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E-Business(Updated on Thursdays)


Everybody wants to rule the Web


Thursday, January 18, 2001

Few cyberlaw cases have sparked as large an outcry as the recent Yahoo France case, in which a French judge ordered the company to block access to Nazi memorabilia offered in its auctions within France.

Free speech advocates reacted with alarm, arguing that the case is a setback for free speech on the Internet that sets a dangerous precedent for countries seeking to impose restrictions on speech outside their borders.

That concern was heightened two weeks ago when Yahoo shifted its strategy and suspended Nazi memorabilia auctions not only in France, but for all its users, a move clearly designed to appease the French court. The company is still pursuing legal action in a U.S. court to nullify the application of the French court's decision.

Before launching into claims of free-speech chill and an unfair assertion of jurisdiction, however, critics would do well to consider how widespread the extraterritorial application of law is on the Internet.

In the United States both Congress and the courts have been willing to extend U.S. law outside that country's borders. For example, the Children's On-line Privacy Protection Act, which establishes stringent privacy requirements for Web sites that target children, applies not only to U.S. sites but to any Web site anywhere in the world that is perceived to be targeting U.S. children.

Similarly, last year's iCraveTV case, in which a U.S. court dismissed Canadian copyright law as irrelevant in ordering iCraveTV to cease broadcasting on the Web, illustrates that the courts have also been willing to extend U.S. law in an extraterritorial fashion. In fact, from on-line gambling cases to domain name disputes, U.S. courts have repeatedly applied U.S. law to foreign operations with little regard for the governing law of the other jurisdiction.

The United States, however, is not alone in this regard. The European Union's Data Privacy Directive has spurred the enactment of privacy laws in Canada and around the world by including a provision that prohibits the transfer of personal data to non-EU countries that do not employ adequate privacy protections. Australia's on-line content regulation, enacted last year, includes provisions that mandate blocking obscene content that originates from foreign Web sites.

Canada has also gotten into the act. Last year the Alberta Securities Commission prosecuted the local promoters behind the World Stock Exchange, a Web site based in Antigua with Cayman Islands ownership. The securities regulators argued that the effects of the site were felt to such a degree in Alberta that asserting jurisdiction was proper.

Despite the dire claims of critics, these actions do not spell the end of either Internet free speech or global e-commerce. Rather, they merely reflect the desire of local authorities to protect their citizens from harm. The complicating factor is that many countries have different views of what is harmful.

There are a handful of issues, such as child pornography and fraud, where there is widespread agreement on the need to for government involvement. That is why efforts by the U.S. Federal Trade Commission and other consumer protection agencies targeting Internet fraud, regardless of its origin, meet with little global criticism.

Conversely, prosecution of hate speech in countries such as Canada and Germany raises the ire of free speech advocates in the United States, where such speech is constitutionally protected.

While there are no simple solutions to the Internet jurisdiction issue, the Yahoo France case provides some important guidance.

First, foreign law matters. Once a company has assets or customers in a foreign country, it can ill-afford to ignore the local legal system.

Moreover, those same companies often enjoy the benefits of foreign law. Yahoo, for example, has relied on local trademark law in countries from India to Israel to contest local cybersquatting. If companies are to benefit from local law, they must also bear its burdens.

Second, work on developing international Internet jurisdiction standards is still needed. The passive versus active test, adopted by courts in the United States and Canada to determine when assertion of jurisdiction is appropriate, should at best be a starting point for analysis.

Web site targeting (identifying the intended jurisdiction of a site), the use of technology to identify location, reliance on contract, and the actual or implied knowledge of the Web site owner should also be factored into the equation.

Third, the resilience of free speech should not be underestimated. Shutting down Nazi memorabilia auctions on Yahoo will not eradicate Nazi materials from the Internet. The Internet is a vast space and if there is demand, Web sites will meet that demand no matter how objectionable the content.

Fourth, it is dangerous to speak in absolutes when it comes to Internet law. All parties, from companies to countries, have issues they view as critical.

Since those views are occasionally bound to conflict, it is unwise to expend significant political capital criticizing the actions of others on jurisdictional grounds. There is always some issue for which everyone wants to rule the cyberworld.
Michael Geist is a law professor at the University of Ottawa Law School and director of e-commerce law at the law firm Goodmans LLP.

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