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Web Hosting and Emerging Internet Law

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Providers of web site hosting and other Internet-related services offer customers the means to acquire and disseminate a plethora of public, private, commercial, and non-commercial information. While the Internet provides a forum for free and open discussion and dissemination of information, there are competing interests at issue, in terms of a web hosting company's Terms of Service (''TOS'') and the various laws that govern such services.

With Internet-based intellectual property lawsuits on the rise, the question has become: how will Internet law keep up with the freedom of speech issues – and, to what degree will these laws affect the web hosting industry as a whole? The ramifications of some recent Internet litigation, and its impact on the web hosting industry are presented and examined below.


Patent Litigation

Recently, a Canadian firm has claimed infringement upon a patent it owns, with regard to Resource Description Framework (RDF), a software based upon Extensible Markup Language (XML). Using this technology, programmers can write software to access web resources, such as web page content, music files and digital photos. Vancouver-based UFIL Unified Data Technologies, holds U.S. patent 5,684,985, a '''method and apparatus utilizing bond identifiers executed upon accessing of an endo-dynamic information node,'' awarded in November 1997. According to the Patent Enforcement and Royalties Ltd. (PEARL)'s web site, as many as 45 companies may be infringing upon the patents. It is believed that the patent may also infringe on the RDF Site Summary standard (web content that's written in something other than HTML). For example, RSS (originally developed by Netscape Communications, now owned by AOL Time Warner), allows web sites to exchange information and content.

The World Wide Web Consortium (W3C), which evaluates and recommends standards for web technologies, has endorsed the RDF standard. PEARL has been engaged to work with UFIL, to enforce the claims, since 1999. According to information released by the W3C, Daniel Weitzner, Technology and Society Domain Leader, indicated that the Consortium had not been approached directly regarding the patent issue. Mr. Weitzner stated, ''We consider it to be quite important that fundamental technology specifications such as RDF should be able to be implemented on a royalty-free basis. If anything comes to our attention that suggests that's not possible, we'll pay attention to legitimate property rights out there, but at the same time, RDF was developed in the open by a very broad range of the web community.''

Freedom of Speech Issues

An amicus brief was recently filed by Yahoo!, Inc., in its lawsuit against LaLigue contre le Racisme et l' Antisemitisme, Case No. 01-17424 (9th Cir.). Later this year, a federal appellate court will decide whether or not French anti-discrimination law can restrict freedom of speech on U.S.-based web sites that are accessible in France.

In 2000, a Paris court ruled that the Yahoo! web site violated French law, due to the fact that its users offered certain Nazi artifacts for sale. In order to force compliance with the order, French plaintiffs must seek enforcement from a U.S. court. In response, Yahoo! sought a declaratory ruling and a federal district court held that enforcing the French order would violate the First Amendment. The matter is now on appeal. The Yahoo! case presents the question of whether the Internet should be governed by myriad local censorship laws from around the world. U.S. courts have held uniformly that the Internet should receive the highest degree of First Amendment protection.

Web.com's Patent and Intellectual Property with Web Hosting Company, Hostopia

In July, 2006, Atlanta-based web hosting, managed email, ecommerce, and online business applications giant, Web.com, entered into a non-exclusive license agreement with web hosting firm, Hostopia.com Inc., granting Hostopia the rights to two of Web.com's patents over five years, on a non-transferable basis. Web.com's portfolio of 19 registered, and numerous pending, U.S. patents relates to several core technologies that are vital to the web hosting industry.

The licensed patents broadly cover methods for website building and web hosting control panels. According to the agreement, Hostopia will pay Web.com a royalty equal to 10% of their gross U.S. retail revenues for five years. In addition, the companies have entered a cross-license agreement in which Web.com was granted rights to thousands of HTML and FLASH website templates and a license to additional intellectual property in the future at no additional cost. The companies have also agreed to a mutual covenant not to sue for patent infringement.

Spokespersons for Web.com had this to say, concerning the licensing agreement with Hostopia:

''Web.com has a portfolio of 19 registered patents with several additional pending patents. Web.com's patents touch on a number of key technologies that are vital to the web hosting and Software-as-a-Services industries. Web.com's first patent license transaction was a milestone for the Company as it validated Web.com's belief in the value of its patents. Hostopia paid Web.com an amount that was roughly equal to 10% of Hostopia's U.S. retail revenues over five years. Web.com intends to use its patent rights as a means of extending its brand and its technology so as to create value for its shareholders and to protect its innovations.''

With regard to the legalities of Internet content, Web.com's representative stated: ''Copyright Website owners and other authors (like bloggers, for example) own the content they create under general principles of copyright law. Copyright law grants the author of any "work" the exclusive right to copy and reproduce that work. Copyright law extends not only to the written word, but also to music, dramatic works (like plays and moves), art, sculpture any other forms of creative expression that are fixed in a tangible medium of expression. Conflicts easily arise on the web because web technology makes it so easy for web users to copy and download content, including music, video, pictures and text. While the author of an article may not object to a web user who links to a copy written article, the author will object if someone copies his article and re-publishes it as if it were a new article. Generally, web hosts are not responsible if one of their clients violates a copyright holder's rights by illegally copying content onto the client's website. The Digital Millennium Copyright Act creates a "safe harbor" from liability for web hosts that follow a specific process in responding to notices from copyright holders alleging copyright infringement from content on a client's website. Among other requirements, the web host must suspend a client's website after the host receives a formal notice that meets the statutory requirement. The host may resurrect the client's site, however, if the client responds with a sworn statement denying any infringement so long as the client's denial also satisfies the statute. So long as the host follows the specific requirements of the statute, the host is not liable even if a court ultimately determines that its client was violating another party's copyright.''

As to content – trademark conflicts, Web.com's spokesperson went on to reiterate: ''Involvement trademark disputes are more difficult for hosts to manage, however. Unlike copyright law — which protects the author of an original work — trademark law protects the brand name of a seller of goods or services. A potential copyright infringement is often easy to see if the infringing site blatantly copies words or images that are protected by copyright. Trademark infringement is trickier to spot, however, as a trademark right in most cases will only extend to the ;scope of use" covered by the holder's goods or services. For example if Company A sells "BrandName" widgets, it may have trademark rights to "BrandName". But, Company A's rights, in most cases, will not prevent Company B from using BrandName to sell goods or services that are different from those sold by Company A. The challenge for web hosts arises when a client website advertises BrandName goods or services but a third party claims trademark rights to "BrandName". How can the host know if the third party's rights are superior? How can the host tell if the client's products are within the third party's "scope of use."

To avoid liability for participating in a client's possible trademark infringement, savvy web hosts will develop processes to follow to respond to allegations of trademark infringement and to ensure that clients resolve those claims. Among other things, a savvy web host will make sure that its client agreement obligates the client to resolve those claims and indemnify the web host for any liability it might have for the client's failure to do so.''

Web.com's representative concluded, commenting on the issue of publication liability, stating that ''Another type of potential content problem for web hosts involves liability for defamation. Defamation is a cause of action (or potential lawsuit) that arises when a party publishes a false statement, knowing that it is false, and that publication injures another person. For example, if a client posted on its website the statement: ''Company X's products cause cancer; and if the client knew that statement were false, the client could be liable for defamation to Company X. If the client honestly believed the statement to be true, however, the client would generally not be liable. Defamation liability would make the web hosting industry impossible if it weren't for the Communications Decency Act passed by Congress in the late 1990s. Under the Communications Decency Act (or ''CDA''), web hosts and other Internet service providers are not liable for the publications (or statements) of their clients so long as they are not contributors to those statements.''

IBM v. Amazon.com

Amazon.com is involved in patent litigation with IBM, in two separate lawsuits. Five patents are alleged to have been violated, as far back as the 1980s, all regarding cataloging and data referencing, including alteration of online content. It has been reported in press releases issued by IBM, that ongoing negotiations since 2002 have failed, that hundreds of other companies have licensed the same patents, and that IBM has attempted to negotiate licensing deals with Amazon. Since Amazon.com is largely based upon web technologies and the ability to quickly process transactions over the Internet, it would seem that if it were a mere matter of licensing, they wouldn't have any problem. It may be that they feel IBM's patents are too broad, and cover technologies they developed themselves in-house.

Net Neutrality

One of the most important freedom of speech aspect of the Internet, is that no one party owns or controls it. However, as telephone and digital companies continue to grow through mergers and acquisitions, Internet and related laws, and the concepts and issues that govern it, have come to the forefront, as a new and legitimate concern for all netizens.

Issues such as network (''net'') neutrality, have become contested areas of law in the United States. Internet giants, such as Google, eBay, and Amazon, fear that network owners will create a biased, two-tier Internet system, unfairly placing telco services first, in addition to the concern that network owners may seek to entirely censor or block content at their own discretion, creating partiality. The terms of the debate place neutralists (such as the Internet's largest content providers), against free-marketeers (including Telcos) who argue against such regulation, deeming it to be counter-productive and even unconstitutional.

The fact remains, that exercising the rights associated with free speech and the Internet, places a high premium on the judgment and responsibility of those who use the it, both in the information they acquire and in the information they disseminate. In order for web hosting companies to survive, it is essential that consumers realize and understand, that when they obtain information through the Internet, web hosting companies cannot monitor, verify, warrant, or vouch for the accuracy and quality of the information that is available.

Therefore, some material posted to the Internet may be subject to patent and/or copyright infringement, deemed inappropriate for certain ages, or otherwise offensive. Because web hosting companies are not in a position to monitor or censor the Internet, they cannot accept any responsibility for the consequences that may result from potentially infringing, inaccurate, offensive, inappropriate, or otherwise illegal Internet communications.

While each user is expected to exercise common sense and good judgment in connection with the services it utilizes on the Internet, web hosting companies do have terms of service rules in place, to govern such things as spamming, and maintaining open SMTP relays. It is ultimately up to the users to exercise the best judgment possible, in relying on information obtained from the Internet. When users and/or consumers disseminate information through the Internet, they also must keep in mind that web hosting companies do not review, edit, censor, or take responsibility for any information its users, clients or subscribers may create. The very same liability as other authors for copyright infringement, defamation, and other harmful speech, apply to users on the Internet.

The outcome of recent Internet patent litigation will most certainly begin to set precedents. In many of the cases, the judge and/or jury is asked to make determinations as to deep issues of technological equivalence as to fast-advancing technology at a particular point in time, which can greatly affect how we continue to do business on the Internet, and the future laws that may result of such litigation.

Many patents, have implications far beyond the alleged infringement specified. A patent found valid by a jury acquires more than the normal status of ''presumption of validity,'' in that it may be used against other parties. All future parties, whether or not they are a party to the lawsuit, are affected. Therefore, patent validity lawsuits have the power to impact much more than just the two parties involved, unlike other business litigation.

Given the fact that Internet law, as a whole, is still largely in unchartered territory, the question of what positive role government can play in a regulatory regime, remains to be seen. Coupled with the fear that new technology laws may allow governments or big business to oppress society, giving them the wherewithal to block freedom of speech rights, such as viewing published materials and other forms of censorship, the spectrum of views on Internet regulation can appear to be endless. The only thing we know for certain, is that the Internet is here to stay. As such, the core issues surrounding the essence and vastness of the Internet, such as of freedom of speech, net neutrality, patent and content infringement, will continue to be at the forefront.

How Congress rules on the bills addressing net neutrality, the Communications, Consumer's Choice, and Broadband Deployment Act in the Senate, and the Internet Freedom and Nondiscrimination Act in the House, will affect the way the public continues to utilize the Internet and ultimately, may determine the success or failure of online businesses and web hosting companies.

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