Lecture 9Lecture 9 Ethical and Legal IssuesEthical and Legal Issues

Source: E-Marketing 5/E (Judy Strauss & Source: E-Marketing 5/E (Judy Strauss & Raymond Frost)Raymond Frost)

© Sekolah Tinggi Teknik Surabaya

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» After reading this chapter, 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 patent, copyright,

trademark, and data ownership issues related to the internet.

˃ Highlight key ethical and legal concerns related to online expression.

» Copyright infringement occurs when people or companies loan software to others for which they have no licenses.

» Counterfeiting occurs when illegally copied software is duplicated and distributed on a large scale.

» Countries with weak software copyright enforcement cost software owners billions of dollars in lost revenue.

» Globally, over a third of the software sold is an infringing version.

» Microsoft uses the following remedies:˃ Proposes intellectual property legislation.˃ Files civil lawsuits.˃ Creates noninfringement technologies.

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

» Ethics and law are closely related.» Ethics takes into account the concerns and

values of society as a whole.» Modern technology presents challenges to

marketing ethics. Critical issues include:˃ Ownership of intellectual property˃ The role of privacy in a virtual world˃ Freedom of expression˃ Use of data and its collection˃ Status of children and digital networks

» Recent U.S. administrations have left the development of the internet to the 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.

» Recent policy-making activities indicate that governments are asserting themselves in areas such as fraud prevention and children’s issues.

» The concept of privacy encompasses both ethical and legal aspects.

» There is constant debate regarding privacy and it has proved to be an elusive concept, both ethically and legally.

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

» Information plays a pivotal role in the concept of privacy.˃ 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.

» Cookies are packets of data created and stored on the user’s hard drive in response to instructions received from a Web page.

» Cookies serve many purposes:˃ Create shopping baskets to hold purchases˃ Recall stored sales information˃ Collect user data

» Cookies are normally executed without any user action.

» They allow marketers to pinpoint an individual’s online behavior.

» Privacy supporters advocate policies to inform consumers of data collection and allow them to participate (opt-in) or decline (opt-out).˃ Critics point out that many users do not understand

how computers operate and question whether consumers have the expertise necessary to successfully opt-out.

˃ Others argue that users wish to receive the benefits of targeted advertising.

˃ Access to personal data is another important online privacy issue.

» Although several Congressional bills are pending, no law exists to resolve the privacy debate.

» Technologies such as cookies, Java applets, and intelligent agents are ubiquitous applications that can function without the user’s knowledge or control.

» The Children’s Online Privacy Protection Act (COPPA) established policies for ethical collection of information from children 12 or under.

» Privacy within electronic mail remains an unsettled aspect of online interaction.

» The European Union (EU) and the U.S. reached agreement in 2000 to protect EU citizen data.

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

» The law protects intangible or intellectual property through 3 basic mechanisms:˃ Patent law is centered on inventions.˃ Copyright addresses issues of expression.˃ Trademark is concerned with words or

images used in the market.

» 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.

» The U.S. Patent Office recently decided to increase the rigor of reviewing applications for software-related protection.

» Ex.5.3

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

» Chief protections include:˃ 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.

» The No Electronic Theft (NET) Act was signed into law in 1997.˃ Confers copyright protection for computer

content and imposes sanctions for infringement.

» The 1998 Digital Millennium Copyright Act (DMCA) contains several provisions.˃ Protects ISPs from acts of user infringement.˃ Criminalizes the circumvention of software

protections.˃ Complies with international standards for

copyrighted material.

» 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.˃ A trademark violation, cybersquatting,

involves the registration of domains that resemble or duplicate existing ones.

» Licenses are an increasingly popular method of intellectual property protection.˃ Licenses 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.

» Legal and ethical debates about data access and ownership questions abound.

» Online technologies such as click data and spidering raise concerns about data ownership.

» A movement is growing to protect specially compiled or sui generis data.˃ U.S. copyright law does not protect facts,

so database vendors are seeking legal protection.

» 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

ethical email marketing.» Expression directed to children remains

a highly visible issue within online law and ethics.

» Online governance ˃ The Internet Corporation for Assigned

Names and Numbers (ICANN) was formed in 1998.

» Jurisdiction is 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.

» Fraud is 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.

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