9781423903055 ppt ch07

Electronic CommerceEighth Edition

Chapter 7The Environment of Electronic

Commerce: Legal, Ethical, and Tax Issues

Electronic Commerce, Eighth Edition 22

Learning Objectives

In this chapter, you will learn about:

• Laws that govern electronic commerce activities

• Laws that govern the use of intellectual property by online businesses

• Online crime, terrorism, and warfare


Learning Objectives (cont’d.)

• Ethics issues that arise for companies conducting electronic commerce

• Conflicts between companies’ desire to collect and use data about their customers and the privacy rights of those customers

• Taxes that are levied on electronic commerce activities


The Legal Environment of Electronic Commerce

• All businesses:– Must comply with same laws and regulations– Face same set of penalties

• Web businesses: two additional complicating factors– Web extends reach beyond traditional boundaries

• Subject to more laws more quickly

– Web increases communications speed and efficiency• More interactive and complex customer relationships


The Legal Environment of Electronic Commerce (cont’d.)

• Web creates network of customers– Significant levels of interaction (with each other)

• Implications of interaction for Web businesses– Violating law or breaching ethical standards

• Face rapid and intense reactions from many customers


Borders and Jurisdiction

• Physical world of traditional commerce– Territorial borders clearly:

• Mark range of culture

• Mark reach of applicable laws

• Physical travel across international borders– People made aware of transition:

• Through formal document examination

• Through language and currency change


• Geographic influences of area’s dominant culture– Limit acceptable ethical behavior and laws adopted

• Culture affects laws directly and indirectly– Through its effect on ethical standards


Borders and Jurisdiction (cont’d.)

• Geographic boundaries on culture– Historically: defined by lack of ability to travel great

distances – Today: people travel easily between countries

• Free EU member country citizen movement

• European Money Union (euro common currency)

• Relationship of geographic and legal boundaries – Four elements

• Power, effects, legitimacy, notice



• Power– Form of control over physical space

• People and objects residing in physical space

– Defining characteristic of statehood– Effective enforcement

• Required for effective laws

• Requires power to:– Exercise physical control over residents – Impose sanctions on violators



• Power (cont’d.)– Jurisdiction

• Government’s ability to exert control over person or corporation

– Physical world laws do not apply to people:• Not located in or not owning assets in geographic area

that created laws– Asserted government power level limitation

• Acceptance by existing culture– Geographic boundaries, cultural groupings, legal

structures all coincide


• Effects– Laws in the physical world

• Grounded in relationship between physical proximity and effects (impact) of person’s behavior

– Diminish as geographic distance increases– Local culture’s acceptance or rejection of various

kinds of effects:• Determines characteristics of laws

– For online businesses:• Traditional measures, resulting laws do not work well

• Example: online Nazi memorabilia sales




• Legitimacy– 1970 United Nations resolution

• Affirmed idea of governmental legitimacy

– Legitimacy (idea)• Those subject to laws should have role in formulating

them

– Countries and governments• Operate with varying levels of authority and autonomy

• Example: China and Singapore versus Scandinavian countries



• Notice– Physical boundaries provide notice (when crossed)

• One rule set replaced by different rule set

– Expression of such a change in rules– Constructive notice

• People informed of subjection to new laws and cultural norms: crossing international border

• Ignorance of law: not sustainable defense

• Creates problems for online businesses: unknown customers from another country accessing Web sites


Jurisdiction on the Internet

• Jurisdiction is difficult on the Internet– No geographic boundaries– Four physical world considerations

• Do not translate well (power, effects, legitimacy, notice)

• Governments enforcing Internet business conduct laws:– Must establish jurisdiction over conduct

• Contract: promise between two or more legal entities– Provides for exchange of value between them

• Goods, services, money


Jurisdiction on the Internet (cont’d.)

• Breach of contract: if either party does not comply with contract terms, other party can sue (failure to comply)

• Tort: intentional (negligent) action taken by a legal entity causing harm to another legal entity– Other than breach of contract

• Contract or tort law claims– Must be filed in courts with jurisdiction

• Court jurisdiction requires:– Subject-matter jurisdiction and personal jurisdiction



• Subject-matter jurisdiction– Court’s authority to decide particular type of dispute– United States examples

• Federal courts: subject-matter jurisdiction over issues governed by federal laws

• State courts: subject-matter jurisdiction over issues governed by state laws

– Rules determining subject-matter jurisdiction• Clear and easy to apply (few disputes)


• Personal jurisdiction– Determined by residence of parties– Defendant: state resident where court is located

• Straightforward determination

– Out-of-state person can voluntarily submit to a jurisdiction

• Signing contract including forum selection clause

• Contract enforced according to particular state laws



• Personal jurisdiction (cont’d.)– Long-arm statutes: state laws creating personal

jurisdiction (details vary)• Create personal jurisdiction over nonresidents

committing tortious acts

– Businesses conducting e-commerce over state and international lines

• Be aware of jurisdictional considerations

– Extent to which these laws apply: unclear• Procedural laws written before electronic commerce

existed



• Personal jurisdiction (cont’d.)– Tortious act

• An exception to general rule determining personal jurisdiction

– Commit tortious act by:• Selling product causing harm to buyer

• Negligent or intentional

• Defamation, misrepresentation, fraud, trade secret theft

– Long-arm statutes invoked more readily for tortious acts

• Compared to breach of contract



• Jurisdiction in international commerce– Governed by treaties between countries– U.S. determines personal jurisdiction for foreigners

• Same manner as in domestic long-arm statutes– Non-U.S. corporations, individuals

• Can be sued in U.S. courts• Foreign courts can enforce U.S. court system decisions

against U.S. corporations, individuals– Judicial comity: voluntarily enforce other countries’

laws• Out of sense of comity, friendly civility



• Jurisdiction in international commerce (cont’d.)– Courts reluctant to serve as forums for international

disputes• Not designed for diplomacy, cost-benefit evaluations

• Prefer government executive branch to negotiate international agreements, resolve international disputes

– Example: eBay in China• Chinese government made it difficult

– Online resources• Berkman Center for Internet & Society

• UCLA Online Institute for Cyberspace Law and Policy

Conflict of Laws

• Business governed by various laws– Federal laws, state laws, local laws

• Conflict of laws: laws address same issues in different ways

• Online businesses– Look to federal laws for guidance

• May lead to problems with state and local laws

• Example: direct wine sales industry– U.S. Constitution’s Commerce Clause versus states’

right to regulate matters pertaining to citizens health, welfare



Contracting and Contract Enforcement in Electronic Commerce

• Three essential contract elements– An offer, an acceptance, consideration

• Contract formed when one party accepts offer of another party

• Offer: commitment (with terms)– Made to another party– Declaration of willingness to buy, sell product, service– Can be revoked

• Acceptance: expression of willingness to take offer– Including all stated terms


Contracting and Contract Enforcement in Electronic Commerce (cont’d.)

• Consideration: agreed upon exchange of something valuable– Money, property, future services

• Implied contract: formed by two or more parties– Act as if contract exists

• Even if no written and signed contract

• Contract– Every agreement or exchange between parties

• No matter how simple

– Important on the Internet



• With Internet communications:– Offers and acceptances occur

• Exchange e-mail, engage in electronic data interchange, fill out Web page forms

• Can be combined with traditional methods

– Example: end-user license agreements (EULAs)• Contract user must accept before installing software

• Excellent contract law resource– Contracts Uniform Commercial Code (UCC)

• Cornell Law School Web site



• Web site seller advertising goods for sale– Inviting offer from potential buyers (not making offer)

• Prevents seller liability to deliver more goods than available

• Legal offer acceptance: usually quite easy

• Courts view of offers and acceptances– Actions occurring within particular context

• If actions considered reasonable under the circumstances:– Courts interpret actions as offers and acceptances



• Written contracts on the Web– Statute of Frauds (state laws)

• Categories of contracts not enforceable unless terms put into writing and signed

• Sale of goods worth more than $500

• Actions cannot complete within one year

– Electronic commerce writing• Pen or paper not required (fortunately)

– Writing exists• When contract terms reduced to tangible form



• Written contracts on the Web (cont’d.)– Electronic commerce contract

• Easy to satisfy writing requirement

– Signature: any symbol executed or adopted for the purpose of authenticating a writing

• Names on telegrams, telexes, faxes, Western Union Mailgrams, typed names or printed letterhead names

• Symbol or code included in electronic file, digital signatures



• Written contracts on the Web (cont’d.)– Article 11 of the United Nations Convention on

Contracts for the International Sale of Goods (CISG)• Requires neither writing nor a signature to create a

legally binding acceptance

– Information on CISG and related topics in international commercial law

• Pace Law School CISG Database Web site



• Warranties on the Web– Implied warranties

• Included in any contract for sale of goods

– Seller implicitly warrants goods offered for sale• Fit for purposes normally used

– Additional implied warranty of fitness• Seller knows specific buyer’s requirements information

• Seller provides specific description of additional warranty terms

• Seller makes general statements in brochures or other advertising materials



• Warranties on the Web (cont’d.)– Seller: avoid implied warranty liability

• Provide warranty disclaimer: statement declaring seller will not honor some or all implied warranties

– Warranty disclaimer: conspicuously made in writing• Put in larger type, bold font, or contrasting color

• State it obviously

• Make it easy to find by buyer on Web site



• Authority to form contracts– Contract formed when offer accepted for

consideration– Problems with acceptance

• Issued by imposter (forgery)• Person does not have authority to bind company to a

contract– Electronic commerce technology

• Makes forged identities easy to create• Provides the means to avoid being deceived

– Prevent forgery: use digital signatures



• Authority to form contracts (cont’d.)– Authority to bind

• Authority to commit company to online contract

• Employee accepts contract, company later asserts employee not authorized

– Avoid • Check public information on file

• Obtain copies of corporate certificates or resolutions

– Can be time consuming and awkward



• Terms of service agreements– Site visitors must follow stated rules

• Most visitors not aware of rules

– Terms of service (ToS) agreements• Detailed rules and regulations

• Intended to limit Web site owner’s liability for what one might do with information obtained from site

– Site visitor held to terms of service by simply using site

• Even if text not read, button indicating agreement not clicked


Use and Protection of Intellectual Property in Online Business

• Intellectual property (general term) includes:– All products of the human mind

• Tangible or intangible

– Protections afforded by copyrights and patents, trademarks registration, service marks

– Right of publicity• Limited right to control others’ commercial use of an

individual’s name, image, likeness, identifying aspect of identity

• Limited by U.S. First Amendment provisions


Use and Protection of Intellectual Property in Online Business (cont’d.)

• Online businesses must avoid:– Deceptive trade practices– False advertising claims– Defamation or product disparagement– Infringements of intellectual property rights

• By using unauthorized content

Web Site Content Issues

• Legal issues with e-commerce Web page content – Common concerns

• Use of intellectual property protected by other parties’ copyrights, patents, trademarks, service marks

• Copyright infringement– Copyright: right granted by government to the author

(creator) of literary or artistic work• Specific time length provided in copyright law• Gives author (creator) sole and exclusive right to the work

(print, publish, sell)• Includes virtually all forms of artistic or intellectual

expressionElectronic Commerce, Eighth Edition 40


Web Site Content Issues (cont’d.)

• Copyright infringement (cont’d.)– Idea contained in expression cannot be copyrighted– Work cannot be copyrighted if idea cannot be

separated from expression• Example: mathematical calculations

– Collection of facts can be copyrighted• Example: Yahoo! Web Directory



• Copyright infringement (cont’d.)– U.S. law still allows registration (no longer required)– Work created after 1989

• Copyrighted automatically by virtue of copyright law

– Most U.S. Web pages protected by automatic copyright provision

– Web client computer copy of HTML file• Fair use: includes copying it for use in criticism,

comment, news reporting, teaching, scholarship, or research


• Nonprofit educational uses get better chance than commercial uses

• Court may consider painting using different standards than sound recording

• Small sections qualify when entire work might not• Court may consider amount of damage caused to

value of copyrighted work



• Copyright infringement (cont’d.)– Copyright law difficult to apply

• Due to elements such as fair use– Vicarious copyright infringement

• Entity capable of supervising infringing activity• Obtains a financial benefit from infringing activity

– Example: Napster• Failed to monitor its network (could have)• Profited indirectly from the infringement

– Music downloads, copying• Legality unclear in may cases



• Patent infringement– Patent

• Exclusive right granted by government to an individual

• Make, use, sell invention

– Invention: must be genuine, novel, useful, and not obvious given current technology state

– 1980s: companies started obtaining software patents• Not useful for Web site software

• Technology obsolete before patent protection secured (rely on copyright protection)



• Patent infringement (cont’d.)– Business process patent

• Protects specific set of procedures for conducting a particular business activity

– Business process patents are controversial• Grant recipients unfair monopoly power

• Inappropriate patent law extension

– Examples• Amazon.com sued Barnes & Noble (process similar to

1-Click method)

• MercExchange sued eBay (fixed price sales option)



• Trademark infringement– Trademark

• Distinctive mark, device, motto, implement company affixes to goods it produces

• Identification purposes– Service mark

• Similar to trademark, identifies services provided– Both registered with governments (state, federal)– Trade name

• Name business uses to identify itself• Protected under common law



• Trademark infringement (cont’d.)– Common Law

• Law established by history of court decisions

– Statutory law• Elected legislative bodies pass laws (statutes)

• Web site designers must not use:– Any trademarked name, logo, other identifying mark

• Without express permission of trademark owner


Domain Names and Intellectual Property Issues

• Cybersquatting– Registering trademarked domain name– Hope that owner will pay huge amounts of money to

acquire URL• Registering generic name is not cybersquatting

• Name changing (typosquatting)– Purposely registering misspelled variations of well-

known domain names


Domain Names and Intellectual Property Issues (cont’d.)

• U.S. Anticybersquatting Consumer Protection Act

• World Intellectual Property Organization (WIPO)– Uniform Domain Name Dispute Resolution Policy

(UDRP)• Handles disputes of trademarked domain names

• Arise when business has common term trademark

– Example: Sting musician case (www.sting.com)– Critics of WIPO UDRP: enforced unevenly


Domain Names and Intellectual Property Issues (cont’d.)

• Name stealing– Someone other than domain name’s owner changes

ownership of domain name

• Domain name ownership change– Information maintained by public domain registrar

changed in registrar’s database• Reflects new owner’s name and business address

• Occurs when safeguards not in place

• Main purpose: harass site owner


Protecting Intellectual Property Online

• Digital watermark– Digital code or stream embedded undetectably in

digital image or audio file• Can be encrypted to protect contents

– Example: Verance (digital audio system)• Audio watermarks do not alter audio fidelity

• Copy control– Electronic mechanism: limiting number of copies

• Example: Blue Spike (Giovanni system)

• Digimarc– Tracks works protected by Digimarc system

Defamation

• Defamatory statement– False and injures reputation of another person or

company

• Product disparagement– When statement injures product or service reputation

• Web sites must consider specific laws:– Before making negative, evaluative statements about

persons or products

• Designers must avoid potential defamation liability: – By altering person’s photo or image depicting person

unfavorably



Defamation (cont’d.)

• Important exception in U.S. law– Defamatory statements about public figures– Allows considerable leeway for:

• Satirical statements

• Valid expressions of personal opinion

• Other countries do not offer same protections– Web site operators with international audiences need

to be careful

Deceptive Trade Practices

• Trademarked object manipulation– Constitutes infringement of trademark holder’s rights

• Personal Web pages include unauthorized cartoon characters, celebrity photographs– Still illegal even if altered

• Web sites linking to other sites– Risk implying non-existent relationship

• Trademark protection– Prevents firm from using same (similar) name, logo,

other identifying characteristic in a way that would cause potential buyers confusion



Advertising Regulation

• Federal Trade Commission (FTC) (United States)– Regulates advertising, publishes regulations,

investigates false advertising claims

• FTC Web site– Includes information releases

• Useful to businesses and consumers

• FTC business education campaign publications– Available on Advertising Guidance page– Help businesses comply with law– See Figure 7-7


Advertising Regulation (cont’d.)

• Illegal under U.S. law– Advertising claim misleading substantial number of

consumers in a material way

• FTC accepts referred investigations– Better Business Bureau

• FTC provides policy statements for e-commerce Web site designers– Information on:

• Permitted advertisements

• Policy statements

Advertising Regulation (cont’d.)

• Policy statements cover specific areas– Bait advertising

– Consumer lending and leasing

– Endorsements and testimonials

– Energy consumption statements for home appliances

– Guarantees and warranties

– Prices

• Other regulatory agencies– Food and Drug Administration (FDA); Bureau of

Alcohol, Tobacco, and Firearms (BATF); Department of Transportation (DOT)



Online Crime, Terrorism, and Warfare

• Internet– Opened up possibilities for people to communicate

• Worldwide

– Opened doors for businesses• Reach new markets

• Create opportunities for economic growth

– Useful tool for perpetrating crimes, conducting terrorism, waging war


Online Crime

• Online versions of physical world crimes– Theft, stalking, pornography distribution, gambling

• New online crime– Commandeering computer to attack other computers

• Law enforcement obstacles– Jurisdiction issues– Prosecuting across international boundaries– Distribution of pornographic material– Online gambling– Applying laws written before Internet prevalence


Online Crime (cont’d.)

• Advance fee fraud– Perpetrator offers to share large payoff with victim

• Victim must make “good faith” deposit, provide funding

– Perpetrator disappears with deposit

• Nigerian scam (419 scam)– Victim receives e-mail from Nigerian government

official requesting assistance in moving money to a foreign bank account

• Perpetrator asks for identity information

• Information used to steal advance fee


• Pornographic material– Subjective distinction between legal and illegal adult

material

• Gambling– Sites located outside United States– State laws specifically outlaw Internet gambling

• Jurisdiction not clear

• Stalking (online)– Few states have passed Internet laws

• Cyberbullying: using technology to harass, humiliate, threaten, or embarrass another



• Infiltrating computer systems with intent of stealing data, creating operational disruptions– Smaller companies are easier targets– Criminal extortion

• Myron Tereshchuk: threatened MicroPatent with confidential client information disclosure

• Internet can help law enforcement– Track perpetrators of crime

• Criminals brag on social networking sites

• Criminals leave clues in online profiles



Online Warfare and Terrorism

• New age of terrorism and warfare– Carried out or coordinated through the Internet

• Web sites (considerable number)– Operated by hate groups and terrorist organizations– Contain detailed instructions for creating biological

weapons, other poisons– Contain discussion boards

• Help terrorist groups recruit new members online

– Offer downloadable terrorist training films (thousands)

Online Warfare and Terrorism (cont’d.)

• Agencies devote considerable resources to monitoring terrorist activities online– U.S. Department of Homeland Security, Interpol– Historically: difficulty in coordinating activities

• Interpol has been motivated to:– Update, expand computer network monitoring skills– Coordinate global antiterrorism efforts

• Sustained terrorist effort could slow down major transaction-processing center processing– More Internet business communications traffic:

• Provides more potential damage



Ethical Issues

• Companies conducting Web site electronic commerce:– Adhere to same ethical standards of other businesses

• Consequences all companies suffer– Damaged reputation, long-term loss of trust, loss of

business

• Web advertising or promotion – Include true statements, omit misleading information

• Misleading when ad omits important related facts

– Products supported by verifiable information


Ethics and Web Business Policies

• Ethical lapse rapidly passed among customers– Can seriously affect company’s reputation– Example: New York Times Amazon.com report

• Arrangements with publishers for book promotions– Example: eBay

• Newspaper stories about illegal items sales

• Important ethical issue organizations face– Limiting use of collected e-mail addresses, related

information– Lack of government regulation

• Most organizations state their policy


Privacy Rights and Obligations

• Online privacy is evolving– Hotly debated in various forums

• Electronic Communications Privacy Act of 1986– Main law governing privacy on the Internet today– Written to deal with leased telephone lines

interceptions

• Legislative proposals– Not withstanding constitutional challenges

• July 1999 FTC report– Concluded no federal laws regarding privacy required


Privacy Rights and Obligations (cont’d.)

• Near-term future privacy United States regulation – Unclear– Direct Marketing Association (DMA)

• Established set of privacy standards• Critics note member activity regulation is less than

successful

• Ethics issues– Significant in area of online privacy

• Laws not keeping pace with Internet, Web growth– Nature and degree of personal information recorded

• Threaten visitors privacy rights


• Ethics issues (cont’d.)– Companies may lose control of personal information

– Companies may lose track of shipments containing computer backup tapes

– Stolen laptops with personal data

– People have access to data once impossible to obtain• Real estate transaction information; privacy reduced

• Worldwide cultural differences provide different electronic commerce privacy expectations– European Union adopted Directive on the Protection of

Personal Data



• Major United States privacy controversies– Opt-in versus opt-out

• No law limiting companies’ use of gathered information

• Companies free to sell, rent customer information



• Opt-out approach– Assumes customer does not object to company’s use

of information• Unless customer specifically denies permission

• Opt-in approach– Company collecting information does not use it for

any other purpose• Unless customer specifically chooses to allow use



• Another opt-out approach – Page includes checked boxes

• Instructs visitor: “uncheck the boxes of the items you do not wish to receive”

• Opt-in approach more preferable– Gives customer privacy protection

• Unless customer specifically elects to give up rights



• Electronic commerce Web sites– Be conservative in customer data collection and use– Use four principles for handling customer data

• Use data collected for improved customer service

• Do not share customer data with others outside your company without customer’s permission

• Tell customers what data you are collecting and what you are doing with it

• Give customers the right to have you delete any data collected about them

– Keep data secure


Communications with Children

• Privacy considerations when Web sites attract children

• Children less capable of evaluating information sharing and transaction risks– Concern

• Children’s ability to read, evaluate privacy statements

• Consent to providing personal information to Web sites


Communications with Children (cont’d.)

• MySpace– 2006: former federal prosecutor (site security officer)– Software looks for sex offenders

• 1998: Children’s Online Protection Act (COPA)– Unconstitutional: restricted lawful material access

• Children’s Online Privacy Protection Act of 1998– Successful: COPPA does not regulate content

• 2001: Children’s Internet Protection Act (CIPA)– Federally funded schools install filtering software


• Disney Online– Offers three registration choices (adult, teen, kids)– Refuses to enroll child under age 13 – Meets COPPA law requirements

• Sanrio– Asks for birth date before allowing access to English-

language site– Encourages visitors to notify company of child gaining

site access in violation of COPPA

Taxation and Electronic Commerce

• Web businesses must comply with multiple tax laws • Several types of taxes

– Income taxes: levied on net income

– Transaction taxes: levied on products or services company sells or uses

• Sales taxes, use taxes, excise taxes, customs duties

– Customs duties: levied on imports into the country

– Property taxes: levied on personal property, real estate

• Web businesses’ greatest concern– Income and sales taxes



Nexus

• Connection between tax-paying entity and government– Similar concept as personal jurisdiction

• Activities creating nexus (United States)– Determined by state law, vary from state to state

• Determining nexus: difficult– Company conducts few activities in the state

• National nexus issues– Business conducted in more than one country

• Establish nexus with a country• Liable for filing tax returns in that country


U.S. Income Taxes

• Internal Revenue Service (IRS)– Charged with administering tax laws

• Basic principle– Any verifiable increase in company wealth:

• Subject to federal taxation

• Pay U.S. federal income tax if:– U.S.-based Web site generating income– Web site maintained by U.S. company

• Credit given for taxes paid to foreign countries – Reduces double taxation of foreign earnings


U.S. Income Taxes (cont’d.)

• States levy income tax on business earnings– Must file tax returns in all states– Apportion earnings in accordance with each state

• Others with power to levy income taxes– Cities, counties, other political subdivisions

• Must apportion income, file tax returns in each locality

• Companies selling through Web site– Do not establish nexus everywhere goods delivered

to customers (in general)• Avoid nexus by using a contract carrier


U.S. State Sales Taxes

• Transaction tax on goods sold to consumers

• Businesses establishing nexus with a state– Must file sales tax returns and remit sales tax

collected from customers– Business not required to collect taxes from out-of-

state customers unless nexus has been established

• Use tax levy– Property used in that state

• Not purchased in that state

– Property not “purchased” at all (leases)


U.S. State Sales Taxes (cont’d.)

• Large companies– Use complex sales tax management software

• Purchasers exempt from sales tax– Charitable organizations, businesses buying items for

resale

• Sales tax collection problem– Confusing; no new laws– Some businesses collect tax on all sales

• Streamlined Sales and Use Tax Agreement– Simplifies state sales taxes


Import Tariffs

• Countries regulate import and export of goods– Goods imported: only if tariff paid

• Tariff (customs duty, duty)– Tax levied on products as they enter country

• Many reasons for imposing tariffs– Beyond scope of this book

• Goods ordered online: subject to tariffs – When crossing international borders

• Products delivered online: subject to tariffs– Downloaded software


European Union Value Added Taxes

• European Union– Transfer taxes generate revenues– Value Added Tax (VAT)

• Most common transfer tax

• Mid-2003: VAT applied to sales of digital goods– EU-based companies

• Must collect VAT on digital good sales

– Non-EU companies must register with EU tax authorities, levy, collect, remit VAT

• If sales include digital goods delivered into EU

Summary

• Issues of borders, jurisdiction, Web site content– How these factors affect company’s ability to conduct

electronic commerce

• Avoiding deceptive trade practices, false advertising claims, defamation or product disparagement, intellectual property rights infringement

• Legal issues when Web used in commission of crimes, terrorist acts, conduct of war

• Role of ethics in formulating Web business policies

• Various forms of taxation
