Singularity Law

Fourth Epoch (1993-2001)

By the early 1990s, the Internet was old-hat to computer professionals, but virtually unknown to the general public. The system began in 1969 as the ARPANet. It was “designed to enable computers operated by the military, defense contractors, and universities conducting defense-related research to communicate with one another by redundant channels even if some portions of the network were damaged in a war.”¹ After two decades, pressure built to open the network to commercial activities. Finally, in 1993, the National Science Foundation (NSF) (which had been administering the Internet for many years) created InterNIC and the Internet was opened to the public. Little did the NSF realize the legal issues that this seemingly simple decision would engender. (More after the jump.)

Since the Internet would now be open to the public, and not limited to scientific and military users, the NSF decided to bow out of its supervisory role. It transferred its obligations to others, including the obligation to administer the domain name registration service to a private company – Network Solutions, Inc. (NSI). Some of the technological savvy quickly grasped the significance of this action and began registering domain names they thought could be later sold at a profit. Because NSI allowed users to register domain names on a first come, first served basis, these individuals, later to become known as cybersquatters,² were able to register the names and trademarks of some of America’s best known companies. It was not until months or years later, when these companies decided to establish an Internet presence, that they learned that someone else controlled their names and trademarks online. This led to years of litigation, arbitration and in 1999, the passage of the federal Anti-Cybersquatting Consumer Protection Act.³ These events made trademark law one of the most litigated areas of Internet law.

One of the most important features of the Internet was the ability to easily and inexpensively post information online. And people, companies and government agencies did so with a vengeance. This vast body of information led one federal court to refer to the Internet as the “most participatory form of mass speech yet developed.”⁴ It is viewed by many as a very liberating medium, allowing average citizens to get their voices heard.

“In the medium of cyberspace, however, anyone can build a soap box out of web pages and speak her mind in the virtual village green to an audience larger and more diverse that any the Framers could have imagined. In many respects, unconventional messages compete equally with the speech of mainstream speakers in the marketplace of ideas that is the Internet, certainly more than in most other media.”⁵

But while the Internet is a liberating force, it can also be abused by those who see its liberating quality as an excuse for excessive, and often criminal, behavior. Obscenity, child pornography, defamation and hate speech have all found receptive audiences online. And law enforcement, Congress and the courts have found themselves struggling to deal with these activities. New laws need to achieve a delicate balance between controlling illegal behavior while not unduly interfering with protected free speech rights.⁶ This balance has been difficult to achieve.

Infringement of intellectual property rights was also rife online. Owners of creative works had to engage in extended legal battles with infringers to control piracy on the Net – with mixed results. As one infringer was shut down, many more popped up. Infringers who found it too difficult to operate in one country, simply moved to another. And the game started again.

Several amendments to copyright law already have been enacted to try to deal with this situation, and future amendments were undoubtedly necessary. The difficulty with crafting copyright amendments is the fact that there are a number of interested parties. It is not just the copyright owners and the pirates who have a stake in these laws, it is also the Internet service providers who are concerned about possible vicarious liability for third party infringements, as well as researchers and users who are concerned that their rights under the fair use doctrine may be eroded.

During this epoch, the courts were repeatedly asked to rule on the patentability of computer software. A series of court decisions at the Federal Circuit and U.S. Supreme Court made it clear that the mere fact that an invention was a computer program or incorporated a computer program was not a basis for rejecting the invention as unpatentable subject matter. One of the most important decisions in this area was rendered by the Federal Circuit, when it held that business method inventions were patentable subject matter.⁷ This opened the floodgates for an enormous increase in patent applications directed at Internet-based business methods.⁸

During this time period, a number of developments made it increasingly easy for people to communicate online. “In rapid succession the deregulation of telecommunications, the miniaturization of satellites, and the development of mobile technologies have made connection available to anyone, anytime, anyplace.”⁹ This had an enormous impact on the growth of the Internet as well as online commerce.

Because of the standard protocols used online, it is possible to create a web site that is accessible from anywhere in the world using any type of computer, operating system and browser. Companies like Amazon.com, eBay and Google became multi-billion dollar companies, with millions of users worldwide. All of the legal issues that face traditional brick-and-mortar companies also faced online retailers. Consumer protection, taxation, unfair advertising and competition, contractual enforcement, and many more legal issues needed to be dealt with.

Unfortunately, one of the side effects of electronic commerce was the increase in the amount of personal information being transferred over the Internet and stored on e-commerce companies’ computer systems. Hackers and other criminals devised ways to gain access to these computers and to steal personal information. The result was a significant increase in identity theft and the need for updated computer crime laws to deal with these illegal activities.

Another event that led to considerable work for computer lawyers during the 1990s was the “Year 2000 problem.” This problem arose from software that stored only the last two digits of a year in a computer record. It saved space in computer systems, and caused no problems as long as every year was within the same century. But as the new millennium approached, it became clear that those software packages that had used this shortcut would need to be modified to deal with the situation of dates being in two different centuries. Fortunately, the clarion call was made early enough, and companies took the problem seriously enough to invest the time and money needed to deal with the Y2K problem. The millennium celebrations were not marred by massive blackouts, planes falling from the skies, and other doomsday scenarios that had been predicted.

The Year 2000 problem not only generated a lot of work for computer lawyers, but it raised the public’s awareness of how dependent society is on computers. It also focused the attention of corporate executives on the importance of computer contracts and those attorneys who knew how to draft and negotiate them competently.

During the heydays of the mid-1990s, billions of dollars were being invested in dot com companies. Investors were so desperate to be in on the Internet bandwagon that they began investing in business plans that had no chance of success. Finally, the house of cards came tumbling down and the dot com boom was “officially” declared the dot com bust. The result was an incredible wake-up call for entrepreneurs, investors and those that provided them with legal advice.

© 2007, 2008 Michael D. Scott. All rights reserved.

Next: “History of Computer/IT Law” Fifth Epoch (2001-20??).
Previous: “History of Computer/IT Law” Third Epoch (1982-1993).

1. American Civil Liberties Union v. Reno, 929 F. Supp. 824, 831 (E.D. Pa. 1996), aff’d, Reno v. American Civil Liberties Union, 521 U.S. 844 (1997). [↩]
2. “These individuals attempt to profit from the Internet by reserving and later reselling or licensing domain names back to the companies that spend millions of dollars developing the goodwill of the trademark.” Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227, 1233-34 (N.D. Cal. 1996). [↩]
3. 15 U.S.C. § 1125(d). [↩]
4. American Civil Liberties Union v. Reno, 929 F. Supp. 824, 883 (E.D. Pa. 1996), aff’d, Reno v. American Civil Liberties Union, 521 U.S. 844 (1997). [↩]
5. American Civil Liberties Union v. Reno, 31 F. Supp. 2d 473, 476 (E.D. Pa. 1999). [↩]
6. This was the balance the U.S. Supreme Court sought to achieve in Reno v. American Civil Liberties Union, 521 U.S. 844 (1997) and subsequent cases involving legislation to control harmful speech online. See, e.g., Ashcroft v. American Civil Liberties Union, 542 U.S. 656 (2004). [↩]
7. See State Street Bank & Trust Co. v. Signature Financial Group., Inc., 149 F.3d 1368, 47 U.S.P.Q.2d (BNA) 1596 (Fed. Cir. 1998), cert. denied, 525 U.S. 1093 (1999). [↩]
8. See, e.g., “Business Methods” Are Broadly Defined, N.Y.L.J., Feb. 10, 2003) (“According to the U.S. Patent and Trademark Office (‘PTO’), the number of applications . . . has exploded from 927 in 1997 to over 8700 in 2001. . .). [↩]
9. Stan Davis & Christopher Meyer, Blur: The Speed of Change in the Connected Economy 9 (1998). [↩]