"DOING BUSINESS ON THE INTERNET"
by JULIAN S. MILLSTEIN, JEFFREY D. NEUBURGER and
JEFFREY P. WEINGART.
When some employees downloaded racist jokes from the Internet and circulated them via
e-mail, their employers faced multimillion-dollar discrimination suits. Yet, executives
also worry they could face invasion-of-privacy suits if they monitor employees' use of the
Internet.
Not only are the legal issues confusing, but the stakes are rising. While many
Internet-related cases have thus far been settled for modest sums, the potential liability
is climbing as the Web extends its reach.
Now, finally, an experienced team of lawyers has put together a complete, up-to-date legal
guide to on-line business. The authors are partners in Brown Raysman Millstein Felder
& Steiner, a pioneer in the field of computer law. Doing Business on the Internet
is understandable not only to lawyers but, mercifully, to nonlawyers as well. It contains
practical information that can be put to immediate use.
For example, privacy has emerged as a significant concern on the Internet. The issue was
highlighted in a recent controversy that erupted when the Navy began discharge proceedings
against a sailor because information in his private America Online profile indicated he
was homosexual. So the book goes into considerable detail about what personal information
a company can legally request concerning employees and customers. The book also explores
how industries are regulating themselves-such as through the strict guidelines adopted by
the Direct Marketing Association. The authors then suggest the on-line world is moving
toward disclosure requirements about how information will be used, toward requiring
specific consent from parents when children use the Internet, and toward providing clear
ways for customers to opt out of providing certain personal information.
An extensive chapter on "Jurisdiction, Obscenity, Defamation, and the Right of
Publicity" covers a host of issues that could create major liabilities for companies.
For instance, can a company be held liable if an employee downloads pornography in the
workplace? What laws govern transmission of obscene materials, and what are the
constitutional issues raised by these regulations?
The book also contains extensive coverage of copyright, trademark, patent, and
trade-secret law. While the Internet has made it easy to share information with a global
audience, it has also made it difficult to control distribution of that information once
it has been placed on-line. This has become evident in numerous cases involving
infringement of software, sound recordings, and even Scientology texts. The biggest legal
fights about the Internet will likely fall in the intellectual property domain.
A weakness of the book is that it focuses primarily on legal developments in the U.S.,
even though Internet commerce raises international issues.
But Doing Business on the Internet has several strengths. As practitioners in the
burgeoning field of on-line commerce, the authors can explain the practical implications
of legal developments and can provide useful models for anyone writing a contract for
on-line business.
In the rapidly evolving field of electronic commerce, where the half-life of knowledge is
less than six months, the law will have to keep pace with technology, and so must
corporations. Until a company has put controls in place to ensure compliance in this
mutating field of law, the wise manager would be well-advised to order this book (on the
Internet, of course) and have it sent to those involved in digital commerce and to his
legal counsel.
Clearly, the path from atoms to bits to dollars will lie through the mine field of legal
caveats.
Mr. Kaul is the chief executive officer of Hanover Direct, a large consumer catalog
marketer. He recently established a services business, named Keystone, that will leverage
Hanover Direct's capabilities by providing third party fulfillment services to companies
wanting to be in on-line commerce. He can be reached at rkaul@hanoverdirect.com.
"THE COMMANDING HEIGHTS"
by DANIEL YERGIN AND JOSEPH STANISLAW
Today, it is a given that the best way to organize an economy is to have an open market in
labor, capital, and goods. State intervention should be minimal. This belief not only
dominates the discussion in England and the U.S.; it has become accepted throughout much
of the world.
But authors Daniel Yergin and Joseph Stanislaw remind us in their engaging book, The
Commanding Heights, that things were not always this way—and that the prevailing
worldview may well change again.
The dominant viewpoint for most of the 20th century was that the state should control the
"commanding heights" of the economy—sectors such as oil,
telecommunications, and steel that were key to a nation's industrial development. The form
of control varied depending on local conditions, as the authors show in their sweeping
overview of the political economy of every major country during this century. The U.S.
largely contented itself with regulation of key industries, such as through the Federal
Communications Commission. In Great Britain, the state went much further. It nationalized
many industries, such as coal, railroads, and steel. In East Germany, the state took
control of everything. Still, the U.S., Great Britain, and East Germany were following the
same principles.
While these policies may look silly today, the authors demonstrate how they were often
rational, pragmatic responses to the crises facing each country, such as the Great
Depression in the U.S. and World War II's devastation of Europe. And for many years these
policies worked. Europe and Japan rose from the ashes of World War II. The Soviet Union
matched the U.S. weapon for weapon.
But then things began to fall apart. Nationalized industries that helped transform
economies became bloated and uncompetitive. Romantic communist movements gave way to the
extremes of the Khmer Rouge. As a result, most of the world turned away from the notion
that the state could solve society's problems.
Instead, the world is embracing the marketplace. China and Russia, once the twin pillars
of communism, have ceded control over much of the economy to the private sector. Brazil
and India, which had heeded the siren's call of nationalism and all but closed themselves
to foreign investment, have moved decisively toward open economies. Only a few countries
in the world, such as Cuba and France, still believe the state should play a primary role
in governing the economy. And look at the wretched condition of those two economies!
With information technology, not Mao's Little Red Book, driving today's revolution, the
rise in global competition could even accelerate the move to market economies. The
Internet could have a similar democratizing effect on political systems, too. (While the
authors only touch on the impact the Internet and information technology are having, the
book does provide a historical basis to understand why some countries are embracing the
Internet and others are resisting it.)
But it is important to note, as Messrs. Yergin and Stanislaw do, that the end of the 20th
century is not the end of history. The various models that countries have in place today
are not fixed. Nor are they perfect. Just look at the rapid meltdown of a number of East
Asian economies.
The view expressed by some Pollyannas that the current economic boom has no end is wrong.
Once the boom subsides, the pressure for states to assume a greater role in the economy
will rise once again. And then what? The Commanding Heights doesn't answer that
question, but it provides a good start for doing so. Because we operate in a world where
economies are increasingly intertwined, the question of what happens next is one that we
all must face up to and be capable of handling.
Eric Nee writes about information technology from Menlo Park, Calif. He is reachable at
enee@forbes.com.
