1. E-Core Values: Ethical, Legal, Taxation, and International Issues

2. The focus of this chapter is on several learning objectives
Ethical issues and how to improve the ethical climate in e-commerce
Legal issues in terms of liability, warranties, copyrights, trademarks, and trade names
Taxation issues, legal disputes, and domain name disputes
Encryption laws and what they mean
International issues, especially with regard to intellectual property and developing countries

3. Issues People don’t operate by the Golden Rule
The computer does not need ethics; it is the user who needs ethics
The legal, moral, and ethical implications raised by the Internet are attracting a lot of attention among industries and governments around the world
There is no doubt the Internet has promoted tax evasion and privacy issues that are causing a nightmare for the law
No single jurisdiction “owns” the Internet, but every state and country wants to control it
Today, any e-business can move beyond the jurisdiction of any given authority
E-commerce often operates in a legal vacuum
The bottom line: legal, moral, and ethical issues raised by the Internet are dynamic and duanting

4. Ethics
Ethics involves systematizing, defending, and recommending concepts of right and wrong behavior.
Ethical theories often are classified into one of three categories:
Metaethics: Where do our ethical principles come from and what do they mean?” Are they merely social inventions? Questions include are there universal truths, do they come from God, and what is the role of reason?
Normative ethics: Derived from social norms of behavior. We do the right thing because society has certain constructed rules about how we should behave
Applied ethics: involves examining specific controversial issues where people are evenly divided.
Source::

5. Ethics Justice, equity, honesty, trustworthiness, equality, fairness
An unethical act is not the same as an immoral or an illegal act, although one may lead to the other
Several factors influence ethical judgement
Individual (family, associates)
Community, societal (social norms)
Professional (code of ethics)
Belief system (religious or personal)
Legal

6. Factors Influencing Ethical Decision Making

7. Code of Ethics
A declaration of the principles and beliefs that govern how employees of a corporation or an association are expected to behave
ACM Code of Ethics and Professional Conduct

8. What Is Computer Ethics?
Computer ethics is that branch of applied ethics that looks at the social and ethical impact of information technology
One view suggests that ethics means acceptance that the Internet is not a value-free zone or something apart from civil society
Topics in computer ethics:
Computer crime
Privacy
Intellectual property
Globalization
Computers in the workplace
Security

9. Major Threats to Ethics
Faster computers and more advanced networks
Sophisticated global telecommunications
Massive distributed databases
Ease of access to information and knowledge bases
Transparency of software
The idea that captured information can be used as a competitive weapon

10. Improving the Ethical Climate
Top managers should act as role models
Firms should establish a code of ethics
Unethical behavior should be dealt with promptly according to criteria and procedures set in advance
Set up and support a strong ethics training program for all new employees and reinforce training on a regular basis
Motivate employees to focus on honesty, integrity, fairness, and justice as goals

11. 10 Commandments of Internet Conduct
Thou shall not use a computer to harm other people
Thou shall not interfere with other people’s computer work
Thou shall not snoop around in other people’s files
Thou shall not use a computer to steal
Thou shall not use a computer to bear false witness
Thou shall not use or copy software for which you have not paid
Thou shall not use other people’s computer resources without authorization
Thou shall not appropriate other people’s intellectual output
Thou shall think about the social consequences of the program you write
Thou shall use a computer in ways that show consideration and respect

12. Issues and Ethics Implementation
Top corporate officer sets the tone for the kind of image the company will have
What to do about employees who spend much of their time on non-productive or non-business-related Internet browsing
Is it ethical for a company to track employee ?
Managers can have problems in controlling unproductive Internet surfing
Business ethics is closely tied to corporate culture and values
Self-assessment is a question-and-answer procedure that allows individuals to appraise and understand their personal knowledge about a particular topic

13. The Privacy Factor Privacy is a basic American value
Inadequately addressed in e-commerce
The Online Personal Privacy Act
The Patriot Act
Personalization in online services creates privacy conundrums

14. Five Principles of Privacy Protection
Notice
Choice
Access
Security/Integrity
Enforcement

15. Categories of Information Privacy Concern
Who owns electronic data that businesses store about consumers?
Security of electronic data transmissions
Unauthorized reading of personal data files

16. Chief Privacy Officer? Privacy regulations HIPAA Sarbanes-Oxley Act
Gramm-Leach-Billey Act
Legal compliance is the number one priority in running an online business
The Chief Privacy Officer (CPO) is a compliance job

17. The Legal Question of Liability
Product liability - tort that makes a manufacturer liable if its product has a defective condition that makes it unreasonably dangerous to the user or consumer
Strict liability - a seller is liable for any defective or hazardous products that unduly threaten a user’s safety
Companies may be liable if employees using mobile tools are involved in accidents
The application of the negligence doctrine to today’s technological society

18. Tort Law on the Internet
Tort: a wrongful act subject to civil action
Tort Law: a special area of law focused on remedying wrongs between parties
Fraud: the intent to deceive
Negligence: failing to take a certain action, which in turn causes injury or material loss to another
False Advertising: advertising the availability of a product or a service when no such thing is available
Misrepresentation: claiming a product will perform certain functions when in fact it cannot

19. Warranties
Uniform Commercial Code (UCC): a law drafted by the National Conference of Commissioners on Uniform State Laws, which governs commercial transactions
Warranty: an assurance made by the seller about the goods sold
Express Warranty: a warranty offered orally or in writing by the maker of the product

20. Warranties (Cont’d)
Implied Warranty: a warranty that arises automatically from the fact that a sale has been made and the assumption that the product will do what it is supposed to do
Disclaimer: evidence of the seller’s intention to protect the business from unwanted liability

21. Liability Designer’s Liability
Out-of-bounds error: an error that occurs because either the software did not have the expertise to address the particular problem or the designer improperly condensed the technology
Nontrivial error: an error that triggers other areas in the software to malfunction and is difficult to correct
Doctrine of respondent superior
User’s Liability
Passive negligence: negligent by omission
Affirmative duty

22. Copyrights, Trademarks, and Trade Names
Intellectual property: includes software, books, music, videos, trademarks, copyrights, and Web pages
Copyright: ownership of an original work created by an author
Copyright law is a law that gives the author or creator of a tangible product the right to exclude others from using the finished work
Protected works include:
Graphic works
Web sites
Good for the life of its author plus an additional 70 years after the author’s death
The Digital Millennium Copyright Act (DMCA)
Trademark: registration of a company’s trade name so that others cannot use it; a word or a symbol that distinguishes a good from other goods in the market

23. Taxation Issues Sales tax is a very controversial issue
On the Internet, tax collection is not easy
The rules for taxation differ by country
All indicators suggest that sales-tax revenue loss is projected to increase exponentially unless something is done to collect the tax
Internet Tax Freedom Act

24. Taxation Issues (Cont’d)
Internet Tax Freedom Act
A three-year moratorium on special, multiple, or discriminatory taxes on the Internet that would be imposed by any state or local governments
An advisory committee to explore different issues relating to Internet taxes, government Internet policy, and its effects on e-commerce
The federal government is barred from taxing the Internet or any transaction that takes place through it

25. Jurisdiction The legitimate scope of government power
Whose laws apply?
State and federal laws limit a court’s jurisdiction over a defendant from another state
International jurisdiction is especially complex and controversial
In an international dispute over e-commerce, whose laws apply?
Violations of IP

26. Guidelines Regarding Domain Names and Trademarks
Find out whether the proposed domain name infringes on any trademarks
Secure federal trademark registration of the proposed name
Register the proposed domain name with InterNIC,
In the event of a poached domain name, bring a lawsuit to force InterNIC to reassign the name to the original owner
Get permission before linking to other Web sites

27. International Issues
What right does any one country have to determine the materials that should be available on the Internet?
Can a country regulate an entity in cyberspace, but not on the soil of that country?
World Intellectual Property Organization (WIPO) succeeded in two treaties to adapt copyright rules for e-commerce
EU’s Electronic Commerce Directive gave online business firms assurance, in 2000, that the firms would have to comply with laws only where the firms are based, not in any other country in the union

28. International Issues (Cont’d)
Digital Millennium Copyright Act of 1998
EU’s Rome II Directive hopes to allow consumers to sue e-businesses in their home country
Hague Convention drafted a treaty in 1992 designed to set global standards for defamation, copyright, and libel on the Internet

29. Intellectual Property
Intellectual property describes the ideas, inventions, technologies, music, and literature that are intangible when created and are converted into tangible products for market consumption
IP laws and cultural norms vary from country to country

30. Management Implications
Legal rules that define the Internet are yet to be clarified
Long-range effect of Internet patents, especially those held by e-companies like Amazon.com that cover fundamental online business practices
Ultimate goal in doing business on the Internet is to promote standards that everyone can accept or adopt
Management must focus on legal and consumer protection issues surrounding B2C e-commerce

31. Chapter Summary
Legal and ethical implications of the Internet are attracting attention in industries and governments around the world
Question of ethics in e-commerce is the current challenge confronting U.S. organizations
Several threats to ethics
Privacy is a basic American value
Many of the legal questions that arise in e- commerce are not settled due to lack of specific laws or legal guidelines

32. Chapter Summary (Cont’d)
Internet copyright and trademark violations fall under intellectual property laws
The question of whether a Web site is a product or a service elicits varied opinions
One the Internet, tax collection is not easy
The ultimate goal of doing business on the Internet is to promote ethics through standards that everyone can accept or adopt