Novel Internet Statute Strategies

These challenges require novel statutory strategies to meet the Internet's current and future status as a channel and communications domain that requires regulation at various levels of operation and use, including e-commerce.

Three unique Internet issues discussed in this article need to be regulated:

1. Property rights associated with the Internet, such as domain name or e-mail access or the rights to virtual property acquired through interaction with an Internet game such as Sims Online;
2. Virtual crime, such as unlawful file-sharing; and
3. Rights of avatars in virtual-reality online games.

To date, three strategies to bring effective Internet statutes to the books have been used:

1. Limiting directives to standards on which all concerned parties in all enforcing nations agree;
2. The assumption that Internet users in the jurisdiction that creates the statute must be regulated; and
3. Internet facilitators in the boundaries of the jurisdiction from which the regulation springs must be regulated ' Internet service providers (“ISPs”), for instance.

Getting Every Jurisdiction On Board

As for the first strategy, particularly in protecting people's legal claims to physical, intellectual and virtual property, two implementation options are available:

1. Make Internet statutes universally acceptable so all countries will enforce them or will agree to assign statute-enforcement responsibility to all nations, which, unfortunately appears infeasible because of diversity of legal imperatives and the lack of impetus to enact universal statues; or
2. Devise a process to divide Internet-statute responsibility among countries to enforce existing statutes.

Of these two options, the second appears more workable. Let's take a look at how it might work.

First, Congress could pass a jurisdictional statute bearing on cases that could be heard in federal and state courts; in particular, the law might provide U.S. courts with jurisdiction only in cases of an Internet transaction and when no other courts of competent jurisdiction exist.

Second, the executive branch could try to integrate the statute into U.S. bilateral-jurisdiction treaties and define competent jurisdiction for each treaty.

Third, the courts could then address any federalism issues caused by Congress' jurisdictional grant so that a jurisdiction would be available if an issue arose. Problems might crop up in the second option over lack of some bilateral treaties, but it's likely Internet disputes could be assigned to a court in a competent jurisdiction.

Controlling Users

The second regulatory strategy, to statutorily control Internet transactions, would regulate Internet users in the jurisdiction of the entity propagating the regulations, especially when guarding against such activities as file sharing. This strategy would be feasible only if technological action against sites beyond U.S. jurisdiction were allowed; for example, if non-U.S. Internet transactions were channeled through one set of servers, then technology could block unlawful transactions. This technological strategy is employed by China, Iran, Cuba and other nations, but lack of due process in technological blocking leaves much to be desired about this strategy being used in the United States and other democracies.

Leashing the Facilitators

The third strategy, to statutorily regulate Internet transactions by regulating Internet facilitators in the jurisdiction of the entity propagating the regulations, such as ISPs, is used for sales-tax collections; specifically, vendors must be state sales-tax collection agents.

Many Considerations, First Amendment Issues

No matter which strategy or combination of them is used, statutes produced must address six types of disputes.

1. Between goods and/or services or technology providers, such as ISPs, and the state, over how an Internet transaction is designed and maintained.
2. Between consumers and the state over whether consumers may participate in certain transactions and what elements those transactions may entail.
3. Between consumers and goods and/or services or technology providers, such as an ISP, over what consumers and providers may and may not do in, and regarding, transactions.
4. Between consumers over whether one party's Internet activities violated another's legal rights.
5. Between goods and/or services or technology providers, such as an ISP, and third parties not using the Internet who complain over an array of possible
   activities on the Internet that harm the third party's legally protected interests.
6. Between consumers and third parties not playing, for instance, a virtual-world game, and who claim the consumers' Internet activities harmed the third party's legally protected interests.

Because the Internet may be considered a form of media, any regulatory schema will likely raise significant First Amendment issues.

The first two categories, for instance, likely will raise constitutional issues, as will certain aspects of the third category.

For example, First Amendment issues will arise if the government tries to restrict participation in virtual worlds in which people play games, acquire property and engage in activities, including sex. Some people argue that goods and/or
services or technology providers, like the government, cannot limit the expression, for example, of virtual-game players. In response, the game owners can be expected to raise their own First Amendment defenses. 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. An examination of these issues in disputes involving online virtual worlds and games follows farther below.

At least some issues will have been litigated as traditional commerce concerns, but 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.

Beyond the constitutional issues, actions might be brought based on copyright, defamation and intentional infliction of emotional distress. Likelihood of legal action increases with arguments that theories of real-world property should apply to assets in virtual worlds, and suggestions that even criminal law may apply to virtual-world disputes.

There's also the possibility that dispute-resolution mechanisms on the Internet will evolve. The most obvious method of resolving disputes would be through the goods and/or service or technology providers' actions. A consumer may have the opportunity to complain to the provider about another consumer's actions and, if the provider decides the other consumer did something wrong, then the provider can act to ameliorate the harm done ' if the action is consistent with the end-user license agreement the consumers accepted.

Informal sanctions might also be imposed. Consider: If a consumer does something other consumers believe is unacceptable, then they may refuse to interact with the offender. An offender's access might also be limited or cut off.

What the Courts Have Said

Video-game case-law authority exists that may be applied to a virtual-world controversy and that suggests the games aren't 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), for instance, businesses were denied the opportunity to install video games because of statutes. The businesses raised a First Amendment claim, arguing that 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, a video game is considered pure entertainment with no informational element. Similarly, as traditional First Amendment issues are raised, so will traditional First Amendment exceptions be raised, such as a defamation action or when obscene materials are involved.

Until recently, it was possible that, because 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 sex acts. The Supreme Court recognized a First Amendment exception for non-obscene child pornography in New York v. Ferber, 458 U.S. 747 (1982), in which the Court saw a need to suppress the market for such material to prevent sexual abuse of children in the material's production and to suppress the permanent record of abuse that child pornography embodies.

In Osborne v. Ohio, 495 U.S. 103 (1990), the Court added another justification for the exception for the use of child pornography to recruit and train new victims of sexual abuse. Pedophiles, for example, could use the materials to try to convince children that sex acts with adults are normal and to teach the children how to perform the acts. That concern led some courts to conclude that animated or virtual child pornography was unprotected because it could be used for the same purpose. (See, United States v. Acheson, 195 F.3d 645, 650 (11th Cir. 1999), which states that criminalizing possession of images of cyberminors engaged in sexually explicit conduct is justified and United States v. Hilton, 167 F.3d 61, 76 (1st Cir. 1999), a case that states it is “well within Congress' 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 made illegal the possession of pornographic images that appeared to depict children, have since been overruled (see, Ashcroft v. Free Speech Coal., 535 U.S. 234, 244, 258 (2002), which found the statute to be overbroad and unconstitutional). Also, the U.S. Supreme Court struck down a law that prohibits the distribution and possession of virtual child pornography that “appears to depict real children.” Ashcroft. Thus the possibility of prosecuting virtual-world child pornography, despite the fact that the computer-generated images are virtually indistinguishable from real children, is precluded under existing statutes that bar child pornography involving real children.

But it's crucial that not just “up the road” ' in fact, now ' that these and related virtual-world and real-world issues affecting global online transactions and activities be addressed, and that effective, workable and equitable solutions be found.

Much as societies have experienced during the evolution of various media, contemporary governments are struggling to formulate and implement laws governing Internet use, which is gaining depth and breadth as part of people's everyday lives ' as an information source, a forum for escape through entertainment, a communication tool and, most importantly, a business platform providing alternatives to traditional bricks-and-mortar commerce.

But the Internet presents special regulatory challenges. Any effective statute, for instance, must be prepared by an entity with the authority to draft, implement and, to some extent enforce, the statute.

Efficacy, of course, hinges on jurisdiction, but the Internet knows no geography and, so, users leap boundaries with a finger poke or thumb flick.

These challenges require novel statutory strategies to meet the Internet's current and future status as a channel and communications domain that requires regulation at various levels of operation and use, including e-commerce.

Three unique Internet issues discussed in this article need to be regulated:

1. Property rights associated with the Internet, such as domain name or e-mail access or the rights to virtual property acquired through interaction with an Internet game such as Sims Online;
2. Virtual crime, such as unlawful file-sharing; and
3. Rights of avatars in virtual-reality online games.

To date, three strategies to bring effective Internet statutes to the books have been used:

1. Limiting directives to standards on which all concerned parties in all enforcing nations agree;
2. The assumption that Internet users in the jurisdiction that creates the statute must be regulated; and
3. Internet facilitators in the boundaries of the jurisdiction from which the regulation springs must be regulated ' Internet service providers (“ISPs”), for instance.

Getting Every Jurisdiction On Board

As for the first strategy, particularly in protecting people's legal claims to physical, intellectual and virtual property, two implementation options are available:

1. Make Internet statutes universally acceptable so all countries will enforce them or will agree to assign statute-enforcement responsibility to all nations, which, unfortunately appears infeasible because of diversity of legal imperatives and the lack of impetus to enact universal statues; or
2. Devise a process to divide Internet-statute responsibility among countries to enforce existing statutes.

Of these two options, the second appears more workable. Let's take a look at how it might work.

First, Congress could pass a jurisdictional statute bearing on cases that could be heard in federal and state courts; in particular, the law might provide U.S. courts with jurisdiction only in cases of an Internet transaction and when no other courts of competent jurisdiction exist.

Second, the executive branch could try to integrate the statute into U.S. bilateral-jurisdiction treaties and define competent jurisdiction for each treaty.

Third, the courts could then address any federalism issues caused by Congress' jurisdictional grant so that a jurisdiction would be available if an issue arose. Problems might crop up in the second option over lack of some bilateral treaties, but it's likely Internet disputes could be assigned to a court in a competent jurisdiction.

Controlling Users

The second regulatory strategy, to statutorily control Internet transactions, would regulate Internet users in the jurisdiction of the entity propagating the regulations, especially when guarding against such activities as file sharing. This strategy would be feasible only if technological action against sites beyond U.S. jurisdiction were allowed; for example, if non-U.S. Internet transactions were channeled through one set of servers, then technology could block unlawful transactions. This technological strategy is employed by China, Iran, Cuba and other nations, but lack of due process in technological blocking leaves much to be desired about this strategy being used in the United States and other democracies.

Leashing the Facilitators

The third strategy, to statutorily regulate Internet transactions by regulating Internet facilitators in the jurisdiction of the entity propagating the regulations, such as ISPs, is used for sales-tax collections; specifically, vendors must be state sales-tax collection agents.

Many Considerations, First Amendment Issues

No matter which strategy or combination of them is used, statutes produced must address six types of disputes.

1. Between goods and/or services or technology providers, such as ISPs, and the state, over how an Internet transaction is designed and maintained.
2. Between consumers and the state over whether consumers may participate in certain transactions and what elements those transactions may entail.
3. Between consumers and goods and/or services or technology providers, such as an ISP, over what consumers and providers may and may not do in, and regarding, transactions.
4. Between consumers over whether one party's Internet activities violated another's legal rights.
5. Between goods and/or services or technology providers, such as an ISP, and third parties not using the Internet who complain over an array of possible
   activities on the Internet that harm the third party's legally protected interests.
6. Between consumers and third parties not playing, for instance, a virtual-world game, and who claim the consumers' Internet activities harmed the third party's legally protected interests.

Because the Internet may be considered a form of media, any regulatory schema will likely raise significant First Amendment issues.

The first two categories, for instance, likely will raise constitutional issues, as will certain aspects of the third category.

For example, First Amendment issues will arise if the government tries to restrict participation in virtual worlds in which people play games, acquire property and engage in activities, including sex. Some people argue that goods and/or
services or technology providers, like the government, cannot limit the expression, for example, of virtual-game players. In response, the game owners can be expected to raise their own First Amendment defenses. 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. An examination of these issues in disputes involving online virtual worlds and games follows farther below.

At least some issues will have been litigated as traditional commerce concerns, but 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.

Beyond the constitutional issues, actions might be brought based on copyright, defamation and intentional infliction of emotional distress. Likelihood of legal action increases with arguments that theories of real-world property should apply to assets in virtual worlds, and suggestions that even criminal law may apply to virtual-world disputes.

There's also the possibility that dispute-resolution mechanisms on the Internet will evolve. The most obvious method of resolving disputes would be through the goods and/or service or technology providers' actions. A consumer may have the opportunity to complain to the provider about another consumer's actions and, if the provider decides the other consumer did something wrong, then the provider can act to ameliorate the harm done ' if the action is consistent with the end-user license agreement the consumers accepted.

Informal sanctions might also be imposed. Consider: If a consumer does something other consumers believe is unacceptable, then they may refuse to interact with the offender. An offender's access might also be limited or cut off.

What the Courts Have Said

Video-game case-law authority exists that may be applied to a virtual-world controversy and that suggests the games aren't 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), for instance, businesses were denied the opportunity to install video games because of statutes. The businesses raised a First Amendment claim, arguing that 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, a video game is considered pure entertainment with no informational element. Similarly, as traditional First Amendment issues are raised, so will traditional First Amendment exceptions be raised, such as a defamation action or when obscene materials are involved.

Until recently, it was possible that, because 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 sex acts. The Supreme Court recognized a First Amendment exception for non-obscene child pornography in New York v. Ferber , 458 U.S. 747 (1982), in which the Court saw a need to suppress the market for such material to prevent sexual abuse of children in the material's production and to suppress the permanent record of abuse that child pornography embodies.

In Osborne v. Ohio , 495 U.S. 103 (1990), the Court added another justification for the exception for the use of child pornography to recruit and train new victims of sexual abuse. Pedophiles, for example, could use the materials to try to convince children that sex acts with adults are normal and to teach the children how to perform the acts. That concern led some courts to conclude that animated or virtual child pornography was unprotected because it could be used for the same purpose. ( See , United States v. Acheson , 195 F.3d 645, 650 (11th Cir. 1999), which states that criminalizing possession of images of cyberminors engaged in sexually explicit conduct is justified and United States v. Hilton , 167 F.3d 61, 76 (1st Cir. 1999), a case that states it is “well within Congress' 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 made illegal the possession of pornographic images that appeared to depict children, have since been overruled ( see , Ashcroft v. Free Speech Coal. , 535 U.S. 234, 244, 258 (2002), which found the statute to be overbroad and unconstitutional). Also, the U.S. Supreme Court struck down a law that prohibits the distribution and possession of virtual child pornography that “appears to depict real children.” Ashcroft. Thus the possibility of prosecuting virtual-world child pornography, despite the fact that the computer-generated images are virtually indistinguishable from real children, is precluded under existing statutes that bar child pornography involving real children.

But it's crucial that not just “up the road” ' in fact, now ' that these and related virtual-world and real-world issues affecting global online transactions and activities be addressed, and that effective, workable and equitable solutions be found.