Consider just a few examples. Auction behemoth Ebay has repeatedly tried to lock out comparison shopping services such as Bidder's Edge and Auction Watch. Ebay claims exclusive rights to use its listings - which are available to anyone, at any time. Even retailing giant Wal-Mart claimed theft of trade secrets, when its key logistics executives jumped to Amazon. But how proprietary is a better distribution system? Amazon also won a first-round legal battle with online rival Barnes and Noble over another common sense patent, its "one-click" shopping cart technology. Businesses and trade groups have also fought over who can use competing versions of new digital music and video technologies, such as MP3 and “streaming” media. Every company wants to become tomorrow's standard format, when no one has the advantage of being first.

On the other side, well-funded copyright owners and artists fear these technologies make it too easy to make flawless copies and distribute them throughout the world without paying royalties. In fact, cases have already been filed to block the spread of techniques to crack anti-copying protection.

Privacy advocates have also kept lawmakers busy. Will the emerging law of online privacy let Net marketers use precisely targeted marketing data (easily gathered by quietly tracking consumers online) to deliver fine tuned ads directly to your email inbox? The e-commerce explosion has already spawned several massive proposed rules, and at least one FTC investigation.

Why has the Net unleashed this flood of lawsuits? Surely all of the young lawyers lured away to Silicon Valley from Wall Street by stock options have better things to do than find new ways to file lawsuits? Perhaps the answer lies in how the Net levels the playing field for e-commerce. When anyone can jump into business for little cost, and shopping bots let online buyers find the best price instantly, sellers must find new ways to "dot.compete". If anyone can (and must) give the best price, how will buyers choose where to shop online?

Instead, when firms cannot compete on price or convenience, (everyone on the Net offers both of these) the law becomes just another tool to eliminate competitors. Why cut prices if you can sue your rivals out of existence? Why not let courts bar them from using the latest technologies? The wide open, frontier state of Net law just encourages this tactic. When most online legal questions only have answers filled with “maybes” and tortured analogies from traditional principles, why not push the envelope and accuse competitors of wrongdoing? At worst, your rivals may be distracted from business while defending themselves, and pay burdensome legal fees. Even better, other potential competitors may be scared away from entering a market if they expect inevitable lawsuits, justified or not.

But can this “trial-by-terror” form of competition build a lasting business, even if it succeeds in the short run? Won't new inventions, and changing technology, eliminate the advantages of today's patent or trade secret and eventually make marketplace winners of firms that continue innovating? “Eventually” may mean only months, not years, in Internet time.

E-business entrepreneurs should still call their patent lawyers. True leaps of technology must be protected, and venture capitalists love to invest when good managers also have a patent application.

But at the same time be sure to let the marketing department brainstorm how to leverage the technology into the next deal or next innovation. The only profits from "competition by lawsuit" go to the lawyers, not the inventors or investors.

Copyright 2000 Stanley P. Jaskiewicz, Esquire

Stanley P. Jaskiewicz, Esquire, Spector Gadon & Rosen, P.C., 1635 Market Street, 7th Floor, Philadelphia, PA 19103; Voice 215-241-8866; Fax 215-241-8844; Unencrypted Email sjaskiew@lawsgr.com Website: http://www.lawsgr.com