ELECTRONIC COMMERCE Electronic Commerce 1 Validity of electronic transactions 1 Writing 2 Signatures 2 Production of documents 2 Retention of information and documents 2 Time of dispatch of electronic communications 3 Time of receipt of electronic communications 3 Place of dispatch and receipt of electronic communications 4 Attribution of electronic communications 4 Types of online contracts 4 Shrinkwrap contracts 4 Clickwrap contracts 4 Browsewrap contracts 5 The position in Australia 5 Domain names 6 Cybersquatters 6 Remedies 6 Passing off 7 The position in Australia 7 Enforcement of judgements outside of Australia 8 Dispute resolution policies 8 Jurisdiction in cyberspace 9

Electronic Commerce * Regulation of electronic transactions * Commonwealth level – Electronic Transactions Act 1999 (Cth) * State level – Electronic Transactions (Victoria) Act 2000 Vic

Validity of electronic transactions * Provides that a transaction is not invalid because it took place wholly or partly by means of one or more electronic communications (s 8 Cth, s 7 Vic). * The term ‘electronic communication’ is defined to include emails, web chatting, phone-texting and voice recognition systems. * May also exclude the general rule in relation to specified transactions and specified laws. * Where the electronic version serves the same function as the traditional paper-based requirement, it should be treated equally before the law.

Writing * Where a law permits or requires a person to give information in writing, it is met if the person gives the information by means of an electronic communication. (s 9 cth, s 8 vic)
Signatures
* Where a law requires a person to provide a signature, if a method is used to identify that person and to indicate the person’s intention in respect of the information communicated then this requirement is taken to have been met. (s 10 cth, s 9 vic) * The method must be as reliable as is appropriate for the purposes for which the information is communicated in the light of all the circumstances. * The reliability test ‘should not lead a court or trier of fact to invalidate the entire contract on the ground that the electronic signature was not appropriately reliable if there is no dispute about the identity of the person signing or the fact of signing’ – See Explanatory Note to the United Convention on the Use of Electronic Communications in International Contracts, para 164.

Production of documents * A person who is required or permitted by law to produce a document in hard copy may instead produce the document in electronic form (s 11 cth, s 10 vic). * For it to be acceptable, the method of its generation must provide a reliable means of ensuring that the integrity of the information is maintained.

Retention of information and documents * To retain a document in hard copy or to retain information the subject of an electronic communication may be met by recording or retaining the information in electronic form. (s 12 cth, s 11 vic)

Time of dispatch of electronic communications * An electronic communication is taken to have been dispatched by the sender when the electronic communication ‘leaves an information system under the control’ of the sender. * SZAEG v Minister for Immigration [2003] FMCA 258, the court applied the Commonwealth Act, finding that the sender’s document was dispatched when it was ‘handed’ to an employee of Australia Post.

Time of receipt of electronic communications * An electronic communication is taken to have been received by the addressee when it becomes capable of being retrieved by the addressee at an electronic address designated by the addressee. * Where the addressee has not designated an electronic address the time of receipt is when the electronic communication has become capable of being retrieved by the addressee and the addressee has become aware that the electronic communication has been sent to that address. (s 13A, s12A) * Evidence of the precise time of receipt by servers can be determined from email logs and can affect contract formation and effective service of notices. * Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678 * MacReady AJ held that an email address is ‘an active information system’ * Evidence of ‘some kind of email exchange log’ is required to determine the time an email was received by the server. * The plaintiff had 10 business days to provide a payment schedule after being ‘served’ with the payment claim. * The payment claim was an attachment to an email sent at 3.06pm on 6 November 2008. * An email read-reciept recorded the email as read at 5.30am on 7 November 2008. * The schedule was sent on 21 November 2008. * It was therefore important to determine whether the email was taken to be received on the 6th or the 7th. * It was held that the time of receipt to be the time in which it was read. * Austar Finance v Campbell (2007) 215 FLR 464. * The postal acceptance rule is an exception to the general rule that there is no contract until the acceptance has been communicated to the offeror. * Where the post is the contemplated mode for communication, acceptance of an offer occurs when the letter of acceptance is placed in the postal system * Henthorn v Fraser [1892] 2 Ch 77 * Adams v Lindsell (1818) 1 B & Ald 681; 106 ER 250. * The postal acceptance rule does not apply to instantaneous communications.
Place of dispatch and receipt of electronic communications * An electronic communication is taken to have been dispatched at the place where the originator has its place of business and to have been received at the place where the addressee has its place of business (s 13 cth, s 12)
Attribution of electronic communications * A person is not bound by an electronic communication unless the communication was sent by, or with the authority of, that person. (s 15 cth, s 14 vic)

Types of online contracts
Shrinkwrap contracts * Shrinkwrap contracts derive their name from the clear plastic wrapping that encloses many software packages. * The package includes a notice stating that by opening the shrinkwrap, the purchaser agreed to the terms and conditions enclosed. * Such contracts typically include provisions such as an arbitration clause, a choice of law and forum clause, disclaimers, limitations of warranties and limitation of remedies. * ProCD Inc v Zeidenberg 86 F 3d 1447 (7th Cir 1996) * The appeal court noted that it would be impossible to print the entire contract on the exterior of the box. * The court found that a ‘notice on the outside, terms on the inside, and a right to return the software for refund if the terms are unacceptable… may be a means of doing business valuable to buyers and sellers alike’. * Enforcement generally depends on whether suitable notice of the terms and conditions have been given to the purchaser or whether the purchaser has the right of rejection.

Clickwrap contracts * A clickwrap contract is formed on the Internet * The user assents by clicking a button marked ‘I Agree’ or ‘I Accept’. * The user can be given the opportunity to read the terms and conditions before assenting. * Hotmail Corp v Van$ Money Pie Inc 47 USPQ 2d 1020 (ND Cal 1998). * This was the first decision on the enforceability of clickwrap contracts * To obtain a free email account the user must ‘agree’ to Hotmail’s terms and conditions * Assent is given by clicking the appropriate button. * The court held that the defendant was bound by the terms and conditions by clicking the button ‘I Agree’. * Caspi v Microsoft Network 323 NJ Super 118; 732 A 2d 528 (1999) * The terms of the agreement appeared in a scrollable window * Next to the agreement were two panels, one containing the words ‘I Agree’, the other saying ‘I Disagree’. * The user could not use Microsoft Network without selecting the affirmative choice * The Appellate Court held that this created an enforceable contract.

Browsewrap contracts * The term browsewrap refers to the situation where a user may download software, without any unambiguous expression of consent to the terms and conditions. * For example, the vendor may merely place a link on the download page with the words ‘terms of download’. * Specht v Netscape Communications Corp 306 F3d 17 (2d Cir 2002) * Specht downloaded Netscape’s SmartDownload software * To download the software, users simply clicked the button marked ‘Download’. * The only reference to the terms and conditions could be seen if the user scrolled down the page. * The user would then have seen the words ‘please review and agree to the terms of the Netscape SmartDownload license agreement before downloading and using the software’. * Next to this statement was a link to a web page containing the terms and conditions. * The court held that Specht was not bound by these terms and conditions. * The court stated that ‘a reasonably prudent Internet user in circumstances such as these would not have known or learned of the existence of the license terms before responding to defendant’s invitation to download the free software, and … defendants therefore did not provide reasonable notice of the license terms’. * ‘Downloading the software did not unambiguously manifest assent to the arbitration provision contained in the license terms’.
The position in Australia * The position in Australia is yet to be determined. * Until the position is clarified, it would be prudent for websites to expressly indicate that terms and conditions will apply. * The user should not be able to proceed without reading or being given the clear opportunity to read the terms and conditions. * It would be prudent include a mechanism which requires the user to actually scroll through the terms before giving assent.

Domain names * Each Internet web address contains a unique domain name, directing each user to a database with text, graphics and other files. * Domain names act as a de facto trade marks and business identifiers for many organisations. * A defensive registration approach is being taken by many to avoid or minimize possible disputes. * However organisations may need to register hundreds of combinations to deal with various combinations and misspellings. * The domain names are issued on a first-come, first-served basis. * The dispute resolution process is governed by auDA

Cybersquatters * The use and misuse of domain names raises new conflicts that call for legal remedies. * Registering a .au domain for the sole purpose of resale is prohibited. * A person who has registered a well-known name as a domain name for the purpose of demanding an exorbitant fee is referred to as a cybersquatter. * Pitman v Nominet [1997] FSR 797. * Two organisations held business names that included the name ‘Pitman’. * Both wanted to use the domain name pitman.co.uk * Given that both parties had a prima facie right to use ‘Pitman’ in their business name, the first to register had the better interest in the domain name.

Remedies * The scope and breadth available of possible domain names is limited. * As with any scarce resource, disputes have arisen as to who has the right to use a specific domain name. * The complainant has two options; * To use the courts * To use the Dispute Resolution Process made compulsory for registrants as a condition of the domain name allocation license.

Passing off * The tort of passing off provides a remedy where a person misrepresents goods or services as having some association or connection with the plaintiff where this is not the case. * Marks & Spencer Plc v One in a Million Ltd [1999] 1 WLR 903. * Contains a broad proposition for challenging a domain name under the tort of passing off. * The court considered that merely registering a domain name may potentially constitute passing off since: * ‘The placing on a register of a distinctive name such as marksandspencer’ makes a representation to persons who consult the register that the registrant is connected or associated with the name registered and thus the owner of the goodwill in the name’ * the registration of the domain name as an erosion of the exclusive goodwill in the name which damaged or was likely to damage the famous retailer Marks & Spencer. * This case represented an extension of the prior concept of passing off in an attempt to provide a suitable remedy for the electronic era.

The position in Australia * It is an infringement where the trade mark is well-known in Australia, is substantially identical with or deceptively similar and is likely to be taken as indicating a connection between goods or services. * One must take account of the extent to which the trade mark is known within the relevant sector of the public. * S 18 of the ACL (formerly s 52 of the Trade Practices Act 1974 (Cth) * CSR Ltd v Resource Capital Australia Pty Ltd (2003) 128 FCR 408. * The defendant (RCA) registered the domain names ‘csrsugar.com’ and ‘csrsugar.com.au’ * RCA wrote to CSR offering to sell these domain names * Hill J considered that anyone seeing the domain name would assume that CSR was the real owner of the domain name. * His Honour held that ‘the act of obtaining registration’ of both domain names amounted to misleading and deceptive conduct pursuant to s 52 of the TPA. * This was because it constituted a representation that CSR and RCA were affiliated. * Hill J also held that the sole director of RCA was in breach of the equivalent provisions in the Fair Trading Act 1987 (NSW). * Hill J ordered that the domain names be transferred to CSR. * ACCC v Chen (2003) 132 FCR 309. * A US resident registered the domain name ‘sydneyopera.org’ * The defendant falsely represented that the site was affiliated with the Sydney Opera House * Persons gave their credit card details in the belief that they were purchasing tickets for events at the Sydney Opera House. * It was held that the defendant’s conduct was misleading or deceptive in contravention of s 52 of the TPA. * The defendant also contravened the prohibition against false or misleading representations under s53 (c) and (d) of the TPA (now s29 (1)(g) and (h) of the ACL).

Enforcement of judgements outside of Australia * Enforcement of judgements outside of Australia is a difficult issue * ACCC v Chen (2003) 132 FCR 309. * The defendant was a US resident who could not be located to serve the pleadings. * Sackville J stated that ‘the fact that… any order might be difficult or impossible to enforce, may be relevant consideration in determining whether a Court should grant injunctive relief’. * At common law, four conditions must be satisfied if a foreign judgment is to be recognized by an Australian court: a) The foreign court must have exercised a jurisdiction which Australian courts will recognize b) The foreign judgment must be final and conclusive c) There must be an identity of parties d) If based on a judgment in personam, the judgement must be for a fixed debt.

Dispute resolution policies * The UDRP authorises the transfer of a domain name to a complainant who can prove that: * The domain name is identical or confusingly similar to a trade mark or service mark in which the complainant has rights; * The registrant has no rights or legitimate interests in the domain name; and * The domain name has been registered and is being used in bad faith. * The auDRP only requires that the domain name has been registered or used in bad faith. * Registration of a trade mark or service mark is not necessary and individual names have sufficient secondary association for complainants to maintain that ‘common law trade mark rights’ exist. * Jeanette Winterston v Mark Hogarth, Case No D2000-0235 heard by WIPO Arbitration and Mediation Center. * Novelist Jeanette Winterson successfully reclaimed her name, which had been registered as Jeanettewinterson.com (as well as .org and .net) * The registrant claimed that he intended to develop websites with reviews, biographies an forthcoming works of authors, including Winterson. * However, the registrant also stated that he wanted to make money and had asked for a 3 per cent share of profits from books sold via the website. * The Panel stated that the ‘Complainant does not rely upon any registered trade marks but on her common law rights in her real name’. * The ‘use of that mark has come to be recognized by the and produced exclusively by the Complainant’. * The novelist had established trade makr rights in the mark for the purpose of the Policy and ordered that all three domain names be transferred.

Jurisdiction in cyberspace * Questions sometimes arise as to which country or State’s courts have jurisdiction to adjudicate a case and which law is to be applied. * This area of law is referred to as conflict of laws or private international law * Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575 * Dow Jones published Barrons magazine (Barrons) * It contained an article that alleged that the businessman Joseph Gutnick was ‘masquerading as a reputable citizen when he was a tax evader who had laundered large amounts of money’. * The magazine sold 305,563 paper copies, only 14 of which were sold in the State of Victoria. * The magazine was also available on the Internet to 550,000 subscribers, 300 of who were in Victoria. * The internet server was located in New Jersey in the United States. * Dow Jones argued that it would be unfair for the publisher to have to litigate in the multitude of jurisdictions in which its statements are downloaded and read. * They stated that ‘activities that have effects beyond the jurisdiction in which they are done may properly be the concern of the legal systems in each place’ * The majority suggested that ‘reasonableness of the publisher’s conduct’ might be considered as ‘necessary or appropriate’ as a common law defence. * This is where all of the publisher’s conduct occurred outside the jurisdiction * The relevant circumstances include ‘where that conduct took place, and what rules about defamation applied in that place or those places’. * The Court determined that the place where damage was inflicted was a most significant factor. * The place where the defamation was comprehended and the plaintiff’s connection with the locality were important factors.