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Americanization of e-Commerce Law
But others ' again, armchair critics, and technowhizzes and recognized online experts alike ' see the Internet as a set of mutually agreeable protocols, and suppose that e-commerce participants apply trade law akin to their medieval trade-fair predecessors (for more on this theme, see, Bick's article in the October edition of e-Commerce Law & Strategy, 'e-Commerce Communities Employ Medieval Justice: Internet Sellers Use Extrajudicial Remedies Similar to Merchant Law'). The observers in this camp highlight the fact that participation in peer-to-peer networks remains very high despite the efforts of copyright owners to shut these forums down, and the fact that anonymous e-mail is regularly used to make false marketing claims.
Despite the Internet's global reach, it is the propensity of American citizens and U.S. residents to engage in e-commerce ' and of American courts and governmental agencies to accept, resolve and publish the decisions in those cases ' that makes it fair to say that American law dominates e-commerce.
Preeminence of U.S.
Law, Activity Online
American law's dominance with respect to commercial Internet transactions arises in part due to the fact that 35% of the world's Internet users are American, and more than 80% of the world's e-commerce transactions involve at least one American party. The U.S. Department of Commerce estimates that total U.S. retail e-commerce sales for the second quarter of 2007 came to $33.6 billion (see, www.census.gov/mrts/www/ecomm.html, and for a detailed accounting, see, 'e-Commerce Still Looking Good: Census Bureau Report Shows Continued Retail Transaction Growth,' in the October 2007 edition of e-Commerce Law & Strategy).
That level of activity has resulted in more than 100 reported e-commerce lawsuits in 2007; in short, because the United States has the most traditional territorial sovereignty over the people, goods and facilities associated with e-commerce, its law is the most influential e-commerce regulator.
Foundation on ICANN, U.S. Law
Another fact that allows the United States to impose its law on so much e-commerce is that the Internet relies on a master naming and numbering authority, in an agreement with the U.S. Department of Commerce, that provides the translation key for Internet addresses ' ICANN (the Internet Corporation for Assigned Names and Numbers). The authority's servers are located in the United States, and the U.S. government has ultimate control over the authority. U.S. courts can order involuntary changes in e-commerce domain names and thereby influence most e-commerce transactions. These factors add up to a pervasive, and powerful, influence and, to a great extent, control of trends in e-commerce that the United States can exert. (For an intriguing treatment of this idea, see, Bick's article, 'Control of the Internet: Does the Government Own the Net? If So, Does That Meet State Action?' in the October 2005 edition of e-Commerce Law & Strategy.)
U.S. Legal Reach in Foreign Internet Matters
Even when foreign courts use their countries' laws to limit e-commerce, an American court will usually be involved. Consider the not-too-distant-past Yahoo! case involving French law. Yahoo! was sued in France for violating French law over the sale of unlawful goods. A French court ordered Yahoo! to ”take all necessary measures' to block visits by Internet users in France to auction sites available on Yahoo.com at which users could bid on and buy Nazi World War II memorabilia, or face the prospect of the seizure of Yahoo!-owned assets in France. Yahoo! did not change its policy and did not comply with the French court's ruling until an American court stepped in to enforce the order.
Application of Geo-ID Software
New Internet software also has helped American courts to impose American law on Internet transactions. In particular, Internet location software, known as Geo-ID services, sends tracing packets to Web site visitors with the content of the visitor's request. While this tool was designed to allow advertisers to feature advertisements of local merchants, help credit-card companies identify fraudulent online purchases and let Major League Baseball stream video online without breaching blackout commitments to local television stations, it also allowed plaintiffs and defendants to demonstrate American jurisdiction.
Role of U.S. Companies and Servers
Also, the fact that e-commerce transactors rely on the cooperation of intermediary computers operated by large American companies ' such as Internet service providers, search engines and credit-card companies ' yields a sufficient nexus to allow American courts to intervene. In the past, the United States enacted laws requiring search-engine and credit-card companies to block certain transactions to help enforce governmental prohibitions on particular e-commerce transactions.
The Potential U.S. Role in
Chinese e-Commerce
While the number of Internet users in China passed 100 million in 2005, relatively few are e-commerce participants. The Chinese government has an international traffic firewall that dramatically diminishes e-commerce. But the software that makes the Internet possible was designed and is administered by the same American firms that were part of the Internet boom, such as Cisco and Yahoo!, which suggests that when e-commerce is allowed for the average Chinese citizen, American firms and, therefore, American law, will be factors in that activity.
Auctions: A Muscular
Force in e-Commerce
Among the most significant sources of e-commerce activity is auctioneering, which is dominated by an American firm ' eBay. Initially, eBay relied on informal dispute resolution and laws that resembled those used to resolve disputes at medieval trade fairs. Today, however, eBay implements traditional forms of government law enforcement, particularly American law. Currently, eBay auctions result in traditional binding contracts and its 800-strong full-time security staff works very closely with law enforcement agencies to fight fraud and help the police investigate eBay-related crimes. If one of the participants is American, then the standard eBay agreement will default to American law.
Sometimes, Foreign Law
Can Take Precedence
It should be noted that although American law may be the code initially applied to e-commerce transactions, another jurisdiction may supersede. The Wall Street Journal, for example, posted a story on its Web site in October 2000 suggesting that Australian billionaire Joseph Gutnick had engaged in dishonest activities. Gutnick read the story online from Australia and brought a libel suit in an Australian court against the Journal's parent corporation, Dow Jones & Co. Dow Jones attempted to apply American law, based on the fact that its servers were in the United States. The Australian court disagreed, ruling that the tort of defamation occurs where the person who downloads the material is located. Dow Jones settled the matter.
(Editor's note: Readers can find an exploration of this case, and the concept of U.S. and foreign law ' in Australia, the United Kingdom and Canada ' as they apply to defamation actions involving Internet content, in Bick's article, 'Overseas Court Decisions Limit U.S. Internet Speech: Foreign Courts' Decisions to Exercise Jurisdiction over Internet Libel Claims Presents a Free Expression, and e-Commerce, Challenge' in the July 2006 edition of e-Commerce Law & Strategy.)
Territorial Considerations, and
Some Regulatory Techniques
It's important to remember, too, that traditional territorial governments continue to play a critical role in the development and management of e-commerce. For example: If an entity has goods that may be seized, storefronts that may be padlocked shut or people who may be arrested, then the jurisdiction where these things are located may assert that its laws apply. Such physical coercion by government is a feature of a traditional legal system; in other words, because so many e-commerce firms have an American presence, American law may be imposed.
The reality, though, is that while e-commerce law may be enforceable online, primarily through self-help devices such as barring a user from an e-commerce site, these actions are uncommon. But American regulatory techniques, such as barring credit-card firms from accepting certain e-commerce transactions, are widely used. All told, these actions, and American administrative law, statutes and court decisions, add to the Americanization of e-commerce law.
Another Realm Tamed
A decade ago, it was popular to think of e-commerce as an unregulated marketplace. Some of this perception is still reflected in the opinions of Internet users, but during the last 10 years, e-commerce has become more tied to our physical-world experience and American law has become the preeminent legal force ' just as an expanding case log and decision docket brought the rule of law to the Wild, Wild West of yore about a century ago.
Jonathan Bick, a regular contributor to e-Commerce Law & Strategy, is counsel to WolfBlock Brach Eichler of Roseland, NJ. He is an adjunct professor of Internet law at Pace Law School and Rutgers Law School. Bick is also the author of 101 Things You Need To Know About Internet Law (Random House 2000), and can be reached at [email protected]. Some observers ' armchair and expert ' compare the Internet to the lawless American West of yore, and they believe that, as was the analogous situation on the plains of the territories in the 1800s and early 1900s, no law, in the modern case, e-commerce law, exists. These people point, for instance, to the fact that about two-thirds of all e-mail is unwanted spam and unsolicited commercial e-mail, and that although Internet gambling is illegal in every state, millions of Americans nonetheless gamble online, generating about $6 billion in revenue for the approximately 2,000 Internet gambling sites (and remember: Internet gambling is illegal in every state).
But others ' again, armchair critics, and technowhizzes and recognized online experts alike ' see the Internet as a set of mutually agreeable protocols, and suppose that e-commerce participants apply trade law akin to their medieval trade-fair predecessors (for more on this theme, see, Bick's article in the October edition of e-Commerce Law & Strategy, 'e-Commerce Communities Employ Medieval Justice: Internet Sellers Use Extrajudicial Remedies Similar to Merchant Law'). The observers in this camp highlight the fact that participation in peer-to-peer networks remains very high despite the efforts of copyright owners to shut these forums down, and the fact that anonymous e-mail is regularly used to make false marketing claims.
Despite the Internet's global reach, it is the propensity of American citizens and U.S. residents to engage in e-commerce ' and of American courts and governmental agencies to accept, resolve and publish the decisions in those cases ' that makes it fair to say that American law dominates e-commerce.
Preeminence of U.S.
Law, Activity Online
American law's dominance with respect to commercial Internet transactions arises in part due to the fact that 35% of the world's Internet users are American, and more than 80% of the world's e-commerce transactions involve at least one American party. The U.S. Department of Commerce estimates that total U.S. retail e-commerce sales for the second quarter of 2007 came to $33.6 billion (see, www.census.gov/mrts/www/ecomm.html, and for a detailed accounting, see, 'e-Commerce Still Looking Good: Census Bureau Report Shows Continued Retail Transaction Growth,' in the October 2007 edition of e-Commerce Law & Strategy).
That level of activity has resulted in more than 100 reported e-commerce lawsuits in 2007; in short, because the United States has the most traditional territorial sovereignty over the people, goods and facilities associated with e-commerce, its law is the most influential e-commerce regulator.
Foundation on ICANN, U.S. Law
Another fact that allows the United States to impose its law on so much e-commerce is that the Internet relies on a master naming and numbering authority, in an agreement with the U.S. Department of Commerce, that provides the translation key for Internet addresses ' ICANN (the Internet Corporation for Assigned Names and Numbers). The authority's servers are located in the United States, and the U.S. government has ultimate control over the authority. U.S. courts can order involuntary changes in e-commerce domain names and thereby influence most e-commerce transactions. These factors add up to a pervasive, and powerful, influence and, to a great extent, control of trends in e-commerce that the United States can exert. (For an intriguing treatment of this idea, see, Bick's article, 'Control of the Internet: Does the Government Own the Net? If So, Does That Meet State Action?' in the October 2005 edition of e-Commerce Law & Strategy.)
U.S. Legal Reach in Foreign Internet Matters
Even when foreign courts use their countries' laws to limit e-commerce, an American court will usually be involved. Consider the not-too-distant-past Yahoo! case involving French law. Yahoo! was sued in France for violating French law over the sale of unlawful goods. A French court ordered Yahoo! to ”take all necessary measures' to block visits by Internet users in France to auction sites available on Yahoo.com at which users could bid on and buy Nazi World War II memorabilia, or face the prospect of the seizure of Yahoo!-owned assets in France. Yahoo! did not change its policy and did not comply with the French court's ruling until an American court stepped in to enforce the order.
Application of Geo-ID Software
New Internet software also has helped American courts to impose American law on Internet transactions. In particular, Internet location software, known as Geo-ID services, sends tracing packets to Web site visitors with the content of the visitor's request. While this tool was designed to allow advertisers to feature advertisements of local merchants, help credit-card companies identify fraudulent online purchases and let Major League Baseball stream video online without breaching blackout commitments to local television stations, it also allowed plaintiffs and defendants to demonstrate American jurisdiction.
Role of U.S. Companies and Servers
Also, the fact that e-commerce transactors rely on the cooperation of intermediary computers operated by large American companies ' such as Internet service providers, search engines and credit-card companies ' yields a sufficient nexus to allow American courts to intervene. In the past, the United States enacted laws requiring search-engine and credit-card companies to block certain transactions to help enforce governmental prohibitions on particular e-commerce transactions.
The Potential U.S. Role in
Chinese e-Commerce
While the number of Internet users in China passed 100 million in 2005, relatively few are e-commerce participants. The Chinese government has an international traffic firewall that dramatically diminishes e-commerce. But the software that makes the Internet possible was designed and is administered by the same American firms that were part of the Internet boom, such as Cisco and Yahoo!, which suggests that when e-commerce is allowed for the average Chinese citizen, American firms and, therefore, American law, will be factors in that activity.
Auctions: A Muscular
Force in e-Commerce
Among the most significant sources of e-commerce activity is auctioneering, which is dominated by an American firm ' eBay. Initially, eBay relied on informal dispute resolution and laws that resembled those used to resolve disputes at medieval trade fairs. Today, however, eBay implements traditional forms of government law enforcement, particularly American law. Currently, eBay auctions result in traditional binding contracts and its 800-strong full-time security staff works very closely with law enforcement agencies to fight fraud and help the police investigate eBay-related crimes. If one of the participants is American, then the standard eBay agreement will default to American law.
Sometimes, Foreign Law
Can Take Precedence
It should be noted that although American law may be the code initially applied to e-commerce transactions, another jurisdiction may supersede. The Wall Street Journal, for example, posted a story on its Web site in October 2000 suggesting that Australian billionaire Joseph Gutnick had engaged in dishonest activities. Gutnick read the story online from Australia and brought a libel suit in an Australian court against the Journal's parent corporation,
(Editor's note: Readers can find an exploration of this case, and the concept of U.S. and foreign law ' in Australia, the United Kingdom and Canada ' as they apply to defamation actions involving Internet content, in Bick's article, 'Overseas Court Decisions Limit U.S. Internet Speech: Foreign Courts' Decisions to Exercise Jurisdiction over Internet Libel Claims Presents a Free Expression, and e-Commerce, Challenge' in the July 2006 edition of e-Commerce Law & Strategy.)
Territorial Considerations, and
Some Regulatory Techniques
It's important to remember, too, that traditional territorial governments continue to play a critical role in the development and management of e-commerce. For example: If an entity has goods that may be seized, storefronts that may be padlocked shut or people who may be arrested, then the jurisdiction where these things are located may assert that its laws apply. Such physical coercion by government is a feature of a traditional legal system; in other words, because so many e-commerce firms have an American presence, American law may be imposed.
The reality, though, is that while e-commerce law may be enforceable online, primarily through self-help devices such as barring a user from an e-commerce site, these actions are uncommon. But American regulatory techniques, such as barring credit-card firms from accepting certain e-commerce transactions, are widely used. All told, these actions, and American administrative law, statutes and court decisions, add to the Americanization of e-commerce law.
Another Realm Tamed
A decade ago, it was popular to think of e-commerce as an unregulated marketplace. Some of this perception is still reflected in the opinions of Internet users, but during the last 10 years, e-commerce has become more tied to our physical-world experience and American law has become the preeminent legal force ' just as an expanding case log and decision docket brought the rule of law to the Wild, Wild West of yore about a century ago.
Jonathan Bick, a regular contributor to e-Commerce Law & Strategy, is counsel to
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