E-MARKETING 5/EJUDY STRAUSS AND RAYMOND FROST

Chapter 5: Ethical and Legal Issues

©2009 Pearson Education, Inc.

Publishing as Prentice Hall

5-1

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 patent,

copyright, trademark, and data ownership issues related to the internet.

Highlight key ethical and legal concerns related to online expression.

5-2

©2009 Pearson Education, Inc. Publishing as Prentice Hall

Software Infringement

©2009 Pearson Education, Inc. Publishing as Prentice Hall

5-3

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.

Software Infringement, cont.

©2009 Pearson Education, Inc. Publishing as Prentice Hall

5-4

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?

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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

Overview of Ethics and Legal Issues

5-5

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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 Problem of Self-Regulation

5-6

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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.

Privacy5-7

©2009 Pearson Education, Inc. Publishing as Prentice Hall

Privacy Within Digital Contexts 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.

5-8

©2009 Pearson Education, Inc. Publishing as Prentice Hall

Cookies and Online Data Collection 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.

5-9

©2009 Pearson Education, Inc. Publishing as Prentice Hall

Privacy Debates and Policy

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.

5-10

Other Privacy Issues

©2009 Pearson Education, Inc. Publishing as Prentice Hall

5-11

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.

International Privacy Issues

©2009 Pearson Education, Inc. Publishing as Prentice Hall

5-12

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

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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.

Digital Property5-13

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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.

Patents5-14

U.S. Patent Office Reviews Applications

©2009 Pearson Education, Inc. Publishing as Prentice Hall

5-15

Ex.5.3

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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.

Copyright5-16

Copyright, cont.

©2009 Pearson Education, Inc. Publishing as Prentice Hall

5-17

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.

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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.

Trademarks5-18

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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.

Licenses5-19

Data Ownership

©2009 Pearson Education, Inc. Publishing as Prentice Hall

5-20

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.

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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

ethical email marketing. Expression directed to children remains a

highly visible issue within online law and ethics.

5-21

©2009 Pearson Education, Inc. Publishing as Prentice Hall

Emerging Issues

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.

5-22

©2009 Pearson Education, Inc. Publishing as Prentice Hall

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.

Emerging Issues, cont.5-23

©2009 Pearson Education, Inc. Publishing as Prentice Hall

FBI Investigates Online Fraud Ex.5.45-

24

©2009 Pearson Education, Inc. Publishing as Prentice Hall

25

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall