1-1

E-MARKETING 5/E
JUDY STRAUSS AND RAYMOND FROST

Chapter 11: Ethical and Legal Issues

©2009 Pearson Education,

Inc. Publishing as Prentice
Hall
 Chapter 5 Objectives
5-2

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Software Infringement
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.
©2009 Pearson Education, Inc.
Publishing as Prentice Hall
 Software Infringement, cont.
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
 Overview of Ethics and Legal
5-5
Issues
 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
©2009 Pearson Education, Inc.
Publishing as Prentice Hall
 The Problem of Self-Regulation
5-6

 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.
©2009 Pearson Education, Inc.
Publishing as Prentice Hall
 Privacy
5-7

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Privacy Within Digital Contexts
5-8

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Cookies and Online Data
5-9
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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Privacy Debates and Policy
5-10

 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.
©2009 Pearson Education, Inc.
Publishing as Prentice Hall
 Other Privacy Issues
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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 International Privacy Issues
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
 Digital Property
5-13

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Patents
5-14

 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.
©2009 Pearson Education, Inc.
Publishing as Prentice Hall
 Copyright
5-15

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Copyright, cont.
5-16

 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
 Trademarks
5-17

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Licenses
5-19

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Data Ownership
5-19

 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
5-20

 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.
©2009 Pearson Education, Inc.
Publishing as Prentice Hall
 Emerging Issues
5-21

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall
 Emerging Issues, cont.
5-22

 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.

©2009 Pearson Education, Inc.

Publishing as Prentice Hall