Trade marks and domain names
In the offline world, your trade mark represents your identity in the marketplace, making you and your products recognisable for the persons and entities with whom you do business, particularly your customers. In the online world of the Internet, domain names have come to fulfil the same role as a trade mark, as your presence on the Internet starts with your domain name.

A domain name is an important corporate identifier. Beyond being the name under which you send and receive e-mail, like any other trade mark or trade name it can be a symbol of your goodwill and recognition in the marketplace. Importantly, when attempting to locate an entity on the Internet, the domain name is often the first component of any search. It is accordingly of vital importance that your domain name reflects your full corporate and/or some or all of your product names, or at least a recognisable part thereof.

Domain names generally consist of three components –

your name;
the top level domain name, indicating the type of entity (such as .com or .co for commercial, .ac for academic and the like); and
the second level domain name, indicating your country of origin (such as .za for South Africa), though in the United States, the second level domain name is usually omitted.
The Internet address of a South African company would typically be “yourname.co.za”.

Generally, domain names are assigned on a first come first serve basis by various regional entities who have been allocated the responsibility of domain name registration. These registrars do not exercise veto power over a requested name so long as that name is not identical to one already assigned. The result is that an Internet user may register as his or her domain name, a well known and established trade mark or proprietary name, to the exclusion of all other persons, including the proprietor of the trade mark.

However, in the United States various well known entities have disputed the use of their names by other Internet users. MTV and MacDonalds, for example, have redeemed their names from use as website addresses by unrelated third parties. In most of these US cases so far, the so-called “hijacker” of the name had no legitimate purpose for obtaining the domain name, other than to harass or hold up the trade mark owner. Although there is no clear precedent, the view in the United States appears to be that existing US laws and remedies for trade mark violations and unfair competition are sufficient to handle disputes regarding Internet domain names. If those principles are applied, domain names which are confusingly similar to registered trade marks may be struck down in the same way as traditional trade mark violations.

On the other side of the Atlantic, Britain’s most famous store, Harrods, also became embroiled in a domain name dispute. In the first case of its kind in Britain, Harrods instituted legal proceedings against a company which registered the name harrods.com in the US. Since these cases are unprecedented, it is difficult to speculate on the outcome, but in most cases the equities will favour the trade mark owners. Because of the exorbitant costs of legal proceedings, however, many of these cases are likely to be settled out of court. Harrods won its case, primarily because the defendant did not appear in court.

The result is that a person who acquires a domain name can accordingly still be sued for using that name by another party who believes that the domain name violates its trade mark or other rights. Some American lawyers are therefore advising clients to first determine whether anyone else is already using a proposed domain name as a trade mark. The failure to follow this course of action may result in the business committing substantial resources to the establishment of a website and the marketing of a domain name, only to find that it has to give up the domain name to the trade mark owner.

No matters of this nature have, as yet, been brought before the South African courts. However, it is likely that any challenge to domain name “hijacking” will be in terms of existing trade mark law. Typically a trade mark is used to identify the manufacturer or supplier of specific goods and services as well as to distinguish those goods and services from the goods and services of others.

According to the Trade Marks Act a trade mark is a “mark” which distinguishes the same goods or services of two different parties. A “mark” is “any sign capable of being represented graphically, including a device, name, signature, word, letter, numeral, shape, configuration, pattern, ornamentation, colour or container for goods or any combination of the aforementioned”.

The fact that a domain name is an alphanumeric address, does not mean that it cannot be treated as a “mark” as defined in the Act, given that it serves some of the same purposes as a trade mark and there is no bar to registering your domain name as a trade mark.

Problematic cases are likely to arise where more than one party has trade mark rights attaching to a name, and therefore a legitimate claim to that name. An example that is frequently quoted is that several organisations use the term United, including United Airlines, United Bank and United Van Lines. If one of these trade mark holders obtains the domain name united.com, do any of the others have the right to object? Applying existing trade mark principles, each owner of a “United” trade mark would have the right to use the domain name united.com, in the same way as they each use the word United on their respective goods or services. The difficulty with domain names is that, even if the name is used in relation to different goods, only one user is entitled to use the domain name in question. The result is that, with names over which more than one trade mark owner has rights, those trade mark owners may find that they cannot prevent others from using their trade marks as domain names.

In an attempt to resolve (or at least regulate) the controversy surrounding domain names, a number of proposals have been made by the International Ad Hoc Committee (“IAHC”), and the World Intellectual Property Organisation (“WIPO”). The final policies and procedures which will be implemented by WIPO are the subject of ongoing discussion and evaluation.

Some of the proposals are –

the establishment of a number of regional domain name registrars who will liaise with one another and attempt to achieve a cohesive international registration policy;
the introduction of a “hold period” after the introduction of a new domain name to provide for any objections thereto to be lodged;
the formulation of a comprehensive dispute resolution procedure in respect of objections to domain names; and
the introduction of a number of new generic “top level” domain names in addition to the existing generic top level domain names (currently .net, .org and .com). The suggested new top level domain names include .firm, .web, .arts, .rec. and .info.

Ensure that your domain name is registered in your own name, rather than that of your website developer or Internet service provider.
Register domain names in respect of names that you wish to use on the Internet, whether you intend using them immediately or at some time in the future and check with the local domain name registry to ensure that your trade marks have not been registered as domain names by someone else.
Search the Internet regularly to ensure that your trade marks have not been “hi-jacked”.
Take the necessary precautions (including trade mark searches if necessary) to ensure that your domain name does not compete with a registered trade mark.
If you have not already done so, register your domain name now since they are allocated on a first come first serve basis.

How to register a domain name
The easiest way to register your preferred domain name is through an Internet Service Provider (“ISP”). You will be required to supply the ISP with the following :

The actual name(s) that you want registered.
The host or service you wish to be registered with (eg WWW).
Your “top level domain”. For South African companies it is usual for “.co.za” to be your top level domain. Other top level domains include :

.ac.za South African Tertiary Education

.gov.za South African Government Domains

.org.za South African Non-Profit Organisations

.mil.za South Africa Military Domains
The result of this information will give you an Internet address as follows (as long as no-one else has registered the name before you):

www.yourname.co.za (for a company)

In addition a numerical Internet Protocol (“I.P.”) address is required which links your domain name to a computer where you will be hosting information. If you do not have an I.P. address your ISP should be able to assign one to your domain name. The I.P. can be changed at a later stage without affecting your domain name. Quite often organisations want to register a number of domain names, these domain names can all point to one I.P. address.

Cognisance should be taken of trade mark and domain name issues referred to earlier in this section.

Ownership of website content and copyright
Copyright gives the copyright owner the exclusive right to utilise and exploit the product of his or her intellectual labour. Literary, musical and artistic works, photographs, sound recordings, films and computer programs qualify for copyright protection. One feature of the expansion of the Internet is a greater use of photographs, images, video and sounds, as well as text, in Internet websites. This makes the site more interesting and visually attractive and is designed to attract a greater number of visitors. It also amplifies the amount of copyright material on the Internet. The question raised by all this material on the Internet is twofold: firstly, how do I protect my copyright on the Internet, secondly, to what extent may I use the material of others?

Applying the provisions of the Copyright Act, the contents of your website will automatically be afforded South African copyright protection if they are –

not contrary to public policy;
original; and
made by a South African citizen or resident.
Accordingly, no-one else may copy, adapt, reproduce, publish or distribute the contents of your site without your permission. There is one major exception, which may loosely be termed “fair use”. The Act gives others the right to use copyrighted works in certain circumstances, such as use for research, study, private purposes, criticism, review, reporting current events, quotation and the like. The requirements for this exemption are that the use must be compatible with fair practice, the extent of the use must be justifiable and the source, as well as the author, must be acknowledged. These are rather imprecise concepts and will need to be considered within the specific circumstances within which the use occurs.

The strength and attraction of the Internet is the ease and speed with which information can be distributed to a virtually unlimited audience across the world. This ease and speed is also the greatest danger to your copyright. Unfortunately, with the current Internet technology, your work can be copied in seconds and then distributed to a virtually limitless global market. Technology to protect copyrighted works is being developed, however, it is unlikely to keep pace with the advances in technology that will allow others to copy and distribute the works.

One area of concern relates to making databases available on the Internet, such as telephone, business and other directories. Generally databases are not capable of copyright protection as they are a collection of broadly available information in the public domain and thus not original. What makes each database unique is the method of collecting and displaying the information collected, not the information itself. Thus anyone may appropriate the contents of a database if the information contained in it is in the public domain and provided they present that information in a different format.

The aim of all commercial website owners is to obtain the maximum exposure from their site. The benefits of increased exposure are increased advertising revenue (if you allow others to advertise on your site), increased sales revenue (if you trade on your site) or additional marketing benefits. Having others copy and distribute your work may even be to your benefit, provided that it constitutes fair use as described above, it does not bring your work into disrepute and you are acknowledged as the author or owner of the work and the copyright.

The same principles will of course apply to your use of another person or entities copyrighted works.

The ‘WIPO’ treaties on copyright
WIPO is attempting to revise the international copyright norms contained in the Berne Convention on Literary and Artistic Works in the light of recent technological developments such as the advent of digital technologies and the Internet.

Only the WIPO Copyright Treaty and the WIPO Performance and Phonogram Treaty have thus far been adopted.

Traditionally, international treaties protected authors by giving them the right to control the production and distribution of copies. But there are no physical copies on the Internet and digital networks.

The WIPO treaties effectively extend existing international copyright regimes to non-physical copies. The WIPO Copyright Treaty establishes that authors and artists have the exclusive right to distribute, sell or rent their work electronically; it prohibits the unauthorized removal or alteration of information about the ownership rights of a work, known as rights management information; and it requires that each country’s implementing legislation provide enforcement procedures.

Copyright Issues: hyperlinks and framing
Hyperlinks
What is a hyperlink?
Usually, in order to locate a particular website on the WWW, a user would need to type in the applicable Uniform Resource Locator (“URL”), for example, www.werksmans.com. If the user does not know the URL in question, a search engine may be used to find the relevant website.

Hyperlinks, also known as hypertext links, make it unnecessary for a user to first type in the URL or use a search engine to locate a website as it allows a user to proceed from the web page they have accessed to another web page or website on the WWW. A hyperlink is incorporated into a web page as a highlighted or differently coloured and distinguishable phrase or image. Often the user’s cursor arrow transforms into a “hand” when scrolling over a hypertext link making the link easily recognisable.

When a user clicks on a hypertext link, the web browser calls up a new website. This enables users to easily access different pages and different sites, without the need to use complicated Internet addresses or arcane keyboard commands. All that is required is the click of a mouse. In fact, the expression “surfing the web” depicts the ease with which a user can link from one site to another using hypertext links.

For ease of reference, a “primary” site is a site providing a hypertext link to another site, while that other site which is being linked to, is referred to as a “secondary” site.

Can you link to another website without permission?
Linking to the pages of another website has caused concern amongst some owners of secondary sites and has resulted in litigation. A significant concern is that the potential of a secondary site to advertise may be undermined by these links, which result in visitors bypassing the front page of the secondary site and being linked directly to subsidiary pages within that site.

In the Scottish case of Shetland Times v. Dr Jonathan Wills & The Shetland News Ltd, the Shetland Times instituted action against an Internet news service for linking to articles within the Shetland Times online newspaper. The case was based on copyright infringement.

It was argued in defence that the news service was technically not copying or modifying any proprietary material of the Shetland Times. By creating a link to another website, the defence went, a primary site is simply directing users to the secondary website. Thus, because the news service does not copy or modify the information, it should not be subject to copyright infringement.

Commentators in favour of unfettered linking also maintain that by linking to another website, the primary website is helping the secondary one by directing users to the site and thereby enhancing the market for the copyrighted material. Further, proponents of linking argue that a primary site has an implied licence to link to a secondary site, since all website owners should anticipate that others may use hyperlinks as a means to access copyrighted material on the Internet. Therefore, website operators who make their material and services available on the Internet without including any limitations or restrictions as to use of the material, impliedly grant others the right to use hyperlinks to access that material.

The court in the Shetland case has issued an interim interdict, temporarily directing that such links be terminated, subject to further litigation.

Analogous to the Scottish case was that of Ticketmaster Corporation v. Microsoft Corporation. In its action, Ticketmaster claims that the “Seattle Sidewalk” guide on Microsoft’s website illegally uses the Ticketmaster name and trade mark by providing links that have circumvented the home page of Ticketmaster’s website which displays advertisements, products and services of entities with which Ticketmaster has advertising contracts. At the time of publication, the Ticketmaster lawsuit was still pending.

Framing
What is framing?
Framing is a technique whereby multiple windows or frames are created on the user’s computer screen. Each frame functions independently and information downloaded into one frame fills up that frame only, as opposed to the entire screen.

The result is that a user may have a multiplicity of windows on his screen, each window displaying the contents of a different website. The use of framing in conjunction with hyperlinks allows the primary site – with its logo and third party advertising conspicuously displayed – to remain as the frame or border to the material on the secondary site.

Can you frame the website content of another website without permission?
InWashington Post Company v Total News Inc., Total News utilised framing technology to present a site that displayed its own logos, advertising and URL on screen, whilst the contents of secondary sites were contained in smaller windows on the screen. The secondary sites, which also sell advertising of their own, were not fully displayed, thus their advertising was distorted. In addition, the fact that the URL did not change when framing was used could have caused confusion amongst casual browsers as to the source of the material. The plaintiffs argued that framing constituted an infringement of their copyright and trade marks.

Total News recently settled the case, and accordingly no judgement was given. Under the settlement agreement, Total News will cease the practice of “framing” the plaintiffs’ websites, but is not prohibited from linking to the plaintiffs’ websites provided that the hyperlinks consist only of the names of the linked sites in plain text.

Conclusion
Without a terra firma in this area having yet been established, the following are guidelines based on the case law and commentary thus far.

Circumventing a website’s home page may have a serious impact on that website’s ability to generate advertising revenue. In addition, website owners carefully design their site so that the pages follow strategically from one to another. Navigational control of a website may be critical to a company’s ability to maximise sales and profits from its website.

Thus hyperlinks might only legally be able to direct viewers to the home page of a certain website rather than deep into its pages. With regards to “framing”, stricter rules seem to apply, for example, that the secondary site’s home page and advertising on it cannot be distorted; that the URL of the secondary site must appear on the user’s browser after the link is completed; and that the primary website must not use its own advertising to border the frame of the secondary website.

Finally, website owners who wish to exert stricter control over the linking and framing of their website content should incorporate on-line terms and conditions, which exclude any implied licence and which limit and restrict the use of the website content and provide, for example, that no linking or framing of that content may take place without the express consent of the website operator.

Be careful of linking to and/or framing the content of another website without the consent of the website owner.
Restrict the use of your website content in online terms and conditions, thereby preventing undesirable linking to and/or framing of your website content.

Liability for content – Defamation
Defamation has become a major concern for people and companies as the Internet now provides potential defamers with easy access to an international stage. The basic issues underlying defamation on the Internet are almost identical to those relating to publication on television, radio or even in newspaper. There are, however, several issues that are peculiar to this new form of communication and publication. The first is whether a South African court has jurisdiction where the defamer has made a statement in another country. South African law states that the delict of defamation is committed where the words are published. With the Internet, publication seems to take place when and where the offending material is accessed. Thus the court in South Africa will probably have jurisdiction as soon as a party in South Africa accesses the statement. There are also some court decisions that would give South African courts jurisdiction even where the publication is not seen in South Africa.

Technically, every broadcast constitutes a separate publication. A person would have an action each time the publication is accessed. In the US several states have adopted a so-called “single publication” rule in terms of which this sort of publication on the Internet would be seen as giving rise to only one cause of action. It is likely that, due to the nature of these publications, South African courts will adopt a similar rule. Once jurisdiction is established however, it will still remain difficult to enforce a court decision against a defamer in another country.

The issue of whether a service provider can be liable for defamatory publications has not been dealt with by our courts but there have been several developments in the UK and USA in this regard. Of particular importance to businesses is the fact that the employers may be vicariously liable for defamatory statements made by an employee using the company’s Internet e-mail system.

United Kingdom
On 4 September 1996 a new Defamation Act came into force in the United Kingdom. The main focus of the Act was to amend the definition and concept of publication with regard to defamation (libel) actions. The issue is that secondary distributors can avoid liability, if they did not know, and were not negligent in not knowing, about the defamatory content of the material they distributed. The defence is known as “innocent dissemination”.

The new section 1 of the Act would cover dissemination of information over the Internet, and is particularly applicable to service providers.

Section 1(1) states that –

“In defamation proceedings a person has a defence if he shows that –

(a) he was not the author, editor or publisher;
(b) he took reasonable care in relation to the publication of the statement complained of;
(c) he did not know, and had no reason to believe, that what he did caused or contributed to the publication of a defamatory statement.”

Section 1(3) states that –

“A person shall not be considered the author, editor or publisher of a statement if he is – …

(c) only involved in processing, making copies of, distributing or selling any electronic medium in or on which the statement is recorded, or in operating any equipment by means of which the statement is retrieved, copied or distributed, …
(e) the operator of a communications system by means of which a defamatory statement is transmitted, or made available, by a person over whom he has no effective control.”.

The importance of section 1(3) is that it offers protection to service on-line providers and system operators who cannot control what is placed on news groups or bulletin boards (this is only provided that they do not edit the information placed on the bulletin boards).

Section (1)5 sets out three factors that a court must consider when determining these matters –

the extent to which the defendant is responsible for the decision to publish the statement;
the nature and the circumstances of the publication; and
the previous conduct of the author, editor or publisher.
It seems therefore that it will be advantageous to a service provider if it has as little control as possible over the contents of the material published.

United States
The two cases dealing with service providers in the US are Cubby Inc. v CompuServe Inc. and Stratton Oakmont Inc. v Prodigy Services Co.

In the Cubby case, defamatory material was published on a forum provided by CompuServe, however the court held that CompuServe would not be liable, because it acted as a distributor and not as a publisher of the statements. CompuServe had no opportunity to review the contents of the publications before they were uploaded onto the computers.

It is important to note that a distributor must have some knowledge of the contents of defamatory material which it distributes before it will ever be held liable by an American court for defamation. The test laid down by the court in Cubby was whether the provider “knew or had reason to know of the alleged defamatory … statements”.

In the Stratton case defamatory material was again published on the Internet and the service provider was sued. Here the court found Prodigy liable as a publisher because it has held itself out to have had some form of editorial control of the information posted on its bulletin boards and it utilised an automatic software screening program. The court said that Prodigy was clearly making active decisions regarding the content of information published on its bulletin boards.

An amendment was made to the US Telecommunications Act and the erstwhile Communications Decency Act providing that interactive computer service providers are not republishers of the data transmitted over their computers. This would in many instances protect the ISP from defamation claims.

Australia
In the 1994 Australian case of Rindos v Hardwick, the court awarded AUS$40 000 as damages against a publisher of a defamatory e-mail message over the Internet.

The difficulty created by defamation cases for companies such as service providers, or even companies that have a home page with a bulletin board, is that by exercising any form of responsibility or regulation of the content published on their web page or bulletin board, they risk being sued for defamation.
If, however, they could have had the ability to regulate what was published and decide to do nothing, they could also be sued for negligence for failing to maintain some form of security procedures or editing control. Until further court decisions both in South Africa and the United States are made, the position of a service provider and companies hosting bulletin boards on their web page is an invidious one.
Be aware that defamatory statements on the Internet, even in casual e-mails, could attract liability for defamation.
Owners and/or operators of computers which are accessible to the public have been held to be liable for defamatory material which is published on their system. This would mean that in certain countries or states, corporations could be found vicariously liable for defamatory statements published by their employees.

Internet and the State
The cross-border nature of the Internet and the general lack of any worldwide uniform regulation has resulted in an environment that sometimes borders on anarchy. While it may be argued that this is the very reason for the phenomenal growth, development and popularity of the Internet, it also offers an environment to circumvent the established domestic laws of a given country. The Internet has for example allowed copyright and trade mark abuse, hacking, fraud, gambling and the distribution of obscene material in countries where this is illegal.

Censorship and free speech
It is no secret that pornography is freely available on the Internet. The Internet has also been used to distribute “hate speech” and a number of attempts have been made to set up neo-Nazi Websites. The question of the availability of pornography and the distribution of “hate speech” on the Internet is no less vexing than the question of pornography and “hate speech” in the off-line world.

To date, a number of countries have attempted to regulate the content of the Internet, most notably the United States by means of the Communications Decency Act (“CDA”). The CDA was passed in an attempt to regulate the most obscene and arguably dangerous material on the Internet, particularly child pornography and pornography depicting graphic violence. The CDA was vigorously opposed on the basis that it went far beyond its original purpose and could have been used to inhibit the right to privacy and free speech. This view was adopted by the United States Supreme Court and the CDA was declared unconstitutional.

With the inclusion in our new constitution of certain fundamental rights, South African law has a human rights perspective with which to assess state regulation. In dealing with censorship and free speech, the constitutional right to privacy and freedom of expression needs to be weighed against the greater good of the community. Implementing such balancing considerations, the Constitutional Court has declared certain provisions of, inter alia, the Publications Act unconstitutional. As a response to these decisions and other considerations, the Films and Publications Act (“the Act”) was passed in 1996, though certain provisions thereof have yet to be implemented.

The Act removes the criminal sanction for possessing certain “classified” material (for example, pornography) and is aimed at regulating the distribution and exhibition of films and publications, having due regard to the fundamental rights incorporated in the constitution. While the Act does not specifically deal with the Internet, it does deal with computer software and the definition of a publication in the Act is broad enough to include Internet sites. Thus pornography and “hate speech” on the Internet may be regulated by the Act. However, the Film and Publications Board established by the Act will not act on its own initiative and it would appear that a complaint will first need to be lodged before the Board will consider any particular publication.

With regard to pornography, if a publication or film is classified as XX, the distribution or exhibition thereof is an offence, and if classified as X18, the distribution thereof other than from licensed adult premises is an offence. With regard to “hate speech”, again only the distribution of such material is an offence and the Act does make the viewing or possession of such material an offence. The only exception is child pornography, where production, importation or even possession of such material constitutes an offence.

Accordingly, other than in respect of child pornography which may be stopped immediately, a complaint concerning the contents of a website must be referred to the Board, the distributor must be given notice of such complaint and the website may then be classified in accordance with the Act. If the website proprietor continues to distribute such material other than in accordance with the Act, he will be guilty of an offence. If the website is not situated in South Africa, the complex jurisdictional problems related to Internet activity (dealt with elsewhere on this site) will need to be considered. On the other hand, material that may be acceptable in South Africa may contravene the laws of another country.

Countries with restrictive political regimes tend to impose restrictive controls on Internet access in order to control political freedom and dissent, as well as pornographic material. Living in a democracy with the protection of a bill of fundamental rights gives South Africans greater freedom, coupled with a greater responsibility for our own self regulation.

Consider using one of the Internet regulators (such as NetNanny) to restrict access by children and/or employees to adult orientated websites.
Ensure that you have an Internet access policy in place for employees, indicating acceptable behaviour on the Internet.
Take care with regard to the contents of your website: what may be acceptable in one country may not be acceptable in another. This is of particular importance if you have a branch or do business in another country and may thus be subject to its laws, or have assets which may be attached.
Gambling
The gambling industry is a massive and ever increasing one. In the United States alone, gamblers spend approximately $500 billion annually and the figures are growing. In addition gambling technology has shown significant advancements in the last twenty years, with the impact of computers on gambling being the most notable. Gaming machines no longer rely on the clockwork mechanisms of previous years and microchips now operate and regulate everything from slot machines to video poker. The latest technological advancement in gambling has been on the Internet.

It is estimated that there are in excess of 600 gambling and gambling related sites on the Internet. A number of these are sites devoted to sports gambling and include comprehensive sports results and information. Certain sites go a step further and provide betting odds and predictions. Many sites deal with gambling generally, including Frequently Asked Questions (“FAQ’S”) on various gambling activities and in particular casino games, advertisements for various casino resorts and even assessments of the best buffet in Las Vegas casinos!

There are a smaller number of sites that offer actual on-line gambling. These include sports betting with the website proprietor acting either as a bookmaker or merely as an intermediary who (for a commission) will locate another party willing to bet against you. Other sites exist through which Bingo can be played on one’s behalf (via a link to the American Indian gaming halls), you can participate in any one of a number of international lotteries and can play various casino games and gambling machines, whether for amusement or for actual money.

We are no doubt all familiar with the various card games available on one’s personal computer, however, Internet gambling takes these time consuming pursuits to a different level. Irrespective of the legality of any such transactions, any potential punter must consider the practical advisability of providing one’s credit card details or paying a deposit, usually into an offshore account, to a website proprietor whose physical location, moral character and reputation is totally unknown and where the gambling machines are controlled by the website proprietor and not by any recognised authority. The opportunities for theft, fraud, tampering with results and deception are limitless. Furthermore, most of the Internet casinos are registered in such exotic locations as Antigua and Belize and pursuing an entity in these jurisdictions will be fraught with difficulties and costs.

With regard to the legality of Internet gambling in South Africa, the Gambling Act of 1965 prohibited all gambling other than in respect of certain specific exemptions. In particular, the 1965 Act provided that there is no exemption from the provisions of the Act relating to lotteries or sports betting by virtue of the fact that such activities are managed or conducted in whole or in part at some place outside the Republic. Gambling activities, other than lotteries and sports betting, managed or conducted outside the Republic do seem to be exempt and Internet gambling based outside of South Africa appears to fall outside the 1965 Act.

The National Gambling Act of 1996 deals extensively with gambling licences. However, the general prohibition on gambling contained in the 1965 Act is not considered nor is the 1965 Act repealed. Accordingly, the intention of the 1996 Act seems to be that gambling remains a prohibited activity unless licenced and conducted in accordance with the 1996 Act and the provincial gambling laws enacted by each province. The Gauteng Gambling and Betting Act of 1995 provides that the 1965 Act shall not apply in the Gauteng province in relation to anything for which a licence or registration is required in terms of the Gauteng Act. Internet gambling is not considered or regulated in terms of the Gauteng Act and the 1965 Act seems to still apply. Obviously, Internet gambling was neither contemplated nor regulated in the 1965 Act and the general principles are inadequate to deal with this computer age phenomenon. We are thus left in a state of great confusion and uncertainty. The legislature has wasted an ideal opportunity of regulating Internet gambling in South Africa and appears to have ignored the technological realities of the information age.

Internet sports betting and lotteries would appear to be illegal provided that the relevant provincial legislation (as in the case of the Gauteng Act) has not superceded the jurisdiction of the 1965 Act. In the case of Gauteng, Internet sports betting and lotteries are illegal unless licensed in terms of the Gauteng Act. Unlicensed Internet gambling operated from a website within South Africa will also be illegal.

With regard to Internet lotteries, websites abound offering information on numerous lotteries world wide and giving one the opportunity to purchase tickets for various national and state lotteries (including various Australian and USA state lotteries, the British and Swiss national lotteries and many more) through such websites. There are also a small number of actual Internet based lotteries, not affiliated with any state or national lottery. The most well known of these is PLUSLotto, which raises funds for the International Red Cross.

In South Africa, a Lotteries Bill has been promulgated and is intended to supersede the 1965 Act with regard to lotteries. The bill prohibits lotteries and sports pools, other than the National Lottery conducted in accordance with a license granted by the state. Certain charitable lotteries and promotional competitions are permissible and may be conducted on the Internet in terms of the Bill, but Internet lotteries, while not specifically mentioned, are prohibited and even participation in an unauthorised lottery will be an offence.

A number of responsible members of the Internet gambling community have embarked on a policy of self regulation. Nevertheless, the use by concerned parents and employers of the various regulatory devices prohibiting access to stipulated Internet sites (such as pornographic and gambling sites) is recommended. In the end, though, it is the public’s perception of fairness which will govern the growth of the Internet gambling industry. A physical casino, regulated by the laws of the state in which it is situated, is obliged to maintain strict standards which prohibit cheating and organised crime control. Furthermore, it would be exceedingly difficult for a physical casino to shut down, to avoid paying a big winner and to duck law enforcement only to re-open somewhere else. Most forms of Internet gaming are illegal in one or more jurisdictions and with their illegality and questionable status comes the possibility of fraud. In order to gamble, one must deposit money into an account or give a credit card number. The Internet casino will always be paid, but the question is: will the gambler be paid?

Consider using one of the Internet regulators (such as NetNanny) to restrict access by children and/or employees to gambling sites.
Take care before using any Internet based gambling site and particularly before giving out your credit card number or paying a cash deposit.

Security, Hacking and Computer Crimes
As the Internet grows into a serious business tool, security has become one of the major issues surrounding it.

Attacks on corporate data come from some surprising quarters. The teenage hacker, usually blamed for compromised security, only accounts for 7% of reported violations, while infiltration by a company’s competition peaks at 39%. Even more surprising is that most of the hacking on a network is done by trusted employees.

Four elements of security should be taken into account:

Authentication
Authorisation
Data privacy
Data integrity
Only recently have Companies begun to realise how vulnerable their electronic publications are to what has been described as “digital arson”.

In early 1997 a New Orleans newspaper, the San Antonio Express News lost 300 000 web pages in a major “hack attack”, that paralysed its website and ISP. Several weeks after the attack, the newspaper had still not been able to repair its systems, or make a complete assessment of financial damage and loss suffered. The suspects included a high school student and an unspecified group of adults. The newspaper has now taken emergency measures to install new fire wall security systems to isolate on line operations from other networks.

There are many security systems and products which can be put in place to ensure that hacking and other security transgressions do not occur. In addition, businesses can limit unauthorized access and hacking by employees by implementing security policies regulating the use by employees of the company’s network. An Internet usage policy for employees should therefore be adopted. This is dealt with, in greater detail, elsewhere on this site.

Computer fraud too is an ever increasing phenomenon and a number of countries have introduced legislation specifically designed to address this issue as well as hacking. To date, South Africa has not tabled any legislation dealing with these issues and relies on the current criminal law to deal with this problem, through common law and statutory prohibitions on, inter alia, fraud and malicious damage to property.

The Interception and Monitoring Prohibition Act prohibits the interception and monitoring of communications, including e-mail and other Internet communications, without the knowledge or permission of the dispatcher of such communication. The implications of this Act for your employee e-mail policy is set out elsewhere in this publication. The Act has some use in the prevention of hacking, where it involves the unauthorised interception or monitoring of communications, but its application is extremely limited.

The Internet and internal network (intranet) are systems which are subject to possible attacks which can be made on a daily basis. Security and privacy are important issues that cannot be left to chance. A pro-active stance is a company’s best defence against those who would compromise a company’s integrity.
Ongoing vigilance will provide a margin of safety and assurance. While no system is invincible, a company can take appropriate measures to protect itself from hungry competitors and disloyal employees.
Until secure alternatives are available, use established and complimentary procedures to confirm Internet transactions.

Shaun Bakamoso

Greetings. I'm Shaun Bakamoso, and I'm thrilled to be your guide through the dynamic world of business news in South Africa here at mbendi.co.za. With a passion for staying informed and a keen interest in the ever-evolving landscape of business, I've dedicated myself to providing you with timely, insightful, and comprehensive coverage of the latest developments impacting the South African economy. bakamoso@gmail.com / Instagram