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As online consumerism expands alongside ever-growing government deficits, legislatures look towards online transactions as a potential source of taxation revenue. Currently, there is no universal taxation on the Internet. Based on Quill Corporation v. North Dakota, a 1992 Supreme Court decision, online merchants that do not have a physical presence in a state are not required to collect sales tax from consumers for online transactions.

However, there is a rising movement towards imposing sales taxes on online transactions. For instance, the House Judiciary Committee is considering the Marketplace Equity Act of 2011, which would serve this exact purpose. Internet sales taxes could raise $20 billion for states. The National Retail Federation supports this law, explaining that the Act will help put an end to “showrooming” where customers review products in physical stores, but complete purchases online in order to save money by avoiding sales taxes.

Jeff Bezos, CEO of Amazon, has commented that although an Internet sales tax may be due, online merchants face an undue hardship because collecting taxes from different states and jurisdictions is highly complicated and involves complex calculations to abide by the various tax rates. The National Retail Federation agrees that taxation on the Internet is largely “a collection issue.”

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Since the Internet allows companies to conduct gambling online, albeit illegally, the legal implications of the sport have come into consideration. Federal and State level gambling laws strictly restrict and regulate gambling throughout the country. The opportunity to conduct gambling online allowed site operators to register sites offline, in districts that allowed online gambling, and begin taking bets while circumventing United States law.

However, according to the Wire Act, under 18 U.S.C. § 1084, an operator that utilizes the American telecommunication network to transmit information to place and manage wagers online is subject to prosecution, fines, and possibly imprisonment. In a 2003 civil case involving an Internet financial services company, the United States government prosecuted and settled with the company for $10 million regarding the company’s involvement in online gambling related transactions. Transmitting information in relation to wagers may be exempt from the Wire Act, under 18 U.S.C. § 1084(b), if the information is transmitted from and to a state or country that permits such betting.

The U.S. Department of Justice maintained that all gambling within America was illegal under the Wire Act. However, in a 2002 case, the Fifth Circuit held in In re Mastercard International, Inc. that Congress intended the Wire Act to apply exclusively to sport-related online wagers. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act, which made it illegal to accept payments in relation to online gambling. Interestingly, this Act does not make it illegal to conduct online gambling.

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The legal implications of electronic signatures have drawn public and legal attention as more parties contract over the Internet, agreeing to terms with the single click of a mouse.

In 2000 Congress passed the Electronic Signatures in Global and International Commerce Act (ESGICA), under Title 15 U.S.C. Chapter 96 (sections 7001-7031), which made electronic signatures as binding as traditional signatures. By making “e-signatures” legally equivalent to paper signatures, ESGICA introduced a new mode of conducting business – the “e-contract.” California, along with 46 other states, has adopted the Uniform Electronic Transactions Act, under California Civil Code §§ 1633.11-1633.17, which governs state law surrounding electronic contracts.

An electronic contract, often called an “e-contract,” exists entirely in electronic form. Parties create and sign the agreement online, without the need to produce hard copies. For example, two parties may correspond over email to create the terms of an agreement and sign the contract after finalization.

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The expansion of the Internet is leading towards an increase in suits for defamation, as more people are able to freely publish their opinions on the Internet and reach a worldwide audience.

A claim for defamation involves an untrue statement that damages a person’s reputation. Defamation in written or printed form is categorized as libel, while defamation involving oral statements is categorized as slander.

The elements required for a defamation claim come under question in light of the expansion of the Internet because the Internet gives the average consumer broad freedom to post opinions regarding, among others, people, corporations, events, and politics. Furthermore, the nature of the Internet allows worldwide exposure of a common consumer’s opinion, and such a posting may remain on the Internet almost endlessly. Furthermore, since most controversial cyber-postings are anonymous, parties wishing to pursue an Internet defamation claim face the unique obstacle of identifying the party that caused the harm.

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According to California Civil Code § 3426, the Uniform Trade Secrets Act, a “trade secret” is information that maintains independent economic value from non-disclosure and is a result of efforts that justify non-disclosure under the circumstances. The knowingly wrongful taking or disclosure of trade secrets is defined as “misappropriation” within the Code, and is considered unfair competition, a civil offense.

In order to initiate a claim for the misappropriation of a trade secret, the following elements must be met:

– The subject of the claim must fall within the protection of the Code,

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According to Article I, Section 8 of the United States Constitution, Congress has the power to protect the exclusive rights of “authors and inventors” in order to support scientific and artistic innovation. As such, Congress enacted the Copyright Act under Title 17 of the United States Code outlining the legal framework of copyrights in order to provide legal protection for authors and inventors.

Section 101 of the Copyright Act defines the various terms associated with copyright law. For example, for purposes of the Copyright Act, a “work” constitutes a tangible product when it is initially “fixed in a copy.” Section 102 lists the types of works that the Copyright Act applies to, which include, among others, written, musical, and photographic works. A copyright owner has certain exclusive rights in relation to his or her creation. Under Section 106 of the Copyright Act, copyright owners have the right to reproduce, distribute, perform, and display their works. This implies that non-owners do not have these same rights towards copyrighted material, which generates issues of copyright infringement and unauthorized use of copyrighted material.

Copyright infringement is the violation of a copyright owner’s exclusive rights under the Copyright Act. Sections 501-513 of the Copyright Act outline penalties for copyright infringement, which may include payment for damages, a court order to stop the unauthorized use of copyrighted material (i.e., injunction), and jail time.

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With a growing concern for national security and expanding information sharing networks, the government is making efforts to establish legislation protecting the American cyber community.

Most recently, in February 2012 Congress considered the Cybersecurity Act (“Act”) as a means to provide for information sharing across different industries to establish cybersecurity. The Act also places the burden of monitoring sites and infrastructures on the owners of the sites, rather than any managers hired to maintain the sites.

Congress ultimately has not passed the Act because there is such a divide among politicians regarding the most effective means to establish protection for the American cyber community. See http://articles.cnn.com/2012-08-02/politics/politics_cybersecurity-act_1_cybersecurity-bill-homeland-security-cyberattacks for more information.

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The lawsuit between Apple, Inc. and Samsung Electronics Company, Ltd. over issues of patent infringement finally came to a close with a judgment in Apple’s favor.

The judgment found Samsung guilty of infringing six Apple patents, including the quick search box, structure detection feature, slide-to-unlock, and auto-correct feature. The jury also found that Samsung willfully infringed on several Apple software and hardware patents. This will allow presiding Judge Lucy H. Koh to triple the award of damages if she finds it appropriate. Apple received an award of over $1 billion. Although this falls short of Apple’s $2.5 billion request, it still qualifies as one of the largest awards in an intellectual property case.

Samsung is anticipated to file an appeal. Samsung representatives explain that the verdict threatens to limit consumer options in the market and therefore the verdict should be overturned. Samsung intends to file post-verdict motions to overturn the ruling and seek relief from the judgment.

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Avenues of social media such as YouTube and Facebook allow users to contribute to individual pages with self-generated content that may infringe upon intellectual property rights. Accordingly, as social media continues to thrive, so do potential trademark infringement disputes. In attempting to resolve these disputes, it is helpful to consider strategies that will lead to desirable outcomes for the involved parties.

First, it is important to establish contact with the other side. Initiate communication through the medium that houses the violation to get the other side’s attention. For example, if the violation involves an unauthorized Facebook page, send a message on Facebook regarding the page in question.

As you begin to establish contact, remember that the most aggressive approach is not always the most effective. The offending party will likely ignore a stern cease and desist letter, or alternatively, become defensive, making future interactions more difficult and strained. A cordial and even-toned letter is more likely to generate an effective response and a possible resolution. For example, it is ineffective to immediately send a letter demanding that the opposing party take down the infringing material under the Digital Millennium Copyright Act (“DMCA”). The DMCA criminalizes the improper use of trademark material and allows for parties to issue a “takedown notice” asking the violating party to remove the infringing material from the social medium. Nonetheless, communicating with the other party before taking strong action, allows for the opportunity to gather background information while sustaining the right to proceed with DMCA procedures later. In addition, gathering such information will prevent the possibility of liability for making false claims of infringement under 17 U.S.C. § 512(f).

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The United States District Court in the Northern District of California has issued a preliminary injunction in favor of Apple, Inc. that prevents Samsung Electronics Company, Ltd. from manufacturing or distributing its Galaxy Nexus smartphone in the United States.

A preliminary injunction is a court order that temporarily prevents or requires a certain action until the court has time to reach a judgment in the case. Under the Patent Act, courts “may grant injunctions” in order to maintain equity between parties and protect the rights secured by a patent. Courts may grant a preliminary injunction where the requesting party shows that it is likely to succeed in the case, the party is likely to suffer “immediate and irreparable harm” without a preliminary injunction, a balance of equities weighs in favor of the requesting party, and a preliminary injunction is in the public’s interest.

Apple filed a lawsuit against Samsung for approximately $2.5 billion, alleging that Samsung’s Galaxy Nexus smartphone violates four Apple, Inc. patents, causing injury to iPhone sales. This is one of the largest patent suits of this kind.

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