Electronic Commerce, 7Th Edition Solutions 7-1

Electronic Commerce, 7th Edition Solutions 7-1

Electronic Commerce, 7th Edition
14188-37032

Chapter 7 Solutions

Review Questions

1. In about 100 words, explain why online businesses might have difficulty limiting the effects of their actions to a relatively small geographic area.
   

Answer:The legal concept of jurisdiction on the Internet is still unclear and ill defined. The relationship between geographicboundaries and legal boundaries is based on four elements: power, effects, legitimacy, and notice.These four elements have helped governments create the legal concept of jurisdiction in the physical world.Because the four elements exist in somewhat different forms on the Internet, the jurisdiction rules that workso well in the physical world do not always work well in the online world.

1. In about 300 words, describe the differences between subject-matter jurisdiction and personal jurisdiction.
   

Answer:Subject-matter jurisdiction is a court’s authority to decide a particular type of dispute.Personal jurisdiction is, in general, determined by the residence of the parties. Acourt has personal jurisdiction over a case if the defendant is a resident of the statein which the court is located.

1. The advantages and disadvantages of issuing business process patents have been hotly debated by legal scholars and business people. One compromise proposal advanced by Jeff Bezos, founder of Amazon.com, is to allow the issuance of business patents, but only allow them to be effective for a short time, perhaps two or three years. In about 300 words, present logical and factual arguments that support the issuance of such limited-term business process patents.
   

Answer:Responses will vary but the following issues should be considered: Business-method patents, such as Amazon's 1-Click technology, may be one of the most lucrative -- and hotly contested -- groups of e-business-related patents to have emerged in the last several years. According to legal Web site NOLO.com, a business-method patent is some combination of software and business methodology that can be categorized as a specific process. Once secured, these patents, like other types of patents, remain under the creator's control for nearly two decades. That means Amazon receives a fee every time another e-commerce vendor licenses its checkout process.

1. Define product disparagement. In two or three paragraphs, describe a situation that would be an exampleof product disparagement.
   

Answer:Product disparagement deals with the ‘badmouthing’ of a particular product. A good example would be Oprah Winfrey discussing her issues with beef. A group of Texas cattle ranchers sued her for her talk show discussion of mad cow disease in 1998.

1. In about 300 words, explain the idea of nexus.Why is it an important concept in state and internationaltaxation? In what ways is it similar to jurisdiction?
   

Answer:The connection between a taxpaying entity and a government is known as a nexus. It’s an important concept, because if a nexus is established, then taxes must be collected and paid. It’s similar to jurisdiction because of the government-seller connection.

Exercises

1. Use Google or your favorite Web search engine to obtain a list of Web pages that include the words“privacy statement.” Visit the Web pages on the search results list until you find a page that includes thetext of a privacy statement. Print the page and turn it in with your answers to the following questions:

• Does the site follow an opt-in or opt-out policy (or is the policy not clearly stated in the privacystatement)?
• Does the privacy statement include a specific provision or provisions regarding the collection ofinformation from children?
• Does the privacy statement describe what happens to the collected personal information if thecompany goes out of business or is sold to another company? List those provisions.
• Write one paragraph in which you evaluate the clarity of the privacy statement.

Answer:Each response will vary, but using Yahoo! as an example, we see that they include a separate policy concerning children and it does explain what happens to any collected information. It also discusses the opt-in/opt-out policy, but not clearly. Yahoo! allows you to opt-in by editing your personal preferences as opposed to a specific policy regarding all information.

1. Use your favorite search engine, the links in the Online Companion for this exercise, and your library, to learn more about the Napster lawsuit. Identify the main issues in the case and the principal arguments that could be used by either side.
   In about 300 words, present the case against Napster.
   In about 300 words, present one or more well-reasoned arguments to support Napster’s position.
   

Answer:Responses will vary, but should include copyright information and payments made to artists in the case against Napster. In addition, arguments in the case for Napster should include the high price of CD’s vs. the low cost of production as well as Napster’s argument that they are not actually reproducing the music downloaded.

1. Use Google or your favorite search engine to find a Web site (other than Disney or Sanriotown) that is directed to young people. Examine the site to determine how it complies with COPPA.Test the site to ensure that it does not accept information from children under the age of 13. Evaluate the site’s compliance with COPPA in a report of about 200 words.
   

Answer:An evaluation of may be similar to the following:

• Privacy notice is clearly stated
• Limits its collection of information from kids to what is known as non-personallyidentifiable information
• Obtains verifiable parental consent from the child's parent before sending newsletter

1. In the United States, a law called the Internet Tax Moratorium (ITM) has been enacted and renewed several times. The purpose of the ITM is to prevent federal, state, or local governments from enacting any new taxes on Internet business activities. Use Google or your favorite search engine to learn more about the ITM. In about 300 words, critically evaluate the rationale behind the law and take a position on whether the law should be renewed again.
   

Answer:Responses will vary but arguments in support of the bill may include the following:

The Carper-Alexander bill could eventually make Internet access more expensive for consumers and small-business owners and would have a negative effect on small businesses, rural communities and lower income Americans. It would not help to close the economic 'digital divide.' Instead, it would expand the divide, diminishing the availability of high-speed broadband which is essential for economic and educational opportunities.

According to NTU’s Paul Gessing, Internet use is already taxed through the burdens that states and localities impose on phone and cable bills. Congress should not allow new Internet access taxes or multiple-state taxation of a single item purchased online, Gessing believes, because "it amounts to double jeopardy."

[Source:]

Cases

Case 1: Nissan.com

1. Answers may vary, but possible concerns from Nissan Motors include: consumers may assume that Uzi Nissan's business is affiliated with Nissan Motors, the company may be concerned that consumers will have a difficult time locating their Web presence, and the Nissan Motor company could miss out on potential revenue if their Web presence is not as easily accessible as it could be.
   Some may feel the $10 million judgment is justified to compensate Nissan Motors for revenue lost from confusion over the company's Web location and identity. Some could also argue that when Uzi Nissan did not respond to the initial communication from Nissan Motors, he unnecessarily led Nissan Motors to waste significant amounts of money on lawyer and court fees.
   Others may feel the judgment is not justified because Uzi Nissan should not be punished for simply registering the domain names first, and registering them for legitimate business purposes.
   
2. Answers will vary, but ethical considerations relevant to the position taken by Uzi Nissan may include: he acted in good faith in registering domain names reflecting both his surname and business name, he had no moral obligation to surrender the domain names to Nissan Motors simply because their company was larger, and the domain names were available for many years so he should not be held responsible for Nissan Motors negligence in not securing them first.

1. Answers will vary, but ethical considerations relevant to the position taken by Nissan Motors may include: they may have felt their global reputation was being smeared by an opportunistic individual, they believed the needs of a global corporation outweighed those of a small regional company, and they may have acted deceptively by sending Uzi Nissan a confusing letter and then attempting to take over the domain names without his knowledge or consent.
   
2. Answers will vary based on personal opinion, but should include specific ethical, legal, and/or business considerations that were used to arrive at the opinion.
   

Case 2: Ellasaurus Products Enterprises

1. From the case the details of Ellen's contract with her publisher is unknown. Also, any contracts she may have with retailers regarding licensed products are uncertain. Answers will vary based on assumptions regarding these contracts. Rights concerning the use of illustrations, content from published books, and licensed characters can be very complicated. She must be careful in creating the Web site and its content to comply with any relevant terms in her publishing and licensing contracts, or to otherwise arrange necessary permissions.
   
2. Answers will vary, but should address the ethical issues specific to offering content to, interacting with, and gathering information from children on the Internet.
   
3. Answers should outline the relevant laws discussed in the chapter beginning on page 340. Recommendations for compliance with these laws could include simply not requiring registration for children under 13. Alternately, the site could require that children only register with the assistance of a parent or guardian who understands and consents to site disclosures and regulations.
   
4. The Web site will be exposed to multiple sales tax liabilities due to its distributed interstate structure. Answers may vary, but should include consideration of the sales tax liability concepts presented in the chapter.