E-Commerce Law Week, Issue 486

Legislators Seek to Crack Down on Child Porn By Adding Requirements for ISPs

Over the past decade, legislatures at both the federal and state levels have enacted a number of laws requiring Internet service and content providers to take steps to protect children from online content, only to see many of those laws struck down by the courts.  But that hasn't stopped legislators from churning out new measures.  Congress's most recent effort, the Securing Adolescents From Exploitation-Online Act of 2007 (SAFE Act), which passed the House on December 5, would amend an existing law that requires any “electronic communication service” (18 U.S.C. § 2510) or “remote computing service” (18 U.S.C. § 2711) that "obtains actual knowledge" of "facts or circumstances" that "appear to indicate" a violation of child pornography laws to make a report to the CyberTipline of the National Center for Missing and Exploited Children (NCMEC).  The SAFE Act would complement current reporting requirements by specifying what service providers must include in their reports, mandating providers' retention of report data, and requiring those filing a report for the first time to register with NCMEC.  The SAFE Act would also raise fines for the "knowing[]" and "willful[]" failure to report apparent child pornography to as much as $300,000.  Meanwhile, a federal court in Utah recently ruled in The Kings English, Inc., v. Shurtleff that several ISPs did not have standing to challenge a Utah law requiring all Utah-based ISPs to offer a service that blocks material "harmful to minors."  But it also allowed other plaintiffs to continue their challenge to provisions of the law barring all ISPs, content providers, and hosting services from intentionally distributing harmful materials to minors and requiring Utah-based content providers to use either labeling or age verification to restrict access to such material.

Courts Ponder the Scope of Jurisdiction in Internet Defamation Cases

In two recent cases involving online defamation, federal courts reached different conclusions about when purportedly libelous statements posted to a website may support personal jurisdiction.  In McVea v. Crisp, a federal court in Texas found that it could assert jurisdiction over James Crisp, a non-resident defendant who had posted an allegedly defamatory statement to a message board dedicated to amateur discussion of Texas history.  Since Texas was the "focus" of the website's content and McVea had indicated in a prior posting that she lived in Texas and had also had a "prior working relationship" with Crisp, the court found it likely that Crisp "knew the brunt of the injury, if any, would be felt in Texas."  On the other hand, in Oxford Round Table, Inc. v. Mahone, a federal court in Kentucky found no jurisdiction over Sloan Mahone, a resident of England who called the business operations of plaintiff Oxford Round Table (ORT) "a fraud and misrepresentation" in postings to the Chronicle of Higher Education's website, emails to an individual at Oxford University in England, and an email to an ORT seminar participant  in Illinois.  Noting that none of Mahone's allegedly libelous statements directly affected Kentucky or took place within the state, the court found that Mahone did not "purposefully avail" herself of the forum.   

EU to Change VAT Rules for Suppliers of Telecom, Broadcasting, and Electronic Services

In coming years European consumers and businesses will pay value added tax (VAT) on "telecommunications, broadcasting and electronic services" (such as web hosting) in the EU member state where the service is rendered, rather than where the supplier of the service is located, as is currently the case.  This is the upshot of the European Council's recent announcement of "political agreement" on two draft directives and a draft regulation to amend the EU's current VAT scheme.  Under the new rules, VAT for all "business-to-business" transactions will now be charged at the location of the customer.  VAT for most "business-to-consumer" transactions will continue to be applied at the location of the supplier, except for transactions related to, among other things, "telecommunications, broadcasting and electronic services," for which VAT will be charged at the location of the consumer.  Under one directive that would be amended by the drafts, "electronic" services include the supply of websites, software, images, text, information, databases, music, films, games, broadcasts and events of various types, and distance teaching.

German Court Decides Not to Require iPhone Interoperability After All

The same Hamburg court that recently issued a preliminary injunction requiring T-Mobile to offer an unlocked version of Apple's iPhone had a change of heart earlier this month, ruling that T-Mobile may go through with its initial plan to offer iPhones that work only on its network and require a two-year contract.  As we previously reported, T-Mobile competitor Vodafone had brought the suit, alleging that the sales terms for the iPhone were harmful to consumers.  The court reconsidered the case on December 4, reportedly finding that German competition law does not bar the type of bundling of devices with exclusive service contracts that T-Mobile uses for the iPhone.  Following the ruling, T-Mobile said that it would stop selling an unlocked version of the iPhone, but that it would unlock customers' iPhones after their two year contracts expire.  The Court has given Vodafone a month to appeal the ruling.

Steptoe & Johnson LLP presents:  "Product Recalls:  Effectively Managing the Process"

With high-profile recalls and product safety in the news, Steptoe & Johnson LLP invites you to a webinar designed to help companies: (1) Identify product hazards; (2) negotiate a corrective action plan with the CPSC; (3) maximize recall effectiveness; and (4) minimize the threat of follow-on consumer litigation. On January 10, 2008, at 1:00 p.m. EST, Steptoe partners Tom Barba, Sandy Chamblee, and Jennifer Quinn-Barabanov, along with Elisha Lawrence, General Counsel, Alltrade Tools, will discuss the steps companies should take to address and effectively manage product safety concerns.  Registration is free, but is on a first-come, first-served basis.

Editor's Note

Due to the holiday, E-Commerce Law Week will not be published next week.  We will resume publication on Thursday, January 4, 2008.  We wish you all a happy holiday season and a prosperous new year!

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