What concerns FTSE is that whereas an Internet service company such as Freeserve is clearly an Internet stock, should Amazon be classed as a retailer "because it fundamentally sells books" or an Internet company? FTSE wants to know whether the fact a company begins conducting business over the Internet changes the nature of the underlying business and uses the analogy of banks which were not reclassified as telecommunications companies when they opened telephone banking divisions.

The British government is now expected to publish a revised Bill in early December that will concentrate on promoting electronic commerce, while the encryption provisions will be incorporated in a pending Home Office bill updating existing law regulating phone tapping.

1.2 PATENT DISPUTES HEAD FOR COURT
As the need to differentiate web sites grows more intense, during the past three weeks both Amazon.com and Priceline.com have commenced legal proceedings in the United States against rival companies they allege have infringed patents protecting proprietary e-commerce technologies.

The Amazon suit, filed in a federal court in Seattle, alleges that the Barnesandnoble.com site has copied Amazon's 1-Click online ordering system, which streamliners the e-commerce process for repeat customers by avoiding the need to complete long registration and shipping forms for each transaction. Barnes & Noble said the suit is "completely without merit" and "a desperate attempt to retaliate for our growing market share".

And Priceline has sued Microsoft in a US district court in Bridgeport, Connecticut alleging that Microsoft's Expedia Internet travel service, which offers a "name your own price" hotel reservation system, violates a Priceline patent. Microsoft described the allegations as "a transparent and desperate attempt by Priceline to slow us down and avoid competing with Expedia on the merits".

1.3 DOMAIN NAME REGISTRARS CANNOT BE SUED
The 9th Circuit US Court of Appeals in San Francisco has ruled that a company that registers Internet domain names cannot be sued by a trademark owner for approving the name of a "cybersquatter" site that infringes another company's trademark.

The case had been brought by the Lockheed Martin aviation group against Network Solutions Inc (NSI) after NSI had registered a number of domains using variations of the words "skunk works". The words are in fact a Lockheed trademark taken from the company's Skunk Works aircraft design laboratory. The court ruled that NSI could only be liable if it intentionally induced a trademark violation. The court also said NSI exercises no more control over the domain names it registers than the US Postal Service does when sending a mail to a street address.

It still remains an option for trademark owners to sue the cybersquatter for infringement.

1.4 SUSSKIND LAYS DOWN THE FUTURE OF LAW
The highlight of the recent Legal IT Forum conference, at Gleneagles in Scotland, was a bravura performance by law firm management-to-courts IT guru Richard Susskind.

In a presentation that substantially expanded upon the theories first voiced in his 1996 book "The Future of Law" Dr Susskind left the audience in no doubt that not only is the future of law digital but that if firms hope to still be in business in ten years time, not only must they embrace technology but they also need to make a far better and more imaginative use of IT than most are doing today.

Using a graphical representation of "the legal IT continuum" - that will probably come to be known as "the Susskind Grid" - Susskind showed how firms should be moving from inward-looking accounts, back office and wordprocessing systems, towards client-facing know-how systems, e-commerce, intranets and online legal services.

But, said Susskind, the majority of the managing partners he has spoken to in large City firms "still don't get it" when it comes to the Internet. The net result is too many firms are still dithering over whether to invest in what Susskind described as "first generation online client relationship systems" when they should already be moving on to second generation systems.

First generation systems offer extranet/Internet access, via a web browser, to case progress/status tracking, financial reporting, secure sites for document distribution, archives, online instructions and matter management. But what they need to do next, said Susskind, is become more client/intranet focussed.

This, he explained, meant that whereas with the present model, the onus is upon the client to log into a firm's web site to obtain information, what firms actually need to do is provide information "feeds" to channel material directly to the client's own intranet/browser interface.

As Susskind pointed out, with the inhouse legal departments of major corporations simultaneously instructing dozens - and in some cases hundreds - of firms around the globe, without some form of "panel management" element, far from making life easier, first generation online systems could actually make life more difficult for the client.

1.5 INTERNET TIME REALLY DOES RUN FASTER
Citing the pace of innovation in the IT industry, US Southern District Judge William H Pauley refused to enforce a restrictive covenant that would have prevented a web site content manager from working for his new company for one year.

"When measured against the information technology industry in the Internet environment, a one year hiatus from the work force is several generations, if not an eternity," Judge Pauley said, denying EarthWeb's motion for a preliminary injunction in EarthWeb -v- Schlack (99 Civ. 10035). "Clearly the balance of hardships tips decidedly in favor of the defendant."

Mark Schlack signed a one year contract with the company in October 1998. His job was to evaluate content for the company's web sites, including identifying which content the company would purchase or license for the sites. A clause in his contract prevented him from working for 12 months for someone in "direct competition," which was defined as an online service whose "primary business is to provide information technology professionals with a directory of third-party technology, software, or developer resources," an "on-line reference library" or an on-line store whose primary purpose is to "sell or distribute third-party software or product uses for Internet site or software development."

Schlack resigned from EarthWeb in September after receiving an offer to work for International Data Group, which plans in January to launch ITworld.com, a single web site that will consolidate four on-line publications, including Computerworld. Claiming a potential loss of trade secrets and alleging Schlack was in violation of the restrictive covenant, EarthWeb filed suit in the Southern District and obtained a temporary injunction. However at a subsequent hearing Judge Pauley found that the two companies could not be considered direct competitors and that, for purposes of the preliminary injunction, that EarthWeb's fear of a loss of trade secrets was unfounded.

Judge Pauley also acknowledged the difficulty of making a line-by-line comparison between the two companies. "Given the dynamics of the Internet, such comparisons may be ephemeral. This underscores the difficulty in assessing the characteristics of ITworld.com, an embryonic business entity that will compete in a nascent industry which is evolving and re-inventing itself with breathtaking speed."

He found that the one-year duration of EarthWeb's restrictive covenant was "too long, given the dynamic nature of this industry, its lack of geographical borders and Schlack's former position with EarthWeb, where his success depended on keeping abreast of daily changes in content on the Internet." Judge Pauley said courts do have the power to "blue pencil" such agreements to make them shorter, but he declined to do so because "the agreement as a whole overreaches."

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