Law Creeps Onto The Lawless Net

Can regulation and liberty coexist online? Or will technology outwit the police?

Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.

From "A Declaration of the

Independence of Cyberspace"

John Perry Barlow

Feb. 8, 1996, on the Internet

This anthem by former Grateful Dead lyricist Barlow has spread like kudzu through the electrical wires of the virtual world. Since Barlow posted it mn the Internet to protest the President's signing of the Communications Decency Act, which criminalized online transmission of offensive materials, more than 5,000 Web sites have picked up and rebroadcast the defiant message worldwide. In recent months, the wired nation has sizzled with rebellion, as emblems of electronic freedom--a fist clutching lightning bolts and blue ribbons fashioned on the red AIDS symbol--zap around the globe.

Barlow's feisty manifesto and other messages of cyberliberty mark a standoff between passionate Netizens and the government. As the virtual world witnesses an influx of mainstream users--from ordinary families to large corporations--U.S. officials and their global counterparts are laying down laws to tame the electronic frontier. For Netizens, the outside interference is an affront to their libertarian creed. "This is an assault by one culture against another," charges Barlow.

But the freewheeling days of the Internet as a cultural outpost are over. Online users have multiplied twentyfold from 1 million in 1988, and commerce on the Net is expected to reel in $45.8 billion by 2000, up from an estimated $2.2 billion last year. Governments are racing to clear the way for a well-functioning virtual marketplace by imposing rules against potential plagues ranging from pornography to copyright infringement to consumer fraud. A lack of safeguards will "slow down the growth of what is likely to be a major boon for consumers and business," says Larry Irving, assistant secretary of commerce for communications and information.

As they pick up speed on the Information Superhighway, U.S. officials are discovering that technology is remarkably resistant to their control. Both regulators and businesspeople are wondering if science has finally outwitted the art of governance. "We're facing the frontier of the law," remarks Peter F. Harter, public-policy counsel for Netscape Communications Corp.

For one thing, the self-propelling Internet, designed in 1969 by the U.S. government itself to avoid sabotage in the event of a nuclear attack, can't be reined in by any one country. The global network of overlapping links automatically reroutes messages when any one channel is blocked. So smut that's banned in the U.S. can wend its way into American homes through electrical impulses in, say, Amsterdam. On the Net, the very concept of geographic boundaries is overthrown.

Many cybernauts and regulators are hoping new technology itself can help settle some of the thorny legal dilemmas. Several software packages have already been developed that enable users to block out unwanted material, and programs that promise to safeguard electronic distribution of copyrighted works are evolving rapidly. These fixes may go a long way toward resolving much of the debate.

Die-hard Netizens, of course, prefer self-rule, and they're developing new software, common ethical codes, and even new governing institutions online. There's now a Virtual Magistrate, an online tribunal founded in March by the Cyberspace Law Institute to resolve disputes arising in the electronic sphere. Magistrates, appointed for their familiarity with the Net by the institute and other legal groups, plan to rule on voluntarily submitted cases by the norms of cyberspace rather than physical-world laws. For instance, they could decide a dispute over copyright infringement in days, vs. months in a terrestrial court. Then it would be up to the parties to agree to abide by the decision.

One of the virtual court's first cases: On Apr.18, James E. Tierney of Lisbon Falls, Me., pleaded for the removal of an ad on America Online Inc. offering bulk E-mail marketing services. Unsolicited E-mail is "bad policy for the Net," he says. "Just like the common law started hundreds of years ago in England, we're building a precedent."

In the end, an uneasy truce, combining technology, Net mores, and old-fashioned regulation, is likely to emerge from the current conflict between the bureaucrats and the cybernauts. "We need new institutions that match the characteristics of the Net," says Henry H. Perritt Jr., a law professor at Villanova University. "We have to modify the rules to fit the new technology."

CLUNKY MOVES. Regulators aren't adjusting easily to the Net's realities, and Uncle Sam has made some clunky moves. Take the Communications Decency Act, which authorizes criminal fines of $250,000 and two-year jail sentences for those who intentionally transmit "indecent" materials or make them available to minors online. When it became law in February, the online community went ballistic, and the Net crackled with protest. The American Civil Liberties Union, Microsoft, AOL, and other Net advocates immediately filed a constitutional challenge--with little choice but to fight for their cause in a traditional court. The suit is pending in a federal district court in Philadelphia, which is likely to decide the case by summer. The parties will then take the case to the Supreme Court, which is expected to hear it this fall.

Cybernauts say the law shows how little ham-fisted bureaucrats understand cyberspace. To anyone familiar with the Net's structure, it's clear that the new restrictions will be unenforceable. Lawmakers, they say, are trying to graft onto it a regulatory framework devised for broadcast, a different medium based on finite spectrum and geographic limits. By contrast, in cyberspace, everyone with a modem is a broadcaster--and a viewer. Controlling the wired multitudes is infinitely harder. "Taking notions from the old media is wrong," says New York new media attorney Ruth Day.

What's more, by criminalizing the posting of "patently offensive" material that might make its way to a minor, the law casts a chill over all speech online, insist civil libertarians. "Fear plus ignorance shouldn't equal public policy," bristles Adam M. Eisgrau, legislative counsel for the American Library Assn., which is also challenging the law in court. Instead, Net advocates want individuals to make their own choices, using technology to block so-called undesirable sites and online discussion groups.

It's a constant refrain by Netizens: Lawmakers, bureaucrats, and judges think in outdated ways. For instance, judges are now pondering whether to apply laws for common carriers, publishers, or bookstores to determine an online service company's responsibility for subscribers' libel or copyright violation. Each has different responsibilities. Publishers can be sued for what they print. But common carriers and bookstores aren't responsible for authors' libelous statements. "We don't fit neatly into any box," says Bill Burrington, public-policy director for AOL. "We're the uncommon carrier."

Congress hasn't absorbed the message yet. The next virtual battleground in cyberspace will be over copyright. Lawmakers are considering legislation to apply copyright to all digital transmissions. The proposal is meant to make the virtual marketplace safe for big companies such as Walt Disney, Time Warner, and the McGraw-Hill Companies (publisher of BUSINESS WEEK) to sell movies, compact disks, and books there. "We're in a very embryonic stage, where people will start to produce products for distribution online," says Patent & Trademark Commissioner Bruce A. Lehman. "Those products will require copyright protection."

Indeed, media companies fear the mindboggling possibilities of online copyright violations, which could easily dwarf the $20 billion piracy problem today. "Making a physical copy to distribute is costly and cumbersome," says Paul Sagan, president of new media at Time Inc. "But online it's cheap, fast, and global."

For now, the problem is relatively minor: It takes almost two hours to scan a 200-page book online. Simon & Schuster CEO Jonathan Newcomb admits: "The economic loss has been de minimis." Still, a few episodes have occurred. In February, the publisher found a bootleg copy of its Hitchhiker's Guide to the Galaxy posted by a student, who removed it later.

IN THE MIDDLE. To publishers' delight, legislation introduced by Representative Carlos J. Moorhead (R-Calif.) and Senator Orrin G. Hatch (R-Utah)--chairs of the intellectual-property panel of the House and Senate--would declare all transmissions of text, music, or video from one computer to another a copy, and thus covered by copyright law. The proposal has the online community in fits. With such a law, essentially all activity in cyberspace--especially the relaying of online discussions over the thousands of computer-to-computer links--would be open to charges of infringement. "Cyberspace is copying," fumes Georgetown University law professor David Post. But Lehman insists Netizens have overreacted. By law, all creative works are copyrighted, he says, but only a fraction become the subject of litigation.

Online service companies, which function as access points to the Net, are caught in the middle. They want a legislative safeguard because they say they cannot patrol the millions of daily transmissions by their subscribers. "It would become a nightmare," says Stephen M. Heaton, general counsel for CompuServe Inc. The House intellectual-property subcommittee is now trying to broker a compromise, requiring online service providers to remove infringed works only when they are notified of them.

Even before the rules are set, there's enough potentially illegal activity to keep enforcers busy policing the I-way. The Federal Trade Commission and the states have brought two dozen cases over the past year against online fraudsters peddling everything from credit repair scams to medicinal cure-alls. "There has to be someone you can call when you've been ripped off," says Minnesota Attorney General Hubert H. Humphrey III, who filed six cases last July against online scams.

But even these more straightforward cases are worrisome to cyberexperts, especially the assertion of local laws over their global space. "They're mapping statehood onto a domain that doesn't recognize physical boundaries," says Georgetown's Post. "When 150 jurisdictions apply their law, it's a conflict-of-law nightmare." Indeed, users of cyberspace fear surprise attacks at any time from the four corners of the earth. Last year, Germany ordered CompuServe to prevent German citizens from accessing sex-related Usenet groups, and China ordered the registration of all its Net users.

Decrying government prohibitions, Netizens insist that only technology and self-rule can work in their unbounded realm. In the early years, Net users relied on a shared code of conduct called Netiquette to keep vicious verbal attacks and other abuses in line. Now, they want to build their own institutions--a sort of CyberLeague of Nations--to stave off outside control. "If we don't have self-government, we're going to have foreign government," warns Esther Dyson, chairman of the Electronic Frontier Foundation, a San Francisco online-rights group.

"MORE COMPULSION." These homegrown remedies have their limitations. Even some cybernauts concede that in fraud and criminal cases, there is currently no alternative to government intervention. "For people who want to play nicely with each other, self-governance is a wonderful solution," comments Lance Rose, an attorney in Montclair, N.J. "But often, a lot more compulsion is required."

Just as Netizens are starting to recognize a need for government, some U.S. officials are learning to bend their minds around cyberconcepts. A group of lawmakers led by Representative Rick White (R-Wash.) recently launched an Internet Caucus to educate members of Congress about the medium. And as the U.S., which leads the world in popular usage of cyberspace, devises ways to harness the Net, other countries will have to climb aboard for the rules to work worldwide. "We don't believe in a global system of governance," says the Commerce Dept.'s Irving. "But we need to have some dialogue."

In the meantime, the tug-of-war between Netizens and their governments will continue. As the two sides reach toward a fitful accommodation, it may not be the Net utopia that John Perry Barlow dreams of, but neither will it be a tightly run colony. In the end, a set of rules that pleases neither side entirely may be the formula to take cyberspace into the next century.

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