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Page 2: Insurance for the Internet: Are you protected?

"Hot issues" abound on the Web

Trademark issues include domain name rights. Anyone can register a trademark as a domain name, not just the trademark's owner. This creates two problems: "cybersquatting" and trademark infringement. Cybersquatting, now outlawed under a federal consumer protection act, occurs when someone registers a trademarked name as a domain, then tries to sell it to the trademarkholder for an exorbitant amount. Trademark infringement can also land you in court; this happens when someone else uses your trademarked name as their domain, but uses it for their own Web site.

And meta-tag abuse, which means using a competitor's trademark name in the keywords that direct a search engine to your site, is the subject of abundant legislation.

For instance, Playboy Enterprises in 1997 sued several Asian Web sites over those sites' use of the trademarked Playboy name in their HTML meta tags. Playboy won, in the first successful lawsuit that resulted in a cash award. But slimy meta-tag tactics endure; unscrupulous sites have even been known to copy entire meta-tag HTML entries off of competitors' Web pages.

Electronic rights to music, graphics, articles, and even Web page coding highlight thorny Web copyright issues. Off the Web, it's not a difficult concept: Artists and writers believe they should be paid for the use of their work. You must have rights to reprint, re-release, or reproduce material in an electronic format to use their material on the Web.

You must have rights to reprint, re-release, or reproduce material in electronic


On the Web, in theory, copyright issues are no different. But the Internet creates new opportunities to distribute artists' work — and it's hard to track. Some companies have taken advantage of the "gray areas," and that's led to legal debacles. Recently, the band Metallica and a recording-industry trade group sued Napster, the Internet music distributor, which allows consumers to download entire MP3 recording libraries for free.

In a landmark 1997 copyright case, a group of freelance writers sued The New York Times for publishing the freelancers' print articles on the Times' Web site. Under traditional copyright arrangements, freelance articles are a one-time-use arrangement between the writer and publisher. The Times argued that freelance writers implicitly signed over their stories for Web use, calling the articles "work for hire.". The court disagreed, ruling that online publishers must obtain permission from freelance writers — compensate them accordingly — before publishing articles a second time online.

Going down with the ship

Risk management for network security

The Internet is an environment that doesn't have a lot of best-practices standards in existence, an environment that's rapidly changing. Two risk-management practices that can help you avoid Internet security problems are:

  • Physical security audits: Audits can help pinpoint areas of your system that are prone to hackers or denial-of-service attacks. Have experts examine your network and servers to determine where weaknesses lie.
  • Management controls: Policies, procedures, and controls can help you manage risk and address security breaches proactively. How are passwords being used? How are firewalls being set up?

The risks involved in e-commerce today are similar to those faced in maritime shipping 300 years ago. If a server goes down, it takes everything on it down at the same time, often irretrievably. Any activity that takes down your Web site — from hacker attacks to viruses — can mean big financial losses for your business. Countless advertiser dollars vanish during lost "click-through" opportunities. Sales languish as potential buyers meet blank screens instead of Web pages. Information Security magazine estimates that businesses engaged in e-commerce are 57 percent more likely to suffer a computer-security breach than those who sell offline.

Hacking happens even to the biggest of the big — eBay, Yahoo!, and eTrade were among sites downed by a three-day hacking spree in February 1999. Hackers flooded the sites with so many requests that regular visitors could not access the sites. And the end of 2003 and early 2004 brought a host of worms and viruses that seriously effected Web service around the world, causing major financial damage to many companies.

One of the first major cyber attacks showing the potential for damage that could be inflicted through computer systems was the Love Bug, a computer virus that carried the message "ILOVEYOU" and disabled computer networks around the world in 2000. The Love Bug virus blanketed the Web in only hours, affecting 20 countries and 45 million users and causing companies an estimated $8.75 billion in lost productivity and remediation efforts, according to the Insurance Information Institute. The perpetrators of these attacks are not just faceless computer criminals hiding around the world. Disgruntled employees can also be network saboteurs, especially when a company's internal security firewalls leave too many holes for employees to work through.

Those losses, and other business-interruption scenarios, are covered by policies designed for computer-network damages that result from hackers. The policies are tailored to avoid the "gray areas" in traditional coverage. For instance, traditional business-interruption coverage usually kicks in when there's physical damage to, say, a storefront, and nothing can be sold. If your e-commerce site goes down, there's little or no visible physical damage, and that's where an e-policy kicks in.

The key to Internet risks is that nobody knows what's coming next.

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