1. E-Marketing/6E Chapter 5
Ethical and Legal Issues

2. Chapter 5 Objectives After reading Chapter 5, you will be able to:
Compare and contrast ethics and law.
Discuss the implications of ethical codes and self-regulation.
Identify some of the main privacy concerns within traditional and digital contexts.
Explain some of the important patent, copyright, trademark, and data ownership issues related to the Internet.
Highlight key ethical and legal concerns related to online expression.
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3. Software Infringement
Copyright infringement “violation” occurs when people download copyrighted software without a license, loan software to others for which they have no licenses, or install software on more computers than allowed.
Counterfeiting occurs when illegally copied software is duplicated and distributed on a large scale.
Globally, over 40% of the software sold is an infringing version.
Compare and contrast ethics and law.
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4. Software Infringement, cont.
Microsoft uses the following remedies:
Proposes intellectual property legislation.
Files civil lawsuits.
Creates noninfringement technologies such as digital rights management (DRM) security programs embedded in software CDs.
Microsoft believes that education is the best weapon against piracy. Do you agree?
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5. Overview of Ethics and Legal Issues
Ethics and law are integrally related.
Ethics frequently concerns the values and practices of those (directed toward individual or group endeavors) who have expert knowledge of a specific field.
Ethics also is a general endeavor that takes into account the concerns and values of a society as a whole.
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6. Overview of Ethics and Legal Issues, Cont.
Law is also an expression of values, but created for broader purposes with the goal of addressing national or sometimes international populations, so that citizens will be familiar with their rights and obligations.
Laws regulating the internet are at a disadvantage because they may be nearly obsolete by the time of passage.
Although there is a relationship between ethics and legality, they are separate entities that should be treated as such.
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7. Ethics and Ethical Codes
The central focus of ethics is the analysis and description of what is right and wrong, and how we judge the difference.
American Marketing Association (AMA) Statement of Ethics (or AMA Codes of Ethics) states a commitment to exercise of:
Honesty
Responsibility
Transparency
Respect
Citizenship
Fairness
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8. Ethics and Ethical Codes, Cont.
Modern technology presents challenges to marketing ethics. Critical issues include:
Ownership of intellectual property
The role of privacy in a virtual world
Freedom of expression
Use of data and its collection
Status of children and digital networks
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9. The Problem of Self-Regulation
Recent U.S. administrations have left the development of the Internet to the free operation of the market.
Supporters of self-regulation stress the private sector’s ability to identify and resolve problems.
Critics argue that incentives for self-regulation are insufficient and true prevention will not be achieved.
Recent policy-making activities indicate that governments are asserting themselves in internet regulation and control in areas such as privacy, data protection and fraud prevention.
Discuss the implications of ethical codes and self-regulation
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10. Privacy
The concept of privacy encompasses both ethical and legal aspects.
There is constant debate regarding privacy and it has proved to be an elusive concept, both ethically and legally.
No specific privacy provision within the Constitution.
Within society, privacy interests compete with concerns for safety, economics, and even the social and psychological need for association with others.
Identify some of the main privacy concerns within traditional and digital contexts.
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11. Privacy Within Digital Contexts
AMA Code of Ethics for marketing on the Internet: “information collected from customers should be confidential and used only for expressed purposes.”
The Internet uses several different ways to gather information, some of which may be considered unethical.
Online advertising firms such as DoubleClick have traditionally recorded users’ clickstreams to form user profiles for marketing purposes.
Controversy arose in 2000 when DoubleClick acquired Abacus-Direct with list of consumer names, addresses, and buying histories and planned to combine the offline data with clickstream data, a plan later withdrawn.
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12. Privacy Within Digital Contexts, Cont.
Cookies are the most common way for online marketers to obtain customer data. Cookies are packets of data created within the hard drive
Cookies serve many purposes:
Can be retransmitted from a user’s computer to websites
Can be used to track user actions and information with no permission
This information may be sold or transferred without permission
Cookies allow marketers to pinpoint an individual’s online behavior.
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13. Privacy Within Digital Contexts, Cont.
Opt-in
Policies that allow consumers to control data
Data collection can only take place if there is an affirmative decision to participate
Opt-out
Presumes data collection will take place
Allows users to withdraw consent by sending an to those requesting the data
The Children’s Online Privacy Protection Act (COPPA) established policies:
Websites cannot collect information from children under 12 years unless conditions are met
Notice to parents
Verifiable parental agreement
Other terms
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14. Privacy Within Digital Contexts, Cont.
Spyware and adware have recently been recognized as possible violations of privacy as well.
Web sites such as Facebook and Google have been involved in numerous privacy cases and class actions.
Nearly every major Web site collects personally identifiable information, but just over half specify on the site how the information will be used.
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15. Privacy Within Digital Contexts, Cont.
Access to personal data is another important online privacy issue.
Cutting-edge applications also raise additional issues.
Hostile applets: programs that can be used to access and transmit data on hard drive s, including addresses and credit cards records, etc…
Intelligent agents: programs that can function autonomously within the web to make electronic decisions.
Cookies, Java applets, and intelligent agents are ubiquitous applications that function without a user’s knowledge or control.
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16. INTERNATIONAL PRIVACY ISSUES
The European Union (EU) and the U.S. reached agreement in 2000 on safe harbor provisions to protect EU citizen data.
There is also growing interest in personal data protection in Asia, especially Hong Kong, Japan, South Korea and Singapore.
The U.S. Federal Trade Commission (FTC) has identified the following norms for the ethical use of consumer information:
Notice – before data is collected
Consent – choose to participate
Access – access data and correct if necessary
Security – policies to ensure the integrity of data
Enforcement – effective means to hold data collectors to their policies
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17. Digital Property
The law protects intangible or intellectual property through 3 basic mechanisms:
Patent law is centered on covering inventions.
Copyright law is centered on covering the expression of ideas.
Trademark law is concerned brands and source identifiers in the marketplace.
A single communication may contain:
A novel way of communicating covered by a patent.
Text and pictures protected by copyright; and
Proprietary branding covered by trademark law.
Explain some of the important patent, copyright, trademark, and data ownership issues related to the Internet.
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18. Patents
“The registered protection of innovations and the ability to reproduce or manufacture an inventor’s product”.
Applying patent law to computing is an uncertain but developing field.
Patents prevent competitors from doing the same thing a different way.
Patent protection has been claimed for reverse online auctions and secure credit card processing, , and methods for reading Web site ads.
The U.S. Patent Office has decided to increase the rigor of reviewing applications for software-related protection.
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19. Copyright
Copyright is “a protection of the right to publish or duplicate the expressions of ideas”.
Copyright is the primary means of protecting most expression on the Internet.
Doctrine of Fair Use
Ability to copy protected material for education and news reporting.
Doctrine of First Sale
Limit the ability of copyright holder to obtain profit after the initial time at which the material is sold.
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20. Copyright, cont.
The No Electronic Theft (NET) Act was signed into law in 1997.
Provide copyright protection for computer content.
Thought to encourage innovation by protecting material placed on the Internet.
The 1998 Digital Millennium Copyright Act (DMCA) contains several provisions.
Protects ISPs from acts of user infringement.
Criminalizes the circumvention of software protections.
Complies with international standards for copyrighted material.
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21. Trademarks
Trademark law is the area of intellectual property governing source identifiers for goods or services.
Trademark law is a consumer protection law.
Trademarks may be registered with the government.
Trademark law as been applied to the Internet naming system of domain names.
Similarities in names may result in trademark infringement claims.
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22. Trademarks Cont.
A trademark violation, Cybersquatting, involves the registration of domains names that resemble or duplicate existing ones.
Metatags – HTML contents that describe a website’s contents
Allow search engines to identify sites.
Provide a valuable means of attracting users to a site
Keywords
Used within search engines
Variations may drive consumers to unlicensed dealers
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23. Licenses
Licenses are an increasingly popular method of intellectual property protection.
Licenses are “contractual agreements made between consumers and software vendors”.
Licenses allow the buyer to use the product but restrict duplication or distribution.
Licenses may be two basic types:
Shrinkwrap or break-the-seal licenses
Clickwrap licenses where the user is required to click to accept the terms
Legal trend favors enforcement of software licenses.
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24. Trade Secrets
The Economic Espionage Act of 1996 makes it a criminal offense to reveal trade secrets such as commercial, scientific and technical endeavors.
Trade secrets may include:
Formulas,
Market data,
Algorithms,
Programs,
Codes, and
Models
Computer-based disclosures: s, downloads, web publications…etc.
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25. Data Ownership
Legal and ethical debates about data access and ownership questions abound.
Online technologies such as:
Click data provides data access from:
Site owners
Marketing professionals
Advertisers
Consumers, and
Spidering raise concerns about data ownership
Using robots (software) to enter targeted website and obtains data for the use of its owner.
A movement is growing to protect data related to facts, namely specially compiled databases or sui generis data.
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26. Online Expression
Mass distribution of unsolicited or spam has been the subject of much complaint.
Spam is the mass distribution of unsolicited electronic mail.
Code of Ethics addresses the spam issue
The expressed wishes of others should be respected with regard to the receipt of unsolicited messages
Regulation raises issues of freedom of expression and voluntary opt-in or opt-out
Highlight key ethical and legal concerns related to online expression
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27. Online Expression, Cont.
CAN-SPAM Act of 2003 created a comprehensive, national framework for marketing.
Expression directed to children remains a highly visible issue within online law and ethics.
The boundaries of expression will continue to be challenged by the Internet.
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28. Emerging Issues Online Governance and ICANN
The Internet Corporation for Assigned Names and Numbers (ICANN) was formed to resolve conflicts related to domain naming.
A private, non-profit regulatory body
Responsible for the administration of the Internet name and address system
Criticisms
Operating under secrecy
Failing to represent the broad range of online users
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29. Emerging Issues, Cont. Jurisdiction
The legal term that describes the ability of a court or other authority to gain control over a party.
Traditionally based on physical presence.
Agreements may provide for international resolution and enforcement.
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30. Emerging Issues, cont. Fraud
The use of deception & false claims to obtain profit.
The average person is not in a position to understand how information is displayed, transferred, or stored.
Thus, the Internet provides opportunities for novel deceptions.
Spoofing is the use of or websites to impersonate individuals or corporations.
Used to extract sensitive information
Leads a customer to believe that a request is coming from a reputable source
The FTC, FBI, and state agencies have increased their efforts to track and accuse fraudulent conduct.
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