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New Economy Creates Patchwork Of Murky Laws
Though the Internet heralded promise of speed and efficiency for businesses around the world, companies now eager to mine foreign markets are finding that they must cope with a murky global legal framework facilitated by conflicting patchwork commercial laws.
Thanks to a slew of recent legal battles that have sprung up around the globe, companies and e-commerce vendors are having difficulties deducing which jurisdiction they operate under as the pressures of commercial competition pit U.S.-based Web sites against the local and regional laws of different countries.
The recent court decision in Paris involving Yahoo and the French government, for example, highlights the looming problem of regulating cultural content. The ruling handed down last week by Judge Jean-Jacques Gomez — who upheld an earlier court decision — that Mountain View, CA-based Yahoo must regulate any content that violates the prohibition of the sale of racist materials has fired the proverbial second shot in the legal wrangling over cyberspace jurisdiction. The ruling creates a roadblock for the growth of international commerce and trade, according to some industry experts.
Yahoo's auction portal served as the means for anonymous Web surfers to buy and sell Nazi memorabilia, namely clothing items and autographs. Yahoo argued that it is technologically impossible to geographically divide Web services and filter certain materials. But technology experts like Internet founding father Vinton Cerf, who is now WorldCom's senior vice president of Internet architecture and technology, told the French court that such filtering would not be impossible, though he since has amended his opinion, telling Agence France-Presse during an interview in Paris that subjecting portals and Internet service providers to such rulings would halt the growth of the Internet.
Content Crimes Differ Culturally
However, Yahoo is simply the latest example of what could be considered the increasingly trend of a piecemeal legal framework governing global cyberlaw.
"Throw into that mix the issue of who you are liable to under national law for content crimes, and what you got is every country with its own set of content laws," said Jonathan Winer, a lawyer with Alston and Bird and former deputy assistant secretary for International law at the U.S. State Department.
The discrepancy already is sing major roadblocks for online retailers. Earlier this year, German regulators forced Wisconsin-based clothing retailer Lands' End to revoke its famous unlimited product guarantees, as the company's gimmick violated Germany's 1932 Free Gift Act which forbid retailers from attracting customer's with free offers.
These types of cases present the opportunity for countries to level the playing field in the fiercely competitive global e-commerce markets. Rudy Baca, an analyst with the Washington, DC-based Precusor Group, noted that the legal trends abroad are a new phenomenon of trade protectionism using obsolete commercial laws. "It creates a lot of uncertainty and what business hates is uncertainty," Baca said. "The whole point of the Internet was that you were supposed to take advantage of the efficiency [of the technology]."
European Parliament voted a month ago to revise the rules of the 1968 Brussels convention-which address international commerce — for the growth of e-commerce. Under the new revisions, consumers would have the ability to sue according to their local laws. Yet huge backlash from European industry groups have stopped the implementation of the amendments "dead in the water," Winer said.
Preserving The Integrity Of National Laws
But industry sources say the uproar over the sale of racist materials in Germany is more about preserving the integrity of national laws, which are markedly different when comparing the European and American markets.
"There is a certain gap between what is illegal here and illegal in the United States," said a source at America Online's German branch. "People try to block content and control the global medium by using national laws, which obviously doesn't work." The source said that AOL Germany doesn't face such scrutiny because "everyone knows we are doing our best and that is all we can do."
These new economy conundrums have been stewing for years. In 1995, former CompuServe Germany President Felix Somm was investigated and later convicted for peddling child pornography through CompuServe's system. Somm was given a two-year suspended sentence and fined 100,000 marks ($56,000) for failing to block Internet access to child pornography.
"Some of these suits are a railing against the globalization of content and the fact that governments are losing control," said Catherine Mann, an e-commerce expert with the Institute for International Economics. "I do think it makes a dent in e-commerce in Europe."
But German regulators maintain that their pressing need to rein in challenges to its laws on racism. A trend of recent violence there has heightened fears over a resurgence of right wing and neo-Nazi extremism. Germany's Justice Minster Herta Daeubler-Gmelin moved to ban Nazi slogans from Web addresses under the country's top-level domain. Similarily, German officials approached companies such as Amazon.com and pressured them into prohibiting the sale of merchandice such as Hitler's Mein Kampf.
Rabbi Abraham Cooper of the Simon Wiesenthal Center, a Los Angeles group that monitors hate crimes and related material told Reuters that Web sites have the choice to limit hate speech and material on the Net. The group, which said it is increasing its efforts to stop the proliferation of racist information on the Net, has secured its own agreements with companies like Amazon to limit sales of Hitler's biography. "When I finally spoke to (Amazon Chief Executive) Jeff Bezos, he conceded they shouldn't be knocking on the doors of people in Germany and peddling hate,'' Cooper said.
The bigger question is enforcement, Baca said, adding that eventually industry and policy groups will need to come together to hammer out some agreements in global cyberlaw. Similarly, the American Bar Association has also suggested the creation of a multinational "global online standards commission," which would set standards for content and Internet-based commercial transactions.
- by Maureen Sirhal
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