Court in the Net: Jurisdiction in Cyberspace

PARIS AND BOSTON (07/27/2000) - Too many people in Silicon Valley believe the Internet is, or should be, above the law and immune from any legal strictures.

So said Henry H. Perritt Jr, dean of the Chicago Kent College of Law, addressing members of the American Bar Association (ABA) at a recent conference on cyberlaw in London.

Perritt doesn't agree with the Silicon Valley pundits that the Net and the law don't mix, but "equally wrong is to stand by while 200 countries try to exert extraterritoriality over the Internet," he said.

The issue of law on the Internet is a complex one. Between the two all-or-nothing extremes detailed above lies a broad spectrum of possibilities.

Many people revel in the freedom to express themselves and the freedom from prohibitions such as zoning restrictions that the Internet apparently affords.

With no law at all, however, the Internet would be no place to do business -- or to live under the shadow of.

Laws give people certainties about their rights and responsibilities: they make life more predictable.

"Without predictability, business will not be able to act efficiently, or price services effectively," Thomas Vartanian, a Washington, D.C.-based lawyer, said at the London conference.

What makes the Net different from the conventional world of business is that it is hard to say where a transaction has taken place, and therefore who has jurisdiction -- the authority to interpret and apply law -- over the transaction. Vartanian chaired the ABA's Global Cyberspace Jurisdiction Project, which has been studying this question for the last two years.

For example: if you buy a laptop in your local computer store, you know your legal rights. If the computer doesn't work when you get it home, and the store won't settle up, you can probably take the dispute to your local small claims court.

But buy the same computer online, from a vendor on the other side of the world, perhaps through a dealer based in yet a third country, and your rights are a lot less clear. Whose consumer protection laws apply: yours, those in the vendor's home country, or those of the intermediary?

Without knowing which particular set laws apply, it's impossible to know who to sue.

"Small claims courts don't work in cyberspace," observed Ron Plesser, chair of ABA's advertising and consumer protection group.

If a little legislation is a good thing, though, a lot is not necessarily better.

Web sites are visible pretty much the world over. Equally, a Net surfer can access sites anywhere in the world. This has tempted some countries to attempt to impose their jurisdiction in unexpected places -- a situation which is made all the more complex because they effectively get two bites at the jurisdictional cherry.

"There are two questions of jurisdiction," explained Vartanian. "'Where can I be sued?', or the choice of forum, and 'Whose laws apply?', or the choice of law."

A case in point is that of U.S. Web portal provider Yahoo Inc., being sued by the International League Against Racism and Anti-Semitism (LICRA) and the French Union of Jewish Students (UEJF) because the company allows individuals to sell war memorabilia, including Nazi items, through the online auction pages of its U.S. Web site.

The sale of Nazi memorabilia (and similar items deemed to be liable to incite racial hatred) is illegal in France. LICRA and UEJF argue that, since sale of such materials is banned in France, Yahoo must prevent French Internet users from accessing the pages. But the company counters that the sale of such memorabilia is perfectly legal in the U.S., where Yahoo and its Web servers are based.

The portal company has a French subsidiary, Yahoo SA, which has already blocked access to the auctions pages in question through its Web site at http://www.yahoo.fr/. Like the 22 other Yahoo subsidiaries worldwide, Yahoo SA recognizes that it has to abide by the laws of the country in which it is based. But while Yahoo SA quickly gave in, its U.S. parent company Yahoo fought on.

For the French court trying the Yahoo case, the answer was clear-cut: if the reader of a Web page is on French soil, then French law applies. In a landmark ruling on May 22, the Tribunal de Grande Instance, France's highest court, ordered Yahoo Inc. to make it impossible for Internet users in France to view online auctions of Nazi memorabilia on its U.S. Web site. The court told the U.S. company to return in two months to explain how it would implement the block.

This is not the first time the question of extraterritorial jurisdiction over Web content has been raised. In November of last year, Felix Somm, ex-manager of CompuServe Deutschland GmbH, was cleared on appeal of pornography charges brought against him in Germany after newsgroups carried on parent company CompuServe Inc.'s U.S. servers were found to contain pornographic material. The judge determined that it had been technically impossible for Somm to close the illegal newsgroups in question.

Following in the footsteps of the CompuServe case, Yahoo is arguing that it would be technically impossible to block just French citizens from access to its online auctions, should the auctions contain objectionable items.

At the latest hearing, last Monday, Yahoo presented not a technical solution but its excuses. The difficulty of identifying French visitors to the company's U.S. site, and deciding which pages were appropriate for them to view, was disproportionate to the benefits, the firm said.

"It's difficult to say for sure where Web site visitors are from," said Web security consultant Jean-Denis Gorin of Edelweb SA, who acted as an expert witness for Yahoo. He explained that current techniques for relating users' IP (Internet Protocol) addresses to their ISP (Internet service provider) -- and hence to the country in which they are likely to be found -- had a margin of error of 20 percent.

New York-based Infosplit Inc., which advised the UEFJ during the case, believes it has an answer to this, in the shape of its product One to One. The product "allows a company to geographically locate in real time a customer and redirect him to an alternative page," according to Arie Aboulafia, vice president of business development at Infosplit.

Such software doesn't meet the strict criteria set by the court, counters Gorin. In particular, users of America Online Inc.'s (AOL's) Internet access service are impossible to locate by means of their IP address because requests for Web pages from AOL subscribers are first routed through servers at the company's U.S. headquarters before being sent out onto the Internet, Gorin said. This state of affairs means that, wherever AOL subscribers are physically in the world, they always appear to such locating software to be in Virginia where AOL is located. This problem alone makes it impossible to definitively locate some 13 percent of French Internet users, said Gorin. AOL France would not comment on its share of the French Internet access market, but a company spokeswoman said AOL has 600,000 paying subscribers in France.

Even if the question of place -- whether the user is in France or not -- can be solved, there remains the question of to whose law the Web pages should be required to conform.

"The most difficult problem is to analyze all the pages referenced on the Yahoo site in order to know whether they are legal in France or not," said Gorin.

The judge has delayed his decision in the Yahoo case in France in order to seek further independent technical advice. [See "Yahoo Wins Court Reprieve in Nazi Sales Case," July 24.] He is due to deliver his verdict Aug. 11.

The verdict may entail more than just technical problems. "The question is not whether the French court can do it (stop Yahoo from displaying the auctions on its the U.S. site), but whether it can enforce it," said Paul Schiff Berman, a professor of law at the University of Connecticut. "Realistically, given the First Amendment repercussions here, only informal diplomatic pressure could help."

Yahoo's General Counsel John Place is a big fan of the First Amendment to the U.S. constitution, which guarantees, among other things, free speech. Speaking at the ABA conference in London, before the latest hearing, he said, "I view the First Amendment as the most brilliant political invention ever devised. I think it's responsible for the resilience of our democracy over 200 years."

Reconciliation of the U.S. predilection for freedom of speech with the European reluctance to give a platform to racists will not be achieved in one court case. In a statement after the hearing, Yahoo called for discussion at all levels.

"This case opens up broader issues on Internet jurisdiction -- whether one country has the jurisdiction to regulate the content of Web sites in another country -- that should be discussed and addressed by representatives of governments and the Internet industry around the world," the Yahoo statement read.

One possibility which came up during the deliberations of the ABA is to make a fresh start. "It's as if we've landed on Mars and we're constructing a commercial and business setting," said Vartanian in a statement issued Tuesday.

"We have to establish new rules of engagement and we have to get people used to dealing with those new rules."

But not too hastily, in Perritt's opinion. "The law should abstain for a while, to give some breathing room while solutions bubble up," he concluded.

The American Bar Association's report can be found online at http://www.abanet.org/buslaw/cyber/initiatives.htmlYahoo Inc., based in Santa Clara, California, can be reached at +1-408-731-3300 or via the Internet at http://www.yahoo.com/. Yahoo SA, based in Paris, can be reached at +33-1-7091-2000 or on the Web at http://www.yahoo.fr/. LICRA (La Ligue Internationale Contre Le Racisme et L'Antisemitisme), based in Paris, can be reached at +33-1-4508-0808 or on the Web at http://www.licra.com/. UEJF (L'Union des Etudiants Juifs de France), based in Paris, can be reached at +33-1-4734-6200 or found on the Web at http://www.uejf.com/uejf/. Edelweb, based in Paris, can be reached at +33-1-5654-1940 or found on the Web at http://www.edelweb.fr/.

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