Notes from the first E-commerce Roundtable, April 13, 2000

The 1st E-commerce Roundtable Meeting was held in Washington DC, 12-2 PM on April 13, 2000. The meeting was hosted by the Consumer Project on Technology (CPT).

The next E-commerce Roundtable meeting will be held on Thursday May 11, noon-2 PM in the conference room at 2040 S. Street NW, (at the corner of Connecticut and S Streets) Washington, DC. This will be a brown-bag meeting. Fortunately, there are a number of places between Dupont Circle and the meeting to pick up lunch.

Rick Weingarten of the American Library Association agreed to chair the May E-commerce Roundtable.

Vergil Bushnell, CPT's e-commerce policy analyst, served as the secretary for this meeting. CPT's director, Jamie Love chaired the meeting.

The following people attended the Roundtable.

Harold Feld, Media Access Project
Rick Weingarten, American Library Assoc.
Brian Kahin, Internet Policy Institute
Michael Donohue, Federal Trade Commission
Sarah Andrews, Electronic Privacy Information Center
Andrew Shen, Electronic Privacy Information Center
Lawrence Hecht, Internet Public Policy Network
Patrice McDermott, OMB Watch
Sue McNeil, American Federation of State, County and Municipal Employees (AFSCME)
Jamie Love, Consumer Project on Technology
Vergil Bushnell, Consumer Project on Technology

The following topics were discussed at the Roundtable.
1. Background/ Structure of Roundtable Meetings
2. ICANN/ New Top-Level Domain Names
3. ICANN/ Names of Famous Individuals
4. US/ EU Privacy Safe Harbor Negotiations
5. Internet Taxation
6. UCITA
7. Business Practice Patents

1. BACKGROUND/ STRUCTURE OF ROUNDTABLE MEETINGS

- A consensus was reached that the E-commerce Roundtable meetings will have revolving chairs.
- Individuals wishing to put an item on the agenda for a subsequent meeting, can notify the Roundtable secretary. Normally, they would be expected to be present at that meeting and be able to speak on the proposed topic, or propose a speaker.
- CPT will try to provide notes for Roundtable meetings. Direct quotes appearing in the notes for Roundtable meetings should first be confirmed, via email.
- Roundtable meetings are open to the public. Members of the press are allowed to attend to obtain background information, and should confirm all quotes.
- Suggestions for speakers to be invited should be emailed to the Roundtable secretary.
- Roundtable meetings should be structured informally, rather than using bylaws, etc.
- An agreement was reached that future E-commerce Roundtable meetings should be held on a monthly basis.

2. ICANN/ NEW TOP-LEVEL DOMAIN NAMES

- Jamie Love of CPT led the discussion on this topic.
- The current state of Top Level Domain Names (Tlds) was briefly discussed, including restricted Tlds (.gov, .edu, etc.) unrestricted Tlds (.com, .org, etc) and so-called country-code Tlds such as .fr.
- It was mentioned that libraries in America prefer to use country-code domain names, which are usually structured like "library.us.state.city".
- Presently, entrepreneurs have been selling access to domain names under the country-code Tlds of several sparsely populated nations. Some of these entrepreneurs don't want new Tlds, because the addition of more Tlds would reduce demand for their services.
- There could easily be many more Tlds, potentially many thousands more. However, the limited number of existing Tlds is restrained from growing by politics. It was noted that Europe has been having difficulty getting .eu approved.
- The trademark representatives of big business are opposed to the expansion of new Tlds.
- New differentiated Tlds could prevent confusion between different firms sharing the same name, but operating in seperate markets. For example, the difference between lotus.car, lotus.flower, and lotus.software would be easily noticed.
- Trademark owners want blocks on all new Tlds for so-called "famous" trademarks, even though the enforcement of such a restriction would go beyond current Trademark law, which would block the use of a firm's name in a single line of business.
- NGO's may wish to incorporate a company's name in domain names for their websites. For example, an NGO may want to set up a website with the domain name Microsoft.criticism to criticize the record of Microsoft, or unions might want boeing.union as a gateway to unions representing Boeing workers.
- Corporate trademark reps. got a famous trademark list clause in a recent WIPO report. The criteria for determining a famous name is unknown.
- Certain people have approached advocates of new Tlds and declared that big trademark owners have the power to block the creation of new Tlds if their demands for a famous trademark list are unheeded.
- Questions were raised about whether it is appropriate for ICANN to determine trademark policy. How would the rights of NGO's be protected under such a system?
- Questions were raised concerning the nature and scope of ICANN. Are standard-setting bodies exempt from antitrust laws? Could ICANN be made irrelevant, via alternative root servers?
- Several issues about the registration of domain names were raised. Should the name of a person/ organization that registers a domain name be publically disclosed? Websites featuring dissident opinions might wish to remain anonymous. Also, people watch the registration of new domain names to gain advance notice of, for example, mergers or future moview releases. Several examples were introduced to explain the value of knowing the identity of the person who registers a domain name. For example, if someone creates a website defaming you, you would have good reason to want to know who was behind the site. Additionally, it is important to know who sponsors/ funds political advertisements that appear online. There were also substantial consumer protection issues where e-commerce is involved.
- Questions were raised about the allocation of future Tlds. Would they be allocated on a 1st-come-1st-served basis or through a round-robin? Would price regulations be implemented? Many other questions were raised.
- ICANN is currently considering creating a limited number, probably 6-10, regulated and unregulated Tlds as a testbed.

3. ICANN/ NAMES OF FAMOUS INDIVIDUALS

- Harold Feld of the Media Access Project led the discussion on this topic.
- The Anti-Cybersquatting Act was passed last fall.
- Currently, the names of famous people, such as actors, are often used as domain names by fans or speculative folks.
- Famous names of individuals used in domain names can be used to make a serious point. For instance, www.gwbush.com is presents several issues critical to the presidential candidate. Domain name disputes involve issues of free expression.
- The Department of Commerce has extended its original deadline for comments on famous names/ domain names issues until late April. The DoC will probably put together a report to Congress.

4. US/ EU PRIVACY SAFE HARBOR NEGOTIATIONS

- Andrew Shen of EPIC led the discussion on this topic.
- The EU released a Directive with a privacy provision dealing with the personal data of EU constituents.
- There have been questions whether comparable US privacy standards meet or agree with the EU standards.
- The EU has refused to accept the latest U. proposal.
- Both proposals do not work together. It may be important to determine how to reach consensus on an International level.
- U.S. business groups have objected to the US proposal.
- One allegation from American companies is that the EU passed this directive to restrict the access of American firms to European markets.
- Neither side really wants commerce to cease between the US and EU, and so far commerce hasn't really been halted as the result of these privacy differences.
- If a standard, like the EU's, is set, other privacy standards may rise accordingly.
- Though the safe harbor proposed may sound good, the problem lies in enforcement.
- Issues pertaining to The Hague Convention on Jurisdiction and Foreign Judgements in Civil and Commercial Matters were introduced. According to some proposals, businesses could opt out of international consumer protection or privacy laws by signing on to a "Best Practices" business-defined code-of-conduct.
- The current draft of the Hague Convention contains a provision (Article 7) dealing with consumer contracts. The present draft excludes arbitration and a guarantee for consumers to sue in their home country. But the US opposes this provision.

5. INTERNET TAXATION

- Sue McNeil of AFSCME led the discussion on this topic.
- In the Fall of 1998, the Internet Tax Freedom Act was passed. It imposed a moratorium on new taxes on e-commerce, and the taxing of Internet access.
- The Act also created an Advisory Commission that has recently submitted a report to Congress. It appears that many in this Commission want a tax-free Internet.
- The problems associated with tax-free e-commerce were discussed.
- If e-commerce proceeds untaxed, it will mean an eroding tax base for state treasuries.
- States rely on sales tax for 25-40% of their revenue. Other taxes may have to be increased to make up for the deficit caused by tax-free e-commerce. Also, funding may be siphoned away from important concerns such as education.
- Traditional brick-and-mortar firms are at a disadvantage because they are forced to collect sale tax at the register.
- Untaxed e-commerce may widen the digital divide. People without credit cards or Internet access may be forced to shoulder the burden of sales tax.
- Several options were discussed. Some proponents of a tax-free Internet have suggested extending the moratorium on taxing Internet access, and multiple and discriminatory taxes on e-commerce until 2006.
- A WTO initiative has proposed elimination of tariffs on Internet transactions. An OECD initiative has proposed no new taxes on e-commerce.
- It was mentioned that the sales tax is a regressive tax, and perhaps the Internet taxation debate will be an opportunity to re-engineer the tax system. However, this may lead to increases in income tax.
- Some people have speculated that the combination of digital money, offshore banks and strong encryption may lead to no one paying income taxes.
- In summary, no real consensus has been reached concerning Internet taxation. It seems that this technical issue has become increasingly politicized.

6. UCITA

- Vergil Bushnell of CPT led the discussion on this topic.
- UCITA's progress through various states was recounted.
- It was mentioned that, in Iowa, so called "poison-pill" amendments were introduced that would have the effect of undoing some of UCITA's provisions.
- There was discussion about UCITA's potential effect on privacy -- especially due to the Act's controversial "self-help" clause enabling software publishers to code "trap doors" in their programs. One recent example of a online computer gaming firm introducing a End User License Agreement (EULA) clause that would enable the firm to access a user's hard drive, and add files was mentioned.
- There was a good deal of support for the proposition that "UCITA must die".

7. BUSINESS PRACTICES PATENTS

- There was a general discussion of business practices patents.
- The WTO's TRIPS agreement, Article 27.1 was referred to. It states "patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application."
- The US seems to be advocating for the rest of the world to honor and acknowledge the validity of business practice patents, even though other nations may be reluctant to do so.