Hastings Communications and Entertainment Law Journal


Electronic commerce in cyberspace faces an uncertain legal environment. In many instances the laws that will shape the future growth and development of electronic commerce have yet to be written. Gaps in the regulatory framework, and rules from other contexts that are made obsolete by cyberspace technology, promote chaotic market conditions and impede innovation. Today, business activity or interaction with people which employs 19th and 20th Century communication technology is governed by an array of civil and criminal laws. It is, however, not at all clear which existing legal rules do or ought to apply to markets in cyberspace. From its earliest days the Internet has operated in a virtual regulatory vacuum, a libertarian paradise, where government regulation is more likely to be scorned than embraced. The explosive expansion of electronic commerce is overtaking the legally unfettered frontier era, as numerous issues are brought to a head, typically on an ad hoc basis when disputes are brought before federal judges. Meanwhile, the absence of coherent policy and rules tailored for cyberspace markets, and the preference of business for greater certainty, adds momentum to efforts to impose law and order in cyberspace on a more systematic and rational basis.

The authors survey the large number of legal changes under consideration by federal lawmakers that would establish new rules for commerce in cyberspace. The authors group these federal policy debates in four main categories: (1) security and privacy-including the current encryption controversy; (2) intellectual property, especially copyright; (3) regulation of commerce; and (4) distributional and participatory democracy issues. The authors find that lawmakers are scrambling to catch up to Internet developments. In most instances, Congress and the White House are far behind, but even when they do get around to addressing an issue of cyberlaw, lawmakers skip over the threshold issue of whether or not to fashion new legal approaches that best fit the reality of new, 21st Century technology. Instead, they proceed immediately to debate ways to tinker with existing laws originally developed for earlier technology. Nevertheless, the authors note that there is time and reason to do the job of writing rules well, whether they be comprehensive and new, or merely a revision of existing regulations. The authors identify basic principles that could guide lawmakers as they develop such rules, including that new rules should be based on an understanding of how the technology works. The rules should stimulate competition and innovation, and they should be flexible to accommodate change. Unless they are future friendly, the new rules for cyberspace will at best be outmoded rapidly, or worse, prevent electronic commerce from reaching its full potential.