno Sues Spammers Using False E-Mail Addresses. 

  Juno On-Line Services, an Internet provider of free e-mail services, has filed suit in federal court against five organizations engaged in allegedly illicit unsolicited commercial 
e-mail (UCE), commonly referred to as "SPAM."  The lawsuit names five companies including Strippers, Inc., of Beverly Hills; IMS, of Knoxsville, Tennessee; Phoenix Interactive, of Hermosa Beach, California; Global Information Services, of Clearwater, Florida; and Scott Allen Export Sales, of Somerset, New Jersey.  The complaint alleges that the defendants forged Juno's return address which wrongfully identifies Juno as the source for tens of thousands of pieces of unsolicited junk e-mail.  By dropping Juno's e-mail addresses into SPAM headers, the solicitors avoid automatic filters set up by individuals and companies attempting to reject incoming e-mail from known UCE sources. 

  "This is a misappropriation of Juno's legitimate identity.  The spammers hide behind our name in order to deceive the people they write to, and avoid the consequences of their actions," said Charles Ardai, Juno's president. Juno seeks $1 million in punitive damages against each of the five organizations. 
 

Congress Takes Another Shot at a Revised Communications Decency Act. 

  In June of 1997, the United States Supreme Court struck down the Communications Decency Act passed by Congress and signed by the President in 1996, under a determination of unconstitutionality.  [Link to WWWiz September 1997 issue.]  The Supreme Court based its opinion on the structure of the CDA which it found to unconstitutionally restrict the content of free speech in violation of the First Amendment to the United States Constitution.  Now, Senator Coats has introduced Senate Bill 1482, in a second attempt to legislate a prohibition against the distribution of adult material. 

  The Bill avoids the fatal pitfall of regulation of content of speech by purporting to merely regulate access.  The Bill imposes penalties for distribution of material "harmful to minors."  Providers must restrict access by persons under the age of 17 years by requiring use of a verified credit card, debit account, adult-access codes, or an adult PIN.  The Bill defines "material that is harmful to minors" as: 
 

  . . . Any communication, picture, image, graphic-image file, article, recording, writing, or other matter of any kind that --  

   (i) taken as a whole and with respect to minors, appeals to the prurient interest in nudity, sex, or excretion;  

   (ii) depicts, describes, or represents, in a patently offensive way with respect to what is suitable for minors, an actual or simulated sexual act or sexual contact, actual or simulated normal or perverted sexual acts, or lewd exhibition of the genitals; and  

  (iii)  lacks serious literary, artistic, political, or scientific value.  
 

  "We agree with the District Court's conclusion that the CDA places an unacceptable heavy burden on protected speech, and that the defenses [such as restricted access by use of verified codes or adult identification] do not constitute the sort of "narrow tailoring" that will save an otherwise patently invalid unconstitutional provision.  In Sable, 492 U.S., at 127, we remarked that the speech restriction at issue there amounted to "burning the house to roast the pig."  The CDA, casting a far darker shadow over free speech, threatens to torch a large segment of the Internet community."

  In order for a defendant to be subject to a lawsuit in any particular state, the local court must have "personal jurisdiction" over that defendant.  Personal jurisdiction is established by a defendant's "minimum contacts" in the particular state where jurisdiction is sought.  Those contacts require that a defendant purposely avail itself of the privilege of conducting businesses within the specific state, thereby enjoying the protection of its laws. 

  In the case of Cybersell v. Cybersell, the United States Court of Appeals for the Ninth Circuit recently held that the mere existence of a website on the World Wide Web did not suffice as "minimum contacts" for personal jurisdiction in the state where the trademark plaintiff resided.  Cybersell of Arizona attempted to sue Cybersell of Florida in an Arizona court, citing grounds for jurisdiction that Cybersell of Florida had a "presence" in Arizona because "cyberspace is without borders and a website which advertises a product or service is necessarily intended for use on a worldwide basis."  The court disagreed, stating: 

  We conclude that the essentially passive nature of Cybersell Florida's activity in posting a home page on the World Wide Web that allegedly used the service mark of Cybersell Arizona does not qualify as purposeful activity invoking the benefits and protections of Arizona.  As it engaged in no commercial activity and had no other contacts via the Internet or otherwise in Arizona, Cybersell Florida lacks sufficient minimum contacts with Arizona for personal jurisdiction to be asserted over it there.