1. Lecture 9 Ethical and Legal Issues Source: E-Marketing 5/E (Judy Strauss & Raymond Frost) © Sekolah Tinggi Teknik Surabaya 1

2. » After reading this chapter, 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.

3. » Copyright infringement occurs when people or companies loan software to others for which they have no licenses. » Counterfeiting occurs when illegally copied software is duplicated and distributed on a large scale. » Countries with weak software copyright enforcement cost software owners billions of dollars in lost revenue.

4. » Globally, over a third of the software sold is an infringing version. » Microsoft uses the following remedies: ˃Proposes intellectual property legislation. ˃Files civil lawsuits. ˃Creates noninfringement technologies. » Microsoft believes that education is the best weapon against piracy. Do you agree?

5. » Ethics and law are closely related. » Ethics takes into account the concerns and values of society as a whole. » 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

6. » 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 insufficiently compelling and true deterrence will not be achieved. » Recent policy-making activities indicate that governments are asserting themselves in areas such as fraud prevention and children’s issues.

7. » 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. » Within society, privacy interests compete with concerns for safety, economics, and need for association with others.

8. » Information plays a pivotal role in the concept of privacy. ˃AMA Code of Ethics for Marketing on the internet: “information collected from customers should be confidential and used only for expressed purposes.” ˃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 consumer names, addresses, and buying histories and planned to combine the offline data with clickstream data.

9. » Cookies are packets of data created and stored on the user’s hard drive in response to instructions received from a Web page. » Cookies serve many purposes: ˃Create shopping baskets to hold purchases ˃Recall stored sales information ˃Collect user data » Cookies are normally executed without any user action. » They allow marketers to pinpoint an individual’s online behavior.

10. » Privacy supporters advocate policies to inform consumers of data collection and allow them to participate (opt-in) or decline (opt-out). ˃Critics point out that many users do not understand how computers operate and question whether consumers have the expertise necessary to successfully opt-out. ˃Others argue that users wish to receive the benefits of targeted advertising. ˃ Access to personal data is another important online privacy issue. » Although several Congressional bills are pending, no law exists to resolve the privacy debate.

11. » Technologies such as cookies, Java applets, and intelligent agents are ubiquitous applications that can function without the user’s knowledge or control. » The Children’s Online Privacy Protection Act (COPPA) established policies for ethical collection of information from children 12 or under. » Privacy within electronic mail remains an unsettled aspect of online interaction.

12. » The European Union (EU) and the U.S. reached agreement in 2000 to protect EU citizen data. » The FTC has identified the following norms for the ethical use of consumer information: ˃Notice ˃Consent ˃Access ˃Security ˃Enforcement

13. » The law protects intangible or intellectual property through 3 basic mechanisms: ˃Patent law is centered on inventions. ˃Copyright addresses issues of expression. ˃Trademark is concerned with words or images used in the market.

14. » Applying patent law to computing is an uncertain but developing field. » Creators of software are attempting to make use of patent law protection. ˃Advocates argue that granting of patents for software will encourage innovation. ˃Critics argue that patents will have stifling and monopolistic effects. » The U.S. Patent Office recently decided to increase the rigor of reviewing applications for software-related protection.

15. » Ex.5.3

16. » Copyright is the primary means of protecting most expression on the Internet. » Chief protections include: ˃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.

17. » The No Electronic Theft (NET) Act was signed into law in 1997. ˃Confers copyright protection for computer content and imposes sanctions for infringement. » 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.

18. » Trademark law concerns the ownership of intellectual property that identifies goods or services. » Trademark law as been applied to the internet naming system of domain names. ˃Similarities in names may result in trademark infringement claims. ˃A trademark violation, cybersquatting, involves the registration of domains that resemble or duplicate existing ones.

19. » Licenses are an increasingly popular method of intellectual property protection. ˃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 a button to accept the terms » Legal trend favors enforcement of software licenses.

20. » Legal and ethical debates about data access and ownership questions abound. » Online technologies such as click data and spidering raise concerns about data ownership. » A movement is growing to protect specially compiled or sui generis data. ˃U.S. copyright law does not protect facts, so database vendors are seeking legal protection.

21. » Freedom of expression is protected by the First Amendment. » Internet technology has resulted in what many consider inappropriate or untargeted types of consumer contact. ˃Spam is the mass distribution of unsolicited electronic mail. » CAN-SPAM Act creates a framework for ethical email marketing. » Expression directed to children remains a highly visible issue within online law and ethics.

22. » Online governance ˃The Internet Corporation for Assigned Names and Numbers (ICANN) was formed in 1998. » Jurisdiction is the ability of a court or other authority to gain control over a party. ˃Traditionally based on physical presence. ˃Treaties may provide for international resolution and enforcement.

23. » Fraud is the use of deception and false claims to obtain profit. ˃The internet provides opportunities for novel deceptions. ˃Spoofing is the use of e-mail or Web sites to impersonate individuals or corporations. » The FTC, FBI, and state agencies have increased their efforts to track and prosecute fraudulent conduct.

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