E-commerce the Worldwide Worry

Joshua Kaufman, Esq. © 1999

On August 20, 1999 Bertelesmann, the giant publisher, pulled Mein Kampf, the Nazi manifesto that Hitler wrote before he came to power from its online bookstore. Barnesnoble.com also stopped selling this book. However, Amazon.com continues to sell Mein Kampf. Why is this an e-commerce issue? The sale of Mein Kampf is illegal in Germany. Germany has a statute which makes it illegal to distribute unannotated hate literature. Even though Bertelesmann's online German service never sold Mein Kampf it was available to Germans from its English and French services. The Simon Weisenthal Center in Los Angeles had filed a complaint with the German Justice Ministry accusing Barnes and Noble and Amazon.com of violating the German law by selling a wide variety of hate literature to German customers in violation of German law.

This incident raises a critical e-commerce question. Selling on the web is by definition international. There are no mechanisms in place to stop those who browse the Internet in one country from viewing websites originating in another country. The issue which looms large for anyone who has a website which contains advertisements or offers goods or services is whether their goods, services or ads violate the laws, customs or sensibilities of those who view the website in foreign countries.

There are numerous examples of these potential and actual problems. It is very common in the United States for us to view comparative advertising in which product A states that they are better than product B or are faster than product B or containing more cleansing power than product B or get rid of your headache quicker than Product B. Comparative ads have been accepted in the United States for decades. However, those very same ads if viewed in many European countries are not only are considered in poor taste and would not be effective ads, but also are illegal in several E.U. countries where running comparative ads violates local law. What might be considered erotic but perfectly legal advertisements in the United States may be considered obscene in other countries, particularly third-world and Muslim countries who have a much higher degree of sensitivity in regard to sexually oriented text and pictures. Last year the U.S. based Compuserve was cited for violating German obscenity laws. Art auctions are proliferating on the web. In the United States one would most likely be able to make a successful argument that the owner of a painting who is trying to sell the artwork at an auction would be entitled under the doctrine of "fair use" to have a copy of the painting appear in the auction catalog (there are no U.S. cases on point and other copyright lawyers might disagree). However, in France a recent court ruling held that auction house catalogs are not fair uses and that a royalty must be paid by the auction house or the consignor to the owner of the copyright in the painting, which is being offered for sale. As such, any online art auction house which show a picture of the artwork being auctioned would be liable for copyright infringement in France (and in other countries that follow the French lead.) If one sells vitamins or other kinds of packaged foods online their labels might pass the FDA and FTC requirements. But if you advertise those same products and ship them to foreign countries you may find yourself in violation of the various counties' drug and food labeling statutes. Process foods from the United States that are advertised on the website and shipped to Europe may be in violation of the health laws of the European countries. While the United States considers itself to be very strict in terms of health regulations our counterparts in Europe do not always agree. Today there are a great number of food products in the United States that contains elements which have been made from altered genes e.g. corn syrups, soy products, cotton seed oil, and the like. These products might not be legal in Europe or at a minimum the disclosure requirements for such products may be much more stringent in Europe. If a website in the United States with the new technology known as "Streaming Video," presents a movie on line but has modified it to make it "suitable for the web" as networks often edit movies for television or perhaps offer a black and white movie which has been colorized. While in the United States the courts have held that the owners of the various rights in a film might not be able to object to colorization or "editing for television" that is not necessarily universally the case. Other countries have recognized a concept called "droit moral" for movies. In these countries the rights of film directors to control how their films are shown is much greater than those granted to American directors. As such, to show any edited or colorizied movie on a website could put the web hosting entity into violation of the moral rights of the director in a number of countries and liable for suit.

The laws of libel also very greatly from country to country. In England the laws are much more stringent then their U.S. counterparts. Many of the defense in defamation actions which are recognized in the United States are not accepted in England. Therefore, a non-actionable article which would appear on a website based in the United States could very well lead the author and/or website proprietor to be liable for libel in England.

Conversely, in England the rights of publicity are not recognized to the extent that they are in the United States. Therefore, if a British website might utilize the names or likeness of certain celebrities in a manner which would be quite appropriate in England, but would violate the American laws of publicity as set out by the various states causing the British entity to be sued in the United States.

The above examples are just the tip of the iceberg. When one begins to analyze the local, state, federal and international laws which affect those doing business on the worldwide web, even after one deals with the various legal obstacles, the cultural aspects as to what they will find to be acceptable is a daunting task. What is taboo, what would be useful marketing versus what would be offensive? These considerations raise another level of problems for those trying to market on the web to new heights.

I recently attended an internet law symposium and one of the panels was on international aspects of the web. I raised the issues presented in this article to the panelists and none of them had any solutions. They all conceded that it is a problem and one that they and the companies that they represent have been struggling with, but as of yet do not have any sufficient answers for. What is clear is that going online and selling on an international basis will dramatically raise the risk factor for every company that seeks the globalization of their business. While some of these issues may seem to be abstract problems for companies that do not transact any sale abroad, nor have any international presence. However, one of the benefits of the web, all companies, is the possibility of a worldwide market. Companies which fill orders abroad, which do have a presence abroad, and assets abroad, can become real targets for individuals and government entities who feel that the entities' U.S. based website have violated their laws or statutes. The continued globalization of our economy, of which the web is a great facilitator, will only exacerbate these problems. In advising clients in these matters one should make sure that not only do they alert their clients to the issues that they have enough expertise in their firm to be able to identify the problems that my be encountered, but that they have an excellent network of local counsel. No matter how many treatises we as American lawyers read on foreign laws regulations there is no substitute for good local counsel. The way statutes and regulations are interpreted, their nuances, the manner of facilitating resolutions, the manner of qualifying are generally going to be outside any U.S. attorney's expertise. The lawyers who will succeed in properly advising their clients on these matters will be those with the greatest network of international counsel.

One suggestion which has been offered (although its usefulness is questionable) would be to place disclaimers on websites. We are all familiar with disclaimers for sweepstakes and other types of contest which state that, "This offer is not available to residents of X, Y & Z states." Perhaps certain of the issues raised above can be handled with disclaimers of that type, stating that these offers are not available to people in certain countries or that various goods will not be shipped to certain countries. It is a prophylactic step, more of a band-aid approach than a solution. What I think we might begin to see are more websites from companies with an international presence, where the home page is a logo and the flags of different nations. Residence of those countries would click on their flags and a hyperlink would take them to websites which would be in their native language and would have been vetted by local counsel to assure that it would not violate any local laws sensibilities or customs and would be an effective marketing tools for those particular countries.

It is incumbent upon any attorney who considers him/herself to be an IP attorney dealing in e-commerce to become proficient in international copyright, trademark and to develop a network of local lawyers around the world who can assist in the structuring of e-commerce websites so that they minimize, if elimination is not possible, the risk of running afoul of foreign statutes, regulations and customs of trade.