E-Business 500 Lecture Six, Copyright © 2007 Michael E. Ewing, Graphic Information Sciences

EBUS500.1 Week Six Lecture

Government Policy and e-Commerce

Governments and government policies play a number of important roles in e-commerce. Federal, state, and foreign governments are themselves users of e-commerce technology and represent a substantial segment of the market. They also have an integral and expanding role in the resolution of legal disputes and claims, as well as policing and regulation of the companies and individuals engaged in the marketplace. Some of the laws and regulations are still being developed, as evidenced by our class discussions regarding spam email problems. Other regulations have been in effect for quite some time, such as those underlying the World Intellectual Property Organization (WIPO), which had its origins in the WIPO Convention of 1967.

Government as an e-Commerce Customer

As a technology customer, government has and continues to be a very important segment of the market for hardware, software, and services. Government and educational institutions have sponsored and developed numerous programs in the areas of scientific research, defense and military applications, and law enforcement, which have led to many technological innovations including the Internet itself. Chabrow (2002) notes that the in the United States, the federal government alone will account for $52 billion in information technology expenditures in the year 2002, and that level of spending ". . . will rise more than 10% in 2003." (p. 33).

One item that should be of particular interest to this class is Chabrow's statement that "Half of the 116 federal agencies surveyed by the General Accounting Office haven't done even the basic agencywide IT planning needed to avoid system duplication and make sure what they buy works effectively. Without such planning, agencies find themselves in the same position as the 145,000-employee Treasury Department, which, until a recent consolidation, had more than 90 payroll and personnel systems, most of which couldn't share data with one another. For all its IT spending, the government hasn't done much to make it easy for citizens in the most wired country in the world to interact with it." (p. 33).

Another example of government's role in e-commerce is the development of the Small Business Administration's "Business Compliance One-Stop", described by Chabrow as "a portal to help business owners decipher often-confusing federal, state, and local laws and regulations and conduct transactions. The portal, and E-government initiative scheduled to begin operating in two years, is managed by the SBA, but the information will come from participating agencies and state and local governments." (p. 34). The reasoning behind this project is well-stated by the SBA's senior advisor for policy planning and E-government: "Small businesses have repeatedly told us it's too difficult to deal with government, and anything government can do to reduce the burden of laws and regulations would be helpful. . . ." (Chabrow, p. 34).

The most recent glaring example of the need for improvement in government IT was the case of the Immigration and Naturalization Service delivering letters to the flight training schools indicating the extension of visas for the individuals who carried out the September 11, 2001 terrorist attacks on New York and Washington, D.C. Chabrow notes the testimony of Tom Siebel, CEO of Siebel Systems, Inc., ". . . before a House panel that a parochial culture and disconnected databases contributed to the government's inability to prevent the September 11 terrorist attacks." (p. 36). Still, it is noted in Chabrow's article that resistance to change is as prevalent in government as in businesses, ". . . probably more so, given the bureaucratic culture. 'Developing these E-government projects alone will not be sufficient to change the future look and feel of government, because at the core is people's resistance to change, which is one, if not the largest, inhibitor to reform,' Craig Luigart, CIO at the Department of Education said last month. . . ." (p. 36).

Another recent article notes that "Government organizations at all levels have gotten the message that their citizens want good service, and some are turning the message into action." (Lamont, p. 9). Nevada County, California's CIO Steve Monaghan notes on customer service improvements made in that county ". . . the technology issues are far less of an obstacle in the implementation than the cultural changes in the organization, where accountability has not been an explicit part of the county's administration." (Lamont, p. 9).

Government and Legal Dispute Resolution

As an example of the impact government regulations and international treaties have on small businesses, I can relate a personal experience that involved alleged "cyber-squatting" and ended with arbitration hearings by the World Intellectual Property Organization (WIPO). While I cannot reveal the names of the companies or individuals involved for reasons of confidentiality, I can tell you that it involved a legitimate small business and several Fortune 500 corporations.

In 1996 I gained a client who was a very small local distributor of products from those large corporations. My initial call to that client was for simple computer support, but after talking with the client I began to try to instill on the owner the opportunity and need to move his operation to the Internet. That advice, as it turned out, was well-taken. My client learned HTML on his own, with a few tips from me on how to get started and where to find additional information. He developed and implemented a web site, and, unknown to me at the time, registered the domain names which covered the corporate and brand-names of his Fortune 500 suppliers. This operation grew phenomenally and was soon garnering business from all over the United States and overseas. Orders were being shipped from his small back-woods operation to customers such as the U.S. Navy in Guam!

At the same time, the increase in business attracted the attention of the local sales representatives for those corporations, and he pointed out to those reps that, at the time, those corporations either did not have web sites or were not utilizing e-commerce solutions that were available to them. All offers to assist and support those corporations were rebuffed, and my client was served cease-and-desist orders regarding usage of the domain names. The dispute was eventually carried to the World Intellectual Property Organization (WIPO) for binding arbitration.

The WIPO arbitration experience was troublesome. In preparing for the hearing, my advice was to gather all the paperwork and other evidence that would prove the legitimacy of my client's operation as a "dealer and distributor" of the suing corporations, and dispel any claims of "cyber-squatting". Due to the small size of the operation, legal expenses had to be held to a minimum. The fact that there were very few qualified intellectual property lawyers available in the area also played a key role, to say nothing of the affordability of such legal counsel.

While all of the companies involved were domestic U.S. corporations, the WIPO arbitration proceedings were held in Switzerland. In order to have a domestic hearing, my client would have had to pay significant monetary charges, basically in order to pay for the arbiters travel expenses to the U.S. The suing corporations had no difficulty sending their legal representatives to Switzerland, and my client's least-cost alternative was to mail his evidentiary documentation and responses to WIPO.

The WIPO hearing took place, and not surprisingly, my client's evidence was disputed and the corporations made the claim that he was not a "dealer" of their products, despite invoices, letters, and other items which, to me, clearly showed that he was legitimate. Since the agreement to submit to WIPO arbitration was binding, there was unfortunately no appeal when the arbitrator found against my client. The web sites were shut-down and the domain names were given over to the companies that had brought suit.

I found a number of things very disturbing about this case, even though my client is still in business and has become one of the largest independent distributors of those very same products in the world. First, the fact that the companies involved rebuffed my client when the offer was made to assist them in developing and implementing their e-commerce strategy said a great deal about their management. Why they would react this way to a web site operator and dealer of their products, especially since that web site was one of the very few to actually be profitable from its very inception, was puzzling.

The claims about my client's not being a legitimate dealer were flat-out lies, but since we were not physically present at the hearings in Switzerland, the WIPO arbitrator had no choice but to find in their favor since we could not make a counter-claim on the spot. This was a case where money talked, and a small business with little or no monetary resources could not hope to win a case against such well-financed legal teams in a foreign venue. The fact that the companies would go to great expense to fight in court, yet not put a penny nor an ounce of effort towards cooperative development of an e-commerce solution also told me a lot about their management styles and attitudes.

We were not alone in fighting this issue with those particular companies, and to this day there is a web site operated by former sales representatives of one of the companies involved who were treated in much the same manner by management and eventually quit. This web site is an example of the right of free speech, and gives consumers a very negative impression of the corporations involved. My client is not associated with that site, however, and as I have indicated, is still in business and growing significantly with his own domain names. In my opinion, and judging by financial returns, he lost the arbitration and branded-domain names, but he is winning the war in the marketplace. It would have been much more prudent for his opponents to have joined forces and jump-started their e-commerce initiatives, but they threw away the opportunity!

The rules, regulations, and international treaties governing the World Intellectual Property Organization are well-documented on the WIPO web site at www.wipo.org, and I encourage you to peruse the materials available there to ensure you are prepared for cases such as the one I have cited above. I am including one table from the WIPO web site that lists the contracting countries of treaties administered by WIPO following the Reference Section of this lecture.

Summary

As e-commerce continues to develop, there are many areas where government regulation and control must be applied to maintain a fair and orderly marketplace. Government will play significant roles as source and supplier of information and services, as well as its role as a customer for e-commerce goods and services. It will be especially challenging since its involvement will be both in e-commerce as well as traditional venues, since government laws, regulations, and services must cover both, and government cannot be a completely "e-operation".

The example of WIPO arbitration points out once again the need for good legal counsel in defending your company in the marketplace. It also highlights the inherent financial and other problems faced by small businesses in doing business in the e-commerce world, yet shows how large, established companies can either cope and deal with technological change or suffer the free-market consequences in the long-run.

Works Cited

Chabrow, Eric (2002, April 15) The Buck Stops Here: The federal government is taking a businesslike approach to IT. If its initiatives take off, citizens should reap the benefits. Information Week Magazine, 33-39.

Lamont, Judith (2002, May, Volume 11, Issue 5) Finding the Right Stuff: Government organizations are improving their ability to mine their knowledgebases, streamline business processes and to analyze, integrate and protect their data. KM World, 8-9, 28.

World Intellectual Property Organization (WIPO) web site, www.wipo.org

Additional information as published on the WIPO web site:

I. CONTRACTING PARTIES OF TREATIES ADMINISTERED BY WIPO

1. Convention Establishing the World Intellectual Property Organization

WIPO Convention (1967), amended in 1979

Status on February 13, 2002

State	Date on which State Member also of became member Paris Union (P) of WIPO and/or Berne Union (B)[1]

Albania.................................................................................	June 30, 1992........................................	P	B
Algeria..................................................................................	April 16, 1975......................................	P	B
Andorra................................................................................	October 28, 1994..................................	–	–
Angola..................................................................................	April 15, 1985......................................	–	–
Antigua and Barbuda...........................................................	March 17, 2000....................................	P	B

Argentina.............................................................................	October 8, 1980....................................	P	B
Armenia...............................................................................	April 22, 1993......................................	P	B
Australia..............................................................................	August 10, 1972...................................	P	B
Austria.................................................................................	August 11, 1973...................................	P	B
Azerbaijan............................................................................	December 25, 1995...............................	P	B

Bahamas...............................................................................	January 4, 1977....................................	P	B
Bahrain.................................................................................	June 22, 1995........................................	P	B
Bangladesh...........................................................................	May 11, 1985.......................................	P	B
Barbados..............................................................................	October 5, 1979....................................	P	B
Belarus.................................................................................	April 26, 1970......................................	P	B

Belgium................................................................................	January 31, 1975..................................	P	B
Belize...................................................................................	June 17, 2000........................................	P	B
Benin....................................................................................	March 9, 1975......................................	P	B
Bhutan.................................................................................	March 16, 1994....................................	P	–
Bolivia..................................................................................	July 6, 1993..........................................	P	B

Bosnia and Herzegovina......................................................	March 1, 1992......................................	P	B
Botswana............................................................................	April 15, 1998......................................	P	B
Brazil...................................................................................	March 20, 1975....................................	P	B
Brunei Darussalam...............................................................	April 21, 1994......................................	–	–
Bulgaria................................................................................	May 19, 1970.......................................	P	B

Burkina Faso........................................................................	August 23, 1975...................................	P	B
Burundi................................................................................	March 30, 1977....................................	P	–
Cambodia.............................................................................	July 25, 1995........................................	P	–
Cameroon.............................................................................	November 3, 1973................................	P	B
Canada.................................................................................	June 26, 1970........................................	P	B

Cape Verde..........................................................................	July 7, 1997..........................................	–	B
Central African Republic.....................................................	August 23, 1978...................................	P	B
Chad.....................................................................................	September 26, 1970..............................	P	B
Chile.....................................................................................	June 25, 1975........................................	P	B
China....................................................................................	June 3, 1980..........................................	P	B

Colombia..............................................................................	May 4, 1980.........................................	P	B
Congo...................................................................................	December 2, 1975.................................	P	B
Costa Rica............................................................................	June 10, 1981........................................	P	B
Côte d'Ivoire........................................................................	May 1, 1974.........................................	P	B
Croatia.................................................................................	October 8, 1991....................................	P	B

Cuba.....................................................................................	March 27, 1975....................................	P	B
Cyprus	October 26, 1984..................................	P	B
Czech Republic....................................................................	January 1, 1993....................................	P	B
Democratic People's Republic of Korea..............................	August 17, 1974...................................	P	–
Democratic Republic of the Congo......................................	January 28, 1975..................................	P	B

Denmark..............................................................................	April 26, 1970......................................	P	B
Djibouti................................................................................	May 13, 2002.......................................	P	B
Dominica..............................................................................	September 26, 1998..............................	P	B
Dominican Republic............................................................	June 27, 2000........................................	P	B
Ecuador................................................................................	May 22, 1988.......................................	P	B

Egypt...................................................................................	April 21, 1975......................................	P	B
El Salvador...........................................................................	September 18, 1979..............................	P	B
Equatorial Guinea................................................................	June 26, 1997........................................	P	B
Eritrea..................................................................................	February 20, 1997................................	–	–
Estonia.................................................................................	February 5, 1994..................................	P	B

Ethiopia...............................................................................	February 19, 1998................................	–	–
Fiji........................................................................................	March 11, 1972......................................	–	B
Finland.................................................................................	September 8, 1970................................	P	B
France..................................................................................	October 18, 1974..................................	P	B
Gabon..................................................................................	June 6, 1975..........................................	P	B

Gambia.................................................................................	December 10, 1980...............................	P	B
Georgia.................................................................................	December 25, 1991...............................	P	B
Germany..............................................................................	September 19, 1970..............................	P	B
Ghana...................................................................................	June 12, 1976........................................	P	B
Greece..................................................................................	March 4, 1976......................................	P	B

Grenada................................................................................	September 22, 1998..............................	P	B
Guatemala............................................................................	April 30, 1983......................................	P	B
Guinea..................................................................................	November 13, 1980..............................	P	B
Guinea-Bissau......................................................................	June 28, 1988........................................	P	B
Guyana................................................................................	October 25, 1994..................................	P	B

Haiti.....................................................................................	November 2, 1983................................	P	B
Holy See..............................................................................	April 20, 1975......................................	P	B
Honduras.............................................................................	November 15, 1983..............................	P	B
Hungary...............................................................................	April 26, 1970......................................	P	B
Iceland..................................................................................	September 13, 1986..............................	P	B

India.....................................................................................	May 1, 1975.........................................	P	B
Indonesia..............................................................................	December 18, 1979...............................	P	B
Iran (Islamic Republic of)....................................................	March 14, 2002....................................	P	–
Iraq.......................................................................................	January 21, 1976..................................	P	–
Ireland..................................................................................	April 26, 1970......................................	P	B

Israel....................................................................................	April 26, 1970......................................	P	B
Italy.....................................................................................	April 20, 1977......................................	P	B
Jamaica.................................................................................	December 25, 1978...............................	P	B
Japan....................................................................................	April 20, 1975......................................	P	B
Jordan..................................................................................	July 12, 1972........................................	P	B

Kazakhstan..........................................................................	December 25, 1991...............................	P	B
Kenya..................................................................................	October 5, 1971....................................	P	B
Kuwait.................................................................................	July 14, 1998........................................	–	–
Kyrgyzstan..........................................................................	December 25, 1991...............................	P	B
Lao People’s Democratic Republic.....................................	January 17, 1995..................................	P	–

Latvia...................................................................................	January 21, 1993..................................	P	B
Lebanon...............................................................................	December 30, 1986...............................	P	B
Lesotho................................................................................	November 18, 1986..............................	P	B
Liberia..................................................................................	March 8, 1989......................................	P	B
Libyan Arab Jamahiriya......................................................	September 28, 1976..............................	P	B

Liechtenstein........................................................................	May 21, 1972.......................................	P	B
Lithuania..............................................................................	April 30, 1992......................................	P	B
Luxembourg.........................................................................	March 19, 1975....................................	P	B
Madagascar..........................................................................	December 22, 1989...............................	P	B
Malawi.................................................................................	June 11, 1970........................................	P	B

Malaysia..............................................................................	January 1, 1989....................................	P	B
Mali.....................................................................................	August 14, 1982...................................	P	B
Malta...................................................................................	December 7, 1977.................................	P	B
Mauritania...........................................................................	September 17, 1976..............................	P	B
Mauritius.............................................................................	September 21, 1976..............................	P	B

Mexico.................................................................................	June 14, 1975........................................	P	B
Monaco................................................................................	March 3, 1975......................................	P	B
Mongolia..............................................................................	February 28, 1979................................	P	B
Morocco..............................................................................	July 27, 1971........................................	P	B
Mozambique........................................................................	December 23, 1996...............................	P	–

Myanmar.............................................................................	May 15, 2001.......................................	–	–
Namibia................................................................................	December 23, 1991...............................	–	B
Nepal...................................................................................	February 4, 1997..................................	P	–
Netherlands..........................................................................	January 9, 1975....................................	P	B
New Zealand........................................................................	June 20, 1984........................................	P	B

Nicaragua.............................................................................	May 5, 1985.........................................	P	B
Niger....................................................................................	May 18, 1975.......................................	P	B
Nigeria..................................................................................	April 9, 1995........................................	P	B
Norway................................................................................	June 8, 1974..........................................	P	B
Oman...................................................................................	February 19, 1997................................	P	B

Pakistan...............................................................................	January 6, 1977....................................	–	B
Panama.................................................................................	September 17, 1983..............................	P	B
Papua New Guinea..............................................................	July 10, 1997........................................	P	–
Paraguay..............................................................................	June 20, 1987........................................	P	B
Peru......................................................................................	September 4, 1980................................	P	B

Philippines...........................................................................	July 14, 1980........................................	P	B
Poland..................................................................................	March 23, 1975....................................	P	B
Portugal................................................................................	April 27, 1975......................................	P	B
Qatar....................................................................................	September 3, 1976................................	P	B
Republic of Korea................................................................	March 1, 1979......................................	P	B

Republic of Moldova...........................................................	December 25, 1991...............................	P	B
Romania...............................................................................	April 26, 1970......................................	P	B
Russian Federation..............................................................	April 26, 1970[2].....................................	P	B
Rwanda................................................................................	February 3, 1984..................................	P	B
Saint Kitts and Nevis...........................................................	November 16, 1995	P	B

Saint Lucia...........................................................................	August 21, 1993...................................	P	B
Saint Vincent and the Grenadines........................................	August 29, 1995...................................	P	B
Samoa...................................................................................	October 11, 1997..................................	–	–
San Marino..........................................................................	June 26, 1991........................................	P	–
Sao Tome and Principe........................................................	May 12, 1998.......................................	P	–

Saudi Arabia.........................................................................	May 22, 1982.......................................	–	–
Senegal.................................................................................	April 26, 1970......................................	P	B
Seychelles............................................................................	March 16, 2000	–	–
Sierra Leone.........................................................................	May 18, 1986.......................................	P	–
Singapore.............................................................................	December 10, 1990...............................	P	B

Slovakia................................................................................	January 1, 1993....................................	P	B
Slovenia................................................................................	June 25, 1991........................................	P	B
Somalia.................................................................................	November 18, 1982..............................	–	–
South Africa.........................................................................	March 23, 1975....................................	P	B
Spain....................................................................................	April 26, 1970......................................	P	B

Sri Lanka..............................................................................	September 20, 1978..............................	P	B
Sudan...................................................................................	February 15, 1974................................	P	B
Suriname..............................................................................	November 25, 1975..............................	P	B
Swaziland.............................................................................	August 18, 1988...................................	P	B
Sweden.................................................................................	April 26, 1970......................................	P	B

Switzerland..........................................................................	April 26, 1970......................................	P	B
Tajikistan.............................................................................	December 25, 1991...............................	P	B
Thailand...............................................................................	December 25, 1989...............................	–	B
The former Yugoslav Republic of Macedonia.....................	September 8, 1991................................	P	B
Togo.....................................................................................	April 28, 1975......................................	P	B

Tonga...................................................................................	June 14, 2001........................................	P	B
Trinidad and Tobago............................................................	August 16, 1988...................................	P	B
Tunisia.................................................................................	November 28, 1975..............................	P	B
Turkey.................................................................................	May 12, 1976.......................................	P	B
Turkmenistan.......................................................................	December 25, 1991...............................	P	–

Uganda.................................................................................	October 18, 1973..................................	P	–
Ukraine................................................................................	April 26, 1970......................................	P	B
United Arab Emirates..........................................................	September 24, 1974..............................	P	–
United Kingdom..................................................................	April 26, 1970......................................	P	B
United Republic of Tanzania...............................................	December 30, 1983...............................	P	B

State	Date on which State Member also of became member Paris Union (P) of WIPO and/or Berne Union (B)[3]

United States of America.....................................................	August 25, 1970...................................	P	B
Uruguay...............................................................................	December 21, 1979...............................	P	B
Uzbekistan...........................................................................	December 25, 1991...............................	P	–
Venezuela.............................................................................	November 23, 1984..............................	P	B
Viet Nam..............................................................................	July 2, 1976..........................................	P	–

Yemen..................................................................................	March 29, 1979....................................	–	–
Yugoslavia............................................................................	October 11, 1973..................................	P	B
Zambia.................................................................................	May 14, 1977.......................................	P	B
Zimbabwe............................................................................	December 29, 1981...............................	P	B

(Total: 179 States)

[1] "P" means that the State is also a member of the International Union for the Protection of Industrial Property (Paris Union), founded by the Paris Convention for the Protection of Industrial Property.

"B" means that the State is also a member of the International Union for the Protection of Literary and Artistic Works (Berne Union), founded by the Berne Convention for the Protection of Literary and Artistic Works.

[2] Date of ratification of the Soviet Union, continued by the Russian Federation as from December 25, 1991.

[3] "P" means that the State is also a member of the International Union for the Protection of Industrial Property (Paris Union), founded by the Paris Convention for the Protection of Industrial Property.

The information in the table above is presented according to the WIPO Terms of Use Statement.

--
Michael E. Ewing
May 15, 2002