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E-Business Legal/Regulatory Ramifications

e-Business Principles and Practices

"Today, Internet retailers offer a stable shopping environment, and many are showing a healthy profit marginÐ'... Product purchasing increased by 8 percentage points from 44.1% to 52.1% while banking online grew by 10.4 percentage points from 17.4% to 27.8%", reports in an April 19, 2005 publication.

Over the past years our society has become centered entirely on the capability of moving considerable masses of information to unlimited locations throughout the world in incredibly quick periods while maintaining minimal costs. The progress of this computerized era, and the emergent desire for instantaneous exchanges, prompted an entire network of globally unified computers to transpire, universally referred to as the Internet or the World Wide Web. The development of this Internet has modified almost every person's daily life, in some way or other, directly or indirectly. Regularly employees depend upon information from the Internet during their workdays, children are learning about utilization of the Internet at school, and even others are exposed merely by watching television in their homes. The Internet is rapidly being recognized as a fundamental requirement to the future of communication. As a result, many groups and organizations, including the government, attempt to regulate and control the information distributed through the World Wide Web. Thus, continued legislation and legal ramifications arise surrounding electronic communications.

A number of legal and regulatory issues affect e-commerce and the organizations operating an e-Business. Because the Internet continues as an increasingly popular tool to boost organizations' profits, a considerable amount of harm can be the outcome Ð'- to the consumer, to the business, and to the innocent "web surfer." This paper explores the various legal and regulatory issues affecting businesses today.


The Internet Tax Freedom Act forced a three-year suspension on federal, state and local taxes on Internet access and electronic commerce (Nellen, 2004, p 1). This moratorium started October 1, 1998 and intended to end on October 21, 2001. However, this very moratorium was extended through November 1, 2003. In any case, the Internet Tax Freedom Act continued to maintain state and local taxing authority if a specific tax was not covered under the moratorium. In other words, sales taxes still applied to the sale of taxable items made via e-commerce (

The Uniform Electronic Transactions Act grants a legal framework for electronic transactions. It gives electronic signatures and records the same validity and enforceability as manual signatures and paper-based transactions. The Uniform Act has three parts. The first part sets out the basic functional equivalence rules, and spells out that they apply when the people involved in a transaction have agreed, expressly or by implication, to use electronic documents. The second part of the Uniform Act establishes rules for the formation of contracts. The third part creates provisions that allow the use of electronic documents in areas that primarily have been dependent

upon paper documentation (

The Federal Trademark Dilution Act protects famous marks from uses that dilute their distinctiveness, even in the absence of competition. "Dilution differs from normal trademark infringement in that there is no need to prove a likelihood of confusion to protect a mark" (Beck & Tysver, 1). In other words, if an e-business has a symbol or generally known mark associated with its business, that e-business may be able to prohibit another person or organization from utilizing the famous trademark. As an e-business this is important in day-to-day transactions as well as long-term consumer relations. For example, if the trademark is used by another organization then many consumers will equate the original trademark owner's reputation to the product. Thus, if the new seller of goods that falsely uses this trademark does not practice honorable business principles, a fair and respectable business may be ruined due to the misuse of the trademark.


While copyright laws have been in effect for decades, the recent popularity of the Internet enables users to illegally obtain or use materials without the proper permissions. Copyright gives authors, artists and others the right to exclude individuals or organizations from using their products (

Recently a popular website, Napster, found itself in court facing charges of copyright violation. "The record companies contend that Napster is facilitating copyright infringement on a massive scale by allowing its millions of members to search for songs on each others' computers and to download them for free" (Borland, 7).

Intellectual Property

Intellectual property can be protected under federal law, and includes copyrightable works, ideas, discoveries, and inventions. Copyright refers to any creations that have a physical form such as books, photographs, or clothing designs. Intellectual property refers to any creation that does not have a physical form such as the files, images, and other items occupying cyberspace. Therefore, these items can be copied, printed, downloaded and saved as files on a personal computer (

Security & Privacy

Privacy is an important issue on the Internet. Simply, due to the way electronic communication is created and transmitted, communication on the Internet is never private.

The Electronic Communications Privacy Act passed in 1986 to guarantee the privacy of e-mail. This Act extended the protections of voice communications to non-voice communications. Likewise, the Act ensures that private messages cannot be intercepted and accessed by government officials without legal permission ( Thus, no person has the ability to retrieve your e-mail without a warrant (

Congress approved the above communications privacy measure to broaden the range of present federal wiretap laws, in order to include security for electronic communications. According to

The Electronic Communications



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