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E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 5: Ethical and Legal Issues

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Chapter 5 Objectives

After reading Chapter 5 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 copyright, patent,

trademark, and data ownership issues related to the Internet.

Highlight key ethical and legal concerns related to online expression.

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Software Piracy

40% of all software worldwide was pirated in 2001.

Piracy resulted in a US$10.7 billion loss for firms.

840,000 Internet sites sold counterfeited software.

Vietnam, China, Indonesia, Ukraine, and Russia have highest piracy rates.

Microsoft believes that education is the best weapon against piracy. Do you agree?

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Ethics and law are closely related.Ethics concerns the analysis of what is right

and wrong and how we judge the differences.Modern technology presents a challenge to

marketing ethics. Critical issues include: Ownership of intellectual property Freedom of expression Use of data and its collection Status of children and digital networks

Ethics and Legal Issues

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What are the roles of formal laws vs. 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.

The Problem of Self-Regulation

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The concept of privacy has both ethical and legal aspects.

There is legal confusion regarding privacy. No specific privacy provision within the U.S.

Constitution. Privacy has been addressed in the common law of

the courts.

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

Privacy

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Privacy Within Digital Contexts

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.

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Privacy Within Digital Contexts, cont.

Data can be obtained through cookies.Cookies are packets of data that are

created and stored on the user’s hard drive in response to instructions received from a Web page.

Cookies allow marketers to pinpoint an individual’s online behavior.

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The Privacy Debate

Supporters of systems such as DoubleClick’s argue that users wish to receive the benefits of targeted advertisers.

Critics point out that most users do not understand how computers process data.

Preliminary terms of the FTC agreement include: Obligation to provide notice of data collection. Ban on combining existing data with personal

information unless opt-in permission is obtained.

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The FTC has identified the following norms for the ethical use of consumer information: Notice Consent Access Security Enforcement

The FTC and Privacy Norms

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The law protects intangible or intellectual property through 3 basic mechanisms. Copyright Patent law Trademark

Protection of Digital Property

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Copyright is the primary means of protecting most expression on the Internet. 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.

Other copyright protection under No Electronic Theft Act and Digital Millennium Copyright Act.

Copyright

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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. Cybersquatting involves the registration of

domains that resemble or duplicate existing ones.

Trademarks

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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.

Patents

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Licenses are increasingly popular method of intellectual property protection. 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.

Licenses

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Online Expression

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 email

marketing. Expression directed to children remains a highly

visible issue within online law and ethics.

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Emerging Issues

Online governance The Internet Corporation for Assigned Names

and Numbers (ICANN) was formed in 1998.

Jurisdiction 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.

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Fraud 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.

Emerging Issues, cont.

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FBI Investigates Online Fraud