Should Auld e-Commerce Be Forgot?

A Taxing Topic

Not surprisingly, the law on Internet taxation remains unsettled ' just as it has been every time we have written about it. In late 2007, Congress once again (as it has done several times) put off a decision on making the Internet Tax Freedom Act permanent. That law prevents state and local governments from taxing Internet access services (in the same way they add charges to your phone bills ' see, www.informationweek.com/showArticle.jhtml?articleID=202801131).

After unanimous approval in Congress, the President quickly signed The Internet Tax Freedom Amendments Act of 2007 on Oct. 31. While the ban did not become permanent, as backers had hoped, this time it was extended for seven years, until 2014 (much longer than the brief extensions passed in 2001 and 2004). (The extension also clarified how related services may be taxed, and began a phase-out of certain provisions that allowed 'grandfathered' pre-existing taxes to survive.) The importance of this extension to consumers and businesses, in an economy that has come to depend on Internet access, can be seen in the efforts abroad to tax online services, as has occurred in France, for example (see, www.dailytech.com/French+President+Proposes+Internet+Tax/article10306.htm). The Internet is such an inviting target to revenue-strapped local taxing authorities ' especially since taxpayers may not be local voters ' that federal protection clearly remains a necessity.

The news has not been as promising for the other side of the tax question, the Streamlined Sales Tax Initiative, which has been advanced by various advocates, including the Streamlined Sales Tax Project ('SSTP'). Despite continuing adoptions in the states, businesses' goal of a single national sales-tax rate remains just that, a goal. Even states that have adopted the program continue to seek non-uniform changes to benefit their in-state businesses (see, www.mondaq.com/article.asp?articleid=55956; registration required). In December, the SSTP organizers themselves tinkered with the 'uniform' rules ' in an effort to increase national adoption ' by changing the controversial 'sourcing rules' (which determine the state that will collect the tax in a multi-state sale), even though the changes could further complicate the stated goal of simplicity and allow 'gaming' the system to benefit local voters (see, www.streamlinedsalestax.org/Governing%20Board/Governing%20Board/Previous_GB_Meetings/Dec_11_07/Documents_Dallas_12_11_07.html). For example, Tennessee exempted certain non-professional horse owners from newly enforced documentation requirements for an existing tax (see, www.thehorse.com/ViewArticle.aspx?ID=11153).

I fully expect another article on sales taxes in 2009, reporting that backers of the initiative remain optimistic, but that a national program remains the goal.

Web Accessibility Issues

One area that has been quite active since I wrote about it in December 2006 is the duty to make e-commerce Web sites accessible to the disabled (see, 'Targeting New e-Commerce Customers' at www.ljnonline.com/issues/ljn_ecommerce/23_8/news/147757-1.html). Following a California federal appellate court's ruling that the Target.com Web site was subject to the rules of the Americans with Disabilities Act ('ADA') because of its close connection to that retailer's physical stores (which were unquestionably covered by the ADA), the trial court certified that lawsuit as a national class action (see, www.dralegal.org/cases/private_business/nfb_v_target.php).

Perhaps more important is that the court also held that two California civil rights laws, the Disabled Persons Act ('DPA') and the Unruh Civil Rights Act, require the same Web site accessibility as the ADA, without relying on any link to bricks-and-mortar stores underlying the original Target decision, because California state law gave broader protection than the federal ADA. 'What the court alluded to in its previous order it will now hold explicitly for the purposes of class certification: the Unruh Act and the DPA reach Target.com as a kind of business establishment and an accommodation, advantage, facility and privilege of a place of public accommodation, respectively. No nexus to the physical stores need be shown,' (Emphasis added.) (See, www.dralegal.org/downloads/cases/target/target-order.txt). Although the ruling was issued by a lower court, the federal appeals court has denied an appeal that tried to block the class-action case from moving forward to trial (see, www.icdri.org/News/Target_update010208.htm).

While the latest Target ruling applies only to California law, and so would not (in theory) affect e-commerce vendors nationally, it remains potentially significant because of the origins and continuing operations of many e-commerce firms in Silicon Valley. For example, a national reseller of hotel rooms faces a similar lawsuit in California, brought by one of the public-interest law firms that succeeded against Target.com (see, www.icdri.org/legal/hotelsdotcom.htm). The Target.com ruling also could increase the competition ' and cost ' to hire Web site design firms able to create accessible Web sites (see, www.businessweek.com/smallbiz/content/dec2007/sb20071217_774630.htm?chan=search).

Moreover, just as in the tax issues, the international reach of the Internet could also affect Web site design and planning, as foreign countries may have more restrictive disabilities-rights laws than the United States. The advice to new e-commerce firms of Garry Grant, the Web designer quoted in the Business Week article cited above, to consider accessibility design 'from the ground up' when creating an e-commerce Web site, echoes my own recommendation in the December 2006 article to treat Web site accessibility as a marketing concern rather than a legal one.

State, Federal Regulatory Efforts

Since I wrote 'e-Lawyering Is Not for the Fainthearted' in February 2007 (see, www.ljnonline.com/issues/ljn_ecommerce/23_10/news/148070-1.html), local attempts to regulate some aspects of e-commerce have continued, as local governments see sales-tax and fee revenue drying up, or fear the loss of control, or both. For example, Pennsylvania has considered applying hoary-auctioneer regulations ' including requirements for expensive, in-person, courses on how to conduct a live auction ' to eBay sellers. Sometimes these efforts appear to be nothing more than the last-ditch efforts of bricks-and-mortar firms to protect their business. Fortunately, one tech-savvy legislator, State Senator Rob Wonderling, a Republican who represents a district in suburban Philadelphia and is former president of a high-tech think tank, is leading the fight to get government 'out of the way' of today's business, especially e-business, by reining in bureaucrats trying to protect their turf against the challenges of e-commerce, just as traditional retailers once had to adapt to it (see, www.senatorwonderling.com/newsreleases/default.asp?NewsReleaseID=1670&SubjectID). In the news release on the Senator's Web site (cited above) titled, 'How the Board of Auctioneer Examiners Stole Christmas,' Wonderling complained:

'In our free-market Capitalist society, you would think allowing people to buy and sell items online is a good thing. Yet efforts are underway to put the bureaucratic brakes on all that good holiday trading. The Pennsylvania State Board of Auctioneer Examiners is telling EBayers and other online sellers that selling items online (that are not your own) will now require you to get an auctioneers license. While you may have never seen an auctioneer in person, no doubt you've seen them on TV speaking almost too fast to comprehend, banging on a gavel yelling 'sold'! I don't know about you, but most of my online purchasing doesn't require a gavel. ' Currently, the Board is actively pursuing EBay consignment shop owners. At least one small business owner has closed his doors because he is facing formal disciplinary action by the Board and civil penalties of up to $1,000 for each violation. That means he could ultimately have to pay a $1,000 fine for every item he has sold on EBay if he is found in violation of the licensing act. Most auction laws were written before computers became a household item. That's why I introduced Senate Bill 908 to exempt online traders from any obligation to get a license from the state. Requiring web-based sellers to endure the state's auctioneering bureaucracy does not make sense in the advent of Internet commerce. Brick and mortar auction houses and online trading are in many respects 20th century apples to 21st century oranges.'

I have frequently written about how e-commerce firms cannot ignore 'old laws' and principles, despite the new technology involved. For example, long-standing telemarketing rules have become a regulatory model for e-commerce. Most recently, the Federal Trade Commission ('FTC') requested comment on whether its generic rules for telephone marketing should apply specifically to e-commerce. The National Retail Federation ('NRF'), like many others who submitted replies, strongly agreed. 'Whether orders come in the mail, by telephone, or over the Internet is secondary to the point that customers should receive the products they ordered, at the price they agreed to pay, and within the time that was promised,' according to NRF SVP and General Counsel Mallory Duncan (see, www.informationweek.com/Internet/showArticle.jhtml?articleID=20280381).

While application of these 'remote sales' rules to e-commerce seems unsurprising and inherently fair, they currently do not apply because of a technicality. The Internet sales in place when the FTC's original rules were most recently amended ' in 1993 ' typically occurred over dial-up lines, and were therefore covered by the original telemarketing rules. But today's broadband connections require a regulatory update to level the playing field. In fact, the FTC itself seemed to telegraph its intent on this issue, when it raised the topic of Internet sales as part of a periodic regulatory review. The Commission said:

'The first potential change relates to merchandise ordered by computer. When the Commission amended the Rule in 1993 to cover telephone-order merchandise, it adopted a definition of 'telephone' that was meant to extend the Rule's coverage to all merchandise ordered by computer. Since then, the technology for accessing the Internet by computer has evolved to include means that do not use the telephone. The Commission accordingly requests comment on whether, to remove any doubt, it should amend the Rule to refer expressly to merchandise ordered by computer.' (Emphasis added.) (See, www.ftc.gov/opa/2007/09/fyi07262.shtm.)

At the state level, New York, for example, extended its existing protection for mail-order purchasers to Internet purchasers last year (see, Bill 1535; http://assembly.state.ny.us/leg/?bn=A01535&sh=t). Indeed, the FTC has been quite active in the last year in matters involving e-commerce. That focus is not surprising, given the intersection of the FTC's consumer-protection mission, and consumers' continuing preference to shop online. For example, in the area of privacy (one of the 'Ten Bits of Legal Advice Every Tech Client Should Get ' on Day One,' from the June 2006 edition of e-Commerce Law & Strategy; www.ljnonline.com/issues/ljn_ecommerce/23_2/news/146702-1.html), consumer advocates have urged the FTC to apply its own 'Do Not Call' rules (see, https://telemarketing.donotcall.gov/default.aspx), mirrored in many states, to online tracking, a core technique for e-commerce businesses (see, www.abajournal.com/news/ftc_to_create_do_not_track_list/). In other words, the FTC wants to regulate the use of cookies, a key online marketing technology. Moreover, as marketers have increasingly recognized the benefits of focused information that can be found through social networks (see my 'Caveat Amicus' article in the October 2006 edition of e-Commerce Law & Strategy; www.ljnonline.com/issues/ljn_ecommerce/23_6/news/147431-1.html), the FTC proposed 'online behavioral advertising privacy principles' last December (see, www.ftc.gov/opa/2007/12/principles.shtm; also, for more on this topic,
see next month's edition of e-Commerce Law & Strategy, and for some issues leading to the action, and background on behavioral advertising, see, 'Is Anyone Out There? Behavioral Targeting and Its Implications,' in the December edition at www.ljnonline.com/issues/ljn_ecommerce/24_8/news/149644-1.html).

The FTC sought to balance the privacy concerns naturally raised by the collection of extremely targeted information through social-networking Web sites against its users' legitimate needs. In the FTC's view, that balance is between 'the benefits (provided) to consumers in the form of free content and personalized advertising,' and the risk that tracking data could be 'used for purposes other than behavioral advertising, and whether such secondary uses, if they occur, merit some form of heightened protection.' The proposals would provide specific guidelines for collection of information for use in advertising targeted to individuals based on prior Web activity (and a requirement that consumers have an opt-out of providing such information), security for that data, and requirements for consumers to consent, affirmatively, to such uses of their personal information. The FTC proposal itself may be found at www.ftc.gov/os/2007/12/P859900stmt.pdf.

The Internet and Due Diligence

The same article also discussed using Internet search resources generally for business due diligence as an alternative to Google. However, several recent cases have gone further, and implied that attorneys may have a 'duty to Google' in certain cases, such as when trying to serve a lawsuit on missing defendants. They also revealed the increasing technical sophistication of our judges (and the risks to the legal system when judges go outside the record to do their own searching for relevant facts ' see, http://209.85.165.104/search?q=cache:naWwigVIYjcJ:www.ali-aba.org/doc/IFF0705.pdf+munster+groce&hl=en&ct=clnk&cd=7&gl=us). (Editor's note: Scroll down on the Web site when it appears to see the newsletter with the article 'Is There A 'Duty to Google'?') As one Florida court commented on traditional ways of locating defendants in Dubois v. Butler (see, www.4dca.org/May2005/05-25-05/4D04-3559.pdf), to admonish counsel that did not even try to locate a defendant online: 'Advances in modern technology and the widespread use of the Internet have sent the investigative technique of a call to directory assistance the way of the horse and buggy and the eight track stereo.' Similarly, an Indiana judge punished a plaintiff that failed to conduct a simple Internet search for a property owner by nullifying a tax sale, even though the court had already assumed (for purposes of the decision) that the property owner had actual notice of the sale; the trial-court judge himself was easily able to find possible leads online to that person's current location, but (to the judge's ire) the plaintiff had not pursued those leads. '[W]e discovered, upon entering 'Joe Groce Indiana' into the Google search engine, an address for Groce that differed from either address used in this case, as well as an apparent obituary for Groce's mother that listed numerous surviving relatives who might have known his whereabouts.' Munster v. Groce, 829 N.E.2d 52, at n. 3 (Ind.App., June 8, 2005), at http://caselaw.lp.findlaw.com/data2/indianastatecases/app/06080501mpb.pdf ' registration required.

In contrast, a Louisiana court specifically rejected another court's own use of Internet searches, as an impermissible attempt to resolve a case by 'judicial notice,' rather than based solely on the evidence in the record.

'[T]he Broyles contend that the trial court erred by conducting an Internet search to determine whether Dr. Weatherly's identity was reasonably ascertainable. We agree. A finder of fact may not consider evidence outside the record in making its findings. More particularly, it is well settled that the resolution of disputed issues by judicial notice is improper.'

Similarly, a Pennsylvania case preferred a telephone directory listing over an unsuccessful Google search (see, www.courts.state.pa.us/OpPosting/cwealth/out/1600CD06_5-31-07.pdf). In that case, the court applied a 'reasonable investigation standard' of 'ordinary common sense business practices to ascertain proper addresses' to hold that the tax bureau's failure to check the phone book, as statutorily required, did not meet that standard (even though the plaintiff had unsuccessfully looked online for an address). When the courts appear to be telling counsel to look for relevant information in as many places as is practicable, online and using traditional methods, reliance on a good law librarian and online research service has become invaluable to meet that burden efficiently. (This need is particularly ironic, in an era when many firms have downsized librarians and libraries because of the availability of electronic research tools.)

Forwarding e-Mail

While not as heart-rending as the post-mortem e-mail dilemmas discussed in 'When Death is More Than a Blue Screen' (April 2007 of
e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/23_12/news/148371-1.html), the problem of receiving or accessing e-mail after a change of Internet access provider presents the same practical challenge. How do you get e-mail sent to an old address, in an electronic world where there is no post office to which to submit
a forwarding-address form? Last October, the Federal Communications Commission ('FCC') took comments on the possibility of requiring providers to forward e-mail from closed accounts (see, www.siliconvalley.com/news/ci_7258712?nclick_check=1), in response to a citizen petition. As of this writing, no comment or decision had been posted. Of course, several providers already offer that service for a fee or even for no charge for those who retain their account, which often is free (see, for example, http://mail.google.com/support/bin/answer.py?answer=10957 for gMail's forwarding instructions). The petition to the FCC may be found at http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519560444, and related material at www.cybertelecom.org/spam/email_portability.htm.

e-Mail Confidentiality

Several cases have developed concerning the confidentiality of electronic information, the subject of my 'Keeping e-Secrets' article
in the September 2007 edition of e-Commerce Law & Strategy (see, www.ljnonline.com/issues/ljn_ecommerce/24_5/news/149201-1.html). For example, New York's highest court allowed use of the ancient remedy of conversion for alleged conversion of electronic data ' contrary to the common-law limitation of that remedy to tangible property ' in Thyroff v. Nationwide Mutual Insurance Co., 8 NY 3d 283 (NY 2007), which readers can see at www.law.cornell.edu/nyctap/I07_0029.htm. The court said:

'In light of these considerations, we believe that the tort of conversion must keep pace with the contemporary realities of widespread computer use. We therefore answer the certified question in the affirmative and hold that the type of data that Nationwide allegedly took possession of ' electronic records that were stored on a computer and were indistinguishable from printed documents ' are subject to a claim of conversion in New York. Because this is the only type of intangible property at issue in this case, we do not consider whether any of the myriad other forms of virtual information should be protected by the tort.'

The recent Massachusetts Appeals Court case Basis Technology Corp. v. Amazon, Inc., No. 06-P-1048., 2008 Mass. App. LEXIS 8 (Mass. App. Ct. Jan. 7, 2008), continued this theme of the indistinguishability between electronic and paper records in ruling that a settlement agreement negotiated by e-mail could be enforced just as if it had been negotiated on paper. The risks to employees who use their employer's e-mail system for personal, confidential, messages was highlighted by a New York trial-court decision allowing discovery of the employee's otherwise privileged e-mail messages with his counsel, because of the employer's typical workplace e-mail policies establishing the employer's rights to review e-mail on its system. Scott v. Beth Israel Medical Center, Inc., 2006 N.Y. App. For tech warriors who live their lives in their workplace inboxes, Scott presents a sobering lesson of the risks of not separating one's work and personal lives, which are increasingly lived through e-mail (a topic covered in 'When the CEO Wants His Hotmail,' in the June 2007 edition of e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/24_2/news/148717-1.html).

Log On, But Don't 'Check Out'

Finally, in 'Tools to Save Time That You Do Not Have,' in the August 2006 edition of e-Commerce Law & Strategy (www.ljnonline.com/issues/ljn_ecommerce/23_4/news/147032-1.html), I discussed the importance of 'mindfulness' in the pressure-driven tech economy of experiencing the moment ' instead of worrying about 'the e-mail that may arrive' and while 'keyboarding on the e-ecommerce treadmill.' A business columnist, William Bunn, expanded on that theme when he coined the term technological autism (see, www.reportonbusiness.com/servlet/story/RTGAM.20071022.wgttechtism1022/BNStory/robNews/home). Bunn speculated that our obsession with remaining available for clients and business messages, created by constant connectivity appliances ' bringing on a phenomenon termed ringxiety ' has risen beyond annoying but necessary job requirements to the level of a formal medical disorder, or even an addiction. Certainly, every law-firm lawyer knows and lives with people who, because of their dependence on their personal digital assistants, have come to be known colloquially as 'crackberry' addicts. The article even reports grave physical injuries suffered by those who mindlessly stepped into traffic while not paying attention to their surroundings while using their devices. 'Fifty percent 'not there' often leads to 100% 'not there.” But in the last year, the ever-evolving growth of technology has shown that 'the Internet-speed driven pressure to work more ' and faster' hasn't gone away, and probably is accelerating. In 2008, therefore, the work/life balance remains a challenge for all lawyers ' and we hope that e-Commerce Law & Strategy and our other ALM publications can keep you up-to-date at work, and leave you time for 'life.'

A Taxing Topic

Not surprisingly, the law on Internet taxation remains unsettled ' just as it has been every time we have written about it. In late 2007, Congress once again (as it has done several times) put off a decision on making the Internet Tax Freedom Act permanent. That law prevents state and local governments from taxing Internet access services (in the same way they add charges to your phone bills ' see, www.informationweek.com/showArticle.jhtml?articleID=202801131).

After unanimous approval in Congress, the President quickly signed The Internet Tax Freedom Amendments Act of 2007 on Oct. 31. While the ban did not become permanent, as backers had hoped, this time it was extended for seven years, until 2014 (much longer than the brief extensions passed in 2001 and 2004). (The extension also clarified how related services may be taxed, and began a phase-out of certain provisions that allowed 'grandfathered' pre-existing taxes to survive.) The importance of this extension to consumers and businesses, in an economy that has come to depend on Internet access, can be seen in the efforts abroad to tax online services, as has occurred in France, for example (see, www.dailytech.com/French+President+Proposes+Internet+Tax/article10306.htm). The Internet is such an inviting target to revenue-strapped local taxing authorities ' especially since taxpayers may not be local voters ' that federal protection clearly remains a necessity.

The news has not been as promising for the other side of the tax question, the Streamlined Sales Tax Initiative, which has been advanced by various advocates, including the Streamlined Sales Tax Project ('SSTP'). Despite continuing adoptions in the states, businesses' goal of a single national sales-tax rate remains just that, a goal. Even states that have adopted the program continue to seek non-uniform changes to benefit their in-state businesses (see, www.mondaq.com/article.asp?articleid=55956; registration required). In December, the SSTP organizers themselves tinkered with the 'uniform' rules ' in an effort to increase national adoption ' by changing the controversial 'sourcing rules' (which determine the state that will collect the tax in a multi-state sale), even though the changes could further complicate the stated goal of simplicity and allow 'gaming' the system to benefit local voters (see, www.streamlinedsalestax.org/Governing%20Board/Governing%20Board/Previous_GB_Meetings/Dec_11_07/Documents_Dallas_12_11_07.html). For example, Tennessee exempted certain non-professional horse owners from newly enforced documentation requirements for an existing tax (see, www.thehorse.com/ViewArticle.aspx?ID=11153).

I fully expect another article on sales taxes in 2009, reporting that backers of the initiative remain optimistic, but that a national program remains the goal.

Web Accessibility Issues

One area that has been quite active since I wrote about it in December 2006 is the duty to make e-commerce Web sites accessible to the disabled (see, 'Targeting New e-Commerce Customers' at www.ljnonline.com/issues/ljn_ecommerce/23_8/news/147757-1.html). Following a California federal appellate court's ruling that the Target.com Web site was subject to the rules of the Americans with Disabilities Act ('ADA') because of its close connection to that retailer's physical stores (which were unquestionably covered by the ADA), the trial court certified that lawsuit as a national class action (see, www.dralegal.org/cases/private_business/nfb_v_target.php).

Perhaps more important is that the court also held that two California civil rights laws, the Disabled Persons Act ('DPA') and the Unruh Civil Rights Act, require the same Web site accessibility as the ADA, without relying on any link to bricks-and-mortar stores underlying the original Target decision, because California state law gave broader protection than the federal ADA. 'What the court alluded to in its previous order it will now hold explicitly for the purposes of class certification: the Unruh Act and the DPA reach Target.com as a kind of business establishment and an accommodation, advantage, facility and privilege of a place of public accommodation, respectively. No nexus to the physical stores need be shown,' (Emphasis added.) (See, www.dralegal.org/downloads/cases/target/target-order.txt). Although the ruling was issued by a lower court, the federal appeals court has denied an appeal that tried to block the class-action case from moving forward to trial (see, www.icdri.org/News/Target_update010208.htm).

While the latest Target ruling applies only to California law, and so would not (in theory) affect e-commerce vendors nationally, it remains potentially significant because of the origins and continuing operations of many e-commerce firms in Silicon Valley. For example, a national reseller of hotel rooms faces a similar lawsuit in California, brought by one of the public-interest law firms that succeeded against Target.com (see, www.icdri.org/legal/hotelsdotcom.htm). The Target.com ruling also could increase the competition ' and cost ' to hire Web site design firms able to create accessible Web sites (see, www.businessweek.com/smallbiz/content/dec2007/sb20071217_774630.htm?chan=search).

Moreover, just as in the tax issues, the international reach of the Internet could also affect Web site design and planning, as foreign countries may have more restrictive disabilities-rights laws than the United States. The advice to new e-commerce firms of Garry Grant, the Web designer quoted in the Business Week article cited above, to consider accessibility design 'from the ground up' when creating an e-commerce Web site, echoes my own recommendation in the December 2006 article to treat Web site accessibility as a marketing concern rather than a legal one.

State, Federal Regulatory Efforts

Since I wrote 'e-Lawyering Is Not for the Fainthearted' in February 2007 (see, www.ljnonline.com/issues/ljn_ecommerce/23_10/news/148070-1.html), local attempts to regulate some aspects of e-commerce have continued, as local governments see sales-tax and fee revenue drying up, or fear the loss of control, or both. For example, Pennsylvania has considered applying hoary-auctioneer regulations ' including requirements for expensive, in-person, courses on how to conduct a live auction ' to eBay sellers. Sometimes these efforts appear to be nothing more than the last-ditch efforts of bricks-and-mortar firms to protect their business. Fortunately, one tech-savvy legislator, State Senator Rob Wonderling, a Republican who represents a district in suburban Philadelphia and is former president of a high-tech think tank, is leading the fight to get government 'out of the way' of today's business, especially e-business, by reining in bureaucrats trying to protect their turf against the challenges of e-commerce, just as traditional retailers once had to adapt to it (see, www.senatorwonderling.com/newsreleases/default.asp?NewsReleaseID=1670&SubjectID). In the news release on the Senator's Web site (cited above) titled, 'How the Board of Auctioneer Examiners Stole Christmas,' Wonderling complained:

'In our free-market Capitalist society, you would think allowing people to buy and sell items online is a good thing. Yet efforts are underway to put the bureaucratic brakes on all that good holiday trading. The Pennsylvania State Board of Auctioneer Examiners is telling EBayers and other online sellers that selling items online (that are not your own) will now require you to get an auctioneers license. While you may have never seen an auctioneer in person, no doubt you've seen them on TV speaking almost too fast to comprehend, banging on a gavel yelling 'sold'! I don't know about you, but most of my online purchasing doesn't require a gavel. ' Currently, the Board is actively pursuing EBay consignment shop owners. At least one small business owner has closed his doors because he is facing formal disciplinary action by the Board and civil penalties of up to $1,000 for each violation. That means he could ultimately have to pay a $1,000 fine for every item he has sold on EBay if he is found in violation of the licensing act. Most auction laws were written before computers became a household item. That's why I introduced Senate Bill 908 to exempt online traders from any obligation to get a license from the state. Requiring web-based sellers to endure the state's auctioneering bureaucracy does not make sense in the advent of Internet commerce. Brick and mortar auction houses and online trading are in many respects 20th century apples to 21st century oranges.'

I have frequently written about how e-commerce firms cannot ignore 'old laws' and principles, despite the new technology involved. For example, long-standing telemarketing rules have become a regulatory model for e-commerce. Most recently, the Federal Trade Commission ('FTC') requested comment on whether its generic rules for telephone marketing should apply specifically to e-commerce. The National Retail Federation ('NRF'), like many others who submitted replies, strongly agreed. 'Whether orders come in the mail, by telephone, or over the Internet is secondary to the point that customers should receive the products they ordered, at the price they agreed to pay, and within the time that was promised,' according to NRF SVP and General Counsel Mallory Duncan (see, www.informationweek.com/Internet/showArticle.jhtml?articleID=20280381).

While application of these 'remote sales' rules to e-commerce seems unsurprising and inherently fair, they currently do not apply because of a technicality. The Internet sales in place when the FTC's original rules were most recently amended ' in 1993 ' typically occurred over dial-up lines, and were therefore covered by the original telemarketing rules. But today's broadband connections require a regulatory update to level the playing field. In fact, the FTC itself seemed to telegraph its intent on this issue, when it raised the topic of Internet sales as part of a periodic regulatory review. The Commission said:

'The first potential change relates to merchandise ordered by computer. When the Commission amended the Rule in 1993 to cover telephone-order merchandise, it adopted a definition of 'telephone' that was meant to extend the Rule's coverage to all merchandise ordered by computer. Since then, the technology for accessing the Internet by computer has evolved to include means that do not use the telephone. The Commission accordingly requests comment on whether, to remove any doubt, it should amend the Rule to refer expressly to merchandise ordered by computer.' (Emphasis added.) (See, www.ftc.gov/opa/2007/09/fyi07262.shtm.)

At the state level, New York, for example, extended its existing protection for mail-order purchasers to Internet purchasers last year (see, Bill 1535; http://assembly.state.ny.us/leg/?bn=A01535&sh=t). Indeed, the FTC has been quite active in the last year in matters involving e-commerce. That focus is not surprising, given the intersection of the FTC's consumer-protection mission, and consumers' continuing preference to shop online. For example, in the area of privacy (one of the 'Ten Bits of Legal Advice Every Tech Client Should Get ' on Day One,' from the June 2006 edition of e-Commerce Law & Strategy; www.ljnonline.com/issues/ljn_ecommerce/23_2/news/146702-1.html), consumer advocates have urged the FTC to apply its own 'Do Not Call' rules (see, https://telemarketing.donotcall.gov/default.aspx), mirrored in many states, to online tracking, a core technique for e-commerce businesses (see, www.abajournal.com/news/ftc_to_create_do_not_track_list/). In other words, the FTC wants to regulate the use of cookies, a key online marketing technology. Moreover, as marketers have increasingly recognized the benefits of focused information that can be found through social networks (see my 'Caveat Amicus' article in the October 2006 edition of e-Commerce Law & Strategy; www.ljnonline.com/issues/ljn_ecommerce/23_6/news/147431-1.html), the FTC proposed 'online behavioral advertising privacy principles' last December (see, www.ftc.gov/opa/2007/12/principles.shtm; also, for more on this topic,
see next month's edition of e-Commerce Law & Strategy, and for some issues leading to the action, and background on behavioral advertising, see, 'Is Anyone Out There? Behavioral Targeting and Its Implications,' in the December edition at www.ljnonline.com/issues/ljn_ecommerce/24_8/news/149644-1.html).

The FTC sought to balance the privacy concerns naturally raised by the collection of extremely targeted information through social-networking Web sites against its users' legitimate needs. In the FTC's view, that balance is between 'the benefits (provided) to consumers in the form of free content and personalized advertising,' and the risk that tracking data could be 'used for purposes other than behavioral advertising, and whether such secondary uses, if they occur, merit some form of heightened protection.' The proposals would provide specific guidelines for collection of information for use in advertising targeted to individuals based on prior Web activity (and a requirement that consumers have an opt-out of providing such information), security for that data, and requirements for consumers to consent, affirmatively, to such uses of their personal information. The FTC proposal itself may be found at www.ftc.gov/os/2007/12/P859900stmt.pdf.

The Internet and Due Diligence

The same article also discussed using Internet search resources generally for business due diligence as an alternative to Google. However, several recent cases have gone further, and implied that attorneys may have a 'duty to Google' in certain cases, such as when trying to serve a lawsuit on missing defendants. They also revealed the increasing technical sophistication of our judges (and the risks to the legal system when judges go outside the record to do their own searching for relevant facts ' see, http://209.85.165.104/search?q=cache:naWwigVIYjcJ:www.ali-aba.org/doc/IFF0705.pdf+munster+groce&hl=en&ct=clnk&cd=7&gl=us). (Editor's note: Scroll down on the Web site when it appears to see the newsletter with the article 'Is There A 'Duty to Google'?') As one Florida court commented on traditional ways of locating defendants in Dubois v. Butler (see, www.4dca.org/May2005/05-25-05/4D04-3559.pdf), to admonish counsel that did not even try to locate a defendant online: 'Advances in modern technology and the widespread use of the Internet have sent the investigative technique of a call to directory assistance the way of the horse and buggy and the eight track stereo.' Similarly, an Indiana judge punished a plaintiff that failed to conduct a simple Internet search for a property owner by nullifying a tax sale, even though the court had already assumed (for purposes of the decision) that the property owner had actual notice of the sale; the trial-court judge himself was easily able to find possible leads online to that person's current location, but (to the judge's ire) the plaintiff had not pursued those leads. '[W]e discovered, upon entering 'Joe Groce Indiana' into the Google search engine, an address for Groce that differed from either address used in this case, as well as an apparent obituary for Groce's mother that listed numerous surviving relatives who might have known his whereabouts.' Munster v. Groce , 829 N.E.2d 52, at n. 3 (Ind.App., June 8, 2005), at http://caselaw.lp.findlaw.com/data2/indianastatecases/app/06080501mpb.pdf ' registration required.

In contrast, a Louisiana court specifically rejected another court's own use of Internet searches, as an impermissible attempt to resolve a case by 'judicial notice,' rather than based solely on the evidence in the record.

'[T]he Broyles contend that the trial court erred by conducting an Internet search to determine whether Dr. Weatherly's identity was reasonably ascertainable. We agree. A finder of fact may not consider evidence outside the record in making its findings. More particularly, it is well settled that the resolution of disputed issues by judicial notice is improper.'

Similarly, a Pennsylvania case preferred a telephone directory listing over an unsuccessful Google search (see, www.courts.state.pa.us/OpPosting/cwealth/out/1600CD06_5-31-07.pdf). In that case, the court applied a 'reasonable investigation standard' of 'ordinary common sense business practices to ascertain proper addresses' to hold that the tax bureau's failure to check the phone book, as statutorily required, did not meet that standard (even though the plaintiff had unsuccessfully looked online for an address). When the courts appear to be telling counsel to look for relevant information in as many places as is practicable, online and using traditional methods, reliance on a good law librarian and online research service has become invaluable to meet that burden efficiently. (This need is particularly ironic, in an era when many firms have downsized librarians and libraries because of the availability of electronic research tools.)

Forwarding e-Mail

While not as heart-rending as the post-mortem e-mail dilemmas discussed in 'When Death is More Than a Blue Screen' (April 2007 of
e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/23_12/news/148371-1.html), the problem of receiving or accessing e-mail after a change of Internet access provider presents the same practical challenge. How do you get e-mail sent to an old address, in an electronic world where there is no post office to which to submit
a forwarding-address form? Last October, the Federal Communications Commission ('FCC') took comments on the possibility of requiring providers to forward e-mail from closed accounts (see, www.siliconvalley.com/news/ci_7258712?nclick_check=1), in response to a citizen petition. As of this writing, no comment or decision had been posted. Of course, several providers already offer that service for a fee or even for no charge for those who retain their account, which often is free (see, for example, http://mail.google.com/support/bin/answer.py?answer=10957 for gMail's forwarding instructions). The petition to the FCC may be found at http://fjallfoss.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6519560444, and related material at www.cybertelecom.org/spam/email_portability.htm.

e-Mail Confidentiality

Several cases have developed concerning the confidentiality of electronic information, the subject of my 'Keeping e-Secrets' article
in the September 2007 edition of e-Commerce Law & Strategy (see, www.ljnonline.com/issues/ljn_ecommerce/24_5/news/149201-1.html). For example, New York's highest court allowed use of the ancient remedy of conversion for alleged conversion of electronic data ' contrary to the common-law limitation of that remedy to tangible property ' in Thyroff v. Nationwide Mutual Insurance Co., 8 NY 3d 283 (NY 2007), which readers can see at www.law.cornell.edu/nyctap/I07_0029.htm . The court said:

'In light of these considerations, we believe that the tort of conversion must keep pace with the contemporary realities of widespread computer use. We therefore answer the certified question in the affirmative and hold that the type of data that Nationwide allegedly took possession of ' electronic records that were stored on a computer and were indistinguishable from printed documents ' are subject to a claim of conversion in New York. Because this is the only type of intangible property at issue in this case, we do not consider whether any of the myriad other forms of virtual information should be protected by the tort.'

The recent Massachusetts Appeals Court case Basis Technology Corp. v. Amazon, Inc., No. 06-P-1048., 2008 Mass. App. LEXIS 8 (Mass. App. Ct. Jan. 7, 2008), continued this theme of the indistinguishability between electronic and paper records in ruling that a settlement agreement negotiated by e-mail could be enforced just as if it had been negotiated on paper. The risks to employees who use their employer's e-mail system for personal, confidential, messages was highlighted by a New York trial-court decision allowing discovery of the employee's otherwise privileged e-mail messages with his counsel, because of the employer's typical workplace e-mail policies establishing the employer's rights to review e-mail on its system. Scott v. Beth Israel Medical Center, Inc., 2006 N.Y. App. For tech warriors who live their lives in their workplace inboxes, Scott presents a sobering lesson of the risks of not separating one's work and personal lives, which are increasingly lived through e-mail (a topic covered in 'When the CEO Wants His Hotmail,' in the June 2007 edition of e-Commerce Law & Strategy, www.ljnonline.com/issues/ljn_ecommerce/24_2/news/148717-1.html).

Log On, But Don't 'Check Out'

Finally, in 'Tools to Save Time That You Do Not Have,' in the August 2006 edition of e-Commerce Law & Strategy (www.ljnonline.com/issues/ljn_ecommerce/23_4/news/147032-1.html), I discussed the importance of 'mindfulness' in the pressure-driven tech economy of experiencing the moment ' instead of worrying about 'the e-mail that may arrive' and while 'keyboarding on the e-ecommerce treadmill.' A business columnist, William Bunn, expanded on that theme when he coined the term technological autism (see, www.reportonbusiness.com/servlet/story/RTGAM.20071022.wgttechtism1022/BNStory/robNews/home). Bunn speculated that our obsession with remaining available for clients and business messages, created by constant connectivity appliances ' bringing on a phenomenon termed ringxiety ' has risen beyond annoying but necessary job requirements to the level of a formal medical disorder, or even an addiction. Certainly, every law-firm lawyer knows and lives with people who, because of their dependence on their personal digital assistants, have come to be known colloquially as 'crackberry' addicts. The article even reports grave physical injuries suffered by those who mindlessly stepped into traffic while not paying attention to their surroundings while using their devices. 'Fifty percent 'not there' often leads to 100% 'not there.” But in the last year, the ever-evolving growth of technology has shown that 'the Internet-speed driven pressure to work more ' and faster' hasn't gone away, and probably is accelerating. In 2008, therefore, the work/life balance remains a challenge for all lawyers ' and we hope that e-Commerce Law & Strategy and our other ALM publications can keep you up-to-date at work, and leave you time for 'life.'