Our 1998 Internet Law Year in Review covers developments from November 1997 through October. This is our second annual review and, barring any serious year-2000 problems, more will follow.
The statistics confirm 1998's rapid growth in Internet use. The number of Internet service providers has nearly tripled to about 4,000, and America Online passed the 13 million-subscriber mark. Although it is hard to measure how many people are online, nearly 10 million of them have made online purchases, according to a survey by Nielsen Media Research and CommerceNet. In fact, Apple Computer reportedly sold $12 million worth of products in its first 30 days of online sales. Much to the chagrin of traditional brokers, Cyber Dialogue reported that one in 10 adult online service users are actively trading stocks online.
Bandwidth demands also increased recently. UUNet, an Internet backbone provider, reported that the volume of Internet traffic, which previously doubled every year, now doubles every three to six months.
Use of the Internet by government agencies is clearly on the rise. For example, the Patent and Trademark Office is now making its database of federally registered trademarks available over the Internet. It also permits electronic trademark filings over its Web site, literally allowing filings as late as 11:59 p.m. on a given day. What a boon to procrastinators!
States are now permitting corporate activities to be accomplished over the Internet as well. Legislation in New York allows electronic notice of shareholder meetings. Such uses of the Internet will only continue to grow in the future.
Many agencies now only make documents available online, or if paper versions are available, they can only be obtained at a much higher cost than generally free online copies. In many fields, the assumption now is that an agency will have a Web site that will have accurate information available about the agency's functions.
In addition to making available information of value to the legal profession, expanded Internet use gives rise to an array of legal issues on civil and criminal fronts, as diverse as the civil antitrust action by the federal government against Microsoft to several federal criminal cases brought against alleged Internet gambling operations in New York State.
This review categorizes the major developments in some orderly fashion -- without warranties, of course.
Jurisdiction and Commerce
The absence of territorial boundaries on Internet activities continues to raise jurisdictional issues.
That the active use of online communications constitutes "interstate commerce" was confirmed in United States v. Kammersell, 7 F.Supp.2d 1196 (D.Utah 1998), where a threatening message sent between Utah residents via America Online (which routes all such traffic through Virginia) satisfied the interstate-commerce requirement for purposes of a federal criminal law.
However, the federal court for California's Northern District held that the mere offering of merchandise on a Web site without specifically targeting California residents did not give rise to personal jurisdiction in that state. See No Mayo-San Francisco v. Memminger, 1998 WL 544974 (N.D.Cal. 1998).
The Minnesota Supreme Court reached a 3-3 stalemate in the continuing saga of State by Humphrey v. Granite Gate Resorts. The standoff's effect affirms the appellate decision, which held that Minnesota did have jurisdiction over online gambling activities directed to Minnesota residents from a Web site in Nevada. See 576 N.W.2d 747 (Minn. 1998).
Similarly, GTE New Media Services Inc. v. Ameritech Corp., et al, 1998 WL 682984 (D.D.C. 1998), was an antitrust action in which regional Bell Operating Companies were accused of conspiring to exclude GTE's Web-based yellow-page services from the market through the control of Internet access points. The court found that it had jurisdiction over the defendants as a result of the injury caused within the court's jurisdiction and the fact that plaintiffs derived economic benefit in the forum jurisdiction from their own yellow page Web sites outside the jurisdiction.