E-Commerce Law Week, Issue 390

David and Goliath Face a Common Enemy in China
In the past few weeks, the Goliath of the online world (Microsoft) and a possible David (Google) have faced remarkably similar problems in China.  The travails of both companies, which have led to a raft of news coverage and the scheduling of congressional hearings, have stemmed from decisions to restrict their services in response to pressure from the Chinese government.  Notwithstanding China's decisive moves towards a capitalist economic system, its nominally communist government continues to maintain authoritarian policies, including discouraging dissent in the press and on the Internet.  Thus, while Internet companies have to deal with the legal and economic realities of the countries in which they do business, it's the real Davids of the world -- the political dissidents, the muckraking reporters, the budding entrepreneurs -- who get the short end of the stick when companies cooperate with authoritarian regimes by suppressing content.

Will Offshoring Be Blown Off Course?
There has been a lot of talk over the last few years from federal government officials and members of Congress regarding limits on federal contractors' ability to send government work offshore or to use foreign nationals on government contacts (either abroad or in the US).  But, as with the case of Internet gambling, the US government's bark has been worse than its bite.  The reality is that there are no general legal restrictions on offshoring unclassified federal contract work.  Currently, the only restrictions that would apply would be those included in an individual contract based on individual agency policy.  Nevertheless, we expect that this issue will heat up this year given the congressional elections in the Fall.  The issue will also likely extend beyond federal contractors.  Several states have already passed laws limiting the offshoring of state contract work, and similar bills are pending in other states.  Moreover, Congress could move to restrict any company's -- not just federal contractors' -- ability to send personal data abroad, tapping into growing worries about identity theft and fraud.  So the offshoring issue definitely bears watching in 2006.

Industry Tackles Data Security
Much recent data security coverage has focused on legislation at the state and federal levels and aggressive enforcement actions by the Federal Trade Commission.  On the whole, the private sector has been fairly quiet when it comes to industry-wide security initiatives.  But that may be about to change, as the credit card industry recently announced initiatives that could have a real impact in enhancing data security practices.  First, MasterCard and Visa USA officials are reportedly discussing the development of an independent standards-setting organization to certify that member banks and merchants meet minimum data security requirements.  Such an entity would both set and monitor standards for the entire payment card industry.  This would not only improve security in that industry, but it would also have the indirect effect of contributing to the developing "standard of care" for data protection across industry sectors.  Meanwhile, MasterCard recently announced that it is launching an incentive program to bring merchants into its SecureCode program, which securely collects and processes cardholder authentication data from online merchants. 

Score Another One For CDA Immunity
Given the ever-growing mountain of case law against them, it‘s safe to say that plaintiffs face an uphill slog trying to sue an Internet service provider (ISP) based on its dissemination of third-party content.  But like Sisyphus, they just keep trying to push the rock uphill.  And courts continue to send them tumbling back downward, citing the Communications Decency Act’s (CDA) sweeping liability shield against holding "interactive computer services" civilly liable for information provided by a third party.  But instead of giving up, plaintiffs are simply searching for more creative arguments to get around the immunity provided by section 230 of the CDA.  A case in point is Doe v. Bates, a recent lawsuit against Yahoo! in which the plaintiffs argued that since they had brought their claim under a section of a federal criminal statute allowing for a private right of action, Yahoo! should lose its CDA immunity because section 230 has an exception for "enforcement" of a "federal criminal statute."  While acknowledging that this reasoning was indeed "novel," a magistrate judge for the Eastern District of Texas nonetheless concluded that any civil claim was barred by section 230, even if the claim was based on a provision that was part of a broader criminal statute.  Accordingly, the judge recommended that Yahoo!’s motion to dismiss the case be granted.

Steptoe IP Teleconference Series Continues on February 23
Steptoe & Johnson LLP, in partnership with IP Law and Business magazine, is pleased to present its quarterly teleconference series highlighting important intellectual property issues that a company might face.  The next teleconference will be on Thursday, February 23, from 1:00 pm until 2:15 pm EST.  Please join Steptoe & Johnson attorneys as they discuss Section 337 litigation.  Section 337 prohibits unfair acts and unfair trade practices related to importing goods into the United States.  Used effectively before the International Trade Commission, it can be a swift, powerful tool to address such unfair acts as patent, trademark, and copyright infringement. 

The teleconference is toll-free, and there is no charge to participate.  For additional information or to register, please contact Alycia Polley (telephone 202.457.5436).

Questions and comments about E-Commerce Law Week are always welcome.  Please send your feedback to Sally Albertazzie.