United States: Dispute Resolution In The Digital Age-One Simple Question:
How Do I Solve A Dispute Across International Borders

John called his attorney last week and left an email marked with the red exclamation point, indicating highest priority. Before his lawyer had responded to the email, John called to explain why he needed urgent advice: "I HAVE ONE SIMPLE LEGAL QUESTION: is it true that the guy I hired to work on my website has some claims to it? I paid him for his work, but he’s now making some claim to having rights to it. I think he heard we sold the company, maybe even heard how much we’re getting. So I guess he’s thinking he’s now entitled to a share."

"Wait a minute, his attorney said. Let’s meet and discuss this further.

Bring the documents, including the documents of the sale and the documents for his work on the website."

"Well, John said, "we don’t really have a contract. We exchanged some emails though. Oh, by the way, the guy is in India. Does that make any difference?"

The next day after reviewing the documents and getting the rest of the story on how the sale of the business came about, the attorney confronted the familiar problem of a client who sought his advice AFTER entering into a transaction and needed help. It was now clear that the buyers of the company bought the business and considered the software operating the website to be a critical asset of the company.

The software was proprietary and had been conceived of by John and his partner to further their business. The two had worked nights and weekends to map out the requirements of a web site, the functional interaction they wanted with their users, the design, "look and feel" and administrative requirements. After this was done, they found a bright young technical entrepreneur who had a small team to execute the plan. The team would write the necessary code to bring to Internet life the vision John and his partner had created.

The buyers now want to back out of buying John’s business because the software is a critical asset. Unless and until the company has the undisputed exclusive rights to the software, John won’t be taking the money to the bank.

By the time John reached his lawyer’s office, he realized he had not one, but two disputes: one with the buyers of his company who were threatening to back out and one with his technical partner in India.

Who owns the website? John’s lawyer immediately started discussing copyright principles and explained that ownership "vests initially in the author or authors of the work", so it depends on who is the "author.

17 U.S.C.§210(a). As John’s lawyer continued, "if the work is for hire, ‘the employer or other person for whom the work was prepared is considered the author’ and owns the copyright, unless there is a written agreement to the contrary. 17 U.S.C. §201(b). But determining whether it is a work for hire is only part of it. As John presses his lawyer to get this resolved as quickly as possible so the sale of the business can be completed, the lawyer explains to John that there are choice of law and jurisdictional questions as well as copyright issues. These are three significant legal issues so it’s a good thing you contacted me (although it would have been far better had you consulted me before you entered into these agreements, she’s thinking.)

Doing business today on the Internet opens up many novel legal issues. The uncertainty of how the law will evolve and be applied has put lawyers in the forefront of negotiating legal shoals to help business and ecommerce thrive.

Historically questions of what law governs a transaction and the proper jurisdiction for resolving a dispute have been closely tied to the place where the transaction took place. "When the transaction occurs in cyberspace, complex questions as to what law applies and what court has jurisdiction make resolving the dispute by legal means difficult, if not impossible." (Draft Report & Concept Paper, ABA Task Force on Commerce and Alternative Dispute Resolution May 2001.)

The American Bar Association has created an E-Commerce & Alternative Dispute Resolution Task Force comprised of representatives from ABA Sections on Business Law, Litigation, International Law and Practice, Dispute Resolution, and Intellectual Property. Together these representatives are examining whether online dispute resolution may provide useful tools to solve cross border disputes.

Online dispute resolution is a new field that refers to use of the Internet and computer technology to facilitate dispute resolution. It can be particularly beneficial in cross-border disputes to save travel expense and time. For example, in the dispute involving John and Raj, the web developer in India, the mediator would use email and instant messenger for contemporaneous text messaging, to narrow the issues and discuss alternatives with the parties and counsel. In addition, counsel might exchange documents through file transfer across the net. Similarly the mediator might caucus with the parties through individual email exchanges and then have a conference call to see if the dispute could be resolved. For example, through some online exchanges, the mediator learns that Raj is not interested in getting money from the sale of the business…he didn’t know anything about it until the other side brought it up. What Raj wants is credit on the website so that others can see his work and he can use it for marketing purposes. The parties and counsel learn through mediation across continents that the dispute can be resolved without a face to face meeting. Both sides are relieved at saving that expense.

For the dispute involving sale of the business, however, counsel agree to use the Internet only for preliminary exchange of information with the mediator, including scheduling, convening the appropriate participants, and exchange of briefs. The parties choose a traditional face-to-face mediation which concludes with the sale of the business once the parties work through the terms of transfer of the software, delay damages and other questions raised by the litigation.

Hon. Alice D. Sullivan (Ret.) has mediated over 1000 disputes and is an experienced international arbitrator. She is a founder of Private Judge, Inc., an international panel of mediators and arbitrators to specialize in cross border technology disputes. The firm is headquartered in San Diego, California amidst telecom, IT and biotech companies.

Judge Sullivan has addressed the Federal Trade Commission and Dept. of Commerce Workshop on "What Should the Rules Be for Online Dispute Resolution".