How has Congress treated e-commerce this year? Some have labeled this the “do-nothing” Congress, and indeed at the moment only one significant cyber bill, the Y2K Act has passed. But judging from what’s being rushed through the legislative pipeline, as this magazine goes to press, there will be a substantial array of bills passed in the next several weeks before adjournment. Although that flow of legislation is hardly prolific (perhaps thankfully so), the landscape for e-commerce will be changed and those in this industry will need to be alert to those changes.

Certainly, this year will produce some legislation intended to promote e-commerce and the industry behind it. Congress enacted the Y2K legislation to help protect software companies against liability for Y2K glitches. Ironically, because the law is so complex, we will not know how successful this effort was until a considerable body of litigation occurs to determine what the legislation meant. In addition, Congress is very likely to pass this year digital signatures legislation that is designed to give effect to electronic records and electronic signatures for the formation of contracts and other legal arrangements via the Internet.

On the encryption front, Congressional efforts to loosen the President’s regulatory holds on the use of encryption technology were rewarded, even without passing any legislation. The President announced on September 16, 1999, that he was ending the curb on the export of encryption software and dropping the plan to permit computer searches by law enforcement officials. The details will not be known until the Com-merce Department issues final regulations which are expected December 15, 1999. Some in Congress may still want to legislate, but that will wait until next year.

Finally, in the realm of intellectual prop-erty, Congress is moving several measures to promote e-commerce. First, Congress is about to pass “anti-cybersquatting” legislation. When enacted, it would enable companies to sue domain name registrants who register names with the intent of selling the name back to the company. It would also create causes of action against people or companies that intentionally use another company’s trademark in their URLs to divert business away from that company. Congress is also likely to pass database protection legislation. This would amend the Copyright Act to protect data-base producers against piracy of their data by prohibiting the extraction or use in commerce of data from “collections of information” in a way that causes harm to the market for that product or service. Another bill likely to emerge is the Copyright Damages Improvement Act. Whether it helps or hurts one’s Internet business may depend on whether one is a content user or a content provider. The bill would increase by 50% the statutory damages for infringement of copyrights, which have remained fixed for many years. The first 30% of that increase just makes up for inflation.

On the other hand, Congress resisted enactment of several measures that were eyed with some trepidation by those active in e-commerce. Many worried that Congress would tax transactions over the Inter-net. Indeed, several bills were introduced to do just that, but Congress seems intent for at least the rest of this year to continue the moratorium on Internet taxation. Another key concern was the call for legislation to protect the privacy of personal information on the Internet, as overly broad drafting could create unintentional but very expensive consequences for the industry. The Congress and the Administration appear for the time being content to rely on voluntary protection of that information. An exception is in the vital area of financial services in which Con-gress will probably grant consumers an “opt-out” option so that they can ensure the privacy of their financial information. One other exception is in the area of protection of children’s personal information. The FTC just issued a rule prohibiting the collection of such information without parental consent.

In general Congress regards e-commerce and in particular the Internet industry as a goose that lays golden eggs, an animal worthy of much pampering. But lately and if one watches carefully, Congress is at times not above grabbing the goose about the neck and swinging it around several times to gain the bird’s cooperation in certain mat-ters of criminal law. That is especially true in the area of cyber vices—Internet gambling, alcohol sales, and illegal drug sales.

View From By Jim Bruce, Wiley, Rein & Fielding 8 Messaging Magazine November/December 1999 On the encryption front, Congressional efforts to loosen the President’s regulatory holds on the use of encryption technology were rewarded, even without passing any legislation.

The emerging pattern begins with Congress and law enforcement agencies seeking to shut down use of the Internet for illegal purposes, such as gambling, and sales and distribution of untaxed alcohol, and illegal drugs. Shutting those sites down, especially those offshore, and keeping them down is difficult, so Congress proposed legislation making it a criminal offense for Internet service providers and “portal” companies to carry or even to link to these offensive sites. Obviously, this greatly threatens these innocent companies that provide routine services in e-commerce because they cannot realistically police all that comes across their system or every site to which they link.

Obviously, these companies would prefer to be exempted from the underlying criminal liability. However, the pattern emerging is often to make them liable, but to immunize them if they take the site or link down, once notified by law enforcement officials that the site is illegal. It’s an odd form of deputizing innocent bystanders in which the deputy is charged with the crime if he fails to get his man. On the other hand, as a practical matter, most law abiding companies are willing to “take down” illegal material once properly notified of its existence, even in the absence of legislation requiring it.

Three bills addressing Internet gambling, alcohol and illegal drug sales over the Internet are racing through Congress at the moment. Their outcome may create a template for future treatment of Internet companies in other Internet-related crime bills.